The critical role of logistics services in trade and economic development can never be overemphasised, deputy director-general at the World Trade Organization (WTO), Anabel González, said during a recent webinar entitled ‘Digitalisation and logistics resilience — lessons learned from Covid-19’.
“As trade is more and more organised through value chains, be it global or regional, logistics services are the “glue” that holds value chains together. Numerous studies have shown that a country's competitiveness highly correlates with its logistics performance, which relies on not only infrastructure, so-called hardware, but also software, namely the ability to supply cost-effective logistics services and the enabling environment.”
She said this was particularly important for developing countries as their logistics services were usually underperforming and LDCs suffered most from logistics constraints.
The Covid-19 pandemic has highlighted again that logistics is the lifeblood of economy. It was international logistics operations - from transport, storage and distribution to delivery - that kept smooth cross-border flows of medical supplies, food and other essential goods when most of the world was in lockdown during the pandemic.
“Thanks to the efforts of logistics providers, now every day millions of Covid vaccines are transported and delivered to all over the world to save people's lives. No need to mention that the production of vaccines also relies on the transportation and delivery of inputs sourced globally.”
The unprecedented pandemic had also brought digitalisation of logistics services to the fore as a result of Covid restrictions and explosion of e-commerce, she added. “If traditional economic incentives were not enough for the logistic sector to transition to a “digital” form, Covid-19 has made such a transformation virtually inevitable.
“The pandemic has largely accelerated digitalisation in the logistics sector. To address deepened complexity and increased uncertainty in business, digitalisation is now seen as a must for any logistics operation and supply chain management. For example, the quick deployment of Internet of Things allows better track and trace shipment and enables the rapid exchange of information between all parties involved along a supply chain. The building of logistics resilience in post-Covid recovery cannot do without embracing automation and digitalisation.”
But as digitalisation is accelerating and expanding, she said various challenges lay ahead for the logistics industry, such as trade protectionism, new regulatory environment, cybersecurity, unintended fragmentation and lack of interoperability between the systems/platforms of stakeholders, just to name a few.
Logistics services providers are also under tremendous pressure to meet customers' ever-increasing demands. For example, the world is expecting a quick solution to supply-chain bottlenecks such as rising shipping rates, container shortage and port congestion, which are also some of the serious consequences of the Covid-19 pandemic.
“Given the importance of logistic services in trade and economy, policy making should be informed of the digital transformation and the challenges facing the logistics industry. Many issues covered in ongoing trade negotiations within and outside of the WTO, such as paperless trading, market access, interoperability, digital platforms, etc are all crucial for the future of the logistics industry. Policymakers would appreciate having more clarity on how digitalisation is transforming logistics services and where new challenges arise as governments are promoting digitalisation and at the same time strengthening logistics resilience.”
