Topic: The Economic Importance of Logistics

Due in part to globalization, logistics has become an integral element for business operations around the world. As a result of improvements in technology, business transactions can occur from anywhere in the world. These transactions often require a comprehensive logistics program to fulfil the high demand for consumers around the world. Likewise, improvement in technology has increase the manner in which online transactions and e-commerce platforms emerge. Finally, the rise in the middle class in many develop markets has created an influx of demand for goods and services. Many of the products will need to be shipped over large geographic regions further requiring heavily investment in logistics platforms around the world. These logistics investments have a very profound impact of the overall economic prosperity of the world. From an investor perspective, individuals are now creating fulfillment centers which have become a very valuable portion of the logistics supply chain. My publicly traded firms within the logistics industry have provide patient investors with very large amounts of capital appreciation in their logistics holdings. Likewise, these investments encourage further economic development through the creation of high-quality jobs for local residents. This creates economic development as it further bolsters the purchasing power of the middle class who can spend their discretionary income on other goods and services. From an economic perspective, logistics can be help provide seamless service to further encourage consumer spending. E-commerce giants such as Amazon and Alibaba continue to perfect methods in which to delivery products seamlessly through a much more robust logistics framework. In the case of Amazon, products can be shipped within 2 business days through a extensive and comprehensive logistics network. Alibaba is using autonomous robots within its own logistic operations and has aims to provide same day deliver to a vast majority of Chinas population by the year 2030. Each of these economic benefits accrue to a large apart of society creating a virtuous cycle and a win-win for all stakeholders involved. From a consumer perspective the are able to leverage the logistics framework of businesses to receive goods and service in a much more rapid fashion. Business are able to use logistics to not only ship goods more efficiently, but they are also able to use data analytics to better automate the supply chain and anticipate future demand. Finally governments benefit through higher collection of sales tax, tariffs, and other duties that can be redeployed back into society to improve the quality of life of citizens (Ziaul, 2017).

To begin, the economic importance of a logistics is becoming increasingly important. For one, logistics continues to account for a growing share of country gross domestic product. In the United States alone, logistics accounts for $1.6 Trillion of GDP or roughly 8 percent. As logistics becomes to be an increasing portion of GDP, its economic importance also rises. Here, the logistics sector has a much larger impact on economic metrics such as inflation, interest rates, productivity, and even energy costs. Likewise, logistics in now become a source of national competitive advantages for many of the nations largest economic powers. This is underpinned by very large secular trends occurring around the world such as the need to shorten product life cycles, increases in global competition, and higher consumer demand (Sharipbekova, 2018).

Specifically in...

…the large populations. In China for example, Alibaba is already using autonomous robots to deliver packages. On Sept. 28TH, Alibaba the companies autonomous driving division delivered 1 million packages throughout China just a year after its launch. 200 of the robots have carried parcels to more than 200,000 consumers in 52 cities across 22 Chinese provinces through its Xiaomanlv fleet. By 2025 the company expects to deliver 1 million packages a day by increasing its robots from 200 to 10,000 throughout the logistics network (Sevgi, 2017).

To conclude, the economic impact of logistics is wide and varied. Logistics is becoming a much more important element within the global economy due to trends associated with globalization, a rising middle class in developing economies, and the emergence of e-commerce. Each of these signs show no indication of abating and are expected to continue for many years to come. Each region of the world, and country is handling these changes in different ways. In America, the country is currently transition from the older retail model predicated on brick and mortal stores to a logistics model heavily predicated on warehousing and storage. Here, the aim is to improve operation efficiency within the model by having product located closer to the consumer. This will ultimately enable process improvements such as same day delivery. From a international perspective China, India, and other developing countries are improving logistics to accommodate a much large population than the United States. Here, many of these countries are investing heavily in artificial intelligence and automation to better improve logistic operations for billions of their citizens and residents. Likewise they are also using data analytics to better predict consumer demand and…