Responding to global logistics trends
with a National Logistics Strategy
Bangkok, January 2007
Paul Amos, Transport Advisor
World Bank, Washington DC
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Contents
I.
What is logistics?
II. What are the global trends?
III. Why have a National Logistics Strategy?
IV. What should be its aims?
V. What should be its scope?
VI. Logistics in Thailand-key challenges.
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Contents
I. What is logistics?
II. What are the global trends?
III. Why have National Logistics Strategy?
IV. What should be its aims?
V. What should be its scope?
VI. Logistics in Thailand-key challenges.
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I. What is logistics?
Freight logistics involves many different physical and
economic activities…
Core logistics
services
Value adding
services
Line-haul transport
Pickup/distribution
Storage
Loading/unloading
Stuffing/stripping
Load consolidation
Packaging
Quality control
Product testing/repair
Assembly
Installation
Information
Inventory control
Support
services
Equip. hire/leasing
Equip. maintenance
Sanitary services
Security services
Trade insurance &
finance
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I. What is logistics?
Not surprisingly, logistics comprise a significant proportion of GDP
Country
Mexico
Ireland
Singapore
Hong Kong
Germany
Taiwan
Denmark
Portugal
Canada
Japan
Netherlands
Italy
UK
US
GDP in US$m
Logistics in US$m
% of GDP
334,726
67,392
94,063
153,068
2,352,472
273,440
174,237
101,182
585,105
4,599,706
392,550
1,214,272
1,151,348
7,576,100
49,753
9,611
13,074
20,992
306,264
35,686
22,440
12,871
70,191
522,982
44,495
137,027
122,344
795,265
14.9
14.2
13.9
13.7
13.0
13.0
12.8
12.7
12.0
11.3
11.3
11.2
10.6
10.5
Source: Transport & Logistics in the Internet Age: International Summit 2001
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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
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I. What is logistics?
Direct transport costs are around 25% of logistics costs
Storage
20%
Storage
39%
OUTBOUND
25%
TRANSPORT
16%
Inventory
Financing
11%
Management
& Control
10%
Packaging
26%
INTERNAL
35%
INBOUND
18%
Administration
Source: OECD Average: Bundesvereinigung Logistik (Germany)
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Contents
I.
What is logistics?
II. What are the global trends?
III. Why have National Logistics Strategy?
IV. What should be its aims?
V. What should be its scope?
VI. Logistics in Thailand - key challenges.
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II. What are the global trends?
The world’s logistics industry is experiencing great change…
Markets
Rapid expansion of international trade in most regions,
and particularly in Asia: many supply chains are now truly
global
Expectations
Global competition in product and service markets is
driving higher standards and lower costs in logistics
supplier markets
Competition
Despite some industry concentration (eg ports) the
freeing of transport markets is creating greater
contestability in logistics services and sub-markets
Technology
All modes of transport are investing to obtain more
efficient, usually larger vessels/vehicles and improved
traffic dispatching, monitoring and control capability
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II. What are the global trends?
…...other changes
Inter-modality
Both standard and specialized containerization continues
to grow , facilitating inter-modal transit and multi-modal
allocation of traffic
Energy
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
Security
Higher standards of security in freight transport are being
sought in all modes, but particularly in international
shipping and aviation
Bottlenecks
Logistics services depend heavily on public infrastructure
in roads, railways, ports, airports, shipping channels etc:
capacity increments are not matching world freight
volume growth
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II. What are the global trends?
Market perceptions:
East Asia logistics costs are generally comparable with OECD
60
50
40
Overall costs
Ports/airports
Rail
Road FCL
30
20
10
0
E. AsiaPacific
EuropeC Asia
High
Income
OECD
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II. What are the global trends?
Market perceptions:
East Asia logistics have much greater service problems than OECD
40
Delays due to
compulsory
warehousing
Delays due to
pre-shipment
inspection
Criminal
activities
35
30
25
20
15
10
5
0
E. AsiaPacific
EuropeC Asia
High
Income
OECD
Bribes
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II. What are the global trends?
Market perceptions:
that the low quality of infrastructure in east Asia is a problem
50
45
40
35
30
25
20
15
10
5
0
fixed transport
infrastructure
telecomms
infrastructure
and services
E. Asia- EuropePacific
C Asia
High
Income
OECD
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II. What are the global trends?
Market perceptions:
the performance deficit OECD vs. E Asia is increasing
70
60
Improving
customs
clearance
Improving
regulatory
regime
Improving
governance
50
40
30
20
10
0
East AsiaEurope/C. High
Pacific
Asia
Income
OECD
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Contents
I.
What is logistics?
II. What are the global trends?
III.Why have National Logistics Strategy?
IV. What should be its aims?
V. What should be its scope?
VI. Logistics in Thailand - key challenges.
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III Why have a National Logistics Strategy?
1. The industry is of national importance
to trade& development
2. The external impacts are significant
incl. transport safety, emissions etc.
Why have
a National
Logistics
Strategy?
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
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Energy efficiency and greenhouse gases
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Contents
I.
What is logistics?
II. What are the global trends?
III. Why have National Logistics Strategy?
IV. What should be its aims?
V. What should be its scope?
VI. Logistics in Thailand - key challenges.
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IV. National Logistics Strategy: key aims
What should National Logistics Strategy try to achieve?
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
Lower service
cost
•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
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IV. Logistics strategy: key aims
High service at low cost requires the 3C’s
Competitive spirit
Commercial culture
Close attention to
costs in a ‘tough’
industry
A focus on
customer service
High-order
marketing skills
Management agility
High levels of staff and
management
incentives
Capital access
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
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Contents
I.
What is logistics?
II. What are the global trends?
III. Why have National Logistics Strategy?
IV. What should be its aims?
V. What should be its scope?
VI. Logistics in Thailand - key challenges.
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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
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III National Logistics Strategy – scope?
Public policy objectives
Roles of public and private sectors
1.
Logistics
policy
principles
Roles of markets and of regulations
Roles of central and local governments
Principles of industry access/licensing
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III National Logistics Strategy – scope?
Benchmarking of service performance
Benchmarking of cost performance
2.
Audit of
current
performance
Benchmarking government functions
(for example, customs performance)
Research into customer perceptions
Problems and bottlenecks
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III National Logistics Strategy – scope?
New legislation/regulations if necessary
3.
Legal and
regulatory
changes
Amendments to existing legislation or
regulations
Changes to administrative structures
to implement logistics strategy
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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
Trade, transport,
tourism etc
Key policy departments
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III National Logistics Strategy – scope?
Finance and management
Access rights to public infrastructure
5.
Public
infrastructure
framework
Pricing and cost recovery policies
Public infra. investment priorities
Land-use planning (e.g. for transport
corridors or logistics centers)
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III National Logistics Strategy – scope?
Measurable objectives
Timetable and milestones
6.
Monitoring
and review
mechanism
Clear responsibility and accountability
Public transparency and reporting
Periodic updating
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Contents
I.
What is logistics?
II. What are the global trends?
III. Why have National Logistics Strategy?
IV. What should be its aims?
V. What should be its scope?
VI.Logistics in Thailand - key challenges.
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VI Logistics in Thailand – key challenges
Thailand – total and manufacturing exports 1990-2004 (USD mills)
120000
100000
80000
Total exports
Manuf. exports
60000
40000
20000
0
1990
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VI Logistics in Thailand – key challenges
Thailand - non manufacturing exports 1990-2004 USD mills
14000
12000
10000
Food
Agriculture
Transport
Travel/tourism
IT etc
8000
6000
4000
2000
0
1990
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VI Logistics in Thailand – key challenges
Thailand – total and manufacturing imports 1990-2004 (USD mills)
120000
100000
80000
Total imports
Manuf. Imports
60000
40000
20000
0
1990
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VI Logistics in Thailand – key challenges
Thailand - non manufacturing imports 1990-2004 USD mills
12000
10000
Food
Agriculture
Fuels
Ores and metals
Transport
Travel/tourism
IT etc
8000
6000
4000
2000
0
1990
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VI Logistics in Thailand – key challenges
Key Challenges
1. 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
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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
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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.
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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)
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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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