State of Global Logistics: Time for a reality check

State of Global Logistics: Time for a reality check

Priorities for global logistics managers are likely to be subject to significant change in 2019, say industry experts and prominent economists. First and foremost, adapting pricing strategies to fit local market conditions will become more important than ever. At the same time, shippers will be tasked with building resilience into global operations to mitigate the impact of trade tensions, currency and debt shock. Finally, shippers must prepare for the eventual end of a robust—but unsustainable—business cycle.

According to the Frontier Strategy Group (FSG), a Washington, D.C.-based consultancy advising Fortune 500 companies on trade opportunities and risk management, developed markets are transitioning out of a long economic recovery and into the expansionary phase. At the same time, the fates of emerging markets are tied to developed markets’ cycles.

“Emerging markets will see increased developed market demand for export products,” says Ryan Connelly, FSG’s senior analyst for global economics. “But as wages continue to increase in developed markets, the rate of return for new investments in low-wage, emerging markets will also ramp up.”

Pricing has become exceptionally complex, says Connelly, who notes that consumers remain price sensitive across much of the world and local competition is increasingly fierce. “But in some markets, high growth has led to an opportunity for each region to differentiate their advantages by offering premium logistical support.”

While most economies in Western Europe are recovering at a steady pace, those of the Middle East and North Africa, Latin America and the Commonwealth of Independent States appear to be less sustainable. China, says Connelly, is staging “a managed slowdown.”

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