Logistical thinking benefits everyone, says Derek Halden
About 20 years ago a colleague, who was at the time a government economist, said to me that if you want to know the state of the Scottish economy, the best short term indicator is the traffic flow on the M8 between Glasgow and Edinburgh.
If people are travelling to work and businesses are trading goods then more activity shows up first in the travel statistics, before becoming visible in GDP and employment statistics.
Yet there is a problem with such thinking. Businesses become more competitive when they reduce their transport costs, so increased travel demand could be an indicator of a less efficient economy. For those of us who work in the transport sector, our future success depends not on simply moving more goods and people but in ensuring efficient transport for competitive businesses.
Meeting the needs of a smarter economy
Logistics and transport is evolving to meet the needs of a smarter economy, not just a bigger one. The Chartered Institute of Logistics and Transport (CILT) provides the professional leadership to help our industry shape the future, not just respond to travel demand. Whereas 20 years ago we might have ordered a few more trucks or buses to respond to customer travel demand, today we are helping to keep traffic volumes down by combining loads from different companies, and passenger transport operators are developing door-to-door services to join up different modes of transport.
There has been a tendency to think that transport investment to deliver economic growth depends largely on government investment in infrastructure such as new roads and railways. However when CILT published its blueprint for the future Vision 2035 the first conclusion was that we will never have the capacity to respond to all demand for transport. Some 20 years ago practices like “just-in-time” delivery were becoming popular in reducing transport, warehousing and stock holding costs for business. Today effective passenger and supply chain management is a pre-requisite for success and innovative businesses are offering additional premium services.
CILT’s vision seeks to shape the future with new customer information and payment systems, more sharing of vehicles, reduced emissions, more intelligent vehicles, and ambitious goals like more underground servicing of businesses in cities. These new approaches put logistics and transport at the heart of the delivery of a smarter more successful Scotland.
The economist John Maynard Keynes said “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist”. CILT members are mainly very practical people keeping buses moving, trains to time, and delivering the goods, but they also recognise the benefits of professional knowledge.
Premium options offering choice to customers
Achieving this economic growth will depend on effective partnerships between government and industry like the current low-carbon bus investment that is securing quieter cleaner buses, and the freight quality partnerships to develop rail freight opportunities. Economic growth in transport will be driven by the growth of these premium options offering customers choices on how green to be, how to share with friends and business partners, easier ways of paying and providing people and business with the information to make new connections.
Logistics and transport have long been recognised as the glue that holds the economy together. The sector is increasingly building the links from the bottom up. Added value services such as packaging for products, or accommodation for people, are increasingly being bundled to offer customers more integrated services. CILT’s benchmarking club Logmark is one excellent example of driving innovation and competitiveness by bringing companies together, enabling targeted and relevant feedback for constant improvement.
Rather than wait for the traffic flows on the M8 to change as an indicator of economic growth, the industry is increasingly able to drive the economic growth by more effective management of the traffic flows. CILT’s unique role is to develop the professional skills and capacity of the people working in the sector, as the only organisation able to work closely with all modes of transport, from freight and waterways to aviation and transport planning.
• Derek Halden is chair of the Scottish branch of the Chartered Institute of Logistics and Transport