REASON FOR FRAGMENTATION
To briefly illustrate the reasons behind the Global Logistics Industry’s (GLI) fragmentation, let’s examine the core element of the GLI -- the shipment flow.
The principles of an efficient shipment flow are:
- Efficiency and cargo security must go hand in hand
- Efficiency must be from shelf-to-shelf
- Shelf-to-shelf is a horizontal process
- The shelf can be anywhere in the world
- Efficient logistics must be global
Today, this horizontal process of a shipment flow is handled by multiple organizations, each with their own vertical systems or methods to manage a specific subset of the entire shipment flow. Such systems or methods are built mainly on their own objectives and needs. In some cases, there are organizations that are part of the shipment process but have no system at all.
Most existing logistics solutions used by today's global logistics organizations were designed to accommodate specific requirements of select organizations. While these proprietary systems perform well within their scope, they were never intended to simultaneously manage the shelf-to-shelf flow of global shipments for a wide variety of companies. The aforementioned represents in brief the core reasons for today’s fragmented global logistics industry. Consequentially, when shipments are forced to cross multiple verticals, constant inefficiencies exist.
Fragmentation in the global logistics industry is mainly due to:
- Varying needs and objectives across the shipment flow
- Dependency on vertical systems, mistakenly attempting to optimize the efficiency of a horizontal process
- Ineffective use of a CUSTOMIZED PROCESS SOLUTION to address a global concern
The fragmentation of the GLI, combined with the rapid freight volume increase, results in increased landed import, export and distribution costs worldwide.
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ECONOMIC IMPACT
The economic consequences of ignoring the fragmentation of today’s $4 trillion GLI are already serious. The increase in the world freight bill to $14 trillion by the year 2020, projected by the World Bank, will only create greater negative economic consequences.
The extra costs currently incurred by shippers, consumers, and ultimately, nations, impedes economic momentum; left unchallenged, their costs can only increase.
The examples listed below represent the economic impact based on the following levels:
- Global
- Regional
- National
- Company
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VOICE OF THE INDUSTRY
The following hyperlinks are the voices of the global logistics industry when addressing fragmentation of the industry.
"Riding the Wave of Globalization" >"Freight Carriers: From Modal Fragmentation to Coordinated Logistics" >
"Addressing the Issues Before Capturing the Power of the Internet" >