Global logistics is known to be as old as global trade itself. Remember Silk Road. It for sure has left traces in the countless transport connections in the air and by sea, road or rail. Today, we know that large logistics service providers operate in more than 100 countries, the largest list as many as 200 countries or more. Have we reached the farthest point to trade yet? Can we still talk about “emerging markets” in trade and logistics sector?
Many researchers go around this topic these days, surveys are being done globally; international experts participate in structured surveys that do not necessitate the physical gathering thanks to the internet. Many emerging markets logistics experts have the chance to reflect their own unique case in these structured surveys, and they are given chances to reevaluate their own and each and every individual case again and again to reach to some sort of a “consensus”.
With always the “state of the art logistics services” in mind, forecasts are done for the next 20-30 years based on extensive research. We are always on the lookout for new markets in global economies. This is an undeniable fact. I do find the existing of extensive global research very promising for the sake of a bright future for logistics sector. It feels like as humanity we are getting together and putting our mutual issues regarding the progress of say improving towards a more efficient and productive “trade and logistics service” into the center of our attention. When are we going to reach the “state of the art logistics services” that are uniformly available in all corners of the globe? Hard to say.
There are a lot of challenges awaiting the “Emerging Markets” like lack of innovative technology, infrastructure, or lack of foreign/private local investments. However, there are countries, which are constantly under microscope by economists and logistics experts alike. We are constantly trying to evaluate whether new hubs and spokes will develop in global transportation networks, and trying to guess the new leaders in the logistics industry in emerging markets. Will they be the state as owner of railroads and postal companies, ports and airports, airlines and shipping companies? Or will they be the existing local private companies or will new players emerge like large multinational corporations from industrialized countries or from “Emerging Markets”? Will the future belong exclusively to high-tech service offerings, or will simple, reliable services also play a role in building long term relationships internationally? These are some of the questions that needs to be answered.
Experts and researchers are looking at the globe trying to find answers, regions which are able to serve as an economical transit point have an inherent advantage in establishing logistics hubs. Currently, many studies point out seven specific emerging markets in the logistics sector: Brazil, China, India, Mexico, Russia, South Africa and Turkey. Just to give an example, currently 600 special economic zones are in the approval process in India. However, free trade zones alone are not a guarantee for higher growth rates or attracting foreign investments. Other factors such as quality infrastructure, a supportive government, lighter regulations, strong export focus and large warehousing and handling capacities also play a significant role.
In 2010, a survey was organized by one of the leading global research companies in the world and these seven countries were put under microscope by 90 industry experts from all over the world in 28 different countries. Almost half (49%) of the experts participating in the survey was born in “Emerging Markets”. Thus the survey aimed to report from and out of these emerging markets instead of reporting about them. Many important points have been discussed in this survey but for my daily operations is from out of Turkey, I tended to pay more attention to the Turkey case.
In my opinion, the most important point made are the importance of foresight of the establishment of free trade zones and resulting increase in foreign direct investment which is projected to lead to above average growth of the transportation and logistics industry in emerging markets.
Privatization also plays a key role for the economic growth of some emerging markets to have better access to the capital, leading the countries like Turkey and China to establish themselves in logistics industry.
The courier, express and parcel (CEP) market is one of the strongest growing sectors of the trade and logistics industry in a number of emerging markets. It is also an area where changes in demographics and consumer behaviors could have the most significant impact. Logistics providers with a service portfolio characterized by low-cost and low-service will have to improve the scope of their services in order to maintain competitiveness for many reasons.
Changing consumer behaviors such as lower levels of reliance on the national post, growing e-commerce, urbanization and a young population is predicted to be driving significant growth levels in CEP in Turkey in the future. The Turkish textile and clothing industry already relies heavily on international CEP services. As a result of these services, samples of ready-to-wear items and new designs can be delivered quickly to potential customers in Europe, avoiding high costs or delay. This example is important to understand the promise the CEP can hold both domestic and foreign logistics service providers.
Turkey, as I mentioned before is a country within the routes of the ancient Silk Road. It had been in the midst of global trade since the beginning of trade. I grew up in Turkey. To me, it is important to understand the structure of trade and logistics in Turkey. My operation is in and out of Turkey. The reasons behind the factors lying under inescapable integration to global logistics is affecting my decision making process on a day to day basis as well. It is with the intention to understand changing factors and players in the future of logistics that I wanted to go over “Emerging Markets” topic.
There is so much more to explore in any of the seven countries that are considered to be “emerging markets”. If you see your country among those, and if you are in logistics industry, or if you are using logistics services, it might not be a bad idea to look for detailed researches done by global experts and be informed about the capacity your country offers. According to Supply Chain Management Institute, EBS Business School expert Dr. Heiko von der Gracht, the emerging markets explosion is about to start and it is about to form the new globalization programme “2.0” and unite the world under one roof. Therefore, the world will grow a common team effort in a way which sociologists and utopians have only dreamed about and trade and logistics will be right in the middle of it all. We can not afford to stay out of this common team.
I hope you all had a great start of the year. Happy transporting.