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The changing landscape of logistics: from city dynamics to carbon-counting

 

Edgar Blanco

Edgar Blanco explains his work on city logistics

June 27, 2012, Washington, D.C. -- Edgar Blanco, a researcher from MIT, pointed to the image on the screen: a street vendor in Bogota, Colombia, buying food to re-stock his cart.


“This is logistics,” Blanco said, underscoring a growing logistics problem in dense, urban centers. It’s not just the big grocery stores and malls that need to serve customers – transporting goods from warehouse to shelf – but hundreds of thousands of small retailers.


Blanco spoke Tuesday as part of a conference on two emerging issues related to trade and transport facilitation: green logistics and city logistics.  The conference, “Decoding sustainable logistics trends: Viewpoints from leading practitioners,” was hosted by the Global Expert Team for Trade Facilitation and Logistics (GET-TFL), with help from the International Trade Department and the Transport Unit. The two topics were chosen for their interest to World Bank clients and because they are relatively new to Bank experts, said Jordan Schwartz, head of the GET-TFL and lead economist for sustainable development in the Latin America and Caribbean Region.


“They are at the nexus of what we are hearing from clients and what we need to know more about,” he said.

 

tunisia shipping

Port of Rades, Tunisia

During the conference, experts from around the world discussed the ways cities, increasingly, are pushing warehouses and other logistics facilities further away from retail customers. They talked about the environmental impact of freight transport and ways governments and private companies could mitigate that impact. And they heard from representatives in China, Thailand, Brazil, Germany, South Africa and Canada about government experiences in building and improving logistics-related policies.

 

Blanco and his colleague Jan Fransoo from the Eindhoven University of Technology (TU/e) described an MIT-supported effort to collect information about supply chains serving small stores in cities. Many of the stores operate only in cash, extend informal lines of credit, and get goods delivered several times a week. The advantage to this system is that consumers do not have to travel far to buy goods, avoiding consumer congestion, Fransoo said. But some of the drawbacks include inefficiencies in distribution, adding to urban congestion, as well as higher prices for consumers and the inefficiencies of working only in cash.

 

TFL Panel

One panel Tuesday included (from left) Jordan Schwartz (GET-TFL), Edgar Blanco (MIT), Jan Fransoo (TU/e), Michel Savy (ENPC), Francesc Robusté (CENIT), Juan Gaviria (World Bank) and J. Rod Franklin (Kuehne Logistics University)

On the environmental side, Alan McKinnon, head of logistics at Kuehne Logistics University in Hamburg, painted a picture of worldwide trends in carbon emission reduction. He showed that countries increase carbon emissions as they get wealthier, but also presented evidence that policies, technology and behavior can make freight transport more environmentally friendly. European trucks, for example, have shown a steady, annual increase in fuel efficiency. Nestle and United Biscuits, two competitors in the food confection business, actually coordinate the transportation of their goods to market in Europe.

 

“They now share vehicles and they’ve cut truck kilometers,” McKinnon said.

 

Africa trucks

Carbon emissions remain linked with economic growth, but opportunities for cooperation abound

Michael O’Leary, of IBM, gave a business perspective on encouraging green practices. He described IBM’s recent initiative to shift some of the planning for environmentally friendly practices down its supply chain. Using the example of IBM’s $12 billion hardware supplier network – 620 suppliers globally in 60 countries – O’Leary explained IBM’s strategy of looking to suppliers for input and collaboration. In 2010, the company began requiring all its suppliers to develop a management strategy to address environmental issues in the production and delivery processes. Among the required components of the strategies were: a system for tracking environmental impact, a recycling plan, voluntary performance metrics and disclosure of goals and performance information to the public. While some aspects were controversial – the process lost IBM an estimated 3-5 percent of its regular suppliers – most suppliers were willing to work with IBM to comply with the new requirements, O’Leary said. Some said the IBM process was helping them work with other companies’ requirements. “The feedback has been, hey, this is important for a competitive place in other channels,” he said.

 

Bernard Hoekman, director of the World Bank International Trade Department, introduced an afternoon session on country experiences in designing and developing logistics-friendly policies. He emphasized that a good logistics environment is not only essential for exporting, but for encouraging investment and competitiveness in the economy as a whole. He pointed out some of the difficulties in developing such policies – countries don’t usually have a “Ministry of Logistics,” for example – but said one role of the GET-TFL was to coordinate logistics work across different disciplines, both inside and outside the Bank.

 

The country stories included successes and lessons learned. One speaker described China’s efforts to accommodate electronics trade by constructing a logistics park adjacent to the Beijing airport. Representatives from both South Africa and Canada discussed projects designed to collect more national data about logistics performance. A representative from Thailand talked about that country’s strengths in designing logistics policies, but failure to have a strategy for implementing them. “We were very good with the PowerPoints, but then the execution was totally lacking,” said Ruth Banomyong, director of the Centre for Logistics Research at Thammasat University in Bangkok.

 

One objective of the conference was to help build a community of academics and practitioners who can better collect data around the world. Jean-Francois Arvis of the International Trade Department, a key organizer of the conference, said the next step would be to move along the project of an international observatory to help countries make fact-based decisions about logistics. J. Rod Franklin, who presented data from Kuehne and Nagel’s consulting work, urged the group to work quickly to meet the ever-changing needs of the private sector.

 

“We need to have in our own heads a timeline, faster than academic cycle, in doing studies,” he said. “Otherwise what we do is not relevant.”

 

 





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