Today it is hard to imagine a world without cross-border trade, and the flow of goods and capital around the globe continues to increase rapidly. This trend can particularly be seen in the exportation of goods, which has recorded increasingly favourable growth rates in recent years. All of this can primarily be attributed to the mega-trend, globalisation. Because of this trend, we now import goods from all over the world and are able to export popular products “Made in Germany” on a large scale. Germany is currently one of the three most significant exporting countries in the world. But what exactly is globalisation and how does it impact the logistics market?
The ability to connect across national borders is currently one of the most decisive developments worldwide and will particularly have a long-term impact on politics, trade and culture. Countries and economic hubs are collaborating closely on an international scale, a factor that is crucial when it comes to the seamless exchange of goods, capital, information and knowledge. The flow of trade and capital makes it possible for countries to focus on their core skills as well as those products that they are able to produce better or more affordably than other countries. This ability to more effectively tap production factors means increased prosperity.
What characterises globalisation?
Access to new markets, removal of trade barriers and the simplified and rapid exchange of information are just a few of the advantages that globalisation brings, benefiting both people and businesses.
Outsourcing commercial activities is particularly widespread in the industrial sector. One of main reasons companies are choosing to outsource is more favourable cost structures for materials, labour and taxes compared to the domestic market. The global interconnected community of various production locations is best illustrated by the automotive industry.
The dynamics inherent in globalisation are being used as an opportunity to gain competitive advantages and tap local value creation. German car manufacturers are seeing twice as many cars produced abroad annually than at their production facilities in Germany. In addition to Asian markets such as China, the U.S. and Mexico serve as particularly important production sites for German car manufacturers. Parts from all over the world are delivered to the factory, sometimes even from Germany itself, and car models are prepared for transport and delivery to the targeted market.
Challenges and opportunities
While the processes involved in globalisation create new opportunities for development, they also pose new challenges. Among these is the fact that the global flow of goods is increasing the complexity of logistics processes (supply chain), as export volumes and the outsourcing of added-value processes continue to grow. This is triggering significant changes and new strategies in logistics, especially in the transportation sector.
In order to increase efficiency and improve competitiveness, extensive investments are being made in infrastructure expansion. Multi-modal freight transport, i.e. transport by road, rail, air and water, continues to gain significance over pure
road transport. Although trucks and other delivery vehicles continue to dominate freight transport due to their availability and speed, especially when it comes to last-mile delivery, the importance of road transport is likely to soon decline in the wake of planned bans on motor vehicles in European city centres. Rail and water transport are both viable alternatives and will play an increasingly significant role as the importance of sustainable logistics grows.
Globalisation and digitisation
However, all of this requires the seamless transfer of information and technology. The quality of technical infrastructure has increased significantly in recent years and extensive investments have been made in automation processes and standardisation in the transportation sector, developments that have clearly shaped the industry. Companies are increasingly shifting their focus to the research and development of new technologies, ringing in a fourth industrial revolution that integrates state-of-the-art information and communications technology into production processes. We will see production processes that are largely self-organised emerge with the help of intelligent, digitally networked systems, revolutionising industrial processes.