The movement of goods from point of manufacture to the end user relies upon the four basic transport modes: road, rail, water and air. Each mode has evolved independently of the others, and each has its roots embedded in its own particular social and industrial history. The four sectors have become industries in their own right with their own infrastructure, cultures, jargon and identity.
It is, therefore, not surprising that these industries - road haulage, the railways, shipping and aviation - are often seen taking robust positions to lobby for, and protect, their particular interests. Today, however, there is a greater awareness of the benefits of integrating one transport mode with another: this has resulted in providers of one type of distribution service moving across into what was the traditional domain of others.
Since 1997, there have been radical changes in the way freight transport and distribution is organised. Today, the principles of logistics are applied to the distribution industry to achieve savings and efficiencies. These changes have come about as a result of competitive market forces, through political, economic and social pressures, and as a result of technological advances. Another important influence has been the evolution of supply-chain management (SCM), which has forced managers to optimise the flow of goods by employing more efficient logistical practices.
The future holds many further developments as the business of freight logistics evolves and as greater economies and efficiencies are achieved. The sector is, therefore, at a dynamic and exciting stage in its evolution, presenting both risk and opportunity for those involved.
The report explains the evolving relationship between the supply chain and the business of freight logistics. It reports on the way in which the different transport modes serve that market, how they compete and integrate with one another and how their respective infrastructures are also developing.
Other influences are also at work. To stay ahead, companies are continuously rethinking their strategies, acquiring and merging with others, and forming alliances with customers in ways that would have been unimaginable a decade ago.
The globalisation of both the production and retailing of goods has had the effect of internationalising the freight-logistics business. Today's logistics providers must build both a global network of their own offices or partner companies, and an effective communication system for the flow of data and information. Software that facilitates the control of goods in transit and delivers savings and efficiencies within the supply chain is now available.
Security has also taken on a new significance as managers question perceived wisdoms concerning cargo safety and the interruption of the supply chain by acts of terror or theft of cargo.
Finally, the problems of pollution and congestion are increasingly influencing the way in which goods are transported and distributed. Regulation and legislation will increasingly dictate these issues, but there are also real savings to be made by adopting a more sustainable approach to distribution. Both service providers and users are scrutinising their logistics policies with a view to achieving such gains, whether through better utilisation of existing arrangements or by the more radical solution of modal shift.
Key Note expects both the movement towards consolidation amongst logistics providers and the integration of logistics providers' services into the activities of their customers' supply chains to continue. SCM itself will advance as inefficiencies are squeezed out of the system. Internet-based IT, such as the evolving freight portals, will also contribute to greater efficiencies. In addition, both EU and national transport policy, responding to social and environmental imperatives, will offer incentives and impose stricter controls to set the business of freight logistics on a more sustainable course.
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