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Wednesday, August 22, 2012

The 2050 supply chain: Part 1

Can we foresee what the supply chain of the future will look like? Supply Chain Matters grabs its crystal ball to present five possible scenarios

The 2050 supply chain: Part 1

The supply chain is faced with a period of unprecedented opportunity, thanks to innovative new technologies, changing regulations around the world, and shifting consumer demand. What will the supply chain of 2050 look like? “Be prepared for diverse developments and to develop diverse strategies,” advises DHL Senior VP for Communications Strategy Jan Muller.

With this in mind, DHL has worked with a wide range of experts, including those from organisations such as the World Economic Forum and the International Energy Agency and academics from universities around the world, to develop five visions of life in the year 2050. These scenarios and the implications for the logistics industry are explored in-depth in the report Delivering Tomorrow: Logistics 2050.

Over a series of articles, Supply Chain Matters presents a tour around the five possible futures.

Scenario 1: Untamed economy – impending collapse


High growth in Latin American and Asian markets, coupled with a slowdown in countries formerly considered developed, has almost closed the global income gap. As a result, billions more people have joined the middle classes and consumption has reached colossal levels. Attempt to drive anywhere and you’ll find the roads clogged with more than four billion cars.

With such high levels of consumerism, it’s not surprising that world trade has mushroomed and now involves far more countries. Supply chains are spread all over the globe. Certain reigions have become manufacturing hubs, including Asian countries, Africa and parts of the West. Maritime transport has become more popular: with the melting of the polar icecaps, Arctic routes are now navigable. However, fuel and energy prices have skyrocketed after a lack of investment in renewable energy development. Since 2010, oil prices have tripled.

The balance of power has shifted to formerly emerging countries: Asian nations are setting the terms, with China having surpassed the USA as the world’s largest economy in the 2020s. Economic self-interest rules, with governments more concerned about increasing their own countries’ wealth than dealing with global issues. Sustainability has been pushed to the back of the agenda. Resources are being mined with little care for the planet, greenhouse gas emissions are high and the world is heading for a 6˚C temperature rise by the year 2100.

“This untamed economy, propelled by unsustainable lifestyles and the uncontrolled exploitation of natural resources, carries the seeds of its own demise,” warns the report. “As massive climate change inches closer, natural disasters frequently disrupt supply chains.”
 
As a picture of our future, it’s not the most appealing. “In this scenario, mankind has failed to tackle the key problem of sustainable growth,” says DHL’s Muller.

However, opportunities for the logistics industry are clear: rising consumption leads to more demand in goods being trafficked around the world; more manufacturers will outsource their logistics needs; and there will be an increased interest in near-shoring due to high fuel prices. But alongside this come risks such as extreme weather disrupting trade routes and high insurance costs. As the report warns: “Climate change impacts value creation in logistics on all levels.”

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