Logistics

What is logistics?

Logistics is the management of transporting goods from the point of origin to the point of consumption. The success of any business or economy in global markets depends, in part, on how trade logistics solutions are integrated and applied.

What is the role of logistics in international trade?

Logistics play a crucial role in the modern global economy. Improved trade logistics infrastructure such as roads & highways, ports, railways and airports are necessary to achieve sustainable and balanced economic development.

The World Logistics Passport (WLP) helps the economies of countries to grow and create jobs by increasing the competitiveness of trade through reduced supply chain costs. It increases economic resilience by easing access to more markets, enhancing existing trading routes and developing new ones. You can read more from our Chief Executive Mike Bhaskaran on how the WLP is helping to build resilient and efficient economies here.

What are the benefits of international logistics?

Ensuring that the international logistics for a business or product are optimized increases the value of a business as its products become available to an increasing number of people. It also helps to reduce costs with the outsourcing of transportation and warehousing, providing faster delivery of goods.

Businesses that join the WLP as members typically see their trade volume grow by 2-3 percent over a two-year period, as they unlock benefits that increase the efficiency of their supply chains, fast-track customs processes, remove impediments to the flow of trade and reduce administrative costs for trade.

How does logistics contribute to economic growth?

There is a well-documented, positive relationship between transport, logistics and economic growth. The correlation is particularly strong in developing economies, where modern transportation and logistics contribute to sustainable economic growth.

The OECD, for example, said in September 2021 that ASEAN economies could be better off by more than US$4.5 billion annually if regional governments encourage fair and transparent competition in the logistics sector.

The OECD’s research concluded that practical, low-cost policies recommended to improve the regulation of the ASEAN logistics industry will empower existing industry participants and encourage new entrants to identify and take advantage of fresh opportunities and the resulting market efficiencies. In turn, this would benefit businesses and consumers, and ultimately accelerate growth and development across the bloc’s economies.

How does logistics affect supply chain management?

From a logistics perspective, the complex system that moves raw materials and finished products around the globe requires predictability and precision. As this article in Forbes Magazine explains,  we sometimes see dislocations in the container market, shipping routes, ports, air cargo, trucking lines, railways and even warehouses.  The result has created shortages of key manufacturing components, order backlogs, delivery delays and a spike in transportation costs and consumer prices.

Whilst the WLP cannot address all these dislocations on its own, the trade initiative could not have been designed at a better time – it was established to unlock market access, increase cost savings and enhance border efficiencies. It is freeing economies to trade, connect and cooperate, and you can watch  this video here to get a better sense of how it is doing so.