Logistics Services and Global Supply Chain: Setting the Context

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1 Logistics Services and Global Supply Chain: Setting the Context Dr Hermione Parsons Director & Associate Professor Institute for Supply Chain and Logistics Victoria University, Melbourne, Australia ASEAN- AUSTRALIA NEW ZEALAND FREE TRADE AREA (AANZFTA) ECONOMIC COOPERATION WORK PROGRAMME (ECWP)

2 What is Freight Transport? Point B Point A The physical movement of goods

3 What is Logistics? Point of Consumption Point of Origin Systematic organisation of goods and services

4 What is Supply Chain? Supply Demand The interdependent organisation of demand and supply, including raw product forecasting and strategic asset investment

5 Supply Chains Are Complex Interdependent Systems And Involve: Systems Thinking Labour Oil and alternative energy Transport Logistics Finance Business Processes Transaction Systems Information Technology Procurement Supply Chain Management Commercial Power Legal and Regulatory Systems People and Relationships Strategic Asset Investment Geo-Political Economy Supply Demand

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9 Insert container ship photo 2 slides further on in the presentation no title for the slide

10 China s String of Pearls Shipping Strategy

11 Yang Shan Port, Shanghai, China

12 Yang Shan Port, Shanghai, China

13 Shanghai Port s Donghai Bridge: 32.5 kms long Longest bridge in Asia Longest bridge that crosses an.

14 ENERGY SECURITY The cost of shipping a 40- foot container from Shanghai to the US increased from $3,000 to $8,000 in a decade >> Innovation

15 Shipping Innovation: Giant kites reduce fuel bills by 20% Slow steaming: 10% less speed >> 25% less fuel per trip

16 The Opening of the Arctic and the Northern Sea Route Asia to Europe Shipping: 20% less oil 40% less nautical miles per trip

17 Melting of the Arctic Polar Caps Creates a new maritime supply chain

18 The bow is for ordinary seas and the stern is an operational icebreaker Nuclear Powered Icebreakers Since 2005 the fleet has more than doubled

19 Panama Canal: Deepening and widening for megaships 5% world s shipping cargo US$5.2 billion investment

20 Terrorist Acts on International Vessels

21 No. of Global Natural Disaster Events Average average Year 2010 Source: Willis Insurers, March 2011

22 10 Years Ago. What was Unthinkable? Global warming The increased rate of natural disaster events Oil demand and oil price increases Opening of the Northern Sea Route Astonishing logistics infrastructure Restructuring global supply chains Unimaginable information exchange China s economic development The new world order around Asia President Obama declaring the Asia Pacific Century The increased global flow of goods and services Reliance on international cooperation and supply chain partnerships Convoluted Supply Chain

23 Convoluted Supply Chains: New and Heightened Complexity New Opportunities New Challenges

24 Pearl Supply Chain: From Oyster Pod to Fashion Cat Walks

25 Shoe Supply Chain: Crocodile Farm to Shop Poor Croc!

26 Prawn Supply Chain: From Sea to the Plate

27 New and Heightened Complexity >Convoluted Supply Chains Logistics - critical to global world development for the last 5,000 years Successful international logistics >> opening of regional and global markets Supply chain competitiveness and innovation >> dramatic change: Mediterranean prawns for European markets transport and labour costs Steel and total vertical integration through international and multimodal investment Reinvention of supply chains and industries by the Internet: Zara (apparel) and Amazon (internet buying) Freight Forwarding and 4 PL Companies (e.g. DHL, Kuehne and Nagel)

28 Convoluted Supply Chains: New and Heightened Complexity? Convoluted can also mean things are becoming too complicated Food traceability and safety: o Melamine in baby-food powder o Horse meat instead of beef in the UK o GMO crops and Monsanto Contamination issues in the USA Ø companies are joining Responsible Trade Worldwide to safeguard reputation and mitigate risk (e.g. child labour, ethical trading and environmental sustainability) Governments across the world have extra, unanticipated pressure; New supply chain dynamics to consider and manage New regulatory requirements e.g. traceability, safety, industrial relations, food security issues and FDI The need for connectivity, effective multi-modal (hard and soft) infrastructure investment and often congestion and traffic management

29 Thank you ASEAN- AUSTRALIA NEW ZEALAND FREE TRADE AREA (AANZFTA) ECONOMIC COOPERATION WORK PROGRAMME (ECWP)

30 Morning Tea ASEAN- AUSTRALIA NEW ZEALAND FREE TRADE AREA (AANZFTA) ECONOMIC COOPERATION WORK PROGRAMME (ECWP)

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