text_TITL pruh_TITL logoC Global View on Logistics Ondrej Castek castek@econ.muni.cz Room no. 537 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Differences in different nations/countries nLogistic performance is limited by aspects: npolitical nsocial neconomical n nExample: nUSA n90 % of roadways are paved surface roads nZimbabwe n19 % paved surface n35 % unimproved dirt 2 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi USA n 2_5_2_usa_html 3 Cradle of logistics Rail system less dense than Germany or Europe, but four times more goods moved in US than in WE by rail. Air traffic also outperformes any other world region. Capable of delivering in 72 hrs anywhere. Share of logistics costs in GDP cca 10 %. Core countries for trade: Canada, China, Mexico, Japan, Germany. Mail market in US Post hands only for last mile, otherwise liberilized. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Brazil n 2_5_3_brasilien_html 4 Poor infrastructure, depends on highways network (60 % of total transport volume), but highways dependable only in South and Southwest. High fees in harbours, other logistics costs also high – twice as much as in the OECD countries (20 % vs 10 % of GDP). Harbours problems: handling capacities, low channel depths, intermodal connections are inadequat. Transport sector was strongly fragmented, but is becoming strongly consolidated. Foreing companies are bringing up to date know how. Core countries for trade: US, Argentina, China, Germany, Netherlands, Japan, Chile. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Western Europe n 2_6_2_westeuropa_html 5 Political changes influencing the shape of transportation: Common European Market Euro European Union enlargement Uniform regulation, reduction of customs bureaucracy. Road transport (80 %) 5 x more than rail transport (16 %) and 10 x more than inland waterway transports (8 %). Road transports increasing, rail stagnating. The trend is to outsource logistics operations if they are not the core business. Postal services mainly controlled by states, the market is to be liberalized. Courier, express and parcel market high concentration and high competition. Central distribution warehouses being set up. Core countries for trade: North America, Far East, Middle Eas, Africa, India. Gibraltar: 300 trade ships per day. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Northern Europe n 2_6_3_nordeuropa_html 6 Bridge between CEE and Russia, core countries: Germany, France, Netherlands, GB, China, CEE, Russia, US. Very good state of highway networks, therefore high share of road transports: SW 60 %, Denmark 70 %. International shipments very important, air traffic not. Rail transports from Finland to Russia to avoid underdeveloped Russian harbours. 50 % of Scandinavian industrial activities within 300 km of Gothenburg. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Eastern Europe n 2_6_4_osteuropa_html 7 Bridge between the East and the West (= core countries for trade). Since 70s increasing share of road transports, share of rail transports still relatively high – still dominant form of shipping in eE. Wide differces in level of infrastructure: „While the Czech Republic, Slovakia, Slovenia, Hungary and Poland have made major strides, Romania, Bulgaria and Croatia are trailing far behind. The infrastructure is in even worse shape farther to the east.“ Harbors: Poland, increasing quality, competing to Hamburg. Problems with „superhighways“ and quality of national highway networks. Interconnectedness of highway networks : the case of tolls AT vs CZ. Since 90s acquiring huge amounts of industrial activites from WE = increasing need for transportation. Next driver: consumption in eastern countries. TPCA and others: CZ one of the leading countries in producing cars per capita. DHL – centre of ocean transports in the CZ. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Russia n 2_6_5_russland_html 8 Vast country, 11 time zones, huge cultural differences, huge differences in infrastructure. Road density: 40 m per 1 km squared. 83 % of transports on rails. Helsinky – Pusan (transSiberian railroad) 47 days on sea, 16 days on rail. Potential of 300,000 TEU per year, but limited more by bureaucracy than anything else. Lack of multimodal hubs. Core countries: WE, China, Ukraine, Turkey, Japan, Korea, US www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi TEU ntwenty-foot equivalent unit 9 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi TEU Length Width Height Volume TEU 20 ft (6.1 m) 8 ft (2.4 m) 8.5 ft (2.6 m) 1,360 cu ft (39 m3) 1 40 ft (12 m) 8 ft (2.4 m) 8.5 ft (2.6 m) 2,720 cu ft (77 m3) 2 45 ft (14 m) 8 ft (2.4 m) 8.5 ft (2.6 m) 3,060 cu ft (87 m3) 2 or 2.25 48 ft (15 m) 8 ft (2.4 m) 8.5 ft (2.6 m) 3,264 cu ft (92.4 m3) 2.4 53 ft (16 m) 8 ft (2.4 m) 8.5 ft (2.6 m) 3,604 cu ft (102.1 m3) 2.65 10 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Drivers of global logistic services niron curtain, political situation ntrade barriers (ASEAN, NAFTA, MERCOSUR, CEM) nstandardization (ISO) ninformation and communications technology nderegulation (railway transport in GB, postal services in WE) n nResult: new competition and cooperation nCase study: UTEX nResult: number of interfaces and need for communication grows 11 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Ideas/terms nfrom cost- and price-based competition to time-based competition (case of Dell) nadded value more and more in transportation ntailored solution – mass customization nenvironment and recycling (reverse logistic flows, city logistics) 12 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Differences in global logistics nlonger distances nmore chain elements ncultural differences npolitical influence 13 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Global business – Utex company case (Suits production) nGeneral information nDesign has lower importance than price (145 USD) in this segment. nThe suit (its parts) travel approximately 100 000 km. However, the transportation costs make only 5 % of the overall costs. Wage costs make 30 %. nThere used to be appreciated suits Made in USA or Made in Italy on the US market in the past, nowadays suits Made in Israel etc. are common. 14 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Global business – Utex company case (Suits production) Task no. Location Task description Per one suit (in USD) 1. Paris Industrial espionage – designs, fabrics. Suit has to look “European”, name has to sound “Italian”. 2. Australia Wool (Merino). Used to be delivered to UK only, nowadays into the whole world. 3. India Spinning mills, world class quality. 100 % production control thanks to the low wages (2.75 – 3 USD/day, which is above average quality) and high end technologies. No child labor – because of the technologies and the demand for quality level. Very bad infrastructure and very rigid state administration. 20 15 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Global business – Utex company case (Suits production) Task no. Location Task description Per one suit (in USD) 4. China Shoulder pads. It is not possible to produce all suits here because of the import quotas of EU and USA. Wages 3 USD/day, high fluctuation, quality comparable to the European one. Working conditions bad (sweatshops), but it still means improvement of the standard of living of the employees. 5. Korea Lining. 0,35 6. Canada Buttons. So small part that it does not pay off to abandon well-proven supplier. 7. Hamburg Logistics. All the parts meet here for the first time. 16 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Global business – Utex company case (Suits production) Task no. Location Task description Per one suit (in USD) 8a. Russia Final assembly. Mafia and state administration complicate business. Clothing industry does not have tradition in Russia = problems with quality and appearance of the products. Wages 2 USD/day are rather under average, but reliable. Employees often co-own the factories, but they never get part of the profit. Seamstress (needlewoman) earns 300 CAD/month (= 30,000 rubles) in Canada, but only 500 rubles/month in Russia. 8b. Romania Final assembly. Production of suits of higher quality. Wages 8 USD/day, higher quality, more renowned in the world than Russia. TOTAL COSTS 50 – 60 UTEX sells (including business margin) 70 Price in the shop for the end-costumer 145 17 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Global business – Utex company case (Suits production) nIt is expected that the production will move again, most likely the final assembly, it is estimated that it will be to Cambodia, Vietnam or Indonesia. Next to the wages, political stability is important (disadvantage of Indonesia) and infrastructure as well (disadvantage of India). Other factors are import quotas (disadvantage of China) and level of quality (Russia provides the minimum quality level which can be accepted in this price range). n nGlobalization spreads the industrial revolution into the whole world: working for UTEX means introduction of new technologies and increase of standard of living in many countries. 18 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Czech Republic: D1 reconstruction nIt is planned to consume 22 bil. CZK (880 mil. EUR) n- nobody believes that the budget will be met n nIt is expected to take 7 years n- but it was delayed already at the start 19 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Performance in logistics 20 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Performance in logistics 21 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Czech Republic: waterways nThere is a continental divide of drainage basins of three seas in the Czech Republic: nRiver Odra leads to Baltic Sea nRiver Labe (Elbe) to North Sea nRiver Morava through river Danube to Black Sea n nPlans to connect these seas through inland waterways in the Czech Republic are 300 – 400 years old, in Czech legal system present since 1901. 22 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Czech Republic: waterways nWater transport is cheap and environment-friendly. nIt also requires appropriate infrastructure. n nEU supports the waterborne transportation. nEU requests its members to maintain 30 – 50 % of their transportation on railways or waterways. n 23 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Czech Republic: waterways n 24 C:\Users\castek\Desktop\MapaCRvcMori.png www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Czech Republic: waterways n 25 C:\Users\castek\Desktop\umori.jpg www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Czech Republic: waterways n 26 C:\Users\castek\Desktop\MapaVodnichCest.png www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Czech Republic: waterways nEstimated budget: 300 bil. CZK (12 bil. EUR) nAdvantages: Disadvantages: n+ transportation n+ flood control n+ water retention n+ national security n+ tourism n+ recreation 27 -construction would harm the environment -public opposition -costs For the south-north canal the costs are estimated to be 150 bil. CZK, which is the amount of damages caused by severe floods in 1997 and 2002, which would be prevented if the canal had been built by that time. www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Performance in logistics – freight transport 28 www.econ.muni.cz pruh+znak_ESF_13_gray4+bily_RGB pruh+znak_ESF_13_gray4+bily_RGB text_zahlavi Performance in logistics – passenger transport 29