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    Past and Future Development of Logistics: A European Perspective Past and Future Development of Logistics: A European Perspective Presentation Transcript

    • Past and Future Development of Logistics: A European Perspective Professor Alan McKinnon, Logistics Research Centre, Heriot-Watt University, EDINBURGH, UK Malaysian Logistics Roadmap Workshop Shah Alam Convention Centre 4th August 2010 MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Degree of Public Understanding of the Role of Logistics in the Economy Very good understanding Some understanding No understanding Slight understanding Source: UK Freight Transport Association, 2010
    • Love Logistics www.lovelogistics.co.uk
    • Programme • Update on the rating of Malaysian logistics in the World Bank survey • Role of government in the development of logistics • Recent logistics trends in Europe • European Commission’s ‘Logistics Action Plan’ – any lessons for Malaysia? • Reconciling economic and environmental objectives • Mounting pressure to decarbonise logistics MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • World Bank Logistics Performance Indicators 2006 and 2010 Connecting to Compete: Trade Logistics in the Global Economy: 2010 Update 4.5 2006 2010 4 Logistics Performance Index 3.5 3 2.5 2 1.5 1 0.5 0 ia an UK a US n il l s y a nd e en ga in az nd ss an ai si or st ed la Sp Ch rtu ay Br ap Ru la m ni ai Sw al er er Po ga ng Th M th G Af Si Ne http://info.worldbank.org/etools/tradesurvey/mode1b.asp MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Malaysia’s International Rank in World Bank LPI Surveys 2006 and 2010 120 rank (out of 150-155) 100 2006 2010 80 60 40 22 29 20 0 x e s ts de nc ng es os in te ci in c ce p e tr a el s d im ic an com an T g ist rm cs g lo r fo sti kin tic p e i ac es cs L og Tr m ti Do is L og LPI = Logistics Perception Index (Prof. Banomyong) 1000 logistics professional worldwide What was the size and Web-based questionnaire composition of the sample Covered 150 individual countries (2006) assessing Malaysian logistics? 5000 evaluations (2006) (average 33 per country) MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Relationship between LPI and Gross Income per Capita Malaysia’s LPI broadly in line with level of economic development MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Government Involvement in the Development of Logistics • Explicit reference to logistics in public policy documents only over past decade • Recognition that companies plan transport with a logistical framework • Policy-makers still preoccupied with transport • Main priorities: promoting economic development minimising the external costs of transport • Limited interest in promoting logistics as an economic sector • Tendency to under-estimate its contribution to GDP • Logistics sector has benefited indirectly from government actions: e.g. – deregulation of freight transport markets – development of transport infrastructure – changes to tax system promoted logistics outsourcing in some countries • Much promotion of logistical activity at the regional and local levels • Reversal of earlier negative attitudes of land use planners to warehousing • A few countries have national initiatives to promote logistics: e.g Germany MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Germany as Europe’s Logistics Hub MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Global Logistics Market Germany – home of two of the world’s largest logistics companies MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Logistical Cost Rebound in Europe Relative to Sales Revenue 14 12.1% costs as % of sales revenue 12 10 8.5% 7.7% 5.9 7.3% Transport 8 6.4% 6.1% Warehousing 3.9 3.8 Inventory 6 3.5 2.4 2.8 Adminstration 3.1 4 1.8 1.6 1.8 1.8 2.5 1.5 1.7 2 1 1.2 1.3 0.8 1.3 1.2 1 0.8 0.8 0.8 0 1987 1993 1998 2003 2008 2013 Source: A.T.Kearney / European Logistics Association, 2010 MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Predicted Changes in Logistics Costs and Value Adding Services between 2008 and 2013 100% 90% 80% % of respondents 70% 60% 50% 40% 30% 20% 10% 0% Transport costs Warehousing Adminstration Inventory costs Logistics value- costs costs added services Source: A.T.Kearney / European Logistics Association, 2010 MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • European Trend in Inventory Levels days of net sales revenue 120 114 Raw materials Semi-finished goods 101 100 Finished goods 34 89 29.4 84 79 days of net sales revenue 80 28.1 21 27.9 16.7 26 -24% 60 14.3 8.5 7 -66% 40 59 54.9 20 47 47.7 45.9 -19% 0 1993 1998 2003 2008 2013 Source: A.T.Kearney / European Logistics Association, 2010 MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Importance of Customer Requirements Source: A.T.Kearney / European Logistics Association, 2010 MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • European Commission: Transport Challenges • To increase Europe’s competitiveness and prosperity • Address the environmental and social impacts of transport • Accommodate globalisation of production / supply chain • Reduce reliance on imported fossil fuels • Manage freight traffic growth (forecast to grow by up to 50% by 2020) MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Forecast Growth in Freight Tonne-kms in the EU Source: EU DG Tren MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Relationship between Freight Traffic and GDP Trends? 160 Ratio of road and rail tonne-km to GDP freight intensity index (2003 = 100) Belgium 140 Czech Republic Denmark 120 Germany Ireland 100 Spain France Hungary 80 Netherlands Finland 60 United Kingdom Source: Eurostat 40 2003 2004 2005 2006 2007 Pre off-shoring Post off-shoring Export of freight-generating activities to lower cost countries Embedded energy, water, carbon and other emissions in imported products Retail distribution centre assembly plant supplier warehouse
    • Focused Production Strategies From National to Pan-European Manufacturing Economies of scale in production BUT • higher delivery costs • more freight movement Product A Focused Nationally- Product B Production based Product C in pan- Production European Product D plants Distribution Source: Cooper 1993 Harrison and van Hoek, 2003 Predicted that European companies will reduce number of distribution sites by 18% between 2008 and 2013 (A.T.Kearney / ELA, 2010)
    • Logistics Action Plan 2007 Operational Objectives 1. Intelligent Transport Systems (ITS) and eFreight 2. Sustainable quality and efficiency 3. Simplification Each with a set of 4. Vehicle dimensions and loading standards Actions 5. Green corridors 6. Urban freight logistics Integration and Harmonisation across EU Member States MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • 1. ITS and eFreight: Actions • design eFreight roadmap: ‘internet for cargo’ • ‘open and robust data architecture for freight data flows’ • Standardisation of freight data sets, coding and technology (RFID) • Standardisation of truck on-board units (OBUs) for telematics • Interoperability in electronic fee collection for truck road charging MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Road-user Charging Schemes for Trucks Germany (2003) 2005 Netherlands 2012 Slovakia 2007 Czech Republic, 2007 France 2012 Switzerland 2001 Austria 2004 Extending the scope of road tolls: Recovering infrastructure costs Congestion pricing Internalising environmental costs MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Average External Costs of Different Transport Modes in EU Source: INFRAS/IWW3/2000 205 200 Aviation to enter 180 the European 160 emissions trading Euro /1000 tkm 140 scheme in 2012 120 88 100 80 60 40 19 17 20 0 Lorries Rail Air Waterborne Accidents Noise Air pollution Climate change Landscape Urban effects Upstream process life-cycle emissions MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • 2. Sustainable Quality and Efficiency: Actions • Relieve freight transport bottlenecks: infrastructural and regulatory • Increase the attractiveness of the ‘transport logistics professions’ • Establish core set of generic indicators for logistics efficiency & sustainability • Develop set of generic benchmarks for freight terminals • Expand and improve collection of ‘freight transport logistics’ data MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • 3. Simplification: Actions • Single-window for administrative procedures for all modes • Single transport document for all goods and all modes 4. Vehicle Dimensions and Loading Standards: Actions • Examine compatibility of loading units transferred between modes • Study options for modifying limits on vehicle size and weight MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Longer and Heavier Vehicles (LHVs) in Europe Sweden / Finland Denmark: 25.25 metre LHVs trial from Jan 2008 55-60 tonne limit - in general use Netherlands: trialled 25.25 metre LHVs 50 tonne limit – general use Germany: limited trial rejection of LHVs UK: Desk-based study TRL / Heriot-Watt for Dept for Transport At EU level: ‘paralysis by analysis’
    • European Rail Industry Perspective on LHVs CER – European Rail Association Australia: land of the real ‘road trains’ MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • 5. Green Corridors: Actions • Establish ‘efficient, green long-distance freight corridors’ across EU • Align infrastructure investment and incentive schemes with Green Corridors Trans-European Networks Roads Rail / combined TENs transport Marco Polo II programme: 740 million Euro 2007-2013 Objective to transfer the equivalent of the forecast growth of international road freight onto ‘co-modal’ services MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • 5. Green Corridors: Actions • Extension of ‘Motorways of the Sea’ programme MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Freight Modal Split in the EU25 % of total inland freight tonne-kms in EU 25 90 80 77% 72% road 70 Forecast annual % growth rates in tkm 2005-2030 % of tonne-kms 60 50 Road 1.8% Rail 1.4% 40 Inland waterways 1.0% Source: DG Tren 30 21% rail 17.5% 20 10 7% inland waterway 5.5% 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Eurostat MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • 6. Urban Freight: Actions • Exchange best practice in urban freight transport: Bestufs programme www.bestufs.net • Improve the co-ordination of urban and inter-urban logistics • More closely co-ordinate of freight and passenger movement MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Re-structuring City Logistics: Interface between Passenger and Freight Flows Takes 400 cars to distribute contents of 1 truck unattended delivery systems CO2 savings from home delivery Dedicated shopping trip by CAR 24 items or more Local depot Home = Dedicated shopping trip by BUS CO2 = 181g per drop 7 items or more MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • EU Transport Policy: Reconciling Conflicting Goals Environmental Sustainability Reducing environmental impact Improved vehicle utilisation Modal shift to rail and water Increased energy efficiency Greener vehicles and fuels Economic Prosperity Increasing freight Social Cohesion transport intensity MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Dramatic Reduction in Pollutant Emissions from New Truck Exhausts Does not cover emissions of Greenhouse Gases MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Most Important Reasons for Considering the Sustainability of your Supply Chain not a major issue at present Source: A.T.Kearney / European Logistics Association, 2010 MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Required Reductions in CO2e by 2050 to keep increase in average global temperature within 2oC by 2100 Sharp divergence from Business-as-Usual trend MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Climate Change: First half of 2010 warmest since records began Ice Melt in the Arctic Extent of Arctic summer ice cover million km2 MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Measuring and Managing CO2 Emissions from Logistics Decarbonisation framework Download from: www.cefic.org
    • Adapting to Climate Change: Implications for Logistics Edinburgh 2110 London 2110 Much climate change ‘in the pipeline’ – cannot be averted Climatic and ecological change unlikely to be linear Rising sea level, more flooding, increased frequency and severity of storms…. Increasing supply chain vulnerability Realignment of transport infrastructure, increased coastal and flood protection, redistribution of population and economic activity, transformation of energy supply, greater need for humanitarian support…. Huge growth in demand for logistics services MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Published March 2010 MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)
    • Contact details Logistics Research Centre Heriot-Watt University EDINBURGH UK A.C.McKinnon@hw.ac.uk http://www.sml.hw.ac.uk/logistics www.greenlogistics.org.uk . MALAYSIA LOGISTICS ROADMAP – THE WAY FORWARD (4TH -5TH August 2010)