The aim is to present research results on global logistics scenarios 2025 with focus on the future contribution the logistics industry can make to the triple bottom line – people, planet and profit.
The research was conducted within the scope of an interdisciplinary foresight conference, where a group of 216 renowned persons from 16 countries in business, academia and politics discussed policies and strategies for the future role of logistics as an enabler and driver of global wealth. Attendants were asked to share their visions of the future via a real-time Delphi study. The results were further discussed in futures workshops according to World Café methodology for group dialog.
Based on extensive desk research of scenario studies, expert workshops, and creative sessions, the authors developed 20 key Delphi projections for global logistics in 2025. Experts were asked to rate the projection's probability, impact, and desirability as well as to provide reasons for all answers via the Delphi online-portal. Key topics of the Delphi-based scenarios include global health care supply chains, resource logistics (urban mining), water transportation, energy supply, and education. Moreover, the authors analysed discontinuities in global logistics, such as pandemics, conflicts, and resource crises.
The increasing impact of logistics on a nation's and company's success underlines the importance of future-oriented and sustainable planning in this field. With this research endeavor, the authors provide insights in action needed to be taken by industry, politics and academia in order to leverage the full potentials of logistics and support the economic development of the world.
A. von der Gracht, H. and Darkow, I. (2013), "The future role of logistics for global wealth – scenarios and discontinuities until 2025", Foresight, Vol. 15 No. 5, pp. 405-419. https://doi.org/10.1108/FS-05-2012-0031Download as .RIS
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Copyright © 2013, Emerald Group Publishing Limited
“The World Is Flat” – in recent years, the title of the international bestseller by Thomas Friedman has become a catchphrase in globalisation. There is a growing awareness of the fact that the global economy has been taking the lifeblood of the global economy for granted for years: logistics. The increasing impact of logistics on a nation's and company's success underlines the importance of future-oriented and sustainable planning in this field.
Logistics has evolved from a mere classic transport function to a strategic, cross-functional, and global discipline (Grant et al., 2006). Supplying production material to factories and distributing finished goods to warehouses and shops are prerequisites of highly fragmented value chains in global economies today. The increasing impact of logistics on a company's success and economic growth underlines the importance of future planning in this field. Supplying the world's population with food, daily goods, books, educational material, and medicine has become one of the key issues in fostering economic prosperity in developing and emerging countries, especially in rural areas. Additionally, the professionalisation of logistics management, as well as the strong conviction that logistics contributes to economic wealth and costs savings, have changed the way logistics-related aspects are viewed. Disaster relief, humanitarian aid, and refugee camp supplies are some important areas which are handled by professional logistics nowadays. Consequently, the overall importance of logistics is increasing. Thus, innovative and up-to-date methods are needed to cope with new challenges in the field.
We present a study which aims at encouraging organisations and companies to discuss their future logistics and that of their environment. The project “Future of Logistics 2025” was initiated at CeMAT, the world's largest in-house logistics fair with approximately 60,000 attendants from 40 countries. This large-scale foresight project was organised with strong support from the German government, several research institutions, industry and Deutsche Messe (German Tradeshow Centre, Hannover). The project demonstrates that long-term analyses are worthwhile in supporting organisations and companies to orientate themselves in complex and dynamic environments, and thereby reduce perceived uncertainty. Such analyses provide a clearer picture by identifying opportunities and threats. This global scenario study elaborates how top level executives from business, academia, and politics see the probable future of logistics and what major discontinuities could occur. It thereby provides a sound planning basis for long-term decisions, demonstrates the value of scenario formulation as a management and planning tool, and exemplifies systematic scenario development and communication processes. For the purposes of this study, a real-time Delphi-survey tool was used in order to build Delphi-based scenarios and discuss discontinuities.
Background of the Delphi- and Scenario-Method
The consideration of long-term developments is crucial to develop future-robust strategies and successful logistics (Singh, 2004). Companies that fail to prepare for the future will face unacceptable risks and higher total costs compared to companies which systematically address questions of how future logistics may evolve (Melnyk et al., 2009). Scenario planning has been identified as one of the most appropriate approaches for long-range planning and to support decision making in uncertain situations (Courtney et al., 1997; Schoemaker, 2002, Phelps et al., 2001). Many approaches to scenario building have been developed since first applications in the 1950 s by the US RAND Corporation. The concepts have become widely accepted and frequently used research methods, especially for futures oriented research. The positive impact of its adoption has been proven empirically. In a broader sense, more than 30 studies have examined a positive relationship between long-range planning and corporate performance over the past four decades (see, e.g. Ansoff et al., 1970; Miller and Cardinal, 1994; Rhyne, 1986).
Over the years, researchers and practitioners developed a range of methodological approaches to generate ideas for forecasting based on the seminal work of Helmer and Rescher (1960). Today, many approaches strive for open-ended and creative aspects of scenario building: In the “age of participation”, as Linstone and Turoff (2011) stated, there are more opportunities to include experts in creative scenario building than decades ago. Therefore, Nowack et al. (2011) discussed the benefits of combining Delphi surveys and scenario building. Linstone and Turoff (2011) elaborated on the future of the Delphi method and called for more collaborative planning systems on the future, which are dispersed and asynchronous. Landeta and Barrutia (2011) proposed a hybrid method to elicit and use information and ideas of experts in professional contexts by integrating focus groups, nominal group technique, and the Delphi technique. The authors stated that most techniques strive to contribute to improving the selection of information sources, facilitating the utilisation of experts' knowledge and ensuring a greater quality of the outcome. We acknowledged this discussion and applied a Delphi-based scenario development approach in order to examine the future role of logistics in contributing to global prosperity, as well as scenarios and discontinuities in the logistics field until 2025.
Challenges in logistics
In the general public, logistics is still often reduced to transport, handling, and storage. However, this is an antiquated point-of-view (von der Gracht, 2008). During the past 50 years, logistics has undergone several development steps and evolved from individually managed, product-flow related activities to an integrated set of processes managed across multiple echelons of a supply chain (Ballou, 2007). It has actually changed from a mere cost factor to a strategic weapon, entailing more duties and activities than ever before (Grant et al., 2006). The Council of Supply Chain Management Professionals (CSCMP) (2012) defines logistics management as that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements.
The future of the logistics service industry is characterised by many upcoming challenges and opportunities. Despite high growth rates, the logistics business has also become more volatile and uncertain (Melnyk et al., 2009). The trend towards globalisation has steadily increased with the effect that supply chains have become longer and more complex (Ballou, 2004). Moreover, customer expectations have changed insofar as they demand quicker response times and more convenient offers (Coyle et al., 2003). Today, companies have to be dynamic in their structure as well as their processes in order to adapt quickly to current market demands (Melnyk et al., 2009). In most cases, it is not sufficient any more to offer a specific product or service in the right quality, at the right costs, and within the right time. It is rather the added value offered to the customer that leads to differentiation and competitive advantages (Grant et al., 2006). Logistics services have emerged as an opportunity to offer such added value. However, as with most services, demands and complexity have increased (Ballou, 2004; Coyle et al., 2003). Moreover, the logistics business is highly technology-dominated. Advancements in information and communication technology, such as Radio Frequency Identification (RFID) or satellite technology, are expected to change logistics processes. Logistics nowadays means acting in complex networks of independent, but interdependent organisations (Christopher, 2005). Intelligent solutions in information and communication technology (ICT) are an essential operation, control, and support instrument of such worldwide networks (von der Gracht and Darkow, 2010).
Companies have to adapt their supply chains to customer requirements, such as the demand for more environmentally-friendly products or quicker deliveries (Finisterra Do Paço et al., 2009). As a consequence, supply chains have to be aligned correspondingly in order to keep up with sudden challenges. The effect of supply chains on environmental issues has been a focal point in recent discussions. It appears to be a consensus among experts that the design of future supply chains will have to focus more strongly on environmental concerns (Soni and Kodali, 2008) and reduce CO2-emissions and energy consumption (Piecyk and McKinnon, 2010; GCI and Capgemini, 2008). The World Economic Forum (2008) identified supply chains and the safe supply of energy as crucial factors that will fundamentally shape the world's future and are “central to the functioning of the world economy and to the well-being of global society”. Consequently, future supply chains, especially regarding the long-term future, will not only have to be designed to maximize profits, to improve on-shelf availability, or to reduce costs; they will also have to be designed to minimize their adverse environmental impact (GCI and Capgemini, 2008). Thereby, the transportation and logistics industry plays a vital role since logistics and transportation activities strongly influence energy consumption, efficiency, and CO2-emissions in supply chains (Piecyk and McKinnon, 2010; Halldórsson and Kovács, 2010).
The interplay among all trends and developments described previously has led to the turbulent environment logistics managers face. Today, uncertainty has become a major concern that companies have to manage more than ever. Managing uncertainty deals with two constantly changing dimensions: dynamism and complexity (Duncan, 1972). Dynamism, on the one hand, describes the stability of decision factors and the frequency with which they change or whether new distinctive factors arise. Complexity, on the other hand, refers to the amount of distinctive factors considered important for decision-making. Although both dimensions influence uncertainty, dynamism has a higher impact on uncertainty than complexity (Downey and Slocum, 1975; Duncan, 1972). The growing degrees of complexity and dynamism in the external logistics environment have thus given rise to the uncertainty faced by logistics managers. Higher complexity and dynamism or, in other words, uncertainty also means that logistics managers face greater risks in their business. Grandjot (2006) highlighted that in the course of global sourcing, production, and distribution, the risk potential for the logistics business has significantly increased. The number of players in global logistics networks has risen, leading to more interfaces and intermodal operations. At the same time, global logistics means longer distances, more handling processes, longer demurrage, and more complex administrative processes (Jung and Nowitzky, 2006). All of these additional activities make supply chains more vulnerable.
Given these facts, there is a considerable need for organisational future orientation and corporate foresight innovation in logistics. The proliferation of futures research and related techniques is important in logistics. In best practice, futures research and innovation management are linked and contribute to each other (von der Gracht et al., 2010). Hines (2002) stressed that being competent in both innovation management and futures research is perhaps the most important source of competitive advantage for organisations in tomorrow's knowledgeable economy. Since logistics management is considered to be a strategic issue nowadays, long-range planning has become more and more attractive in order to support far-reaching logistics decisions, which concern supply chains (Singh, 2004). However, according to von der Gracht and Darkow (2010) the potentials of futures research in logistics have by no means been realized yet. It has been previously discussed that dynamism and complexity have significantly increased in logistics, leading to higher uncertainty. As a consequence, the majority of logistics planners is currently unsatisfied with planning and prognosis tools and strives to change planning practices in the future.
In summary, the research revealed that there is only a small amount of secondary data available on scenario planning practices in logistics. The low quantity of corporate-related data could actually stem from two facts. First, due to the strategic relevance for organisations, such planning activities are not externally communicated. Second, the proliferation of the scenario technique is indeed low. We aim to address these two topics by providing a scenario development approach to appropriately develop future scenarios of logistics in 2025. More specifically, two research questions guided our research: how will the macro environment (political/legal, economic, socio-cultural and technological structure) of the logistics services industry change by 2025? How will the micro environment (industrial structure) of the logistics services industry change by 2025?
A scenario development approach for the future of logistics
The methodology consisted of several research phases that were interlinked and can be divided into a pre-, main-, and post-conference phase as described in Figure 1. The research initiative lasted for approximately nine months.
The pre-phase included the development of the study concept, the set-up of the real-time Delphi platform, a pre-test of the survey, the recruitment of an international expert panel, and the first part of the real-time Delphi survey itself among 216 invited internationally renowned experts (Part I). The project was launched in January when the study was designed and the online portal for the web-based Delphi survey was set up. The Delphi-internet portal opened on March 1.
Participants registered for the Future of Logistics International Conference were sent a personal invitation link, giving them exclusive access to the Delphi portal. Overall, 65 of the 216 people who attended the conference took part in the survey. With an uptake of around 30 per cent, this high figure underlines the relevance of the topic and guarantees that the results are valid. The final Delphi panel is shown in Figure 2.
The experts from business, politics and academia were confronted with 20 future theses, i.e. projections, in the following four subject areas: economic developments, political challenges, socio-cultural trends, and technological innovations.
The real-time-Delphi method was an innovative and quick-response platform for participants to appraise their expectations of the future (Gnatzy et al., 2011). The participants were asked to appraise 20 projections online in terms of their probability of occurrence (metric scale, 0-100 per cent), impact (five-point Likert scale), and desirability (five-point Likert scale). They could also add comments and justifications for their responses. A total of 826 comments were provided by the participants. Therefore, a very extensive and extrapolated futures database was compiled. Immediately after answering a question, the real-time calculations provided the participants with insight into the statistical group opinion and comments given. The participants were then able to reconsider and change the responses they provided after the first round (see Figure 3).
The Delphi survey was designed to be self-explanatory. Nevertheless, the participants were able to access a tutorial at any time, which explained the background to and the procedures used in the real-time-Delphi method. In total, 67.7 per cent of the participants used the tutorial, which proves that the fundamental rationale of the new Delphi concept was clear.
Every participant completed an average of four rounds in the survey. The first round ran through all 20 assumptions, i.e. 20 first round screens and 20 revision screens with group statistics. Each time the participant logged in subsequently, this was considered to be a new round. The statistical group opinion was provided for each survey dimension in the form of a boxplot. A boxplot (also known as a “box-and-whisker plot”) can be described as a diagram showing a row of univariate numerical data (e.g. from 0 to 100 per cent) as well as several characteristics of the series of data (e.g. median, distribution, outliers). The median was indicated by a black line in the boxplot. A gray shaded area showed the second and third quartile – also called “interquartile range”, which is known as a measure of dispersion. The central innovative aspect of the boxplot was the graphical and differentiated illustration of an outlier position. Divergence from the group was indicated using different colours: green: within the group opinion, yellow: moderate divergence, orange: significant divergence, red: strong divergence. An “outlier labeling rule” also helped in classifying observations as “out” or “far out” of the group opinion. In addition to the statistical group opinion, the arguments already collected from the experts for each projection could also be viewed. Once all 20 projections had been answered, the session was ended automatically.
The next time the participants logged in, they were immediately forwarded to a consensus portal. The consensus portal served as a control panel in which a respondent could enter and review every projection. As indicated previously, the colour of the buttons indicated the status of the given probability judgment for a projection, or the divergence from the group opinion. The fact that the participants completed several rounds underpins the validity and reliability of the results and a good group dynamic process. The innovative concept of the real-time Delphi survey has proven to be an ideal tool for the subjects under scrutiny.
The interim results of the survey were presented at the Future of Logistics Conference as part of an international logistics trade fair in May. The main-conference phase consisted of briefing the 216 attendants with the Delphi survey results and joint reflection thereof in presentations and moderated rounds of discussions (2+1 keynotes), open discussions as well as discussions in small groups, “World-Cafés”, which is an innovative form of participatory workshop dialog.
The post-conference phase, in turn, included a follow-up real-time Delphi survey (Part II). The online tool was available to the participants until the end of June so that they could modify their responses. Once the portal was closed, the final analysis and aggregation of all data, scenario development, discontinuity analysis and dissemination were conducted. Possible global future scenarios were generated based on the Delphi data collected from the experts questioned. Conceivable opportunities as well as surprise happenings were sketched out in detail. The opportunities represent future scenarios that can be actively shaped.
Opportunities are the key to identifying future lines of action
Our methodological design proves to be a profound foresight approach to research a complex and dynamic environment, such as the international transportation and logistics industry. The different research formats, several linkages and cross-validations, as well as intense participatory reflections with policy makers enhanced the scope of the content and its penetration. Especially, the use of innovative approaches, such as the real-time Delphi survey and World Café, stimulated the discourse significantly. The real-time Delphi survey alone generated 826 comments on 20 future projections, which were assessed by 65 participants. Overall, the situations in nine different countries from all continents were considered in the scenarios. Moreover, the web-based, real-time Delphi study was able to significantly streamline the process since all group opinion calculations were provided in real-time during the survey.
During the analysis, the intensity of convergence and degree of consensus were evaluated alongside the expected probability, impact, and desirability. Convergence describes the process of approaching a consensus, or the extent to which the level of agreement among the expert panel increases over successive Delphi rounds. The intensity of convergence is based on the percentage difference between the standard deviations from the first round of the survey and the final round. It is an indicator of the level of agreement reached among the experts during the survey. The degree of consensus was measured using the interquartile range. The interquartile range (IQR) is the measure of dispersion for the median and consists of the middle 50 per cent of the observations. Thus, an IQR of less than 1 means that more than 50 per cent of all opinions fell within 1 point on the scale. For the real-time-Delphi survey, an IQR of 25 at maximum was used to indicate consensus. We present the survey results in Figure 4.
Nine of the 20 projections (45 per cent) resulted in consensus according to our defined consensus criteria. The economic environment provides the highest density of very probable projections. The socio-cultural and technological projections tend to be considered less likely to occur. The Delphi comments given by the experts clearly show that socio-cultural projections are often considered to be very long-term developments and therefore extend beyond the year 2025. The technological projections, on the other hand, tend very strongly towards an increasing degree of automation. Nevertheless, the results prove that it is highly likely that logistics will still be a people's business in 20 years' time. Projection 3 (energy sources) attained the highest expected probability of this study – 67.8 per cent. The high levels of dissent among the panel of experts does however show that energy issues are a very controversial subject in which opinions vary greatly despite the high probability of them occurring. Projection 7 (modal shift) attained 37.9 per cent, making it the most unlikely projection in the study. A consensus was also reached for this appraisal: It is not assumed that there will be a clear shift in transport. This is certainly a clear call to politics and business to reconsider or enforce certain decisions. The values assigned to impact indicate an average of 3.1 or higher. This supports the careful selection of study content a priori as the only projections included in the study were those generally considered to be of at least average relevance to logistics and business. It is also clear that when compared with political projections, they have considerably greater impact values.
Against this background, companies should consider becoming more actively involved in politics in the future. Lobbying work through organisations and pressure groups might be conceivable. The criterion of desirability should be viewed in a differentiated light.
A simple comparison of the numerical values does not do justice to the complexity of the issues since some issues contain clearly negative content (e.g. projection 5: terrorist attacks) and others clearly positive content (e.g. projection 15: health care supply chains). Several projections display a particularly large discrepancy between desirability and probability. This is particularly the case for projections 3 (energy sources), 7 (modal shift), 10 (global water crisis), 11 (educational revolution) and 14 (global business coalitions). The logistics industry should play an active role here to influence the occurrence of the projections, depending on their desirability. Particular mention should be made of projection 17 (innovations in transport) at this point as this was awarded 4.6 out of a possible fivw points, making it the most desirable in the study. It had the second highest expected probability, also displayed a very strong convergence and very high consensus, and is therefore the clearest statement in the study. The logistics industry should make its contribution by helping to preserve resources through the use of innovation.
If we analyse the driving forces in the market environment and the developments we can expect on the market, we find opportunities in the form of possible ways for the logistics sector to innovate and invest in business development. These opportunities present future scenarios that can be actively shaped. Developing these opportunities broadens companies' horizons for what may happen in the future in terms of products and services, strategies, processes, and solutions. We analysed a selection of the most promising opportunities arising from the Future of Logistics Conference. These are business areas that are either brand new and may at first seem rather unusual, or simply represent possible extensions of existing business areas. The course we take to equip ourselves for the future can be set today by developing such opportunities. Each company must decide individually which of these opportunities to pursue. The formulation of opportunities is a very creative process. Based on the results of the real-time Delphi survey and the material discussed at the Future of Logistics Conference, 120 possible courses of action were identified for the logistics industry in several creative workshops. Numerous areas were covered, including products and services, collaborations and networks, controlling and finance, people and culture, marketing and public relations. In Table I we present an excerpt of these opportunities.
Each opportunity was described in a small portrait. A particular focus was set on the future contribution the logistics industry can make to the triple bottom line – people, planet and profit.
Discontinuities and the surprising future
Unlike many scenario studies, we also included discontinuities, which can take the form of surprising events or developments, such as natural disasters, innovations and their consequences, or societal changes. The financial crisis 2008/2009 can be classified as such a discontinuity. By excluding discontinuities, scenario planners run the risk of missing major opportunities.
By including discontinuities, companies can identify further alternatives and increase their ability to adapt to surprises. They help to broaden the perspective and test the robustness of strategies and decisions. There are two common ways for companies to systematically consider discontinuities: extreme scenarios and wild-card scenarios. Both approaches were included in the Future of Logistics project.
Extreme scenarios for global logistics challenges
Two projections (energy sources and global water crisis) were selected as extreme scenarios, both of which display a very high probability and impact. Four scenarios were developed from these two projections (scenario axes), each of which describes a situation that could actually happen.
Scenario axes are a widely recognised tool for constructing extreme scenarios in a coherent and systematic way. According to this instrument, scenario planners select two driving forces or key factors that are considered to be of particular interest for scenario considerations. These factors are then plotted on two axes, resulting in four different scenario quadrants. In the scope of this study, the projection about energy sources and a global water crisis were selected due to their high probability and impact rating as well as their topicality and momentousness – an assessment shared by many conference participants (see Figure 5). This also allowed for including the point of the probable scenario according to the Delphi panel, if the axes are considered metric scales. In fact, the probable scenario is situated in the “World out of balance” quadrant. The scenario writing process, or the definition of scenario premises and the description of the scenarios, was supported by extensive desktop research.
The simulation of extreme scenarios underlined the potentials of logistics companies in the field. In particular two key opportunities could be further framed during the scenario axes exercise, which shall be outlined now.
Specialisation in Water Logistics: The experts consider a global water crisis to be highly probable (see projection 10 Global Water Crisis). Developing and emerging countries would be particularly affected by this scenario. In principle the Earth's water cycle is a closed cycle. The key problem is the way that water is unevenly distributed around the world. Specialist knowledge and expertise in water as a resource will be increasingly in demand in the future. Logistics will have a central role to play in this respect. Logistics companies will be able to assist companies and governments in global water crisis management. But these companies will first have to build up expertise in obtaining, treating, transporting and storing water and disposing of waste water. The uneven distribution of water could be managed locally, nationally, and internationally by the intelligent concepts of Integrated Water Resource Management (IWRM). These look at the ecosystem as a whole and endeavor to balance the different demands for use of water. Logistics service providers could have a central role to play in water projects as they realize the importing and long-distance transporting of water. This could be done through transport by boat, via pipeline, large water bags (Medusa bags), and carrying it overland in vehicles. Following successful pilot projects, Maglev “Water Trains” may be used in the future throughout the world to transport water hundreds of miles at little cost (Maglev, 2000, 2001). These trains could deliver 2 billion gallons of water per day – enough to supply 100 million people with 20 gallons daily – over a distance of 500 miles.
Engagement in Energy Logistics: The path to a global energy turnaround is improving. The portion of total global energy consumption represented by renewable energy could amount to as much as 40 per cent by 2025. Depending on the location requirements, countries are likely to use sunlight and solar thermal, wind, water, biomass, and geothermal as sources of energy. In the interim, fossil fuels and atomic energy will still be used – however more efficiently and in a more environmentally-friendly way than before, e.g. in form of coal-burning power plants with carbon dioxide capture and storage (CCS). However, in such a scenario energy logistics companies could ensure that consumers are supplied with the energy they need at the right time and to the right place. They would be dealers and infrastructure providers in one. Their work would include trading on electricity markets and on online energy markets, optimized cost management of the energy mix, and the establishment and maintenance of an energy structure. Using future information and communication technology, it may be possible to operate virtual power plants. These would represent clusters of decentralized smaller power plants which are collectively run by a central control entity and therefore allow for the delivery of peak load electricity and balancing power.
Wildcard scenarios for global logistics
The wildcard scenarios described single events or developments that may seem improbable from today's standpoint but ultimately cannot be ruled out. The probability of such events is not decisive, rather the potential impact that they or similar occurrences could have. They could be the result of technological breakthroughs, social tension, or political overthrows. Our wildcard scenarios involved among others terrorist attacks and the potential spread of a pandemic.
Terrorist attacks on logistics networks: The disruption of logistical networks could have detrimental effects on the economy of a country. Such networks are therefore an attractive target for terrorists. Attacks on political, ideological, or religious targets are possible at different points. Important hubs, such as seaports and airports, could be disabled by physical aggression. The same applies to bridges or tunnels which span narrow passages between geographical boundaries. Attacks on these targets could bring traffic to a complete standstill or greatly hinder transportation along the route concerned (von der Gracht, 2008). Since 9/11, the fear of terrorist attacks on logistical networks has grown – particularly attacks on the most important shipping routes and seaports. The attack on the French tanker “Limburg” along the coast of Yemen in October 2002 proved that these fears are realistic. A boat filled with explosives rammed a hole in the starboard side of the ship and 90,000 of the 400,000 barrels of oil on board poured out into the sea. Also, 80 per cent of the oil destined for Japan, South Korea, and China is transported through the Strait of Malakka. Terrorist attacks on oil tankers could lead to a complete blocking off of the region and thereby stop trade flows. The Institute for Defense and Strategic Studies (IDSS), Singapore, estimates that the closure of the Singapore harbour would cost approximately 200 billion dollars (Ho, 2005). The redirected sea route would mean that ships needed two days longer to reach their destination and cost 8 billion dollars per year. Furthermore, the US Congressional Budget Office (2006) warns that a one-week halt in the flow of cargo containers into America's two largest ports would cost the national economy $65 million to $150 million a day.
Spread of a pandemic through logistics networks: New pathogens originate worldwide on a regular basis. The usual cause is natural mutation. It has been observed that new agents are often more resistant to current medical treatments. The effects of a pandemic can be appreciated if we take the example of the Spanish flu which killed up to 50 million people between 1918 and 1920 via an unusually virulent progeny of the influenza virus (subtype A/H1N1). For years, experts have been warning of the outbreak of another pandemic. The World Health Organisation (WHO) estimates that should the avian influenza virus (type A/H5N1) spread, 1.5 billion people would have to be treated and 40 million could die. The economic consequences would be just as catastrophic. The World Bank recently calculated that the mere occurrence of bird flu in several East Asian countries, which did not claim many lives, resulted in costs of between 0.1 per cent and 0.2 per cent of GDP. The impacts on logistics are obvious. International logistics networks are considered to be risks in this respect (von der Gracht, 2008). A virus would quickly spread through the transport of people and animals that are carriers of contaminating agents. Nation states and regional associations of states would seal themselves off from potential regions of danger. Global sourcing, production, and distribution would be paralyzed by employee absences. The financial markets would be just as affected as the commodity markets. Production and supply chains would be interrupted. With just-in-time production, production would come to a standstill. It can be assumed that these developments would inevitably hit all industries.
Discussion and conclusion
In our research, we aimed at closing a research gap with respect to future developments in the transportation and logistics industry with special focus on how logistics can provide solutions to increase global wealth. More specifically, two research questions guided our research: how will the macro environment (political/legal, economic, socio-cultural and technological structure) of the logistics services industry change by 2025? How will the micro environment (industrial structure) of the logistics services industry change by 2025? Based on empirical research, we examined possible events and developments, identified major factors and aggregated expert knowledge on the long-term future. We developed and applied a real-time Delphi survey, discussed the results in participatory workshops and a conference with experts from politics, academia and industry, and derived scenarios as well as recommendations for managers and governments.
On the one hand, this research project discusses global logistics areas which are brand new and may at first seem rather unusual. However, on the other hand, it also examines possible extensions to existing logistics areas. These include the categories: products and services, collaborations and networks, controlling and finance, people and culture, and marketing and public relations. Special attention was given to non-corporate logistics topics, as water logistics, education, health care and humanitarian logistics. Moreover, extreme scenarios and wildcard scenarios were also projected. Two projections (energy sources and global water crisis) were selected to be developed into four extreme scenarios because they were judged as highly probable and having a high impact on the corporate world as well as on the well-being of nations. The wildcard scenarios outlined involved among others terrorist attacks and the spread of a pandemic. Again, we show possible future developments which will have a detrimental impact on global societies.
An analysis of the survey and conference responses revealed three clusters of projections: potential surprises (low-probability, high-impact cluster), eventualities (medium-probability, high-impact cluster), and expectations (high-probability, high-impact cluster). Potential surprises are often neglected by companies and politicians because they are considered improbable, but they have a moderate to high impact if they do occur. The projections in this cluster involve some kind of revolution – educational revolution in developing countries, health revolution brought about by global business coalitions, technical revolutions due to automation and digitisation, or societal revolution due to terrorist attacks. The occurrence of high-impact eventualities is not considered to be very likely, but should they occur, they would have serious impacts. When they become the object of debate, a wide range of very controversial opinions usually emerges. In this study, the projections grouped under this cluster can be combined under the heading “competition”. They revolve around the best access to resources, protectionism in spheres of interests, and competing megacities. Finally, high-impact expectations are characterised by a high expected probability and high impact. They are of great strategic importance to companies, politicians and the academic world. Projections in this cluster included the availability of resources at all levels, from trained staff to energy and water. The respondents believe that the formation of industrial clusters and technical innovations will offer solutions to these urgent problems.
This research particularly focused on the linkage between the global transportation and logistics industry and its expected socio-economic contributions in the fields of sustainability, health care and social responsibility, among others, in the future. The aim of the project was to support companies, politicians and academics to best prepare for the future, by weighting out the risks of product innovations, entering new markets and leveraging logistics solutions to increase the well-being of nations. Our approach includes projections of future trends related to supply and care for people around the world by utilizing the technological and management knowledge which stems from logistics and related industries.
We aim to encourage experts from industry, academia and politics to discuss the future of the transportation and logistics markets, of the companies operating therein, as well as of the economy in general. We demonstrate that long-term analyses of the global logistics environment are worthwhile since they help companies and clusters within national economies to orient themselves in complex and dynamic environments and therefore reduce perceived uncertainty. The analyses facilitate in gaining a clearer picture of the future and identifying opportunities and threats. Our global scenario study has illuminated how top-level executives from business, academia and politics view the probable future and what major discontinuities could occur. It provides a sound planning basis for long-term decisions in logistics and mobility, demonstrates the value of scenarios as a management and planning tool, and exemplifies a systematic scenario development and communication process. Especially in the field of humanitarian logistics this research project initiated several projects, conferences and application of corporate knowledge to Non-Governmental Organisations (NGO). The most important German logistics conference has now sessions on these topics in order to facilitate knowledge transfer and collaboration between wide ranges of stakeholders.
The overall feedback of the participants in the research process was very positive. The experts welcomed the opportunity to share opinions and insights with their peers assembled for this purpose and encouraged us to proceed with the approach. Future foresight exercises should include an even broader range of participants. The real-time Delphi tool could be used to further encourage the discussion and dissemination process, and be applied during conferences and/or participatory workshop sessions. This research, and especially scenario development, is mainly based on qualitative research, although statistical data supports our qualitative findings. Further quantitative data, with respect to cost implications and industry growth rates, may be included in the analyses to provide a more tangible basis for strategic planning.
With this research endeavor, we provide insights in action needed to be taken by industry, politics and academia in order to leverage the full potentials of logistics and support the economic development of the world. Based on the global logistics scenarios 2025, we place specific focus on the future contribution that logistics can make to the triple bottom line – people, planet and profit.
About the authors
Dr Heiko A. von der Gracht is Founder and Director of the Institute for Futures Studies and Knowledge Management (IFK) and post-doctoral researcher at EBS Business School in Wiesbaden, Germany. His research interests are corporate foresight, Delphi and scenario techniques, decision support, and quality in futures research. His works have been published in several books and in peer-reviewed journals, among them Technological Forecasting and Social Change, Futures, and International Journal of Production Economics. He is a member of the German node of the Millennium Project.
Dr Inga-Lena Darkow is Research Fellow at the Institute for Futures Studies and Knowledge Management (IFK) at EBS Business School, Wiesbaden, Germany, and Senior Expert Supply Chain Strategist at BASF, Ludwigshafen, Germany. During her career, she has held various academic positions in research and university education. Her research interests include corporate foresight and futures studies, especially in logistics and supply chain management. Her works have been published in several books and in peer-reviewed journals, among them Technological Forecasting and Social Change, Futures, and International Journal of Production Economics; and Journal of Business Logistics.
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The authors would like to thank in particular Dr Stefan Walter, Florian Schick, Rafael Belzer and Janice Magel for their valuable support and assistance. Further, they would also like to thank all participants of the Delphi study as well as the international futures conference. Received 1 May 2012. Revised 1 May 2012. Accepted 12 September 2012.