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North American Developments Impacting the Global Supply Chain

By Joel Anderson | 10/30/2013 | 7:18 AM

 

Global-supply-chain-technologyThird-party logistics organizations reduce landed transport costs and thereby enrich the wealth of trading partners, says a new report from the World Trade Organization.  The “World Trade Report 2013: Factors Shaping the Future of World Trade” includes a section about transportation costs. According to the report, “The cost of transportation determines where the line between tradable and non-tradable goods is drawn and shapes which firms are able to participate in trade and how they organize their production internally.” 

These data reflect several advancements that members of the International Warehouse Logistics Association (IWLA), based in North America, are experiencing as a result of new technology, innovations and infrastructure development. The following are examples of contributing factors to this reduction in transportation costs:

  1. Technology. IWLA members implement new technologies in their warehouse-based logistics companies. Mobile technologies, cloud-based warehouse-management systems and business intelligence data collection systems help members create greater transparency around the movement of their clients’ goods and sales projections. The e-commerce boom drives use of new technologies. Warehouses place high priority on measurement of operational efficiencies and productivity to meet client needs.
  2. Near-shoring and enhanced multi-modal transportation structures. Infrastructure development in new ports, intermodal ramps and highways pave the way for U.S. transportation operations to effectively use labor/resources in Mexico, South America and China. The expansion of the Panama Canal provides a useful route for moving goods by sea helping reduce costs across all modes of transportation.
  3. U.S. government recognition of the warehouse-based third-party logistics industry. IWLA members are becoming more recognized for their key role in transportation and economic development in America through a robust government affairs program. This concerted effort gives our industry more influence over the regulatory/legislative environment that affects the U.S. supply chain.

As the global supply chain continues to grow, North American developments will have lasting
impacts on shores near and far. For example, according to the report, data from nine Latin American countries showed a 10 percent reduction in average transport costs associated with a 10 percent increase in the number of products exported and a 9 percent increase in the number of products imported.

Unlocking these benefits requires firms with expertise in the fundamental determinants of transport costs.  Third-party logistics providers are those subject-matter experts whose knowledge includes the geographical features of the country, the quantity and quality of the physical infrastructure that support the transportation services, the procedures and formalities used to control the movement of goods from one country to another, the extent of competition in the innovation sector and the cost of fuel (Behar and Venables, 2010). 

Logistics is a science that is as much about cultures and governmental relations as it is about new innovations to assist in the physical movement of products. And, it is the 3PL that works across and through these determinants to move products throughout the world.

IWLA vice president Jay Strother and senior coordinator of marketing & public relations Morgan Zenner contributed to this posting.

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The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Joel Anderson

Joel Anderson

Joel D. Anderson is president and CEO of the International Warehouse Logistics Association (IWLA). Based in Des Plaines, Ill., IWLA is the 120-year-old association of the warehouse-based third-party logistics industry, with 500 members in the U.S. and Canada. Before joining IWLA, Anderson spent 28 years at the California Trucking Association, the last 13 as executive vice president and CEO. An economist by training and profession, Anderson was also a past board member of Cascade Sierra Solutions. He is a frequent speaker before supply chain industry groups.



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