Transforming Economies Through Transports & Logistics CILT International Conference, Colombo, Sri Lanka – November 2012 1 Presentation by: Mangala P. B

TRANSFORMATIONAL LOGISTICS IN EMERGING

MARKETS

Transforming Economies Through Transports & Logistics

CILT International Conference, Colombo, Sri Lanka – November 2012

1

Presentation by:

Mangala P. B. YapaM.Sc. (Hons.) Eng. (Astrakhan, USSR), MBA (Sri J)C. Eng. FIE (SL), FCPM, MIMarEST

Managing Director/Chief Executive OfficerColombo Dockyard PLC


Overview

Emerging Markets Introduction Sri Lanka as an Emerging Market Some Terminology Characteristics Supply Chain in Emerging Markets

Case Review – Colombo Dockyard PLC

Transformational LogisticsQuestions 2


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 3


An Envious Geographical Positioning…

4


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

5


Characteristics of Emerging Markets

Globalization and ICT development has made the

world flat. Thomas Friedman, July 2007

6

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



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! 7

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.

8

Contd.


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.

9



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 Lanka10

Contd.

Ship Repair & Ship Building Industry in Sri Lanka

11CILT International Conference, Colombo, Sri Lanka – November 2012

Seatrade Sri Lanka Ports, Trade & Logistics

S-1

Noboru Ueda Chairman & President, ClassNK

The Importance of Emerging Maritime Hubs in the Indian OceanAdvancing the Continued Growth and Development of the Maritime Industry

S-2

10

20

3040

50

6070

80

90

100

110

1930 1940 1950 1960 1970 1980 1990 2000 2010

Mil. gt

JapanEurope

KoreaChinaOther

Shipbuilding’s move from West to East

Source: Shipbuilders Association of Japan

Construction Volumes (GT) by Country/Region 1926-2011

S-3

Shipbuilding’s move from West to East

EuropeanShipbuilding Asian

Shipbuilding

S-3

S-4

Shipping’s move from West to East

Country No. of Ships Mil. Gross TonsJapan 8,730 150.9 Greece 4,664 148.0Germany 4,562 97.8China P.R. 6,584 96.8United States 5,065 47.8South Korea 2,785 47.1Norway 2,724 46.8Italy 1,970 34.2Singapore 3,560 32.1Denmark 1,704 31.6

Owned Fleet by Nationality

Source: Clarksons, May 2012

S-5

Shipping’s move from West to East

Europe:Shipowning

Asia:Shipowning & Shipbuilding

S-5

S-6

The Rise of Singapore

S-7

The Rise of Dubai and the Middle East

S-8

EuropeAsia

The Rise of Sri Lanka

Middle East

SE Asia

Sri Lanka & India

The New Map of the Maritime World

S-8

S-10


S-9Source: Royal Society: Interface

World Shipping Routes by Traffic Density


S-10

Thank You For Your Attention!

S-8

EuropeAsia

Middle East

SE Asia

Sri Lanka & India

S-11


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

23


Diversity & Complexity …examples from CDPLC

SHIPREPAIRS SHIPBUILDING

HEAVY ENGINEERINGOFFSHORE ENGINEERING

24


Growth

25


Shiprepairs

26


Index of global shipping, Baltic Dry falls to a 25-year-low!

Collapse in dry bulk shipping rates unprecedented in its severityThe 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.

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.

27


Diversity & Complexity …examples from CDPLC

2007 2008 2009 2010 2011 2012-E -

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.0

Major SR Revenue Vessel Type wise - US$ Mn

Tankers Dredegers OSVs Passengers Reserch LPGTugs Bulk Car Genral Cargo Container car Barge Naval

28


Shipbuilding

SingaporeAHTSV x(2),MPSV x (2)

IndiaAHTS V x(2)MPSV x (2)

Lakshadveep Islands Passenger V x(2)

Maldives 35m, 42 m, 24 m Vessels &

Other Crafts x (13)

Dammam, Saudi Arabia Crew Boats x(2)

Nigeria, Port Harcourt Crew Boats x(2)

Jeddah, Saudi Arabia Tug Boats x(3)

JakarthaMPSV

BrazilMPSV x(1)

19752005 2006 2007 2008 2009 2010

2011


Materials & Stocks

30


Materials & Stocks … STOCKS TURNOVER DAYS02 03 04 05 06

07

08

09 10 11 12

0

25

50

75

100

125

150

175

10079

29 36

63.6976831091181

95.601724137931

107.448192771084

136

8074.2630878438332

31.2987003230411

Location C (MAIN) Stores Stock

Sto

ck T

urno

ver D

ays

31



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.

32



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

33

Contd.


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.

Transformational Logistics

34

Thank You.

3535CILT International Conference, Colombo, Sri Lanka – November 2012

Documents

Transforming Economies Through Transports & Logistics CILT International Conference, Colombo, Sri Lanka – November 2012 1 Presentation by: Mangala P. B