Logistics can boost trade

GOVERNMENTS in Asean can take a leading role in helping to develop North-South and South-South trade by designing a proper legal framework and through easing administrative bottlenecks. 

Also, any improvement made to their present logistics conditions is likely to have a very significant effect on their economies and on the prosperity of their traders, notes Assistant Professor Dr Ruth Banomyong of the Faculty of Commerce and Accountancy, Thammasat University, Thailand. 

A coherent integrated logistics approach can bring short-term benefits to local traders and transport operators, as well as long-term consistent structural changes in the transport of a country’s international trade, he told StarBiz in an interview. 

Noting that, at the moment, no developing countries were equipped with efficient logistical systems, as national interest usually took precedence over regional or international ones, Ruth said it was possible that economic integration might force the issue following full implementation of the Asean Free Trade Area regime – as was the case with the European Union. 

“But there is still a long way to go for the Asean countries to harmonise their transport network and infrastructure in order to take full advantage of integrated freight logistics services,” he added. 

Dr RuthBanomyong

Nevertheless, by managing potential improvements under an integrated logistical approach, synergy can be created, resulting in unexpected trading opportunities for both local traders and transport service providers to the benefit of the national economy, noted Ruth, one of the speakers at IBM Forum 2003, which will be held at the Sheraton hotel in Subang Jaya on April 8-9.  

He urged sellers and buyers to adapt their commercial practices; and governments, to provide the logistics service providers with an institutional, regulatory, and operational environment that can stimulate the application of integrated logistics systems. 

“By introducing freight logistics, a country has the opportunity to realise synergy from the potential improvements which can be obtained from public and private interests: public administrations, state-owned and private transport companies, importers and exporters,” he said.  

Freight logistics takes advantage of the recent development in container-based transport logistics to offer better and more cost effective services for shippers and consignees.  

For example, the efficient and rapid pace of land-side development has led to new competitive sea-rail multi-modal alternatives to traditional all-waters operations, and the level of efficiency of both conventional and double-stack train services has enabled ocean carriers to achieve better utilisation of their fleet. 

“Freight logistics should be seen as a systematic approach to trade efficiency and competitiveness, not as a turnkey system which can be bought and installed from one day to the next,” Ruth said.  

“Such a system approach calls for an integrated view of all relevant trade- and logistics-related issues in a country.”  

Tougher international competition and expansion of geographical markets have forced manufacturers to focus on integrated production and logistic strategies in order to reduce costs, and at the same time, to obtain higher service standards. The need to control logistical costs have become as important as the need to keep down other production costs.  

“The emergence of reliable and competitive time-definite freight logistics services can contribute to, and foster, new trading opportunities as well as increased competitiveness,” he said, noting that logistics remained an impediment for the international trade of many developing countries.  

“A better awareness on the part of all concerned is probably a key element for the development of an integrated logistical approach. Appropriate technical assistance in creating this awareness and implementing the necessary changes may be another.  

“It is, therefore, necessary to search for a development policy on how to sustain growth and maintain competitiveness.”  

An integrated logistical approach must encompass not only the economic, commercial and operational aspects of the international movement of goods, but also all issues related to the facilitation of trade and the responsibility for the goods while in transit, Ruth said.  

“Relationships between logistics users, logistics services providers and governments must be clearly identified; and proper coordination in the implementation of improvements must be established,” he stressed. 

“Trading opportunities will be improved by implementing integrated freight logistics operations, and by an appropriate legal environment that stimulates the provision of efficient local logistical services by taking advantage of international joint ventures.”  

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