The implosion of the Internet and related technology might make us forget the role of logistics in facilitating trade. E-commerce appears easy because you do the shopping from the comfort of your house or office.
But online shopping is often a black box. Between clicks and getting your goods, a lot goes on behind. That black box is logistics. The success of Amazon or Alibaba depends on logistics, often the third party.
Once you make an order, the product must be shipped from the warehouse. If not there, it has to be assembled with parts shipped to a central place. That calls for efficient logistics. That applies to small things like shoes to big items like planes.
Remember outsourcing? It could not have evolved without good logistics and supply chain management. One reason it’s cheap to source parts from anywhere in the world is that good logistics and transport bring down the cost of goods.
Since we started trading, we have relied on efficient logistics. But once you get that product, you don’t ask how it got there, which seems to diminish the importance of logistics. After all, you had paid for shipping.
China, through its one road, one belt initiative, has recognized the strategic importance of logistics. The west is trying to come up with countervailing projects. China could not become an economic power without logistics.
No wonder the world’s great trading nations, as measured by exports and imports as a ratio of GDP, are along the coasts or rivers, leveraging on logistics. Examples are Netherlands and Singapore.
Yet, in facilitating trade, we focus too much on tariffs, not logistics. Think of Africa’s free trade area, hailed as the master key to Africa’s rise. This dream can’t be realized without mass investment in logistics and transport.
Trade is envisaged as the best route out of poverty for most developing countries. That route is shorter with good logistics and transport network. The beauty of logistics and transport is that you can’t hide it. We see roads, highways, ports, and airports.
Paradoxically, we forget what we see daily as the catalyst of trade at the local and global levels. Trade is not just about exchanging goods and services but also about taking them to the right place through logistics and transport.