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The drivers of change in global logistics

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As an industry mostly concerned with speed, global logistics, which comprises of a wide range of business from container shipping, courier companies, port operators, and air freight, is naturally well-suited for rapid change. The industrial machine that moves things from one place to another is that which powers the continual growth of the world economy. Any improvement to its operation is an indirect improvement to all, which why progress in the industry is so integral to any country’s growth.

The arrival of the digital economy, advancements in technology, and international market trends are pushing the limits of logistics further, demanding sweeping changes and continuous growth.

The World Economic Forum predicted that as populations grow over the following decades, such demands will grow even more rigid. The logistics industry must not only find a means of addressing the needs of an estimated nine billion people in 2050, but also connect remote areas of the world together as new economies emerge.

“With an ever-larger global middle class and expanded Internet access, increased demand for e-commerce will require logistics providers to deliver to remote locations in emerging economies for the first time. Air freight in emerging markets is predicted to increase by more than one million metric tons by 2018, with the fastest growth on routes between the Middle East and Asia,” the World Economic Forum wrote in a report on its Web site.

According to the report, the rise of ‘megacities’ will also pose a challenge to logistics companies.

“By 2030, it has been predicted that there will be 41 ‘megacities’ with populations of more than 10 million people. Megacities will provide a stiff challenge for firms tasked with making deliveries swiftly in a gridlocked metropolis.”




This is compounded by the exponential growth of e-commerce through the prevalence of smartphones. The World Economic Forum predicts the number of smartphone subscriptions in the world to reach four billion by 2025, with nearly all of the growth coming from emerging markets.

As more consumers are empowered with the ability to purchase products from anywhere in the world, the companies making the deliveries must compete to meet rising standards in the quality of service of other industries.

“No longer is it enough for logistics firms to deliver a consignment on time, they now also need to offer a multiplatform service to both personal and business customers,” the organization wrote.

Meanwhile, the price of oil, trade harmonization, and environmental concerns could impact the operations of logistics companies on a fundamental level. The industry as a whole is vulnerable to spikes in the price of oil, and with the world at large slowly shifting towards more sustainable and more environmentally-friendly sources of fuel, logistics must soon change its methods of transportation for both more practical and more sustainable ones.

Developments in international trade, especially those concerning economic unions like NAFTA, the EU, and ASEAN, could either help or hamper the industry with shifting regulations.

“Economic unions, such as NAFTA, the EU and ASEAN, have made progress toward trade harmonization within their borders. These free-trade areas have reduced the expense of processing trade documentation but increased the cost of complying with a growing body of regulations,” the World Economic Forum wrote.

The global logistics industry has come a long way since the crash it witnessed with the 2008 financial crisis. But if progress were to continue, the industry must be willing to implement a swift transformation that can adapt to such issues on a massive scale. — Bjorn Biel M. Beltran

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