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Transportation and Logistics 2030 New Hubs, New Spokes, New Industry Leaders? Key Findings for the Road Freight Industry www.pwc.com Dr Andrew Shaw Presentation.

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Presentation on theme: "Transportation and Logistics 2030 New Hubs, New Spokes, New Industry Leaders? Key Findings for the Road Freight Industry www.pwc.com Dr Andrew Shaw Presentation."— Presentation transcript:

1 Transportation and Logistics 2030 New Hubs, New Spokes, New Industry Leaders? Key Findings for the Road Freight Industry Dr Andrew Shaw Presentation to Road Freight Association 20 May 2013

2 PwC 1 Changes in global trade and logistics patterns 3 2 Emerging economies driving growth 11 3 China as an investment destination 17 4 Outlook 26 Page SectionOverview Table of Contents Page 2

3 1 Changes in global trade and logistics patterns Page 3

4 PwC 1990 distribution of world merchandise exports by exporting country/region 2009 distribution of world exports by exporting country/region Change in exports by region North Americas and Japans decline in export market share is significantly greater than that of Europe, Africas export share of global exports has increased by more than 50%, albeit from a low base, and Developing Asias export share has increased three fold Source: PwC Economic Views, Future of World Trade – Top 25 sea and air freight routes (March 2011) Page 4

5 PwC Important sales and supply markets evolve in which emerging and least developed countries play a major role. New transport corridors will emerge, especially between Asia and Africa, Asia and South America as well as intra- Asian. Globalisation Page 5 May 2013

6 PwC Top 25 bilateral trade pairs in 2009 (sea and air freight) Page 6 Source: PwC Economic Views, Future of World Trade – Top 25 sea and air freight routes (March 2011)

7 PwC Top 25 bilateral trade pairs in 2030 (sea and air freight) Page 7 Source: PwC Economic Views, Future of World Trade – Top 25 sea and air freight routes (March 2011)

8 PwC China will dominate global trade in 2030, featuring in 17 of the top 25 bilateral sea and air freight trade routes. Page 8 Source: PwC Economic Views, Future of World Trade – Top 25 sea and air freight routes (March 2011)

9 PwC Evolution of 2030s largest bilateral pairs Evolution of the five fastest growing bilateral pairs Source: PwC Economic Views, Future of World Trade – Top 25 sea and air freight routes (March 2011) Page 9

10 PwC Trade between China and Africa Bilateral trade between China and Africa has risen from US$8bn to US$73bn in current prices between 2000 and Headline Trade China - Nigeria Investments and agreements for natural resources have been struck across Africa, including those for oil in Sudan, Angola and Algeria, copper and agriculture agreements in Zambia and mining in South Africa. China has also invested heavily in transport infrastructure (e.g. Kenya). Trade flows from China to Africa mainly consist of Chinese consumer goods. In the next twenty years the flows of merchandise exports between China and Africa is expected to be a key growth area for global trade. Infrastructure Trade flow forecast to increase nearly eight times by In 2010 the China State Construction Engineering Corp agreed a $23bn deal to build 3 refineries in Nigeria. Source: PwC Economic Views, Future of World Trade – Top 25 sea and air freight routes (March 2011) Page 10

11 2 Emerging economies driving growth Page 11

12 PwC China: by far the highest GDP, but relatively low per capita GDP per capita seems to correlate with urbanisation rate Only India has lower GDP per capita and urbanisation rate than China Smaller economies show higher GDP per capita and urbanisation rate – Brazil – Mexico – Russia – Turkey Urbanisation facilitates centralised distribution strategies The structure of emerging economies differ substantially Page 12 Source: PwC T&L 2030, Volume 3: Emerging Markets – New hubs, new spokes, new industry leaders? (Dec 2010)

13 PwC Logistics Performance Index (World Bank) summarises logistics performance of countries in six areas: – customs – infrastructure – international shipments – logistics competence – tracking & tracing – timeliness China leads the group of seven (ranked 27 th among 155 countries covered), mainly due to the high quality of transport infrastructure South Africa (ranked 28 th ) leads in competence and quality of logistics services Logistics performance of emerging economies Page 13 Source: PwC T&L 2030, Volume 3: Emerging Markets – New hubs, new spokes, new industry leaders? (Dec 2010)

14 PwC Territory insights – Seven routes to one goal: growth. Page 14 Source: PwC T&L 2030, Volume 3: Emerging Markets – New hubs, new spokes, new industry leaders? (Dec 2010)

15 PwC Customs union Mercosur – trigger for logistics activities 2014 FIFA World Cup, 2016 Olympics – trigger for FDI and upgrading of transport infrastructure Domestic demand for logistics services will grow strongly, relevance of FDI may decrease CEP market promising double-digit growth Opportunities for the private sector envisaged, following continued privatisation of T&L operations Gradual policy reforms should encourage FDI in the T&L industry Multinationals dominate the logistics demand Growth in international trade will depend on the effectiveness of regulatory reforms Special economic zones will stimulate trade flows between Asia, Europe and North America The level of competition of multinational logistics service providers is expected to grow Starting point of a new transport corridor to Asia; investments in transport infrastructure needed Ports, railways, pipelines – public; road transport and logistics – private Continued growth and new opportunities in 3PL and CEP Wave of privatisation – ports first; highways, maritime operations, bridges, railways to follow Territory insights – key findings Page 15 Source: PwC T&L 2030, Volume 3: Emerging Markets – New hubs, new spokes, new industry leaders? (Dec 2010)

16 PwC 8 assertions about the future of emerging markets The establishment of free trade zones and resulting increases in foreign direct investment will lead to above- average growth of the transportation and logistics industry in emerging markets. The degree and pace of privatisation of state-owned T&L organisations will strongly differ among emerging markets; while governments in some cases become watchdogs, they are still the game makers in others. Important sales and supply markets evolve in which emerging and least developed countries play a major role. New transport corridors will emerge, especially between Asia and Africa, Asia and South America as well as Intra-Asian. After a period of tremendous market growth and continuous market entrance of multinational LSPs, the T&L industry in emerging markets will face fierce competition followed by consolidation. The T&L industry in emerging markets will increase its level of professionalism, partly driven by strong commitment, technology and know-how transfer of multinationals in their markets. LSPs from emerging markets will not gain significant market share in developed countries, even low-tech logistics solutions are not perceived as a viable route to win market share. LSP from developed countries will heavily engage in emerging markets, however emerging markets will not become the new centres of gravity in logistics as regards standard setting, innovation and technology transfer. Transport corridors ConsolidationCompetition Regulation Its all about money the importance of barter trade diminishes. Page 16 Source: PwC T&L 2030, Volume 3: Emerging Markets – New hubs, new spokes, new industry leaders? (Dec 2010)

17 PwC Logistics Service Providers (LSPs) from developed countries will heavily engage in emerging markets. Emerging markets will not become the new centres of gravity in logistics as regards standard setting, innovation and technology. Competition Seven of twenty most important ports are located in China Innovations, standard settings and headquarters will remain in developed countries representing the centres of gravity in logistics Some emerging economies demonstrate low-tech low-cost innovative domestic logistics solutions PwC (2010) Delphi panel: does not see a shift before 2030 Page 17 World Port ranking in container traffic in 2008 Source: Institute of Shipping Economics and Logistics LSPs from emerging markets should focus on their more attractive domestic markets and seize opportunities to enhance their service level and logistics capabilities. The future for Logistics Service Providers

18 PwC Percentage modal share for domestic freight (2007), as measured by ton kilometre Page 18 Source: Source: McKinsey and PwC Research, Van Eeden & Havenga (2011), National Department of Transport South African Maritime Study (July 2011)

19 3 China as an investment destination Page 19

20 PwC China remains the top investment destination China 56% Brazil 52% India 37% Turkey 25% Russia 19% Indonesia 12% South Africa 11% US 34% Mexico 26% Source: PwC Choosing China: Insights from multinationals on the investment environment (2013) Page 20

21 PwC Areas global CEOs want Chinas Government to focus on Improving government transparency and anti-corruption 73 % Reducing intervention in the economy and allowing an increase in private competition 53 % Source: PwC Choosing China: Insights from multinationals on the investment environment (2013) Page 21

22 PwC Chinas reform measures investors find attractive Economic development driven by domestic demand 48 % Financial reform, steady liberalisation of foreign exchange controls and interest rate policy 43 % Doubling residents per capita income by % Page 22

23 PwC China could overtake US as worlds largest market in PPP terms by 2017 China could overtake the US in PPP terms 2017 China could overtake the US in MER terms 2027 PPP: purchasing power parities MER: market exchange rates Source: World in The BRICs and beyond: prospects, challenges and opportunities. Published by PwC, January 2013 Source: PwC Choosing China: Insights from multinationals on the investment environment (2013) Page 23

24 PwC Parts of the value chain carried out in China by German companies Page 24 Source: PwC Logistics in China: An All-inclusive Market? (Jan 2012)

25 PwC Page 25 12% Of PwC survey participants only 12% rated logistics providers in China average level of development as high Source: PwC Logistics in China: An All-inclusive Market? (Jan 2012) Level of development of logistics services providers in China

26 4 Outlook Page 26

27 PwC Outlook Growth in China will continue to dominate world trade: -China will continue to be an attractive investment location -Largest growth in trade lanes will be between China and other emerging economies -The practices of logistics service providers in China will lag those of the developed world -Africa, with Nigeria and SA in the lead, will build closer trade links to China Logistics performance in South Africa is ahead of many emerging economies A period of growth in the logistics industry to support rapid changes in trade patterns and growth in emerging economies is likely to be followed by a period of consolidation


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