Logistics is a significant component of modern distribution and production systems and a crucial contributor to macroeconomic progress and development. Holistic logistics are representative of roughly 10% of GNP in developed nations and are more in less developed nations (Savy, 2016). Beyond its costs, the inefficiency and efficiency of logistics affect the whole production as well as the exchange process. There is no doubt logistics is vital to the normal operations of supply chains. Supply chains are sensitive and complex as they are contingent upon the dynamic demands of consumers, but supply chains cannot ensure high value if the logistics and transportation system is not organized effectively.
Role of Governments in Logistics and Transportation
Transport, inclusive of freight transport, typically receives recurring attention from public authorities at all levels of institutions ranging from local authorities to central governments. Each government has a ministry of transport, which is solely responsible for managing the transport domain. Considering how logistics and transportation are crucial to the nations, the jurisdictions typically integrate logistics into their policy concerns. This means that the domain of logistics and transportation can easily be affected by both domestic and foreign governments especially considering the process of globalization whereby organizations and businesses develop international operations or influence. In the globalized business world, production has become fragmented into isolated activities and can be spread geographically across and within national borders while still being integrated organizationally within a network of companies or a multinational company. The globalization of production networks has raised a myriad of issues in policy and has questioned certain widespread perceptions in regards to the effectiveness and impacts of policy initiatives.
Delegate your assignment to our experts and they will do the rest.
Examples of How Domestic and Foreign Government Action Can Affect Global Logistics and Transportation
Domestic Government
Within the context of the United States, congressional interest in global logistics and transportation stems from the interests of economic wellbeing, security, as well as the practice of values. In the same manner, there is the constitutional mandate for Congress to control commerce with foreign nations. Congress also formulates a myriad of policies that are linked to investments, market access, the flow of capital, misalignment of currencies, IP rights, shipping security, the safety of products, labor, as well as the environment. In a broader sense, business globalization is directly related to issues such as the maintenance of the industrial base of the United States, the training and education of the labor force, health care, immigration, and a plethora of other elements which consider the wellbeing of Americans. Therefore, logistics and transportation policies that are formulated by Congress can directly affect global logistics and transportation.
Foreign Government
In international trade, conventional policies that are proposed to decrease border barriers typically increment economic efficiency, but the global logistics and supply chain may affect the impact or incidence of such policies. On an international level, global logistics would be affected, especially if major economic powers are involved. For instance, tariffs from both the US and China would significantly slow down trade and affect supply chain operations. Prices of shipping products towards China or the US would significantly increase, thus leading to increased shipping costs (How Chinese Tariffs Affect Your Freight and Logistics, 2019). This ultimately affects the global supply chain and distribution as companies grapple with the sudden increase in costs due to the tariffs imposed on imports. Good shipping and logistics companies may have the capacity to easily undertake cross-border operations as they can adjust their routes and handle clearance from customs. This means that freight and logistics companies that have a network of reliable supply chains perceive little to no impacts from the increased tariffs.
Conclusively, it is apparent that domestic and foreign government actions can significantly affect global logistics and supply chains. Therefore, the company should have a vigilant awareness of its supply chains by surveilling its internal and external environments, especially in terms of political influences on its logistics and supply chain.
References
How Chinese Tariffs Affect Your Freight and Logistics. (2019). Retrieved 2 July 2021, from https://www.freightright.com/news/how-chinese-tariffs-affect-your-freight-and-logistics
Savy, M. (2016). Logistics as a political issue.
