The Importance of Global Transportation and Logistics Management

Abstract
The purpose of this paper is to provide a systematic review of the relevant literature concerning global transportation and logistics management. While the current trade war with China remains at the forefront of the challenges that are faced by the global transportation industry, the research that follows makes it clear that international trade is the key to economic growth. The major findings that emerged from this review included the enormous growth that is being experienced by the global transportation industry which is expected to nearly double in revenues by 2023, as well as innovations in technologies that have improved the efficiencies and effectiveness of logistic management. In addition, more goods are transported over roadways than waterways, and these trends are expected to continue well into the foreseeable future. Finally, the research that follows also makes it clear that the global transportation industry practitioners must remain vigilant to identify additional technological innovations that can further improve the efficiencies of logistics management at every level.
Global Transportation and Logistics Management
Notwithstanding the recent trade wars between the United States and China, international trade remains the key to building stronger ties between countries and fueling global economic growth. Against this backdrop, identifying opportunities to improve the logistics management involved in global transportation represents a valuable and timely enterprise. To this end, the purpose of this paper is to provide a review of the relevant literature concerning global transportation and logistics management, including recent and current trends. Finally, a summary of the research and important findings concerning these issues are presented in the paper’s conclusion.
Review and Discussion
According to the definition provided by Techopedia, logistics management is “a supply chain management component that is used to meet customer demands through the planning, control and implementation of the effective movement and storage of related information, goods and services from origin to destination” (Logistics management, 2018, para. 2). Although specific vary by venue and type of commercial operations, logistics management typically involves several common components including the following:
· Selecting appropriate vendors with the ability to provide transportation facilities
· Choosing the most effective routes for transportation
· Discovering the most competent delivery method
· Using software and IT resources to proficiently handle related processes (Logistics management, 2018, para. 3).
Whether by land, sea or air, logistics management is challenging but critically necessary for efficient global transportation. In this regard, Feng and Yuan (2009) emphasize that, “Global logistics in business operation is playing a critical role in responding to the changing market demand in a world of globalization and mass customization. The efficiency of global distribution holds the key to success in international trade” (p. 623). Similarly, Parker (2004) emphasizes the need for streamlining the logistics management function in order to achieve the full benefits that can accrue to efficiency supply chain operations. In this regard, Parker (2004) point out that, “The global industry in which we operate, demands logistics management to plan and execute, customer-led, profit-driven tactics; where an array of alternative production and procurement methods are deployed simultaneously” (p. 10). In sum, logistics management involves all of the planning and control factors that are needed to deliver products to a desired location in a timely fashion at the lowest possible cost (Parker, 2004).
Moreover, logistics management practitioners have increasingly sought to identify ways to improve the efficiency of global transportation to reduce costs and add to companies’ bottom lines. For example, according to Bolte (2009), “Transportation/logistics, once a mundane haven of administrative expense, has emerged over the past decade to become one of the new frontiers of cost savings and even profitability” (p. 74). These outcomes have been made possible through a combination of innovations in transportation as well as multidisciplinary teams that are working to achieve new strategies that reduce costs while optimizing the logistics management needed to coordinate global trade.
These trends have resulted in the growing recognition that highly efficient supply chains can add value to corporations’ operations and new approaches are continuously being developed for this purpose (Bolte, 2009). These recent trends also underscore the enormous amounts of money that are involved in the global transportation industry as well as the need to constantly search for ways to reduce costs and improve safety and efficiencies even further (Bolte, 2009). In addition, there have also been calls for improvements in logistics management operations in ways that are environmentally friendly, socially responsible and contribute to sustainable operations in developed and developing nations (Tepprasit & Paopan, 2016).
Clearly, there is much at stake in logistics management at the global level, but many observers may not realize the importance of road freight transportation as a major component of global transportation. While nearly half (47.9%) of freight is still shipped by waterways of some type, the remainder continues to be transported over roads (Berman, 2017). According to one market analyst, logistics management has become the focus of increased scrutiny by major global actors, including most especially China which has succeeded in achieving a mature and efficient long-haul road freight transportation system that has facilitated its economic growth (Berman, 2017).
These trends are especially noteworthy given the value of the goods involved in global transportation, and current estimates indicate that the industry will become even larger in the foreseeable future. For instance, according to Allen (2016), “The global logistics market will be worth $15.5 trillion with 92.1 billion tons of goods being handled within eight years” (para. 2). Further, the Asia-Pacific region accounts for almost half (46.6%) of global transportation revenues with China in the vanguard (Allen, 2016). These increases are all the more noteworthy given the current value of global transportation which is estimated at approximately $8.1 trillion, meaning that these revenues will almost double by 2023 (Allen, 2016).
Despite these increases in revenues and volume, the global transportation network remains highly fragmented with four companies, Deutsche Post DHL, Ceva Logistics, UPS, and FedEx, accounting for less than 15% of the market (Allen, 2018). These companies and other major actors in the global transportation industry have made significant investments in technologies to further streamline their supply chain operations and improve the efficiencies of their operations. In this regard, Allen (2016) reports that, “Investment in technological innovation is one of the major drivers in the market. This includes automated material handling equipment, trailer seals, GPS, warehouse control software, warehouse management software and biometrics” (para. 4).
Although these innovations are demonstrating that technologies can help improve the efficiency of global transportation networks in a wide range of ways, many companies are faced with an uphill battle since these issues have been placed on a backburner compared to other management issues. For instance, according to Funder and Hoyos (2010), “While many companies have worked hard to develop internal processes, marketing and sales, the purchasing, logistics and supply chain 'aspects have often been neglected. For the most part, the search for ways to optimize these processes is only now gaining importance” (p. 3). Fortunately, there have been a number of strategies developed in recent years that contribute to global transportation efficiencies, but there still remains a need to communicate the lessons learned from these efforts to other practitioners. In this regard, Funder and Hoyos (2010) conclude that, “Companies need to find new ways to deal with suppliers and customers through focusing on more strategic approaches, long-term thinking and an investment in training to allow managers and staff to implement best practice business processes” (p 4).
Likewise, Chan (2010) also cites that the need for additional investments in training and the adoption of a “big picture” approach to global transportation. For example, Chan notes that, “A global view of the link between logistics, transportation, trade, and corporate strategy suggests that global supply chains are now a corporate imperative for strategy making and seriously calls into question corporate strategies based on national or regional perspectives of the firm” (p. 37). A growing number of North American companies have recognized this need and have taken steps to improve their global transportation capacities. For example, the following initiatives represent some of the recent investments in improving the transportation capabilities of the East Coast of the United States:
· In New York/New Jersey, a $760 million investment to deepen the port channel to 50 feet and $1.6 billion for port infrastructure.
· The Norfolk, VA Port is investing $400 million in container terminals and new on-dock rail capacity.
· At the Port of Charleston, a new three-berth container terminal at a former naval base will elevate capacity by 1.4 million twenty-foot equivalent units (TEUs) to more than 4 million TEUs per year, double that of Vancouver. Crane operations have improved substantially, from 40 container moves per hour to 53 per hour, thus reducing what is called dwell time.
· New warehouse facilities in Houston constructed by Wal-Mart (1.3 million sq. ft.) compliment a 1.4 million sq. ft. warehouse by Home Depot, and 1.5 million sq. ft. facility in Virginia by Target Stores.
· n Miami, there is a plan for $250 million of investments in port infrastructure, including port deepening by the US Army Corps of Engineers (Chan, 2010)
Similar initiatives are also underway in India, Mexico and China where berth capacity is being expanded dramatically to facilitate greater international trade (Chan, 2010). Likewise, South Africa has made significant investments in improving its global transportation capabilities, including expansions of their two major ports at Durban and Richards Bay which account for 79% of the country’s bulk cargo and 66% of its container and break-bulk cargoes (Mabuyakhulu, 2009).
Conclusion
The research showed that the world is truly becoming a smaller place due to innovations in logistics management that have facilitated the growth and maturity of the global transportation network. The research also showed that the value of the global transportation industry is projected to nearly double by 2023, and countries around the world are taking steps today in order to remain competitive in the international marketplace. An especially noteworthy finding that emerged from the research was the fact that more goods are being shipped on roadways than waterways. Finally, the research was consistent in emphasizing the need for additional innovations in technologies that can further improve the efficiencies of global transportation and logistics management.
References
Allen, A. (2016, November 5). Logistics industry to be worth $15.5 trillion by 2023. Supply Management. Retrieved from https://www.cips.org/en/supply-management/news/2016/ november/logistics-industry-forecast-to-be-worth-155tn-by-2023/.
Berman, J. (2017, January 26). 2016 global transportation and logistics. Logistics Management. Retrieved from https://www.logisticsmgmt.com/article/2016_global_transportation_ and_logistics_ma_heads_down_says_pwc.
Bolte, R. J. (2009, November/December). Global logistics/transportation: An evolving frontier of strategic value and total savings. Business Credit, 102(10) 74-79.
Chan, D. (2010, May/June). Global logistics: Are Canadian firms competitive? Ivey Business Journal Online. 37-38.
Feng, C. M. & Yuan, C. Y. (2007, December). Application of collaborative transportation management to global logistics: An interview case study. International Journal of Management, 24(4), 623-626.
Funder, M. & Hoyos, J. (2010, October-December). ITC's modular learning system in supply chain management: International Trade Forum, 4, 3-7.
Logistics management. (2018). Techopedia. Retrieved from https://www.techopedia.com/ definition/13984/logistics-management.
Mabuyakhulu, M. (2009, April). Aiming for global markets. African Business, 21
Parker, D. W. (2004, January). Logistics management: Cornerstone to sustainable competitive advantage. Management Services, 38(1), 10-14.
Tepprasit, P. & Paopan, N. (2016, December). The reverse logistics management model: Thailand context. International Journal of Business and Information, 11(4), 385-389.