1
Q
What are logistics markets defined by?
A
Logistics markets are largely defined by national characteristics. A mix of government regulation, social factors and economics are behind the development of logistics provision.
2
Q
What influences logistics markets’ characteristics?
A
- Regulation
- Openness and trade
- Retail development
- Import/export balance
- Urbanization and population distribution
3
Q
How did regulation look like in European countries?
A
o Previously European countries operated a system of permits that acted as quantitative controls on the entry of new operators into the transport market.
o Removed during the 1980s and 90s by liberalization, but controls still exist in terms of quality, if not quantity.
o In many developing countries, restrictions exist on foreign investment in the transport sector.
4
Q
How did openness influence the trade?
A
o The openness of a country’s economy is also important to the transport market.
o Belgium/Netherlands: have highly developed international road freight markets due in part to their geographical location on key transit routes, but also due their role as important trading hubs
5
Q
How does Retail development influence the trade?
A
Consolidation of a country’s retail sector is very important. UK: large contract logistics players developed by doing business with a handful of giant supermarket chains.
o Italy/ Spain where a fragmented retail sector in which local stores predominate has meant that logistics companies have not developed to the same sort of scale.
6
Q
How does Import/export balance influence the trade?
A
In developed markets the balance of logistics provision will be on secondary distribution (from warehouse to retailer or consumer) as relatively few consumer goods are manufactured in the region.
o In China: transport market is still largely focused on moving goods from factory to port – a largely commoditized activity.
7
Q
How does Urbanization and population distribution influence the trade?
A
Countries with dense urban communities can be better served by a range of more sophisticated contract logistics and express parcels providers than those with dispersed populations
8
Q
Characterize logistics market development in Western Europe
A
Highly competitive. Many global LSPs but there is also no shortage of medium to large national players with good logistics capabilities
9
Q
Characterize logistics market development in France
A
Out-sourcing was slow to take off due to the regulated nature of the market and the structure of the retail sector.
The transport market is being squeezed by Eastern European and Spanish hauliers and has been hurt by the migration of manufacturing eastwards.
10
Q
Characterize logistics market development in UK
A
Most mature contract logistics market in Europe due to early deregulation.
A large proportion of the market is dedicated to the distribution of imports through ports and the retail sector.
E-retail is now changing the structure of the market significantly in terms of logistics provision.
11
Q
Characterize logistics market development in Italy
A
Highly fragmented with a large proportion of owner-drivers.
Cabotage is seen as a growing issue for domestic hauliers, losing market share to eastern European providers.
12
Q
Characterize logistics market development in Spain
A
The market is highly competitive and centred around Madrid and Barcelona.
Foreign companies have traditionally struggled against local, commoditised freight providers although this is now changing with the influx of international retailers.
13
Q
Characterize logistics market development in Central and Eastern Europe
A
- Key to the development of logistics in Central Europe has been the investment in the region by EU manufacturers and retailers.
- Automotive sector has been the leader in this trend, with German vehicle manufacturers the largest investors.
- Due to increasing disposable income, the consumer sector has been building a substantial logistics infrastructure in most of the countries of the region.
- Few indigenous contract logistics providers but a large number of local road freight operators providing cheap but commoditized services.
14
Q
Characterize logistics market development in North America
A
- Fragmented! Besides transportation services and warehousing and distribution services, numerous niche players offer specialized services such as reverse logistics, IT services and consulting.
- Trade continues to improve steadily. Driver shortages, tight capacity, infrastructure and government regulations are affecting the industry.
- Trends in distribution centres are changing: shippers are consolidating their requirements. The number of distribution centres is declining for the average shipper and now are being located in more strategic locations throughout the region.
- The truckload sector is highly fragmented with more than 500,000 carriers. The majority are smaller operators, working with fewer than 20 trucks.
- The less-than-truckload sector is much more consolidated than the truckload sector, with fewer than 10 companies in North America accounting for more than two-thirds of the industry revenue.
- Intermodal transportation is increasing in importance. This is due to a number of reasons such as: the lower costs of intermodal transportation; a shift from exclusive use of trucking because of tight capacity; and the more ‘environmentally friendly’ use of rail versus truck.
15
Q
Characterize logistics market development in Canada
A
o United States absorbs more than 70 per cent of Canadian exports.
o Significant proportion of trade is cross-border intra-company transfers. Automotive parts, for example, frequently cross the border several times before entering the final assembly stage.
o In the oil and gas extraction sector, storage and transportation of equipment represents a significant portion of investment.
16
Q
Characterize logistics market development in Asia Pacific
A
- Increasing intra-Asian trade, along with a
growing increase in imports not only for manufacturing inputs but also consumer products, characterizes the Asian logistics market. - Instead of specializing in producing certain types of final goods, Asian exporters have specialized in certain stages of production.
- Air and sea freight markets are critical for the movement of intermediate goods arounds the region before final assembly, largely in China.
- China’s labour market becoming more expensive, supply chains are encompassing ever more remote markets such as Laos.
17
Q
Characterize logistics market development in Japan
A
- Considered to be Asia’s logistics leader in
terms of sophistication and transportation connectivity, although a market difficult to penetrate by foreign companies. - Signs indicate that the long, structural downturn in the market is spurring Japanese companies to sell off their logistics subsidiaries and open up to third parties.
- Japanese companies are also shifting their production abroad, mainly to China, which will increase demand for the services of international logistics companies.
18
Q
Characterize logistics market development in India
A
- A boom in economic and trade activity although it has been held back by its transport infrastructure.
- World Bank estimates that India’s logistics costs are approximately 2-3 times higher than in developed countries.
- Local and international logistics operators are stepping up their investment in the market.
19
Q
Characterize logistics market development in South America
A
- Increase in international trade due to demand for commodities such as minerals, oil, steel and agricultural goods.
o Trade and associated logistics service growth has been particularly strong with China.
o Infrastructure remains a major issue for the region. Congestion at ports and airports, lack of paved roads and outdated rail systems have caused delays in the transport of goods and commodities to global markets.
o Intra-South American volumes are increasing as road and rail networks connecting east to west South America are created.
o Increases in trade have provided many new opportunities for global and regional 3PLs, ocean carriers and other transport operators.
20
Q
Characterize logistics market development in Brazil
A
- Brazil: the most important logistics market in South America.
o Along with local providers, global logistics providers such as DHL, Kuehne + Nagel, Panalpina, Expeditors, CEVA and UPS have all established operations to support Brazil’s growing automotive manufacturing, footwear and agricultural activities.
o Brazils Infrastructure has not kept up with the growth the country has experienced although the government and private companies have introduced plans for infrastructure improvements.
21
Q
Characterize logistics market development in Middle East
A
- Middle Eastern economies vary substantially, from Egypt with its large population and growing economy based on tourism and manufacturing, to the oil and gas driven economies of the Gulf.
o Oil, gas and chemicals are the most important sectors in terms of logistics. This includes the movement and storage of bulk products as well as (more importantly for contract logistics players) oil field maintenance services. - Gulf States in particular have diversified into sectors such as airlines, tourism and ports.
- By building a large complex of container ports as well as substantial air freight facilities, Dubai has sought to position itself as the logistics provider for a huge area of the Middle East, Central and Southern Asia.
- Pharmaceutical logistics is attracted to the mix of good-quality temperature-controlled warehousing and intensive airfreight services.
- Tourism and hotel support logistics is also important.
22
Q
Characterize logistics market development in Africa
A
- African logistics sector is more a collection of national markets than other, more integrated regions.
- Logistics costs in Africa remain high, constraining the development of the sector.
- Corruption is rife in many parts of the continent, and this not only creates delays but adds to the cost of moving goods.
- Africa’s logistics sector will only take off when African industry moves up the value chain and manufacturing becomes more important.
- South Africa is increasingly being viewed as an important emerging market with large investment opportunities.
- Nigeria is the second largest market in Africa. The principal interest that Nigeria holds for foreign logistics companies stems from its major oil production operations.
23
Q
What does international shipment involve?
A
International shipment will most often involve water or air: therefore there will be airports or ports involved
24
Q
What are the airports & ports in the hub-and-spoke model?
A
Airports and Ports
* Are regarded as “nodes” or “hubs”, and they are transfer points
25
What are the tunnels & canals in the hub-and-spoke model?
Tunnels and Canals
* Are regarded as “links”. They serve to connect bodies off water separated by land, whereas tunnels and bridges ling land bodies divided by mountains or water
26
What are the 4 types of ports?
Sea; Lake; River; Canal
27
!!!!!!! What should be researched to locate distribution centers? !!!!!!! (the emergence of logistics clusters)
- Function in supply chain
- Customer distribution profile
- Type of product that is being shipped
- Customer service levels required
28
!!!!!!! How to locate distribution centers based on the function in supply chain? !!!!!!! (the emergence of logistics clusters)
If a distribution centre function is to carry out primary logistics activities (e.g. feeding vendor managed inventory into a manufacturing site) the main hub will be located near to the customer.
o If the hub is designed for secondary logistics purposes (for example, to distribute finished goods to a consumer market) then its location will be governed by the need for geographic centrality.
29
!!!!!!! How to locate distribution centers based on the customer distribution profile? !!!!!!! (the emergence of logistics clusters)
- Customer distribution profile is of importance to the location of a hub.
- This may mean geographic centrality, although if the customer distribution profile is global (for example, a medical technology spare parts operation) then the ‘connectedness’ of an airport may be the overwhelming requirement, more than its physical location.
30
!!!!!!! How to locate distribution centers based on the type of product that is being shipped? !!!!!!! (the emergence of logistics clusters)
- Important both from the perspective of a product’s physical attributes as well as intrinsic value.
- If small packages are being shipped, location next to a parcels hub or airport will be important.
- For higher volume/lower value goods, location at a road interchange or proximity to a seaport may be more important.
31
!!!!!!! How to locate distribution centers based on the customer service levels required? !!!!!!! (the emergence of logistics clusters)
- In sectors where suppliers have to offer their customers a very high level of service (such as in the after sales market), achieving deliveries in small time windows will have a major effect on the structure of a distribution network.
- This may require a network of close-to- customer Forward/Field Stock Locations (FSLs), replenished from national or regional distribution centres.
32
When can you try to find the ‘Secondary’ supply chain attributes? (the emergence of logistics clusters)
Once these ‘primary’ supply chain attributes have been identified, a system of subsidiary factors can then be prioritized and ‘weighted’ in importance.
33
Through what can the ‘Secondary’ supply chain attributes be found? (the emergence of logistics clusters)
Through:
1. Air links
2. Shipping links
3. Road links
34
How can you find the ‘Secondary’ supply chain attributes through air links? (the emergence of logistics clusters)
- Where volumes include air cargo, proximity to an airport is obviously important. However, not any airport will do, as the level of ‘connectedness’ is essential.
- For high value-density shipments, the need for proximity to an international air express hub has led spare parts operations, retailers, high-tech companies, etc to cluster around airports such as Memphis (FedEx) and Louisville (UPS).
35
How can you find the ‘Secondary’ supply chain attributes through shipping links? (the emergence of logistics clusters)
- Similar issues of ‘connectedness’ exist for sea freight. As well as the number of routes available from a seaport, fleet deployment (number of ships), container carrying capacity (number of TEUs) and number of shipping lines are important factors.
- China, Hong Kong and Singapore have the highest level of connectivity.
36
How can you find the ‘Secondary’ supply chain attributes through road links? (the emergence of logistics clusters)
- For most manufacturers or retailers, road links are the most important modal factor in the location of a distribution hub, influencing access and time to market.
- InEurope,thishasledtothedevelopment of hubs around towns such as Venlo, Eindhoven or Roermond in the Netherlands.
37
What are the non-modal factors that help in making decisions about the location of a distribution centre? (the emergence of logistics clusters)
Decisions will be made through a combination of the following factors:
- Cost of rental, land and build costs - The costs of renting, buying and building distribution warehousing varies considerably even over relatively short distances. In Europe rental at Heathrow Airport in London is highest, many times that of regions such as Limburg, Netherlands or even of Frankfurt Airport, Germany.
- Labour - it is an increasingly important factor in the location of a distribution centre. Legislation in some countries has made the workforce significantly less flexible than in others.
- Other factors - involved in the location of distribution centres include the flexibility and efficiency of customs. The availability and quality of a large number and range of logistics service providers.
38
Most distribution structures normally fall into one or more of the distribution centre functions. What are they? (the emergence of logistics clusters)
- Global distribution centre: often located close to a worldwide manufacturing site and serves to distribute goods to the different worldwide geographic regions.
- European distribution centre (EDC): serving as a central storage of goods for the European, Middle East and Africa (EMEA) regions.
- Regional distribution centre, serving as a main distribution centre for a specific region within EMEA, for example the UK/Ireland region or the Nordic region.
- Country/local distribution centre, serving final distribution to customers.
39
By what has the industry trend towards European distribution centres been driven? (the emergence of logistics clusters)
By the removal of barriers to cross-border transactions between countries within the European Union.
40
Several European countries possess many of the key attributes that make them good locations for distribution facilities. Which ones are they? (the emergence of logistics clusters)
- Belgium benefits from its proximity to seaports (such as Antwerp) and airports (Brussels).
- Germany benefits from being the largest economy in Europe, its proximity to rail hubs and its infrastructure.
- The Netherlands benefits from its proximity to seaports (Rotterdam) and airports (Amsterdam Schiphol), its transport infrastructure, the incentives offered to investing companies, the multilingualism of its nationals and the positive business environment (including flexible customs regime).
41
What are the logistics clusters called? What regions are they in? (the emergence of logistics clusters)
1. UK/Irland
2. Nordic/Baltic
3. Benelux/Northern France/West Germany
4. South Germany/Austria/CEE
5. Iberia (Spain & Portugal)
6. South Europe
42
How did accession of Central and Eastern European countries into the European Union impact on European distribution? (the emergence of logistics clusters)
* These countries are attracting many Western companies for location of production and/or distribution facilities owing to their relatively less expensive land and labour costs.
* Thus, in turn, is changing distribution structures.
43
Characterize the centralization of distribution in the United States (the emergence of logistics clusters)
- Distribution in the United States is divided between coastal areas and ‘inland ports’.
- Traditionally, ports in California, Seattle, Florida and the East Coast around New York and New Jersey have been a magnet for warehousing and distribution space.
- The saturation of coastal space has also seen the development of ‘inland ports’ in locations such as Chicago, Atlanta and Dallas.
- These ‘inland ports’ have also seen an increase in activity due to the increasing level of goods that are arriving from Asia Pacific and in particular China.
- There have also been major changes in distribution patterns in the retailing sector. This is characterized by centralized distribution centres around the centres of gravity of major markets.
44
By what the significant demand and growth potential of Chinese distribution markets has been driven? (the emergence of logistics clusters)
- World Trade Organization related policy changes
- a strengthening manufacturing sector
- growth in export markets
- ‘Open Skies’ aviation agreements
- expanding domestic markets and investment.
45
What are the key distribution hub locations in China/Asia (the emergence of logistics clusters)
- Distribution centres in China: the Pearl River Delta, the Yangtze River Delta; the Beijing Tianjin area
- Major air cargo hubs situated on mainland China: Shanghai, Beijing, Guangzhou
- Hong Kong - the most important (airports) link, (primarily due to the large number of destinations served, the modern facilities and the efficiency of the operation).
46
What are the main issues in commercial
airport management?
1. Ownership and Control
2. Airport Congestion
3. Airport Safety and Security (e.g. September 11 - acts of terrorism)
4. Environmental Concerns
47
Why is the ownership & control one of the main issues in commercial airport management?
Public authorities, city and government or counties. as with water port privatization, airport privatization has resulted in companies that specialize in (he management and control of airports. Perhaps one of the best known of these companies is the British Airports Authority (BAA now Heathrow Airport Holdings). Which was formed to manage and control major British airports such as London Gatwick and London Heathrow. BAA/HAH also operated a number of other airports in other countries
48
Why is the airport congestion (overcrowding) one of the main issues in commercial airport management?
Airport congestion is an acute problem at many of these facilities. One response to airport congestion is to construct new airports or to expand existing ones. This is often easier said than done, however, particularly in industrialized nations. e.g. cost/location/distance e.g. Stanstedt.
49
Why are the environmental concerns one of the main issues in commercial airport management?
Environmental concerns that are important to airport management include air, water, and noise pollution, along with the potential disruption to natural ecosystems that can be caused by airport constructions projects. E.g. no flight earlier than 6 am, frogs in Sydney.
50
What are the world’s two largest canals (in terms of tonnage)?
Suez Canal & Panama Canal
51
What areas does the Suez Canal join?
Joins the Mediterranean and Red Sea. It cut of half the water distance between Asia and Europe
52
What are the measurements of the Suez Canal?
90 mile (144km) length, 77 meter wide, draft 20 meters
53
What is the total length of the Suez Canal?
193.3 km
54
How long does it take a vessel to transit through the Suez Canal?
12 to 16 hours
55
In what the Suez Canal helped?
It allowed pilgrims to make pilgrimage to Mecca
56
What is the percentage of the world's shipping container volume that transits through the Suez Canal?
Roughly 30%
57
What is the percentage of total global trade of all goods that passes through the Suez Canal?
12%
58
What areas does the Panama Canal connects?
It links the Atlantic and Pacific Oceans. It cut off 8000 miles from San Francisco and New York
59
What are the measurements of the Panama Canal?
50 mile (80km) draft 12/15 meters, 8-10 hours to transit
60
Which international bridges are the world’s most prominent ones?
The world’s most prominent international bridges are those involved in facilitating movements between the NAFTA countries.
Examples: Laredo (Mex-US), Sweden-Denmark.
61
In what tunnels can specialize? Give examples.
Tunnels can specialize in either road traffic (the Detroit-Windsor Tunnel) or rail traffic (Channel Tunnel).
62
Where was the Mont Blanc Tunnel? What happened there?
It was between France and Italy. It collapsed in 1999 - 40 died, it took 50% of the truck traffic.
63
What is a dryport?
A dry port is an inland intermodal terminal directly connected by road or rail to a seaport and operating as a centre for the transshipment of sea cargo to inland destinations.
64
What are the advantages of the dry ports?
Reducing total transport expenses;
* Shift from road to rail transport, which is more environmental friendly.
* Connecting cargo handling from the port with other types of cargo at one common transport centre;
* Strengthening the ports in transport chains;
* Strengthening multi-modal solutions;
* Reducing the use of expensive, centrally located areas in the port; The seaport get a larger hinterland and can therefore obtain a competitive advantage, because the seaport now can store a larger amount of ITU’s
* Possibly avoiding traffic bottlenecks, which give less congestion on the roads near the harbour area, due to the fact that a modal change has happened.
* Reducing local environmental problems in the cities;
* Integrating port areas with the cities: Especially in Less Developed Countries (LDC’s) the development of the hinterland can be beneficiary for an area in form of creation of jobs in the affected area.
* The possibility of speeding up the customs clearance process for goods transferred overseas can be gained by establishing dry ports with the right to conduct customs clearance
65
How many good can a train carry in comparison to the trucks?
One train can carry the same amount of goods as approximately 40 trucks
66
Define free trade zones, and discuss their benefits and any disadvantages
It is a special area within a country where foreign companies can import materials, manufacture goods, export products, etc. without being limited by the usual rules and taxes.
+ access to new markets; + increased trade; + economic growth; + better logistics (learn from others); + lower prices & increased variety of available products
- enable cartels and other criminal organizations to transport illegal goods, expand their illicit international trade, export criminality and violence, and launder the revenues of their illegal activities; - Unhealthy working conditions (Outsourcing jobs in developing countries can become a trend with a free trade area. Because many countries lack labor protection laws, workers may be forced to work in unhealthy and substandard work environments); - Less tax revenue (Since member countries are no longer subject to import taxes, they need to think of ways to compensate for the reduced tax revenue)
67
What are the size limits of ships that wish to travel through the Suez Canal?
Ships up to 20 m (66 ft) draft or 240,000 deadweight tons and up to a height of 68 m (223 ft) above water level and a maximum beam (promień) of 77.5 m (254 ft)
68
What are the size limits of ships that wish to travel through the Panama Canal?
Normal transit - 289.6 meters (950 feet)
Passenger & container ships - 294.43 meters (966 feet)
69
Assume that you will be sending trucks to Dublin, Ireland and want to use the new tunnel that bypasses/goes under the city. Is there anything you should know?
New tunnel - is It already opened? Can it be used?
What hours is it opened & when closed
Are there any days when it is closed?
How long does It take to get through
The allowed draft, weight & height of the trucks
Any additional documentation that may be needed
If there are any additional fees that should be payed before using the tunnel
70
What are micro landbidges?
It is an intermodal* transportation service where cargo is transported between two locations by a combination of ocean freight and overland transportation modes, such as truck or rail, providing an alternative to traditional land transportation methods
From foreign origins through ocean to the port and from port inland
*the transportation of containerised freight through the use of different modes of transportation such as trucks, boats, aircraft, etc
71
What are mini landbridges?
(MLB) is an intermodal transportation service that combines ocean transport with inland transportation by utilizing rail or truck to move cargo from a port to its final inland destination
From foreign origins through ocean to the port and from one port through the land to another port
72
What are macro landbridges?
Foreign origin into the port, from port through the land into another port, and then from the port through the ocean to foreign destination
It uses an intermodal transportation service that combines ocean transport with inland transportation by utilizing rail or truck to move cargo
73
What does congestion mean?
A situation in which a place is too blocked or crowded, causing difficulties
International Logistics
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Decks in class (8)
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