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TRANSFORMATIONAL LOGISTICS IN EMERGING MARKETS

Transforming Economies Through Transports & Logistics CILT International Conference, Colombo, Sri Lanka – November 2012. TRANSFORMATIONAL LOGISTICS IN EMERGING MARKETS. Presentation by:

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TRANSFORMATIONAL LOGISTICS IN EMERGING MARKETS

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  1. Transforming Economies Through Transports & Logistics CILT International Conference, Colombo, Sri Lanka – November 2012 TRANSFORMATIONAL LOGISTICS IN EMERGING MARKETS Presentation by: Mangala P. B. YapaM.Sc. (Hons.) Eng. (Astrakhan, USSR), MBA (Sri J)C. Eng. FIE (SL), FCPM, MIMarESTManaging Director/Chief ExecutiveOfficerColombo Dockyard PLC

  2. Overview Emerging Markets • Introduction • Sri Lanka as an Emerging Market • Some Terminology • Characteristics • Supply Chain in Emerging Markets Case Review – Colombo Dockyard PLC Transformational Logistics Questions

  3. Emerging Markets In 1970s LEDCs- Less Economically Developed Countries Term was introduced by World Bank Economists, Antonine van Agtmael in the 1980s Found in countries considered to be in a “transitional phase between developing and developed status” “..regions of the world that are experiencing rapid informationalization under conditions of limited or partial industrialization” – Center for Knowledge Societies Examples: Indonesia, Iran, some countries in Latin America, some countries in Southeast Asia, South Korea, Russia, most countries in Eastern Europe and some countries in the Middle East and parts of Africa Emerging Markets are nations with social or business activity in the process of rapid growth and industrialization Markets that provide greater opportunities, but with associated risks. Sri Lanka, an Emerging Market

  4. An Envious Geographical Positioning…

  5. BRIC and related acronyms BRIC : Brazil, Russia, India & China BRICS: BRIC + South Africa BRICET: BRIC + Eastern Europe & Turkey BRICM:BRIC + Mexico BRICK:BRIC + South Korea BEM : Big Emerging Markets: Brazil, China, Egypt, India, Indonesia, Mexico, Philippines, Poland, Russia, South Africa, South Korea and Turkey

  6. Characteristics of Emerging Markets There really is no such thing as a free market. We have laws which regulate commerce. And the most successful economies in the world have become that way by protectionist policies. This includes the US, Japan, England, and South Korea Ha-Joon Chang Globalization and ICT development has made the world flat. Thomas Friedman, July 2007

  7. Characteristics of Emerging Markets Contd. Widely different markets: • Emerging: the BRIC & the Second Eleven • DEVELOPING: those with high degree of social and economic hardship; lacking the robustness to compete alone such as host of African, South American and Asian countries. • DEVASTATED: those wrecked by geological or metrological phenomena and requiring humanitarian aid and international support , such as Haiti, Niger, Pakistan, Chile • DISLOCATED: experiencing or recovering from warfare such as Iraq, or Afghanistan • TRANSITIONAL: those moving from centrally planned to open markets like Russia, Eastern Europe and the Baltics in the 1990s One Size does not fit all!

  8. Characteristics of Emerging Markets Contd. High level of informal economic activity. Hybrid and asymmetrical supply chains. Significant regional, urban and rural differences. Variable levels of hard and soft infrastructure connectivity. Inconsistent and insufficient levels of sanitation, energy and market access. Extremes of affluence and poverty; literacy and numeracy and, cultural norms on gender and social mobility.

  9. Supply Chains in Emerging Markets Diversity & Complexity results in asymmetrical Supply Chains linking traditional, low tech and highly fragmented supply bases. Globalization pushes the enterprises to integrate into the global markets Logistics & Supply Chain thinking is the key challenge in emerging markets.

  10. Supply Chains in Emerging Markets Contd. Mainstream logistics and supply chain thinking will not work, as is. Adapting to the unique conditions in Emerging Markets is inevitable. Hybrid Techniques that uses available resources and able to be responsive to local context & needs. The approach – Transformational Logistics A case review from Sri Lanka

  11. Ship Repair & Ship Building Industry in Sri Lanka CILT International Conference, Colombo, Sri Lanka – November 2012

  12. Seatrade Sri Lanka Ports, Trade & Logistics The Importance of Emerging Maritime Hubs in the Indian Ocean Advancing the Continued Growth and Development of the Maritime Industry Noboru Ueda Chairman & President, ClassNK S-1

  13. Shipbuilding’s move from West to East 110 Mil. gt 100 Construction Volumes (GT) by Country/Region 1926-2011 90 Europe Japan 80 Korea 70 China 60 Other 50 40 30 20 10 1950 2010 1940 1970 2000 1930 1960 1980 1990 Source: Shipbuilders Association of Japan S-2

  14. Shipbuilding’s move from West to East European Shipbuilding Asian Shipbuilding S-3 S-3

  15. Shipping’s move from West to East Owned Fleet by Nationality Source: Clarksons, May 2012 S-4

  16. Shipping’s move from West to East Europe: Shipowning Asia: Shipowning & Shipbuilding S-5 S-5

  17. The Rise of Singapore S-6

  18. The Rise of Dubai and the Middle East S-7

  19. Sri Lanka & India The Rise of Sri Lanka The New Map of the Maritime World Europe Asia Middle East SE Asia S-8 S-8

  20. The Rise of Sri Lanka World Shipping Routes by Traffic Density Source: Royal Society: Interface S-10 S-9

  21. The Rise of Sri Lanka S-10

  22. Sri Lanka & India Europe Thank You For Your Attention! Asia Middle East SE Asia S-11 S-8

  23. Thoughts on Sri Lanka… “With growing populations, a rapidly surging economy, a hunger for natural resources and growing demand for new ports and other infrastructure, there is little doubt that it is the Indian subcontinent that will drive the world economy in future. And, at the heart of this new maritime region, and at the heart of world trade, is Sri Lanka. I believe that Sri Lanka could easily emerge as the new great maritime nation - joining the ranks of with Singapore and the U.A.E. as a leader in the maritime world”. Noburu Ueda – Chairman and President of Class NK, Seatrade Sri Lanka 2012 Conference, Colombo, June 2012

  24. Diversity & Complexity …examples from CDPLC SHIPREPAIRS SHIPBUILDING OFFSHORE ENGINEERING HEAVY ENGINEERING

  25. Growth

  26. Shiprepairs

  27. Index of global shipping, Baltic Dry falls to a 25-year-low! The Baltic Dry Index has fallen nearly 65% since the beginning of 2012. This is one of the few leading economic  indicators that is not subject to government or corporate manipulation giving a true economic barometer of what is to come. The index is a measure of global shipping rates mainly composed of raw materials used for other products. Collapse in dry bulk shipping rates unprecedented in its severity The recent (2012) months' collapse in dry bulk shipping rates has been unprecedented in its severity, the head of the body that organizes the key shipping market said yesterday, as a key market index hit its lowest level since 2008.

  28. Diversity & Complexity …examples from CDPLC

  29. Shipbuilding Dammam, Saudi Arabia Crew Boats x(2) Jeddah, Saudi Arabia Tug Boats x(3) India AHTS V x(2) MPSV x (2) Nigeria, Port Harcourt Crew Boats x(2) Singapore AHTSV x(2), MPSV x (2) Lakshadveep Islands Passenger V x(2) Maldives 35m, 42 m, 24 m Vessels & Other Crafts x (13) Jakartha MPSV Brazil MPSV x(1) 2011 2010 2009 2008 2007 2006 2005 1975

  30. Materials & Stocks

  31. Materials & Stocks … STOCKS TURNOVER DAYS

  32. Supply Chains in Emerging Markets Diversity & Complexity results in asymmetrical Supply Chains linking traditional, low tech and highly fragmented supply bases. Globalization pushes the enterprises to integrate into the global markets Logistics & Supply Chain thinking is the key challenge in emerging markets.

  33. Supply Chains in Emerging Markets Contd. Mainstream logistics and supply chain thinking will not work, as is. Adapting to the unique conditions in Emerging Markets is inevitable. Hybrid Techniques that uses available resources and able to be responsive to local context & needs. The approach – Transformational Logistics

  34. Transformational Logistics Transformational Logistics is; A framework for research into logistics and supply chain thinking and practices that are relevant to Emerging Markets. A forum to build better understanding and common purpose between the formal and the informal elements of the economy as a whole. A means to embed a viable, inclusive and sustainable market as an economy responds to a natural disaster, the devastation of warfare or, political and economic dislocation. and Transformational Logistics can be: An enabler to grow logistics skills standards, capacity and delivery. A facilitator to promote and share adaptable, affordable and accessible practice in all end-to-end flows (physical; information, cash and skills) relevant to effective and efficient operations in these markets. A catalyst for mature markets and established companies to access new markets and learn from them.

  35. Thank You. 35 CILT International Conference, Colombo, Sri Lanka – November 2012

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