The China-Pakistan Economic Corridor (CPEC), one of the largest cooperative investments in Asia, is underway. Focused on economic growth, productivity gains, growing the middle class, and cutting product costs, CPEC promises to revolutionize trade in the entire region.
Faced with such a great opportunity, logistics companies must avoid becoming the History of Tomorrow. Companies should be tightly focused on readiness to ride the highs this new infrastructure will bring to the region.
The closest analogue in history for CPEC is the Federal Aid Highway Act of 1944 in the United States, which:
- Improved living standards and expanded the middle class
- Made $6 for every $1 invested
- Cut product costs by at least 24%
- Improved international competitiveness
- Created a suburban sprawl
- Increased productivity by at least 31% during the initial phases of the project
- And many more benefits to at least 31 of the 35 industries in operation at the time the project was implemented.
The US Interstate system as a result of the Federal Aid Highway Act of 1944
If we look at the current logistics ecosystem in the US, we have some very large participants, but also a great deal of small LTL, 3PL, and TL providers, without whom the ecosystem is unsustainable. The entire industry has gone through extensive technology investments towards communication, automation, and digital transformation. Now, small-to-medium enterprises are undergoing a digital innovation phase on top of digital transformation initiatives and platforms they previously developed.
The key point to remember is that a typical company has invested much time in the development of platforms that enable the realization of competitive advantage. Many small-to-medium players are still struggling with silos, turf wars and internal politics, where individual business units have their own systems that don’t support the overall mission of the enterprise. This is primarily because vision and strategy for both business and technical dimensions are missing.
For example, Marketing CRMs are separate from Customer Service CRMs and Sales CRMs. Operational systems don’t talk to entry systems, and in turn, neither provide value to delivery and transportation systems. Hence, there is a great opportunity for companies in Pakistan, China, and Central Asia to develop strategies that enable a digital supply chain ecosystem. These players must remember that their competitors may be their partners on certain transactions while partners may turn out to be competitors in others, so governance, strategy, and support for the complete ecosystem are key.
New infrastructure through Asia and Europe resulting from CPEC
Assurety Consulting has over a decade of business and technical strategy experience, helping some of the largest and mid-size enterprises such as RR Donnelley, USPS, Morocco Post, and many small-to-medium sized businesses develop and implement technical platforms that enable sustainability and growth.
Logistics companies must develop business and technical strategies to connect their organizations through technology with a focus on a data-driven supply chain, supporting marketing, sales, operations, transportation, delivery, finance, digital innovation, and hybrid technologies, and using IOT where possible to create competitive advantages.
Also, it is critical for large freight, parcel, post, and express businesses to remember that a sustainable ecosystem requires smaller niche players. These smaller entrants enable large organizations to sustain their own businesses while providing growth and sustainability to the entire ecosystem.
CPEC is sure to impact Pakistan, China, and the Middle East and Central Asian republics at large, extending the reach of businesses to Europe while cutting costs and bolstering the middle class wherever the network grows.
Start with strategy and governance in mind and avoid becoming the History of Tomorrow.
Visit Assurety Consulting at booth 6 at the 7th Annual Sustainable Shipping, Logistics, & Supply Chain Summit & Exhibition on August 10, 2017, in Karachi and ask us how our logistics consulting can help you get ready for CPEC. For larger organizations in need of strategic decision support, ask us about our business modeling and big data analytics services.