Predicting additional growth in APEC economies: DHL

DHL, the world's leading logistics company, has identified three key levers to help emerging economies improve their logistics efficiency and reduce the cost of trading by up to 30% by 2020. It appeals to governments, shippers and logistics companies to become active partners in reducing paperwork and administration, reform customs and security processes and invest in infrastructure to maintain the APEC countries' competitive advantage.

Speaking to media in Tokyo ahead of the APEC CEO Summit 2010, Hermann Ude, CEO, DHL Global Forwarding, said: "Over the past 30 years, world trade as a percentage of GDP has increased from a third to over 50% making international trade the most important driver of economic growth and rising living standards. However, inefficient logistics in many economies are still a road block to trade growth. For example, BRIC countries on average require twice as many export/import documents versus Singapore or Germany. As a result, paper-work can be the single most time consuming element in the life of a shipment, with vital days lost and costs increasing as products spend more time in warehouses than on the move."

Ude said that of the 60 days it currently takes from order to delivery in a typical ocean freight shipment from India to Mexico, goods were on the move for less than half of that time ' with over 32 days spent on export and import documentation and customs. A decreased administrative burden is the lever that can provide the most logistics cost savings and is a relatively easy win via the increased use of technology, such as e-customs, and better cross-border co-operation and governmental agreements.

Customs and security are of paramount importance in this day and age, but increased physical security requirements alone are not the panacea. On average, BRIC countries do 10 times more physical cargo inspections than best-in-class countries, without notably improving security. Introducing smarter and globally more consistent security regulations are necessary to promote intelligence sharing. "The way forward is through improved intelligence, not sole reliance on physical security measures. Information sharing, facilitated by stronger collaboration between businesses, industries and public authorities all need to take place to make our world a safer place," said Ude.

Infrastructure investments in key areas such as strategic ports and interlinked road and railway systems are also needed if costs are to remain competitive with growth maintained. "Infrastructure bottlenecks or sub-standard transport facilities can force logistics companies such as DHL to use sub-optimal routes in order to guarantee delivery and this increases costs. For example, insufficient port capacity can lead to 15% to 30% higher sea transportation rates on otherwise comparable routes and these costs come with additional CO2 emission", said Ude.

With emerging economies growing two to three times faster than developed countries, infrastructure limitations could seriously hamper competitiveness in the long-term. However, strategic investments in key areas could contribute 6% of the 30% reduction in logistics costs possible by 2020.

Cost savings are not the only benefits emerging economies could enjoy if they address customs, security and infrastructure issues now. Trade transit times could also be cut by 65% and 20% to 40% more trade could be generated.

As the global expert in international express, air and ocean freight, road and rail transportation and contract logistics, DHL plays a key role facilitating trade between more than 220 countries and territories, including all emerging and key economies and has established global best practice benchmarks.

It is working proactively with policy makers and shippers with the ambition of facilitating a logistics cost saving of 30% and a lead time reduction of 65% for an average BRIC shipment traveling by sea. To this end, DHL has developed a wide platform of solutions to cut administration costs such as e-freight, EDI connections, and created over 100 high security locations to ensure the security of transport operations. In addition to working with governments to identify strategic areas requiring infrastructure development, DHL invests in infrastructure globally and has invested over ‚¬2.2 billion in Asia alone in recent years.

"30% improvement is a big ambition but one that governments, shippers and service providers such as DHL can jointly achieve and must work towards achieving if countries are to enjoy continued economic success and rising standards of living. If regulators decrease bureaucracy and become more process-orientated, logistics companies work consistently to reduce costs and improve lead times and shippers form deeper partnership with logistics providers, emerging market growth will stay on track," said Ude.