What Effect is Globalization Having on Logistics?
Over the last few decades, trade agreements between globalized nations have been organizing the world into a variety of trade blocks where it is intended that goods should be exchanged without impediment across borders. This includes nations who would previously have used economic protectionism as a way of safeguarding their industries from international competition, by employing financial penalties, duties and tariffs. The historic Free Trade Agreement joined by the US, Mexico and Canada during 1992 set a precedent and the trend continues to develop.
More recently, Canada has made a deal with the EU, and is in talks with 11 other nations over the Trans Pacific Partnership. The US is currently working with it’s European counterparts to make the EU Trans Atlantic Trade and Investment Partnership a reality, and there is also the Regional Comprehensive Economic Partnership which combines 16 Asian countries including China. These agreements, if they are completed successfully, will see a total of 49 countries bound together in trade and will allow them to control the majority of the global economy.
Globalization is a phenomenon, and it’s impossible to see another way. In these circumstances, multinational companies have enormous influence, but how do these trading trends effect how they move goods around the globe? What do they need from their partners in logistics?
Companies attempt to change up their supply chains where low tariffs, standards and rules present themselves with newly designated trading zones. This means they require the services of logistics companies who can operate globally with diligence.
Multinationals who manufacture and sell a variety of products are trying to pair down the logistics companies they hire to those who have the best local knowledge and are embedded in communications. They also need partners who can cover every facet of logistics, from the manufacturing base, to warehousing until the point of delivery, those who are flexible in this will be quite busy.
Logistics companies must also anticipate the markets and spot trends that will affect how they do business. This means they have a great need for IT, in order to process the multitude of data that can help them to spot trends before their competitors, usually by the time it’s published in a journal it’s too late. It is also needed to run the operation in the most efficient way, through a variety of channels within the supply chain.