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Logistics: Building skills to prepare for the jobs of tomorrow

Yin Yin Lam's picture


As one of the key foundations for manufacturing, trade and growth, logistics is a strategic component of every economy. The sector can also contribute significantly to job creation. For example, in the UK, logistics is a $120billion industry that employs about 8% of the workforce. In India, it is a $160billion industry accounting for 22 million jobs, with employment growing 8% annually.

In 2016 and 2018, the World Bank’s Logistics Performance Index found that many developing countries face a significant skills gap in the logistics sector, especially at the managerial level. Similarly, several studies conducted in emerging economies such as China, India, and South Africa report shortages of supply chain talent.

In that context, emerging economies must tackle two critical challenges in order to develop a competitive logistics sector:
  • How can governments plug the skills gap in logistics?

  • How can the sector cope with the rapid changes brought about by technology, such as warehouse automation “freight uberization” or online platforms matching demand and supply, and their impact on the labor market?
Let’s look at three countries that consistently rank high in various global logistics rankings—Germany, the Netherlands, and Singapore—to see how they manage these challenges.

India: A logistics powerhouse in the making?

Karla Gonzalez Carvajal's picture
Photo: Daniel Incandela/Flickr
The numbers are in: India now ranks 44th in the latest edition of the World Bank’s Logistics Performance Index, a relatively high score compared to other countries at similar income levels. This number matters not just to the logistics sector, but to India’s economy as a whole. Indeed, logistics can directly impact the competitiveness of an entire market, as its ability to serve demand is inextricably linked to the efficiency, reliability and predictability of supply chains.

Broadly defined, logistics covers all aspects of trade, transport and commerce, starting from the completion of the manufacturing process all the way to delivery for consumption. To say that it is a complex business is an understatement.

First, there is always a delicate balance between the public arm, which provides the roads, railways and waterways, and lays down the rules and regulations, and the private sector, which has responsibility for carrying out logistics operations in a smooth and seamless manner. This fine interplay is further complicated by the globalization of manufacturing which—with many more ports of call in the logistic chain—is putting ever-increasing pressure on the sector. In addition, there are very practical challenges in integrating different modes of transport, in speeding up border crossings, and in dealing with trade protections–all of which impact external trade.

But as difficult as it might be, creating a well-functioning logistics sector is essential to any nation looking to compete in the global economy. India is a case in point. To fuel its global ambitions, the country has taken active steps to up its logistics game.

Intermodal connectivity in the Western Balkans: What’s on the menu?

Romain Pison's picture
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As in most other regions, trucks reign supreme on freight transport across the Western Balkans, a region that encompasses six countries including: Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro, and Serbia.

The domination of road transport in the freight sector comes with several adverse consequences, including unpredictable journey times, high logistics costs, congestion, as well as high levels of pollution and greenhouse gas emissions. To address this, our team is looking at ways to redirect part of the freight traffic in the Western Balkans region away from roads, and onto more efficient, greener modes such as rail or inland waterways.

You may think we’re trying to bite off more than we can chew here. After all, even advanced economies with state-of-the-art rail infrastructure have been struggling to increase and sustain rail freight transport.

However, as evidenced by the Global Competitiveness and Logistics Performance Indexes, there is strong potential to close gaps in the quality of the Western Balkans transport systems or custom clearing processes. The region has also experienced sustained economic growth (higher, for instance, than OECD countries), while its geographic position makes it a strategic link between Western and Eastern markets, especially considering Turkey’s rail freight developments and global connectivity initiatives.

So where should we start?

The future of transport is here. Are you ready?

Stephen Muzira's picture
Photo: Max Talbot-Minkin/Flickr
Technology is transforming transport with a speed and scale that are hard to comprehend. The transport systems of tomorrow will be connected, data-driven, shared, on-demand, electric, and highly automated. Ideas are moving swiftly from conception, research and design, testbed to early adoption, and, finally, mass acceptance. And according to projections, the pace of innovation is only going to accelerate.

Autonomous cars are expected to comprise about 25% of the global market by 2040. Flying taxis are already tested in Dubai. Cargo drones will become more economical than motorcycle delivery by 2020. Three Hyperloop systems are expected by 2021. Maglev trains are already operating in Japan, South Korea, and China, and being constructed or planned in Europe, Asia, Australia, and the USA. Blockchain technology has already been used to streamline the procedures for shipping exports, reducing the processing and handling times for key documents, increasing efficiency and reliability,

E-commerce is booming. What’s in it for urban transport?

Bianca Bianchi Alves's picture
Também disponível em: Português
 

Worldwide, e-commerce has experienced explosive growth over the past decade, including in developing countries. The 2015 Global Retail E-Commerce Index ranks several of the World Bank’s client countries among the 30 most important markets for e-commerce (China ranks 2nd, Mexico 17th, Chile 19th, Brazil 21st, and Argentina 29th). As shown in a 2017 report from Ipsos, China, India, and Indonesia are among the 10 countries with the highest frequency of online shopping in the world, among online shoppers. Although growth in e-commerce in these countries is sometimes hindered by structural deficiencies, such as limitations of banking systems, digital payment systems, secure IT networks, or transport infrastructure, the upcoming technological advances in mobile phones and payment and location systems will trigger another wave of growth. This growth will likely lead to more deliveries and an increase in freight volume in urban areas.

In this context, the Bank has been working with the cities of Sao Paulo and Bangalore to develop a new tool that helps evaluate how different transport policies and interventions can impact e-commerce logistics in urban areas (GiULia). Financed by the Multidonor Sustainable Logistics Trust Fund, the tool serves as a platform to promote discussion with our counterparts on a subject that is often neglected by city planners: urban logistics. Decision-making on policies and regulations for urban logistics has traditionally been undertaken without sufficient consideration for economic and environmental impacts. For instance, restrictions on the size and use of trucks in cities can cause a number of side effects, including the suburbanization of cargo, with warehouses and trucks located on the periphery of cities, far from consumers, or the fragmentation of services between multiple carriers, which may lead to more miles traveled, idle truck loads, and inefficiencies.

Preparing for the future - A logistics industry roadmap

Yin Yin Lam's picture
Photo: Sarah Starkweather/Flickr
The government of Singapore recently outlined its vision for the country's future, describing how different sectors could harness technology, innovation and mega-trends in order to take the city-state to the next level. This approach includes a dedicated Industry Transformation Map for the logistics sector, which accounts for 7.7% of Singapore's GDP and over 8% of jobs. Logistics is also understood as a crucial enabler for other significant parts of the economy, such as manufacturing and trade.

How is Singapore anticipating the transformation of logistics?

Singapore has been considered a major logistics hub for quite some time, and is currently ranked first in Asia according to the Word Bank’s Logistics Performance Index. The sector, however, is experiencing significant transformations such as the rise of digitally enabled logistics services, and the emergence of new delivery capabilities (autonomous vehicles, 3D printing).

The Industry Transformation Map (ITM) will help Singaporean logistics keep its competitive edge in this rapidly evolving context, and aims to achieve a value-added of S$8.3billion (US$6 billion) by 2020. In particular, the ITM intends to strengthen innovation, productivity, as well as talent development across the logistics sector—including by leveraging trends such as artificial intelligence and collaborative robotics.

To feed the future, let’s make logistics and transport sustainable

Jose Luis Irigoyen's picture
How serious are we about addressing the challenge of food security in the face of climate change?  This is one of the topics to be discussed at Food for the Future, one of the events at the IMF-World Bank Group Annual Meetings this year.

If we are dead serious about this challenge, then we really need to pay greater attention to the role of transportation and logistics, both crucial in increasing food security, so we can feed 9 billion people by 2050, and mitigating impact on climate change. Just consider these facts:

  • Up to 50% of harvest is wasted between farm and fork, the moment we actually consume food.
  • Transport-related emissions account for about 15% of overall greenhouse gas emissions. And 60% of those emissions are coming from road transport.
  • And logistics costs affect small farmers disproportionally (up to 23% of their total costs).
Thus logistics – the services, knowledge, and infrastructure that allow for the free movement of goods and people – is now recognized as a key element in achieving sustainable food security, and thus a driver of competitiveness and economic development. The development of agro-logistics, for example, has helped address the food security challenge more holistically: from “farm to fork” and all stages in between.