DHL Press Meet Stills
Chennai, India – October 8, 2009: DHL, the world’s leading logistics company, together with the London School of Economics today revealed that when international trade rebounds in the medium term, it will likely see a rise in the proportion of trade, particularly in value terms, accounted for by the air express industry.
Frank Appel, CEO, Deutsche Post DHL, said, “Trade is critical to economic growth and to global development. It is heartening to note that the one agenda that the recent G20 agreed on was trade promotion. All governments agreed that trade will help in the short-term, and is a critical and inevitable part of long term economic development. As an economic integrator, our role is critical in ensuring that our services meet the growing needs of both developed and developing markets.”
The study “International trade, Express Logistics and Globalization: Part and Parcel of the Solution to Current Economic Challenges” revealed that the medium term outlook for global trade remains strong even as trade remains at best stagnant in the short run due to low availability of credit. However, when credit becomes freely available and trade rebounds, the study suggests that the return of trade will not benefit all countries equally.
The study has singled out cost of sea transport and the availability of review procedures as two key prominent factors that influence an economy’s appeal to attract international trade. The findings were based on an analysis of the cost and quality of logistics in Brazil, Russia, India and China (BRIC) which account for 40 percent of the world’s population and 15 percent of the global economy and serve as exemplars to other emerging economies.
The cost of air-borne freight is relatively constant for the BRIC countries, compared to the cost of sea borne transport which varies much more dramatically around the world. Countries that provide low cost shipping logistics are more attractive to firms producing generally low value products that are sent by ship. India for example, has shipping costs that are more than 50 percent higher than those of China, while Russian shipping costs are over four times as high. Should India be able to reduce the cost of shipping to match Chinese levels, its trade would increase by 10 percent while Brazil and Russia’s trade would increase by 30 percent and by 50 percent respectively if they were to match China’s shipping costs.
The study shows that countries wanting to attract firms that use air express shipments need to look not so much at improving costs, but ensuring reliability and timeliness. In particular, countries where traders can ask for low cost, transparent review of any decisions made on the ground will have a higher share of world trade. The report also notes that effective review procedures are notably absent in the emerging economies, posing a challenge to shippers who intend to import or export time sensitive goods, such as high value “must have” electronics. The analysis has inferred that if these countries were to ensure the discipline and current availability of such reviews, China and India could increase trade by 20 percent, while Brazil and Russia would increase theirs by 30 percent during post crisis recovery.
“Transport and logistics costs in particular, outweigh tariffs as the greatest barriers to trade by a factor of 9:1. The study shows that countries which seek to be at the forefront of the next wave of globalization need to benchmark themselves against global best practices. Export reliant emerging economies can improve trade conditions to strengthen their international trade levels when the global economy rebounds,” said Frank Appel, CEO, Deutsche Post DHL
Chennai, India – October 8, 2009: DHL, the world’s leading logistics company, together with the London School of Economics today revealed that when international trade rebounds in the medium term, it will likely see a rise in the proportion of trade, particularly in value terms, accounted for by the air express industry.
Frank Appel, CEO, Deutsche Post DHL, said, “Trade is critical to economic growth and to global development. It is heartening to note that the one agenda that the recent G20 agreed on was trade promotion. All governments agreed that trade will help in the short-term, and is a critical and inevitable part of long term economic development. As an economic integrator, our role is critical in ensuring that our services meet the growing needs of both developed and developing markets.”
The study “International trade, Express Logistics and Globalization: Part and Parcel of the Solution to Current Economic Challenges” revealed that the medium term outlook for global trade remains strong even as trade remains at best stagnant in the short run due to low availability of credit. However, when credit becomes freely available and trade rebounds, the study suggests that the return of trade will not benefit all countries equally.
The study has singled out cost of sea transport and the availability of review procedures as two key prominent factors that influence an economy’s appeal to attract international trade. The findings were based on an analysis of the cost and quality of logistics in Brazil, Russia, India and China (BRIC) which account for 40 percent of the world’s population and 15 percent of the global economy and serve as exemplars to other emerging economies.
The cost of air-borne freight is relatively constant for the BRIC countries, compared to the cost of sea borne transport which varies much more dramatically around the world. Countries that provide low cost shipping logistics are more attractive to firms producing generally low value products that are sent by ship. India for example, has shipping costs that are more than 50 percent higher than those of China, while Russian shipping costs are over four times as high. Should India be able to reduce the cost of shipping to match Chinese levels, its trade would increase by 10 percent while Brazil and Russia’s trade would increase by 30 percent and by 50 percent respectively if they were to match China’s shipping costs.
The study shows that countries wanting to attract firms that use air express shipments need to look not so much at improving costs, but ensuring reliability and timeliness. In particular, countries where traders can ask for low cost, transparent review of any decisions made on the ground will have a higher share of world trade. The report also notes that effective review procedures are notably absent in the emerging economies, posing a challenge to shippers who intend to import or export time sensitive goods, such as high value “must have” electronics. The analysis has inferred that if these countries were to ensure the discipline and current availability of such reviews, China and India could increase trade by 20 percent, while Brazil and Russia would increase theirs by 30 percent during post crisis recovery.
“Transport and logistics costs in particular, outweigh tariffs as the greatest barriers to trade by a factor of 9:1. The study shows that countries which seek to be at the forefront of the next wave of globalization need to benchmark themselves against global best practices. Export reliant emerging economies can improve trade conditions to strengthen their international trade levels when the global economy rebounds,” said Frank Appel, CEO, Deutsche Post DHL
