Freight, shipping and logistics in the Commonwealth
With only seven landlocked countries within the Commonwealth freight and shipping in most countries takes place via all modes land, air and sea. The sophistication, norms and modality of the logistics industry as a whole vary from country to country. The logistics industry can be divided into four main levels:
- First party logistics, which are the firms and individuals requiring the shipment of goods and other logistics solutions such as warehousing
- Second party logistics, which includes mainly companies and governments owning the infrastructure, including ports, ships, freight trains, long haulage trucks and freight planes.
- Third party logistics, composed of freight forwarders and providers of integrated transportation, warehousing, inventory control, order processing and customs brokerage
- Fourth party logistics, which are mostly consultancy firms
The industry in most Commonwealth countries goes as far at the third party logistics level.
First and second party logistics around the Commonwealth
First party logistics are the original source of revenue and a function of the economy mostly consumption and trade in respect of intra-national and international movement of goods. Second party logistics also a function of the economy are more concerned with sophistication of and investment in infrastructure including ports, ships, long haulage trucks and freight planes.
- In the Caribbean Commonwealth by virtue of being island states most of the countries are dependent on the sea for trade. The shipping industry is labour intensive in some parts and highly developed in others. Freeport in The Bahamas and the Kingston Container Terminal are the major ports in the region, ranking between 50 and 100 as the busiest ports in the world. The proximity of the Caribbean to major North and South American markets has been seen as a potential route to growth.
- In Commonwealth Asia because of rapid economic development – the rise of economic giants India and China – and greater volumes of trade, ports are the busiest in the Commonwealth and the world. By most accounts Singapore has one of the busiest and most sophisticated ports in the world.
- In Europe, the UK has seen a marked decline in the shipping sector since the 1970s when it once was a major industry in the private sector although the sector itself is sophisticated with advanced infrastructure.
- According to the Asian Development Bank shipping in Commonwealth Pacific Island states is relatively expensive having a significant effect on the logistics industry as a whole, raising the cost of goods generally and affecting the economic welfare of communities. Most of the international ports, though, have the necessary infrastructural capacity to handle large cargo.
- Although developmental initiatives abound, similar problems of cost constrain development throughout Commonwealth Africa, particularly for the seven landlocked countries. Many African countries trade with the EU and China.
Third and fourth party logistics around the Commonwealth
There is a wide presence around the Commonwealth of large third party logistics companies such as Exel, UPS, DHL, FedEX and TNT. In countries where such large global logistics companies do not operate, local companies are used as partners. The impact of these major players in third party logistics services such as global couriering is that most of the competition they get emanates mainly from logistics entities of national postal services. Any other local company will tend to be a small or medium enterprise with only a few local companies with what could be considered as dominant market share.
In many developing countries large established first party logistics companies such as those involved in manufacturing may choose to fulfil their third party logistics requirements in-house (warehousing, inventory control, order processing and customs brokerage) because of the lack of development of the industry within those countries.
Fourth party logistics, the most sophisticated level of the logistics industry is really the preserve of developed countries and emerging markets such as Australia, Singapore and India in the Commonwealth. Consultancy companies providing services on this level will can advise on supply chain management, warehousing system management, the development of distribution centres, logistics IT, distribution network design, and provide advice on third party logistics.
