SCDigest Editorial Staff
The world has gone flat and global, and it is almost difficult to have a sourcing and market strategy today that does not involve globalization.
The current economic slowdown has eased the pressure off of US and most global logistics infrastructure, and there are at least some plans and additional dollars targeted at improving that infrastructure. However, companies can expect to see gridlock and related logistics problems returning soon.
So says George Stalk, a senior adviser and a BCG fellow at the Boston Consulting Group, both in a recent interview with Supply Chain Digest and a new article in the Harvard Business Review.
“Today’s economic meltdown masks the threat [from the lack of infrastructure],” Stalk says. “But if pre-recession trends reappear when the economy recovers, lack of infrastructure capacity, in combination with rising oil prices, will constrain global trade and drive up costs.”
He is not optimistic that the US stimulus package will make much of a dent in the problem, saying that it is most likely to result in projects that quickly create jobs and produce newly painted bridges and newly paved roads, but are unlikely to address the real capacity problem.
“Few executives realize the magnitude of the challenges that are about to hit them. Even fewer are investing to reduce transportation costs, improve logistics, and gain an advantage,” Stalk says.
He notes, for example, that since 1990, vehicle traffic has risen by some 41%, while miles of US “highway lanes” have increased by just 5%. Similarly, US rail traffic has increased 71% over the same period, while miles of US railroad tracks have actually decreased by 19% since 1990.
It is not only a US issue – Europe as its own challenges. The three largest European ports (Antwerp, Hamburg, and Rotterdam), at least until this year, have all been operating at well over capacity in terms of container handling, and struggle as in the US to add capacity in the face of environmental and development resistance. There are also rail issues in Europe, as differences in national gauges, electrical systems, and management practices place constraints on rail transport flow.
(Global Supply Chain and Logistics Article - Continued Below) |