ADDED-VALUE LOGISTICS SERVICES TO BE OFFERED IN DEVELOPING COUNTRIES

Dist. GENERAL UNCTAD/SDTE/TIB/2 9 September 1998 Original: ENGLISH United Nations Conference Trade Development ADDED-VALUE LOGISTICS SERVICES TO BE OFFERED IN DEVELOPING COUNTRIES Report UNCTAD secretariat GE.98-51678 2 Executive summary report highlights importance logistics economy. describes typical operations supply, production distribution processes, emphasizes possibility outsourcing number operations local enterprises experience perform . , suggests Governments developing countries countries transition contribute "- engineering" international trade-oriented productive sectors part global production schemes. Chapter presents basic elements logistics explains logistics contributes creation national economy. describes challenge faced developing countries field logistics. Chapter II outlines types added- logistics services needed industrial commercial sectors country. stresses services outsourced, creating opportunities potential local services providers. Chapter III suggests actions Governments initiate foster development local logistics services. CONTENTS Chapter Paragraphs Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - vi . Logistics national economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 20 II. Types added- logistics services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 - 49 III. Governments’ contribution development logistics services . . . . . . 50 - 66 3 1 Programme Budget Biennium 1996-1997 (TD/BWP/98), Subprogramme 4 (SIDTE), Activities (3. Published material/-recurrent publications), . 19, 1996. Introduction () part technical cooperation training activities, UNCTAD organizes workshops seminars fields international trade transport. Emerging activities, inter alia recurrent request practical information basic logistics services supporting economic development national manufacturing industry. report, envisaged Programme Budget 1996-1997 Biennium postponed, presents interested government institutions and1 commercial parties review potential offered efficient logistics services developing countries countries transition. (ii) developments globalization production goods services field information technology management industrial supply chains considerable impact developed countries developing countries countries transition. (iii) experience advanced economies demonstrates major savings achieved -coordinated management flows goods information sectors industrialized country. savings generate economy. (iv) Developing countries countries transition learn experience apply logistics tools national industrial sectors. industrial branch concerned, local enterprises revise supply, production distribution processes view identifying “core business” operations outsource operations performed efficiently outsiders. () logistics operations performed countries, essential give dynamic character operations order flexible adaptive -changing conditions ( markets, technological , fluctuations foreign exchange, .). Today’ solutions valid tomorrow. International national economic intelligence essential logistics managers actions basic cost-affecting parameter changed. (vi) logistics operations performed country performed private sector, Governments important role play providing proper legal institutional environment required efficient private sector initiatives. , foster long-lasting partnerships growth development. product time place Production & logistics costs Processing/trading Storage Transport result Competitive price MarketMarket 4 Figure 1. competitive price Chapter Logistics national economy chapter introduces basic elements logistics explains logistics contributes creation added . concludes describing challenge faced developing countries countries transition field logistics. . Economics logistics 1. maintain improve share market, enterprise offer product, place, time competitive price (figure 1). implies basic functions correctly performed: provision , access , goods ( manufacturing trading); storage goods; transport; marketing. Manufacturing creates, trading locates, goods result customers' satisfaction ( product); storage holds goods needed ( time); transportation brings needed ( place); marketing results transfer goods person (competitive price). 2. coordinate functions, enterprise establish information management function maintains control movements goods related transactions, including order processing, invoicing commercial legal documentation (including checking, inspection, weighing clearance) entailed flow materials/goods. 3. () product, arrangements storage, transport related information management constitute logistics strategy enterprise, aimed satisfying consumers’ demand. 5 4. "Logistics" defined American Council Logistics Management : " process planning, implementing controlling efficient, cost-effective flow storage raw materials, -process inventory, finished goods, related information point origin point consumption purpose conforming customers' requirements". 5. decades, application logistics crucial consequence, inter alia, : () monitoring labour organization manufacturing processes; () increase cost production factors (energy, money) reduction (information technology); () reduction number distribution channels industrial commercial concentrations. 6. defined level quality, enterprise seek minimize production logistics costs. production process, lowest costs delivered products. 7. combination technically related types costs -transport, handling/storage, administration-, "logistics costs" heading defines basket alternative solutions selected. area optimum solution wider decision maker choose optimum logistics solution. important enterprise optimum transport solution. isolated optimization individual logistics functions necessarily lead optimum solution. 8. practical terms, means alternatives compared. cases, result higher transport costs, offset reduced handling/storage administration (financial, order processing, .) costs. , inefficiency productivity mode interface acceptable offset proportionately greater gains entire system. 9. Logistics cost-efficient assets enterprise order offer consumers quality product commercial conditions ( regard space time). impact key decisions enterprise potential trade-offs production processes, transport handling/storage operations, information management. 10. decisions long-term consequences, logistics influence location major investments infrastructure (location production plant, location warehouses, .). decisions medium-term consequences, logistics determine major terms transport, storage handling equipment 6 2 “Letters Editor”, Opinion (Web) Page Telegraph Herald, 1997 (http://www.wcinet.//). enterprise’ locations, outsourcing strategies ancillary services (.. information management), . decisions short-term impact, logistics details transport, handling storage operations, including schedule services, availability equipment personnel. . Logistics added- chains 11. enterprise transforms raw materials assembles semi-finished components elaborated products (semi-finished finished products), enterprise transports stores goods, adds qualities product. , enterprise adds product processes. enterprise place goods increases. added- created enterprise difference sales revenue cost materials services entered production/trading process. enterprise inputs form manpower, equipment, materials services. 12. inputs significant impact country’ economy. , creation enterprise constitutes contribution national production. added- pay parties involved production: labour force (wages social charges); capital ( distribution dividends profit, increased assets); State ( taxes excise). 13. Logistics source addition. streamlining transport, storage handling operations, reducing inventories ( financial storage costs) making cost-efficient assets, logistics reduces cost delivered goods increasing time space utilities ( time, place). result, price delivered goods competitive, increase profit enterprise / increase market share. added- created enterprise, segment production/ consumption cycle, increase. logistics generate wealth country adding creating competitive advantage country’ business. 14. evolution logistics costs economy United States America interesting (figure 2). gross domestic product (GDP) increased 240 cent 1982 1986, logistics costs increased 155 cent. result, participation logistics costs GDP fell 16.35 cent 10.51 cent. happened, experts , “retailers manufacturers storing inventory, demand smaller frequent shipments blue jeans beer”.2 0 100 200 300 400 500 600 700 800 900 1982 1987 1992 1996 ill io lla rs Inventory Transport Admin. 7 Figure 2. Evolution logistics costs United States America 1982 1987 1992 1996 Total logistics costs ( billions US dollars) 515 552 647 797 Gross domestic product ( trillions US dollars) 3.15 4.54 5.95 7.58 Logistics costs/GDP (%) 16.35 12.16 10.87 10.51 Source: .. Delaney, “State Logistics Report 1997", annual report logistics United States, reported Logistics Management staff website (http://www.manufacturing.net/magazine/logistic/). . challenge logistics developing countries 15. years, dominant interrelated themes changed solution logistics equation enterprises world: () Globalization. Logistics systems increasingly challenged reduce costs increase customer service enterprises expanding international operations search markets, materials sourcing manufacturing sites; 8 () Information technology. Newer, faster, cheaper computer hardware, software telecommunications technology aggressive enterprises substitute inexpensive information assets expensive inventory, transportation traditional logistics costs; () Supply chain management. enterprises strive build closer working relationships key suppliers key customers, -integrated logistics processes key components successful supply chain management. 16. continuing transport communications revolution brought enormous reduction importance distance ( physical separation) natural barrier trade investment. transport costs extended reach global production labour-intensive manufacturing, allowing dispersion production stages longer distances, products -added margins. time, high costs inventory holdings led enterprises review supply chain processes advantage information technology. 17. Developing countries traditionally thought sources raw materials manufactured outputs industrialized countries, availability -cost labour considered advantage attract foreign investments local productive sectors. situation changing drastically. 18. Developing countries heavily dependent place global production distribution chains major source growth. time, location production distribution activities volatile, effort maintain position chains competitive. , problems difficulties private enterprises Governments face efficient management global logistics changed drastically. -examine local characteristics logistics light efficient management global chains eye supporting adaptation adjustment dynamic environment. 19. Developing countries confronted fact trading nation today’ market forced adjust trade management practices partner countries , implication, practices international logistics transport industry. words, commercial success international trade-oriented industry developing country depends ability effectively tie emerging international trade logistics service networks. 20. Table 1 summarizes main strengths, weaknesses, opportunities threats (SWOT) faced developing countries logistics strategies. highlights challenge stake countries, industries Governments. 9 Table 1. SWOT assessment logistics developing countries Factor Assessment Strengths Increase regional international trade resulting increased transport logistics demand; Target population (consumers) increasing trade-related services. Weaknesses Lack local transport logistics services expertise; Deficient transport infrastructure (congestion, poor conditions, .); High logistics costs. Opportunities Possibility creating competitive advantages local products; Possibility securing greater control transport, processing, packing distribution; Consequences WTO-generated reduced barriers trade investment; Falling costs international communications transport. Threats Developing countries traditionally exported primary commodities added; Inelastic supply importing countries generally choose alternative sources supply; Availabilities substitutes exported commodities; Traditional reliance exporting countries international buying cartels distributors share gains supplier; Barrier protective tariffs quotas high transport costs; Lack control means international transport deliver exports; Obstacles facing developing countries form appropriations added (foreign) links logistics chain final consumer. 10 3 . Damiens, “Pourquoi comment les transporteurs évoluent vers les prestations logistiques”, Logistics Magazine, . 106, April 1996, pp. 104-114. Chapter II Types added- logistics services introducing basic logistics operations required manufacturing industry, chapter discusses outsourcing logistics operations, describing range services offered area distribution. . Basic logistics operations3 21. supply, production distribution processes manufacturing industry ( enterprise) rely series operations involving transport, handling, storage goods, information management relating operations. 22. operations, called logistics operations, grouped categories, position respect production process: - Inbound logistics operations: operations preceding production process (supply side); - Outbound logistics operations: operations production process (distribution side); - Production logistics operations: operations related production process. 23. Logistics operations cover types flows: physical flows information flows. Operations related physical flows refer movement goods, operations related information flows refer operation. , stock management operation dealing stock levels supply orders information processing operation, handling/storage operation requires information stock input output localization goods physical operation. INFORMATION FLOW Selecting rvices providers Stock management Consolidation cargo flows Inbound storage Inputs preparation Nearby storage Feeding assembly units Minor industrial operations PHYSICAL FLOW 11 Figure 3. inbound logistics process (supply side) .1 INBOUND LOGISTICS: PHYSICAL FLOW OPERATIONS Inbound storage enterprise request services provider manage stock raw materials, components subsystems production process. “typical ” storage operation. storage facility located supplier’ plant, location enterprise’ production units units. facility’ characteristics depend essentially nature stored goods packaging (bulk, heavy load, containers, pallets handling boxes). facility specific storage means handling rules procedures. addition, depending storage operation integrated -- time (JIT) process, stock volume/quantity subject wide variations smoothed. integration supplier’ production operations JIT process result stock reduction enterprise. Inputs preparation operation refers order preparation based goods inbound storage facility. Orders directed subsequent unit, production/assembly unit nearby (buffer) storage facility. Depending supply requirements applicable subsequent unit ( demand, programme, JIT), operation cover 12 small quantities high frequency requests large quantities frequency requests. implies supply regimes terms number profile requests (quantity/weight/volume). Nearby (buffer) storage type storage facility generally production/assembly unit requires tight real-time supply. Quantities stock security stock absorbs fluctuations supply process. Nearby storage facilities common automotive industry. , trend car manufacturers requiring suppliers located close production site reducing facilities sort. Material supply production/ assembly units operation refers delivery close , , production chain. tight real-time operation, article/ piece/part - duly identified - positioned front , , production equipment utilize minutes. Minor industrial operations operations refer --spot preparation inputs minor production operations performed main production operations, unpacking parts, preparation products, quality tests subsystem assembly (.. tyre wheel). .2 INBOUND LOGISTICS: INFORMATION FLOW OPERATIONS Selection operators -party logistics provider defines client terms reference provision transport services prepares bid offers. proceed selection suitable operators. operation performed request client. Stock management operation covers financial management stock levels triggering inputs supply orders required. complements storage operation. Consolidation cargo flows delivered factory stage corresponds organization inbound transport operations. Consolidation concern cargo proceeding suppliers, delivered destination sites. INFORMATION FLOW Final invoicingStock management Consolidation cargo flows PHYSICAL FLOW --production operations Outbound storage Order preparation Customer-designed operations Se rvices clients 13 Figure 4. outbound logistics process (distribution side) .3 OUTBOUND LOGISTICS: PHYSICAL FLOW OPERATIONS Operations production line operations production process; complementary operations conditioning packaging; labelling marking; quality tests controls; ultimate assembly operations comply clients’ requirements; configuration testing products (.. computers). Outbound storage classic storage operations complete handling units ( central storage facilities), high-rotation products (liquids, dry bulk, large-volume goods) partial units split distributed (regional storage locations). case inbound storage operations, depending nature goods profile activity, operations (handling means, types storage, operating procedures, .). Order preparation covers selection ordered quantities packing; operations performed consecutively simultaneously. type operation complements outbound storage operation. cover computerized administrative processing orders received 14 clients/consignees. triggered start product- launching operation issuing production orders clients’ files. timing triggering operation important terms managing priorities balancing workload ( case, work capacity controlled -party logistics services provider, implied managed generating order). Modification reconditioning goods operations similar performed production line ( ). needed change final destination products (change sales unit), products subject promotional offers price. performed initial phase storage operation, products stored order preparation. Services clients complementary services, performed delivery goods: storage shelves market-place, unpacking, set- demonstration equipment, assembly furniture, . .4 OUTBOUND LOGISTICS: INFORMATION FLOW OPERATIONS Stock management inbound stock management operations, performed jointly storage operations. Stock manag- ement cover sites time case distribution networks. operations trigger compl- ementary operations modification reconditioning goods, discussed “Outbound logistics: Physical flow operations”. Consolidation cargo flows operation refers organization outbound transport operations. Final invoicing operation continuation order preparation operation. covers invoicing goods final client, behalf issued order. Electronic data interchange (EDI) plays important role field, framework EDI norms accepted standards. 15 . Logistics operations provision supply distribution services 24. Depending type industry, logistics operations sophisticated complex perform . require specific -, equipment facilities, implying investments assets consequent operating costs. enterprise define boundary operations part production process ( -called core business) performed externally, cost-effective manner performed internally. words, enterprise decide operations part contribution creation , . 25. Operations performed externally, cost-effective manner performed internally, outsourced industries services providers. 26. main benefits outsourcing : () Reducing controlling operating costs. Access provider cost structure compelling benefits outsourcing. results cost reduction compared total cost establishing maintaining internal capabilities. () Making capital funds . Outsourcing reduces invest capital funds -core business functions. capital funds core areas. Outsourcing improve financial measurements eliminating show return equity capital investments -core areas. () Generating cash infusion. Outsourcing involve transfer assets customer provider. Equipment, facilities, vehicles licences current operations enterprise sold provider part transaction; results cash payment. () Reducing risks. Outsourcing results risk reduction enterprise sharing provider investment risks rapidly changing technology time increasing enterprise' flexibility. () Securing resources internally. companies outsource access required resources organization. , organization expanding operations, geographical area, outsourcing viable important alternative building needed capability ground . 16 () Gaining control difficult--manage --control functions. - sourcing viable alternative addressing types problem areas involving -core competencies. important point, , strategic sourcing eliminate management responsibility. 27. logistics operations outsourced. constitute basis potential physical supply distribution services. services cover: () movement goods; () related services goods idle transfer points (logistics infrastructure). 28. , case outbound logistics (distribution), essential stages: () Movement transfer point, pre-(main) transport operations; () Services transfer point; () Movement final consumer, post-(main) transport operations. 29. Pre-transport operations correspond movement consolidated unit loads trains (block-trains) trucks trailers advantage bulk transport operations. 30. Post-transport operations correspond diffuse movement smaller parcels small medium-size vehicles. operations lead operations research solutions optimize routes ( “salesman shortest route” algorithm) reduce number empty return trips. 31. Services transfer points correspond operations earlier, order preparation modification goods. 32. case inbound logistics (supply), similar stages identified: pre- transport operations correspond collection raw materials parts; services transfer points include inputs preparation minor industrial operations; post- transport operations correspond movement consolidated unit loads. Physical distribution services Production unit Production unit Production unit Logistics infrastructure (warehouse, interface facility, .) Sales point Sales point Sales point Related services Pre-transport operations Post-transport operations 17 Figure 5. essential stages outbound logistics 33. categories logistics operations (inbound, production outbound) contribute differently creation added- services provider’ perspective, case French industry (table 2). Table 2. Distribution logistics costs French industry Stages Cost items % % Supply (Inbound) Transport 12.0 29Storage 8.5 Inventory 8.5 Production Production 7.0 7 Distribution (Outbound) Transport 32.0 64 Storage 15.4 Inventory 6.5 Order processing 10.1 Source: Study BIPE Conseil, Paris, 1993. 18 34. Logistics services providers tend focus related services offer possibility creating greater added- (pre- post-) transport services . 35. services cover: () related services performed interface points, technical operations related physical supply/distribution management operations, including information management; () Operations change mode ( means) transport: reception control delivered goods, handling warehousing, .; () Operations related final delivery goods: order preparation, tailored-assembly loads, packaging, price labelling, .; () Management operations: order processing, follow- consumption dates, stock management, .; () Computer-based management: stock management, fleet management, order management, accounting, teletransmission, . 36. manage efficiently series logistics operations, -party logistics services provider establish system continuous reliable information follow- flows tasks. system smooth coordination operations, continuous follow- performance operators contracted provider. 37. information readily accessible consultation client. client system providing regular real-time information goods party’ custody; systematic printout delivery certificates; real-time information problems; regularly updated information performance indicators “problems ratio”. 38. -party logistics provider succeeds covering wide set operations, develops expertise, cases provide assistance client making services offer. capable providing services added- chains, position consolidate demand invest equipment, increase share outsourced-services market. . Outsourcing logistics services 39. Logistics operations enterprise outsourced. , performance logistics operations requires access handling equipment, storage facilities computerized information systems. Possibility assessing performances High ss pe ci fi ci ty ow ig Internal logistics Outsourced logistics 19 Figure 6. essence outsourcing cases, equipment, facilities systems easily satisfy common requirements enterprise, cases specific characteristics products markets satisfied. 40. enterprise’ decision outsource logistics depends primarily specificity required assets organizing logistics operations, possibility assessing performances logistics services providers contracted. 41. industrial sectors assess logistics costs quality required physical supply distribution services basis -defined precise criteria (.. administrative costs order processing, number claims, fulfilment delivery dates). , case. 42. general terms, logistics operations remain enterprise specificity assets required operations high assessment performances difficult. , outsourcing solution (figure 6). 43. logistics operations outsourced . survey shows operations distribution side (outbound logistics) outsourced operations supply (inbound logistics) side (table 3). 20 Table 3. Participation outsourcing logistics operations Stages Logistics operations Percentageoutsourced Inbound Transport 59 Storage 16 Outbound Intermediate transport 55 Final transport 89 Storage 60 Inventory 31 Reconditioning 36 Order processing 42 Source: Study French industry, Aslog/Brossard, Paris, 1993. . Main profiles logistics services 44. branches industry require types logistics operations. Depending technical organizational requirements, services requirements information requirements, profiles logistics services grouped sets: high, medium demand profiles, shown table 4. 45. potential logistics services provider specialize industrial branch. branch develop knowledge products specific logistics requirements. 46. task analyse market segment industries groups similar expectations terms outsourced services. Segmentation criteria account important elements influence potential enterprises’ choice logistics strategy: price quality service. 47. price -defined, quality service assessed basis : () Reliability/regularity services provider; () Speed performance service; () Conformity delivered goods; () Capacity provide regular reliable information status service offered expected time arrival product destination. 21 ab le 4 . em pr ile lo gi st ic se rv ic es em pr ile xa pl es ec hn ic al ga ni za ti al qu ir em en ts Se rv ic qu ir em en ts fo rm io qu ir em en ts IG Su pp ly pa rt fo du st ri al pr od uc tio ; tr ib ut io ig - va lu du st ri al ro du ct sp ar pa rt . te gr ed tr sp ro ce ss es ; sp ec ia ra ns po rt ac ili tie ; fl ib le em - nt ed pl ni ng ch ed ul ( ou rs ) ho rt ot ic . bs ol ut lia bi lit ; pe ed ; ig le ve de liv er st da ; er - ta ke tr ; ec ur ar ra nt qu al ity ; er ch di si ng . te gr ed fo rm io sy st em ; nt uo om pu te da ta ch ge ; va ila bi lit ta tu ve nt da ta . IU ra di ng tr ib ut io ed iu - al ue oo ds ; tr ia pr od uc ts ch ro du ct io . te gr ed tr sp ro ce ss es ; ef fi ci en ut om ed ra ge sy st em ; ul de rs ; ed iu - te rm ch ed ul pe ri od ( im um 5 ay ) . ig de gr ee lia bi lit ; gu la , ta ar di ze se rv ic es qu ir em en ts ar di ng av ai la bi lit de liv er tim . ul ar , ta ar di ze ch ge fo rm io ; ve nt io na tr sm si da ta ; ga di vi du al ns ig nm en ts ck . Pr od uc ts ith lo lo gi st ic st ; pr od uc ts aw er ia ls . Sh ip en bu lk ; pe ci al iz ed ve cl es dl eq ui pm en ; lo ng er - er ch ed ul pe ri od ( ev er al ee ks ). em - nt ed el ia bi lit ; st da er vi ce fo ar eh ou si ng , ac ki ng tr sp ; pr ov id ad eq ua te ca pa ci ty . xc ha ng da ta ith gh ta bi lit ; ga di vi du al ns ig nm en ts ve ra ll ve nt . ou rc : . . ta na , ra de lo gi st ic ag em en el ed tr sp nf ra st ru ct ur se rv ic es , eu ts ch se nh de ls - er ke hr ss ch ul - es ea rc st itu te , en , ay 1 98 8. 22 48. market analysis based criteria lead groupings shown table 5, recognizing enterprise values differently price quality services, depending economic characteristics characteristics products concerned. groupings basis key characteristics product: market ; situation market regard competition; care required handling product. Table 5. Typical groupings products logistics services required Market Criteria Examples enterprises segment segmentation types enterprises selecting services Criteria providers 1 Marketing : high -fi, video, computers Information status Competition: strong Garments Conformity delivered Product care : high Cosmetics Price Reliability/regularity Speed 2 Marketing : high Delicatessen high- Conformity delivered Competition: strong valued foodstuffs Price Product care : Speed 3 Marketing : high Spare parts Speed Competition: moderate Information status Product care : high Price 3a Marketing : high Furniture Conformity delivered Competition: moderate Price Product care : high Reliability/regularity (fragile products) 5 Marketing : Phytosanitary products Price Competition: strong Canned foodstuffs Speed Product care : high Perishable products Conformity delivered 6 Marketing : Dangerous chemical Price Competition: moderate products Speed Product care : high Paper Conformity delivered 7 Marketing : -dangerous chemical Price Competition: moderate products Reliability Prod. care : limited Building/raw materials Source: Le marketing appliqué au transport, Editions Celse, Paris, 1986. . Examples distribution outbound logistics services 49. mentioned , commonly outsourced logistics operations related distribution process (outbound logistics). area, basic segments distribution services identified characterized : 23 () Large store distribution. services basically concern foodstuffs sector. Flows increasingly fragmented storage space reduced converted sale space. results frequent supply shipments. addition transport storage operations, labelling packaging operations required. () Specialized store distribution. services refer -foodstuff products (.. garments, furniture) sold specialized stores. handle large number articles multiple suppliers. Services include transport, storage complementary operations, cope problem consolidation cargo. () -fi video products distribution. products facing major constraints: remote location suppliers, short seasonal life cycle products. National networks dedicated storage required. () Cosmetics products distribution. services refer differentiated dispersed distribution networks worldwide industrial groups. delicate short-life products require high levels service quality. () High-technology industry logistics. services refer basically computer industry. Products fragile expensive. Suppliers limited; clients professionals. addition distribution operations, require complementary operations production process client services fully aware specificity industrial branch. () Automotive spare parts logistics. services generally rely express carriers. trend creation stocks clients’ sites, temporary storage delivery required. () Manufactured products logistics. services deal components subsets finished products industry integrated consumer product. part inter-industry exchange logistics. Depending products size enterprises, scope services extends transport subcontracts complex integrated systems. () Heavy industrial products logistics. Dealing raw materials, inter- mediate goods heavy products (bulk foodstuffs, chemical products, building materials), services depend physical nature goods call specific transport means storage facilities, specific services (stock management, bagging, palletization, distribution request, .). cases, require specific services, .. dangerous chemical goods. 24 Chapter III Governments’ contribution development logistics services importance logistics national economy untapped demand logistics services, chapter presents ideas Government contribute provision logistics services local operators. 50. ability developing countries countries transition compete global markets rests successful development basic (transport) infrastructure, , importantly, establishment effective mechanisms facilitate development efficient trade transactions. essential improve quality international transport logistics, adapt commercial practices international standards remove unnecessary trade barriers. . Quality international transport logistics 51. efficient operation transport modes interface facilities precondition effective improvement international trade transport operations. implies reduced physical barriers institutional interference, simplified legal regimes. 52. physical condition performance inland distribution networks developing countries countries transition adequate obstacle establishment market-responsive trading arrangements. 53. developing countries inroads global manufacturing chains progressive developing advanced intermodal systems supported port liberalization. collaborate experienced international transport -party logistics operators order meet demand global manufacturing chains. emerging trends establishing efficient intermodal transport systems constitute essential part core global logistics excellence. 54. challenge developing countries countries transition, , identify essential transport infrastructure logistics options achieve maintain active competitive role global economic integration. 25 . Commercial practices trade barriers 55. Quality service key element gaining competitive advantage. time, public administrations business communities faced apparent inability address effectively stringent requirements foreign enterprises reliable deliveries increasingly short intervals reject rates. 56. , Governments’ actions focus improving physical features ( "hardware") transport networks, - importantly - adapting commercial practices international standards removing unnecessary trade barriers. involves inter alia improving performance transport operators auxiliary services, changing commercial behaviour users, introducing innovative relations public institutions transport providers users ( "software") international trade transport. 57. developing countries countries transition, laws regulations govern conduct trade organization trade-supporting services infrastructure scarcely changed time promulgation decades . countries face challenge designing regulatory provisions organizational arrangements generate optimal existing physical network structures. 58. challenge offers ample scope creating synergies public-private partnerships financing managing trade-supporting infrastructure services, giving Governments role promoting managing synergies. context, public policy makers focus critical issues preconditions effective infrastructure, environment safety impacts. 59. Logistics systems largely developed private-sector enterprises. involved industries positioned judge needed optimize systems, Governments advantage ensure entrepreneurial freedom choosing transport logistical arrangements. 60. , countries, lack strong industry associations active role promoting synergies constitutes obstacle. 61. problem developing economies countries transition regulation, planning management elements trade-supporting infrastructure highly disjointed effective coordination. lack coordination parties trade transaction forums transparent discussions public private sectors simplification procedures, documentation (excessive) regulations inhibits exports increases costs imports. develop policies administrative arrangements bridge institutional organizational disparities inconsistencies. 26 4 logistics hub, called “logistics platform”, coud part inland clearance depot (ICD) facility. . Government’ initiative: creation logistics hub 62. availability appropriately located logistics hub part action4 initiated Government. 63. specific issues considered strategy create logistics hub: development logistics infrastructure, reform legal regulatory framework, enhance international cooperation. 64. , order prepare development logistics infrastructure, large investments actively pursued context national development plan. 65. , regulations legislation effective ensuring development utilization national transport, logistics technology resources, promoting fair effective competition cope changing environments. Government invest operate major transport infrastructure. Irrational transport pricing caused problems financial burden operators, level service, demand distortion lack capital resources. order remove obstacles, Government attempt partial privatization complete privatization, contract operation facilities private sector selected fields. 66. Finally, transportation major area concern formulation close economic ties countries region. Coordination neighbouring countries easy achieve, intergovernmental agreement essential discouraging wasteful competition obstruction. encourage intergovernmental intermodal cooperation, initially encourage good relations academics, researchers, economists, transport planners private businessmen. cooperation serve preliminary step finding ways fully realizing aspiration build single transport system region.