What is Globalization Doing to the World of Logistics?
Since the early 1990s, global trade agreements have divided the world up into larger and larger chunks of trading blocks where goods can flow virtually unimpeded across national borders that once protected their precious industries from outside competition with tariffs, duties and penalties. The Free Trade Agreement between the U.S., Canada and Mexico was signed in 1992 and the trend continues unabated.
Canada now has its deal with the European Union (EU) and it is negotiating with the 11 nation Trans-Pacific Partnership. The U.S. is working toward the EU Transatlantic Trade and Investment Partnership, and the Regional Comprehensive Economic Partnership that binds China and 15 other major Asian countries. Once completed, these agreements will tie 49 countries together and govern a huge share of the global economy.
Clearly, globalization is here to stay and large, multinational corporations are reaping the benefits, but what effect is this trading trend having on the physical movement of product around the world? What are these multinationals asking from their logistics partners?
As they try to quickly adapt their supply chains in order to take advantage of lower tariffs, rules and standards within these new trade zones, companies need the help of multinational logistics firms with a local presence and expertise across the globe.
Multinational customers manufacturing and selling everything from health and beauty products to electronics and automotive parts are looking to consolidate their logistics suppliers down to a few key partners that have local knowledge of culture and communications. They are also looking for intercontinental logistics expertise in all facets of logistics from the plant to the warehouse to the end customer. Today, the market continues to reward flexibility and adaptability with more business.
Anticipate Market Changes
As logistics partners, we also have to be market anticipators. Where low labor costs once drove manufacturing offshore to Asia, the growing middle class there has developed a taste for high-end consumer goods that we now sell to them. At the same time, their wages have increased and, without that labor advantage, manufacturing is now moving back to the Americas. Witness the billions of dollars in recent investments earmarked for the automotive and electronics industries in Mexico, along with rising employment numbers in the U.S. manufacturing sector.
Global logistics also depends on information technology like never before. Not only to track shipments, but moving millions of dollars worth of product around the world also produces reams of data—Big Data. This information has to be gathered, interpreted and manipulated to help configure new and less-expensive trade routes while avoiding high conflict regions.
Staying ahead of the curve requires a storehouse of smart people and this is an area that receives little attention when discussing global logistics in our changing world. Falling trade barriers not only affect the movement of goods, but also the movement of intelligent employees. Many executives forget that their companies are only as good as the in-house talent they maintain.
Talent acquisition and retention is paramount to a successful, international logistics company. The trade barriers may be falling, but local cultures, customs and language remain the same. Employers must have the ability to relate to cultural differences and interpersonal relationships. They must understand the need for work-life balance. Here, once again, flexibility, adaptability and opportunity mixed with some discipline will make your company a preferred employer in this: the age of globalization.