Transport Logistics

2.2. Effects of advanced information technologies and technological innovation on logistics

2.2.1. Improvement in the performance of logistics

The use of ICT has improved the exchange of supply chain information, leading to the

development of integrated production and logistics management systems and has thereby improved

supply chain performance in many ways.

Commercial transaction flow and physical distribution are separated. Electronic Data Interchange

(EDI) has dramatically changed the ways in which commercial transactions are managed. These

systems use computer links instead of hard-copy paper which required extensive time to transfer and

often contained errors. The advantages of these ICT-supported information exchange systems include:

increased speed and reliability, increased storage capacity, increased transparency, reduced transaction

costs and increased worldwide coverage.

Goods and vehicle tracking as well as real-time vehicle routing and scheduling systems have

transformed logistics management. Cargo can now be identified, tracked and scheduled in real-time

almost anywhere in the world.

Mechanisation and automation inside the logistics facility, quality control and warehouse

management technologies have also improved.

Lead-time has been reduced by the introduction of EDI, mechanisation, automation and optimal

vehicle routing systems, leading to potentially lower levels of stock surplus.

The development of the Internet provides a convenient way of gathering, organising and

distributing information on products, services and trade regulations at a global level. Inter-company

trade in goods over the Internet will continue to grow and will extend the globalisation of trade,

increasing the average haulage distance. Several companies use the Internet as an exchange

mechanism for planning the supply chain with their partners. Major freight transport service providers

have resorted to creating Web pages on the Internet to provide information on their services, schedules

and rates that can be easily accessed around the clock by the global market. More advanced freight

transport suppliers already provide the possibility for interactive responses to cargo-tracking inquiries

made by shippers and forwarders.

These developments have increased competition among logistics providers. Transportation

requirements of shippers have changed due to competition as manifested by fast, frequent and reliable

services, just-in-time manufacturing, warehousing and distribution, door-to-door intermodal services,

cargo tracing services and other advanced information related services. The transport industry’s

response to shippers’ requirements has brought about higher quality value-added services resulting in

current trends of supply chain integration, strategic partnerships and alliances, third party logistics,

equipment sharing and paperless exchange of information. Greater competition among different

companies on a global scale will also increase the pace of innovation and put downward pressure on

prices -- both potentially beneficial to welfare creation.