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The impact of globalisation on supply chains
A selection of talks on Finance, Accounting & Economics
I'd like to welcome you to this presentation on the Impact of Globalization on Supply Chains. My name is John Mangan, and I'm a professor of Marine Transport and Logistics at Newcastle University in the United Kingdom.
Today's presentation is divided up into four parts. Firstly, we answer the question what is globalization, and we will divert to define and maybe even to measure globalization. The second part will look at the very considerable growth in global trade that has occurred over the of last 50 to 60 years, and in particular the importance of Marine containerization. In the third part of the presentation, we'll examine the whole area of extended logistics reach, looking at how firms through foreign direct investments setup subsidiaries overseas, which is obviously related to increase outsourcing and offshoring and the more recent phenomenon of nearshoring. And we look at all of the costs associated with this, understand the concentration of international trade traffic that goes with this extended logistics reach. And finally in the fourth part of the presentation, we look at enhancing the competitiveness of the global supply chain examining issues, such as sustainability and roll played by logistics service providers in truly facilitating the global supply chain.
I'd just like to start then with a very simple slide and on this slide you can see two pictures, they both relate to moving product by sea. The first, dates to 1912 and this in fact, a view of Dockers handling kegs and you could see there's a lot of manual handling here, it's labor intensive, and also obviously low technology, to not exploiting what we would call economies of scale. We fast forward to the bottom part of the slide, what you've got is one of the new Maersk vessels, these are these giant container ships, these are now trading across the seas with the consigned capacity booked at 14,000 TEUs and the TEU is a Twenty-Foot-equivalent unit. So most boxes that you see, such as those on this Maersk vessel, they are typically two TEU in length and this vessel has the capacity of 14,000 TEUs. So in less than a 100 years, you can see that the transition which has occurred from a very labor-intensive manual handling, low volumes for cargo as depicted on the top left hand inside of the screen. And then the bottom part of the screen, you've got this huge 14,000 TEU vessel operating with minimal crew, exploiting huge economies of scale. And in a sense, this evolution from manual handling to scale-based efficiency in logistic systems, has really been the driving force behind a lot of the growth in the international trades, globalization that we see today and the ability for global supply chains to function.