Logistics: what is it?

ETF Seminar: ‘How to recruit and organise in the logistics sector?’

Runö, Sweden 8-11 February 2009

Paula Hamilton, ITFhamilton_paula@itf.org.uk

What is Logistics?

The work of logistics Logistics in Central and Eastern Europe Main Actors in Logistics (in the region) Gearing up to strengthen our unions

Logistics

‘The work required to move and position inventory throughout the supply chain which serves to link and synchronise the overall supply chain as a continuous process and is essential for supply chain connectivity.’ (Bowersox et al, 2007)

Logistics Logistics is a subset of and occurs within the

broader framework of supply chains.

Logistics activities occur within and between all companies active within supply chains.

The rise of logistics is driving restructuring across the whole transport sector

The ‘new’ logistics industry plays a vital role in the global economy.

Physical Flows, Nodes and Networks

Global Gateways: Container and Air Cargo

CONTAINER PORT AIR CARGO TERMINAL

Information and Communication Flows

Enable faster and more consistent communication within organisations and between corporate actors in supply chains

Enhances effective communication between logistics information systems and their physical operating environments

ICT and Logistics

Customers demanding real time information

Used to reduce inventory, labour requirements and risk

Improve timing/speed Increase reliability Increase transparency in supply chains

ICT Systems

Supply Chain Information Systems (SCIS) are responsible for linking all logistics activities into an integrated process

These have four major components: Enterprise Resource Planning systems Communication systems Execution systems Planning systems

Information and Communication Technologies

Types of ICT used

Bar coding and scanning Global data synchronisation The Internet Satellite technology Image processing Extensible markup language

The work of logistics

Order Processing

Inventory

Transport

Warehousing, Materials Handling and Packaging

Facility Network Design

Order Processing

Order preparation Order transmittal Order entry Order filling Order status reporting Key customer interface

Inventory

Raw materials Work in process Finished goods Supplies

Warehousing, Materials Handling and Packaging

Many types of warehousing Traditional role has been to hold or store inventory

but Today many value added activities occur in such

environments, operations focus on customisation, velocity and movement

Packaging serves to protect products during the logistics process

Materials handling involves receiving, moving, storing, sorting and assembling.

Facility Network Design

A facility network is the number, size and geographical relationship of facilities used to perform logistical operations.

Include manufacturing plants, warehouses, cross-docks, ports and retail outlets.

Facility network design determines the number and location of all types of facilities used to perform logistics work

Facility networks are in a constant state of flux

Transport

These are the operations which geographically move and position inventory

Include road, rail, water, air and pipeline Is the largest element of logistics costs Reduces inventory, storage and materials handling Transport’s role is becoming increasingly important

in supply chains

Logistics Industry: Markets

Air Cargo Airports Contract Logistics Finished Vehicle Logistics Freight Forwarding Ports Express and Parcels Intermodal NVOCC

Rail Road Haulage and Trucking Service Parts Logistics Temperature controlled

logistics Warehousing and property

development Information and

Management Services Shipping

Barriers Between Modes Disappearing

Deutsche Post World NetPrivatizing German Postal Service•DHL•Danzas•Airborne Express•Exel: #1 US Warehouse Co.

NOL/APLSingapore Based•Steamship Line•Terminal Operator•#3 US Whouse Co.,•Rail = Liner Trains

Logistics in Central and Eastern Europe

Fundamental changes in the logistics market in recent years Production – ‘near sourcing’ in CEE Growing consumer markets Large LSPs – new models to serve clients Few indigenous international companies operating on a

global scale Pattern in most CEE countries = strong local logistics

presence serving the needs of small business + large TNC providers providing services for the international ‘incomers’

Possible restructuring with some CEE based companies grouping themselves together to provide services across the region

CEE: Contract Logistics Market Size and Growth

2007 grew to €991m, a growth rate of 24% Highest growth rate in the Slovak Republic

(39%) Baltic States also experiencing strong growth,

helped by proximity to Russian market 2011 market forecast = €1956m (18.56%)

CEE: Express and Parcels

Still major differences between CEE and WE markets but likely to change as shippers demand specialist levels of service and pricing

Growth is not homogeneous across the region, Baltic States and Slovenia show above average growth

Automotive is particularly important to the express sector in Poland, Czech Republic, Slovakia and Hungary

All major global express providers are well positioned in Poland and Czech Republic

CEE: Freight Forwarding

2007 grew to €2112m, a growth rate of 21.3%

2007 - Air forwarding grew to €637m, a growth rate of 17%

2007 – Sea forwarding grew to €1475m, a growth rate of 23.3%

2011 – freight forwarding market forecast is €3731m, a growth rate of 15.3%

CEE: Road

Source: Eurostat

By Type 2006 (m t km)

Logistics Actors in the Region

Include:

Manufacturers

Retailers

Local, regional and national Governments

The European Commission

AND Logistics Service Providers

Ocean carriers Inland transport

Manufacturers

3PL

POWER

“Wal-Mart is hard to do business with. I had a cardiac episode while I was working for them.” - Former Exel manager of Wal-Mart DC

Logistics Industry: Main Actors in the Region

Deutsche Bahn CEVA DPWN DPD DSV Ewals Cargo Care FedEx Fiege Logistics FM Logistics GAC GEFCO

GLS Geodis (SNCF) Kuehne and Nagel M&M AP Moller Maersk Group NYK Logistics Panalpina TNT UPS UTi Worldwide Wincanton

Logistics Industry: Main Actors present in all your home countries

Deutsche Bahn DPWN DSV GAC Kuehne and Nagel M&M Others (variable range of operations)

M&M: Militzer & Münch International Holding AG

Owned by TransInvest Holding AG Headquartered in Switzerland Operations divided into 6 regional groups A major partner in the System Alliance

organisation, a FedEx partner Products and Services include rail cargo, air

cargo, sea cargo, groupage, customs service, warehousing and logistics

                                                                            

 Source: Transinvest

M&M Organisation

M&M: Strategies for Growth

Build its network in Eastern Europe Focus on developing its IT-aided processes Become more active in new and developing

markets with a focus on Central Asia and China

GAC

Head office in Dubai Privately owned Operates in over 40 countries, with 250

offices and over 7000 staff Business areas include shipping, logistics,

marine and solutions Target markets include oil and gas, retail,

automotive to dry bulk and cruise liners

GAC: Strategies for Growth

Aims to provide an integrated solution to its clients’ logistical needs

Expansionist strategy, particularly in emerging markets

Tends to enter new markets via partnerships first, then set up subsidiary

Four hub agency centres: London, Dubai, Singapore and Houston

Logistics revolution

Consolidator / freight forwarder, 3PL

Road transport

Manufacturer

Air freight

Ocean shipping

Port trucking

Warehouse: deconsolidator,

3PL, wholesaler, DC

Warehouse: deconsolidator,3PL, wholesaler, DC

Rail

Road transport

Road transport

Retailer

Small parcel deliveryHome

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