Fourth GMS Economic Corridors Forum (ECF-4)

Assessment of Logistics Services in GMS

Click to edit Master subtitle style Presented by Anthony Bayley ADB Logistics Consultant

7/19/12

What is Logistics?
Logistics in about optimization of the Supply Chain between producer and consumer
SUPPLY CHAIN
LOGISTICS

L
PRODUCER STORAGE TRANSPORT STORAGE CONSUMER

Distribution

7/19/12

Logistics
Logistics industry is demand

driven in that it responds to a need created by their clients

Key component is inventory

7/19/12

management rather than transport. With advanced logistics transport costs usually rise but are offset by savings in inventory

Development of Global Logistics

Initial demand drivers have

been the retail/supermarket sector seeking to minimize front-end inventory

Benefits then realized by

industrial sector, particularly auto and electrical industries

7/19/12

3PLS
Domestic 3PLs usually major transport

companies extending activities along supply chain, especially inventory control and addedvalue services companies also extending activities along supply chain

International 3PLs usually major forwarding

High investment in IT and staff to be

competitive
Partnership arrangement with clients Maximisation of integrated services
7/19/12

GMS Overview
Constrained domestic demand due lack of

demand drivers:

a strong retailing or manufacturing sector, with

major players capable of dictating delivery terms to their suppliers. Small enterprises dominate
the presence of large multinationals a willingness to outsource

Constrained domestic supply due to:

lack of demand, thus making it difficult to
7/19/12

establish any real market penetration

GMS Overview
International logistics sector more advanced

because of external demand:

foreign manufacturers/multinationals establishing

operations in GMS familiar with outsourcing to 3PLs , many already have master contracts off stock from the suppliers using ex-works or depot trading terms to control supply chain

foreign buyers use advanced logistics systems to call

foreign manufacturers engaged in processing use

advanced logistics calling in raw materials only on a JIT basis to their production line
7/19/12 Suppliers

mainly overseas 3PLS/forwarders due to:

GMS country assessments

Cambodia
drivers sector
No significant domestic sector due absence of demand Limited international sector , particularly in garments

Lao PDR
No real domestic sector due absence of demand drivers Limited international sector , particularly in garments

sector

Myanmar
No 7/19/12 significant domestic sector due to absence of demand

GMS country assessments

Viet Nam
Small domestic sector in response to demand drivers such

as supermarkets, but only starting to evolve

International sector much more advanced due to demand

drivers, especially presence of multi-nationals and exports of higher value manufactured products. Market dominated by international 3PLs due lack of local resources and expertise

Thailand
Growing domestic sector in response to demand drivers,

such as supermarkets and multinationals

Advanced international sector due to presence of multi7/19/12

nationals and exports of higher value manufactured

GMS country assessments

PRC
Domestic sector slow to grow due combination of

lack of demand drivers, particularly willingness to outsource and absence of 3PLs

International sector more developed but

predominantly related to non-PRC element of supply chain

GMS areas of PRC less developed as not major

exporter of high value products

7/19/12

Key Development Issues

Logistical services are the domain of the

private sector because of the need for high customer service orientation demand for its services- it is not a demand creator

Logistics industry will expand solely based on

The logistics industry in most countries lacks

recognition and a strong organization structure capable of representing the industry in its links with government

7/19/12 There is a need to encourage foreign

Key Development Issues

Sector does not require further regulation as it

operates best in a lightly regulated environment

Sector will need to gradually diversify to

handle more types of product, rising prices may stimulate demand region using 3PLs is not an option but will be mandatory to retain international competitiveness and maintain trade growth

Development of trade logistics within the

7/19/12

Thank you

7/19/12