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Responding to global logistics trends with a National Logistics Strategy Bangkok, January 2007

Responding to global logistics trends with a National Logistics Strategy Bangkok, January 2007. Paul Amos, Transport Advisor World Bank, Washington DC. Contents. What is logistics? What are the global trends? Why have a National Logistics Strategy? What should be its aims?

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Responding to global logistics trends with a National Logistics Strategy Bangkok, January 2007

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  1. Responding to global logistics trends with a National Logistics Strategy Bangkok, January 2007 • Paul Amos, Transport Advisor • World Bank, Washington DC

  2. Contents What is logistics? What are the global trends? Why have a National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand-key challenges.

  3. Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand-key challenges.

  4. I. What is logistics? Freight logistics involves many different physical and economic activities… Value adding services • Packaging • Quality control • Product testing/repair • Assembly • Installation • Information • Inventory control • Core logistics services • Line-haul transport • Pickup/distribution • Storage • Loading/unloading • Stuffing/stripping • Load consolidation Support services • Equip. hire/leasing • Equip. maintenance • Sanitary services • Security services • Trade insurance & finance

  5. I. What is logistics? Not surprisingly, logistics comprise a significant proportion of GDP Source: Transport & Logistics in the Internet Age: International Summit 2001

  6. I. What is logistics …..and a substantial proportion of product prices Food Chemical Metal Paper Textile Electrical Automotive AVERAGE 0% 5% 10% 15% 20% 25% 30% 35% Logistics Costs in Relation to Annual Turnover Source: European Logistics Association

  7. 39% OUTBOUND 26% INTERNAL 35% INBOUND I. What is logistics? Direct transport costs are around 25% of logistics costs Storage 20% Storage 25% TRANSPORT 16% Inventory Financing 11% Management & Control 18% Administration 10% Packaging Source: OECD Average: Bundesvereinigung Logistik (Germany)

  8. Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand - key challenges.

  9. II. What are the global trends? The world’s logistics industry is experiencing great change… Rapid expansion of international trade in most regions, and particularly in Asia: many supply chains are now truly global Markets Global competition in product and service markets is driving higher standards and lower costs in logistics supplier markets Expectations Despite some industry concentration (eg ports) the freeing of transport markets is creating greater contestability in logistics services and sub-markets Competition All modes of transport are investing to obtain more efficient, usually larger vessels/vehicles and improved traffic dispatching, monitoring and control capability Technology

  10. II. What are the global trends? …...other changes Both standard and specialized containerization continues to grow , facilitating inter-modal transit and multi-modal allocation of traffic Inter-modality The expectation of perpetually cheap energy is waning due both to declining fossils fuel stocks and expectation of higher energy taxes in response to global warming Energy Higher standards of security in freight transport are being sought in all modes, but particularly in international shipping and aviation Security Logistics services depend heavily on public infrastructure in roads, railways, ports, airports, shipping channels etc: capacity increments are not matching world freight volume growth Bottlenecks

  11. II. What are the global trends? Market perceptions: East Asia logistics costs are generally comparable with OECD

  12. II. What are the global trends? Market perceptions: East Asia logistics have much greater service problems than OECD

  13. II. What are the global trends? Market perceptions: that the low quality of infrastructure in east Asia is a problem

  14. II. What are the global trends? Market perceptions: the performance deficit OECD vs. E Asia is increasing

  15. Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand - key challenges.

  16. III Why have a National Logistics Strategy? 1. The industry is of national importance to trade& development Why have a National Logistics Strategy? 2. The external impacts are significant incl. transport safety, emissions etc. 3. The industry depends on public infrastructure for its success 4. Government policy and admin. responsibilities are fragmented 5. The private sector is also very diverse, with conflicting interests

  17. Energy efficiency and greenhouse gases

  18. Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand - key challenges.

  19. IV. National Logistics Strategy: key aims What should National Logistics Strategy try to achieve? Lower service cost Higher customer service • Customer responsiveness • Geographic coverage • Delivery time • Reliability of delivery time • Frequency of delivery • Safety and security of goods • Protection of corporate image • Value-adding services • Transport & storage tariffs • Inventory holding costs • Product damage or deterioration • Pilferage losses • Insurance costs • Administration • Customs and other clearances • Bribes and malicious delays • Social & environmental costs

  20. IV. Logistics strategy: key aims High service at low cost requires the 3C’s Commercial culture Competitive spirit Capital access • Close attention to costs in a ‘tough’ industry • High levels of staff and management incentives • A focus on customer service • High-order marketing skills • Management agility • Investment in physical assets that deliver demanding service standards • Investment in IT to monitor and control operations Logistics strategy should encourage private enterprise and competition

  21. Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand - key challenges.

  22. III National Logistics Strategy – scope? 1. Logistics policy principles 2. Audit of current performance What should be in a National Logistics Strategy? 3. Legal and regulatory changes 4. Stakeholder participation process 5. Public infrastructure framework 6. Monitoring and review mechanism

  23. III National Logistics Strategy – scope? Public policy objectives 1. Logistics policy principles Roles of public and private sectors Roles of markets and of regulations Roles of central and local governments Principles of industry access/licensing

  24. III National Logistics Strategy – scope? Benchmarking of service performance 2. Audit of current performance Benchmarking of cost performance Benchmarking government functions (for example, customs performance) Research into customer perceptions Problems and bottlenecks

  25. III National Logistics Strategy – scope? May involve trade, transport, economic, and/or environmental legislation and regulations 3. Legal and regulatory changes New legislation/regulations if necessary Amendments to existing legislation or regulations Changes to administrative structures to implement logistics strategy

  26. III National Logistics Strategy – scope? Customers of transport & logistics Private suppliers of logistics services 4. Stakeholder participation process Public infrastructure suppliers Gvt. services suppliers (e.g. customs) Local government authorities Key policy departments Trade, transport, tourism etc

  27. III National Logistics Strategy – scope? Finance and management 5. Public infrastructure framework Access rights to public infrastructure Pricing and cost recovery policies Public infra. investment priorities Land-use planning (e.g. for transport corridors or logistics centers)

  28. III National Logistics Strategy – scope? Measurable objectives 6. Monitoring and review mechanism Timetable and milestones Clear responsibility and accountability Public transparency and reporting Periodic updating

  29. Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand - key challenges.

  30. VI Logistics in Thailand – key challenges Thailand – total and manufacturing exports 1990-2004 (USD mills)

  31. VI Logistics in Thailand – key challenges Thailand - non manufacturing exports 1990-2004 USD mills

  32. VI Logistics in Thailand – key challenges Thailand – total and manufacturing imports 1990-2004 (USD mills)

  33. VI Logistics in Thailand – key challenges Thailand - non manufacturing imports 1990-2004 USD mills

  34. VI Logistics in Thailand – key challenges Key Challenges • Build on Success • The Thai Logistics Industry has enabled trade growth of 340% in 14 years and manufacturing trade growth of 370%. • The industry has performed well...identify the success factors and hold onto and strengthen them. • Identify impediments to continuing success…and address them

  35. VI Logistics in Thailand – key challenges Key Challenges • 2.Look to the future • Thai manufacturing will become more sophisticated to serve more demanding international markets • International amenity services can grow alongside travel, tourism and IT industries especially in Gulf region • Logistics services need to be world class for Thailand to win international competitions in goods and amenity services

  36. VI Logistics in Thailand – key challenges Key Challenges • 3.Match strategy to markets • The Thai logistics sector has many and diverse suppliers, services and customers, and is always changing • Government departments cannot and should not try to micro-manage the logistics sector • Strategy should aim to remove the economic, administrative and infrastructure barriers that prevent logistics markets from working.

  37. VI Logistics in Thailand – key challenges Tools and Knowledge Resources from the World Bank • Global Facilitation Partnership for Transportation and Trade (GFP) • GFP aims at pulling together all interested parties, public and private, national and international, who want to help achieve significant improvements in transport and trade facilitation in Bank member countries • Trade and Transport Facilitation: A Toolkit for Audit, Analysis and Remedial Action • Logistics Perception Indicators: being developed and aiming to measure global connections • Business Climate Surveys • World Bank Port Reform Toolkit (updated, 2007)

  38. VI Logistics in Thailand – key challenges Thank you for your attention Questions and comments to: pamos@worldbank.org or zliu@worldbank.org The findings, interpretations and conclusions expressed herein are those of the author and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent

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