Digital readiness for logistics development is the priority

Logistics is a combination of a number of activities starting from inventory management to shipping, tracking, storing and many other connected activities. It is a process of coordinating and moving resources materials and equipment from one location to the desired destination. Each activities requires costs, so those who can reduce costs by having these coordinated activities is a much more efficient way will be competitive to win the race.

A number of innovations is going on throughout the whole world to make logistics more dynamic and affordable by using digitization. Countries are trying to reduce process, time, and cost to slash lead time. Bangladesh also has identified logistics as one of the export diversified and priority sectors, however, a strong coordinated effort and big push is required to reach a new height. Considering importance of the issue a national logistics development and coordination committee has been formed under the chairmanship of the principle sectary at PMO. More than thirteen concerned secretaries and leading private sector organizations are members of the committee. The first meeting of the committee has been held recently where some relevant working groups have been formed to speed up the work.

Bangladesh is one of the emerging country has fragmented logistics sectors, there are more than fourteen ministries, twenty sub-agencies looking after the activities of logistics. It is seen that there are more than seventy policies, rules governs the sector. Bangladesh’s ranking in the logistics services is not promising. Agility Emerging Markets Logistics Index 2023 published its 14th edition to take a look to the ranking for international logistics, domestic logistics, business fundamental and digital readiness. The survey gathers about 800 logistics industry executives of fifty countries and they have given opinions on the new changes they are going to face in 2023.

The survey analyzed fifty world’s most promising emerging logistics markets, reflecting the complexities, connectedness and opportunities of each market provides. Each of the four areas such as domestics logistics opportunities, international logistics opportunities, business fundamentals and digital readiness have different sub-index. In regards to digital readiness it tried to see the progress of the emerging market in becoming a digital-led, skill, rich, and innovation –oriented and sustainable economy for the future.

Bangladesh ranked 35th among 50 countries, score is 4.53 (last year 4.38) against 7.43 of India (last year 7.23) and 8.3 of China (last year 9.75). In case of domestic opportunities it is 5.02 for Bangladesh, against 8.04 of India and 8.47 of China. In the field of international opportunities China ( 9.75) and India( 8.04) are ahead , while Bangladesh’s score is 5.02.

Another important index is business fundamental, China scored 7.11, India 5.94 Bangladesh 3.53. In case of digital readiness score of China is 6.63 while India has 7.61 against Bangladesh 4.63. India is the highest in digital readiness, 2nd is UAE (7.39), good scores of some other countries are; Malaysia (6.72, Indonesia (6.21), Saudi Arabia (6.30), Qatar (6.38) and Thailand (6.04).

India is trying to move ahead with its ‘Make in India’ policy and making their economy digitally ready, introduced a start-up seed fund. Govt. is playing protectionist policy to discourage global platform-specifically banned 59 Chinese apps from the market, present Govt. has also introduced tax on digital services affecting global platform.

Digital readiness of tracking shipments, coordinating with suppliers and customers, and managing documentation using internet tools can reduce time and costs. There are several steps between shipping, customers and the services that move cargo, which includes ocean freight, land transportation, air freight, rail services, and many more. Freight forwarders work as a media, use existing relationships to negotiate the lowest price for cargo moves.

Freight forwarders also play an important role in coordinating and controlling the transportation of products from one place to other. Using digital technologies is known as digital freight forwarding which definitely can reduce costs, margin error, establish connection with customers efficiently to make business competitive. In addition to reducing costs, it helps improving product quality, time to market, finally improve collaboration within and across functions. Ensure access to the sources for multichannel for competitive prices.

A large majority of respondents said that prospect of global recession as likely continue in 2023, more than 90% have been hit by higher logistics costs, more than 80% blamed Russia-Ukraine war for some of their increased logistics costs and supply chain disruption. Most of them were trying to accommodate the situation by diversifying production and sourcing from more new locations or by moving production to their home markets, nearby countries and other political allies. China’s strict anti-Covid policies make the supply chain most risky.

Most of them foresee strong growth in the use of digital freight forwarding, especially to address error management. A number of them believe e-commerce growth has reached a new height. Also some respondents shared that climate change will impact business.

China’s Covid situation has brought supply chain fragmentation, on top of it tension over Taiwan issue, and growing protection may bring uncertainties and higher inflation. What is clear that supply chain environment is set to become complex, with the prospect that globalization open market now looking remote, the survey remarked. Key findings of the report shows 42.3% respondents believe that air freight rate will be normalized with high price while 46.8% think sea freight rate will also be normalized with high freight rates. Meaning cost of business will face further increase.

Among the interesting survey findings said that supply chain will increasingly by-pas China while Southeast Asia, India, Europe and North America could be more attractive production and sourcing destination while 66.4% of the respondents said that global recession is certain or likely in 2023.

Survey findings showed that digital forwarding has been successful and while looking ahead to 2027, it is seen that volume shipped and booked through digital forwardness will further increase from the current average of 47.7% to almost 60.1%, with the growing maturity of technology and digital forwardness are gaining scale.

The writer is CEO of BUILD a Public Private Dialogue Platform. She can be contacted at ceo@buildbd.org