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Alan McKinnon – Professor of Logistics

THE 
LOGISTICS BLOG

Current issues in logistics and transport

Logistics at Davos

The World Economic Forum’s Annual Meeting 2022 in Davos in May this year was smaller than normal with many ‘A-listers’ absent. It still brought together around 2200 executives, public policy-makers and experts to debate an unprecendented set of global issues.  During my two previous visits to Davos in 2011 and 2012 there was little in the main programme about logistics and supply chains. This time, supply / value chain resilience was one of the dominant themes, with its own sessions and frequent mention in general debates on trade, energy, war and globalisation. Here are some of the ‘take-aways’.

There was wide recognition that disruptions to global supply chains over the past two years have been so severe and prolonged that we will not now return to some pre-2020 normality.  This does not mean that globalisation will go into reverse to shorten supply chains.  The concept of ‘de-globalisation’ is rather simplistic and one-dimensional.  It under-estimates the true complexity of global value chains.  A process of ‘re-globalisation’ is more likely, with value chains being reconfigured to broaden the supply base in both geographical and corporate terms.  To the vocabulary of off-shoring, re-shoring and near-shoring is now added ‘friend-shoring’, i.e. sourcing more from liberal democracies that can be trusted not to go to war with us or get sanctioned.

This reflects the new role that geopolitics is playing in reshaping supply chains.  Davos discussions suggest that, given the recent impact of supply disruptions on macro-economics, social welfare and international relations, business efforts to strengthen resilience need to be bolstered by government action, as currently underway in countries such as the USA and Australia. There was broad consensus that this should involve close public-private collaboration and avoid becoming an excuse for trade-reducing protectionism.

Logistics also featured in discussions on another major Davos 2022 theme – climate change.  There were sessions specifically on the decarbonisation of road freight and shipping at which uncertainties about the future low-carbon energy mix persisted.  Whatever the final mix, huge investment will be required in the infrastructure to produce, distribute and store the renewable energy and to manufacture and retrofit the trucks, vessels and planes to use it.  To accelerate this investment the WEF launched its First Movers Coalition at COP26 to harness ‘the purchasing power of companies to decarbonise seven hard-to-abate sectors’ including trucking, shipping and aviation. It was announced at Davos that the coalition has grown from 35 to 55 companies with a combined market value of $8.5 trillion and including four logistics businesses, DHL, Maersk, Fedex and Agility

Another sector was added to the Coalition – carbon dioxide removal (CDR).  At a session on this topic it was predicted that by 2050 we may need an industry the size of today’s oil and gas sector to remove enough CO2 already in the atmosphere to keep the global temperature rise within the critical 1.5oC by 2100.  This could involve transporting twice as much liquidised CO2 in 2050 as the amount of fossil fuel moved today – hopefully over short distances, but still a massive logistical challenge.

Logistics Manager July 2022

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© Professor Alan McKinnon 2025

Kuehne Logistics University
Hamburg
Germany

contactme@alanmckinnon.co.uk

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© Professor Alan McKinnon 2025

 

Kuehne Logistics University
Hamburg
Germany

 

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