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On Track: The Future Horizons of Freight

China, the irrepressible economic powerhouse that The Navigator discussed at length in the last issue, is set to continue its unprecedented growth in 2011, continuing to shift the centre of the logistics industry eastwards. What is significant, though, is the rise in domestic consumer spending in China – set to contribute more than half of the expected 9 per cent GDP growth in the new year – that will drive imports to help the total annual trade volume to over $3 trillion. Germany, on the other hand, has managed to stave off the Europe-wide economic malaise and actually increase its exports by 16 per cent in 2010, driven by the demand for its luxury items in emerging markets. Noted automaker BMW recorded a staggering eleven-fold increase in third-quarter profits, much of it driven by China.

In terms of the industry’s responsibility towards the environment, efforts will continue to focus on not just being green, but being lean, too. Offsetting carbon footprints is a noble goal, but only if overall efficiencies similarly reduce transport miles, inefficient “less than a load” shipments and unnecessary storage requirements.

Perhaps more importantly, though, the industry needs to lead the drive towards “reverse logistics”, in which old or defective products from the end consumer are returned or recycled. Ronald Tibben-Lembke in the Journal of Business Logistics has described the issue as “critical for many firms”, suggesting the costs are more than outweighed by strategic gains. For instance, an effective and efficient returns policy, with innovations such as local suppliers favored for repairs instead of repatriation, can be a key customer-service policy. This needs to also apply to dealing with end-of-life items, in which effective disposal will create new opportunities for shipping and transport operations.

The future of freight, then, is also a reflection on the future of international trade and commerce. How these challenges are met might just be the best indicator of what we can expect in the next decade. And beyond.



Read more in past issues:-

1. On Track: Eruption Disruption

2. On Track: 20/20 Vision - Logistics at the end of 2020

3. On Track: The Logistics of e-commerce




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