Private sector, government and logistics industry collaboration vital to realize potential economic success
With the world economy pinning its hopes on emerging markets to power growth and recovery, DHL, global market leader in the logistics industry, has identified three main barriers limiting potential success: high customs costs, slow market liberalization and under-developed distribution channels.
Rob Siegers, COO, DHL Global Customer Solutions, said: “Twelve emerging ‘Hotspots’, identified in the IMF World Economic Outlook released earlier this year, have a greater growth potential than the main economies of the developed world combined. While this is something to cheer about, a closer look at supply chain logistics is vital to ensure that these economies can deliver on their growth promises in the short and long-term.”
As the global expert in international express, air and ocean freight, road and rail transportation and contract logistics, DHL plays a key role facilitating trade between more than 220 countries and territories, including all emerging and key economies. As a result, DHL believes that to meet anticipated growth and increasing logistics needs, emerging markets will need to rapidly increase network capabilities along all modes of transport infrastructure, speed market liberalization and free trade zone development, and slash customs costs.
Richard Owens, CEO, DHL Global Customer Solutions, Asia Pacific, said: “In Asia Pacific, almost 15 per cent of supply chain costs are still related to customs and regulations procedures, compared to just three per cent in Europe. As logistics is the backbone of worldwide trade, easing the movement of goods and services via better logistics processes, infrastructure systems and government policies in these markets will allow emerging markets to reach their goals on schedule.
“Key growth industries such as textiles and garments, pharmaceuticals and renewable energy also need to play a part in driving improvements and sustainability in the supply chain.”
A study by the World Bank suggests that the logistics performance of a country has a relatively high impact on any country’s economic and trade growth vis-a-vis its peers at the same level of development. DHL, as an industry leader, has made sustainable development a priority and it aims to improve carbon efficiency by 30 per cent by 2020.
Owens added: “For long-term success, emerging markets need to put sustainable supply chain solutions high on the agenda. From moving diverse cargoes and commodities to supporting infrastructure energy-related projects to complex customs clearance, the logistics industry can play a critical role in enabling emerging markets to continue their upward trajectory in regional/global integration by supporting, investing and expanding logistics capabilities ahead of the demand curve.”
“Hotspot” economies include Mexico, Turkey, Russia, mainland China, Korea, Taiwan, Thailand, India, the United Arab Emirates, Saudi Arabia, South Africa and Brazil. Together, they are expected to achieve an average GDP growth of 7.2 per cent in 2015, compared to the projected 2.1 per cent of the G-7 nations. The combined GDP of these “Hotspot” economies is expected to command a 38 percent share of global GDP by 2015 — two per cent more than the G-7’s global GDP. Last year, the average GDP growth for these hotspots stands at 2.8 per cent, compared to -3.4 per cent for the G-7 nations. Global GDP market share was 32 per cent, just 9 per cent lower than the G-7’s stake.
Other emerging market challenges identified by DHL include: fragmented markets; political volatility, youthful, growing population with limited income, language and communication issues and large socio-economic divisions within populations.