Going Global

Going Global

For the transportation and logistics industry in the United States, globalization is a double-edged sword. Operators who have a hand in moving the goods that come into the United States from abroad are swimming in new and growing business.

Companies that specialize in an entirely domestic economy may have an entirely different view. For them, the move of manufacturing from Massachusetts and Indiana to Chengdu and Mumbai is an entirely different matter, and the shells of factories across the country's industrial heartland offer a sobering warning for the future.

For both, however, the impact of globalization is increasingly evident and growing.

It's an impact that author Thomas L. Friedman, the Pulitzer Prize-winning columnist of The New York Times, argues is in its infancy. His new book, "The World is Flat: A Brief History of the Twenty-First Century," describes a world where what today we call outsourcing really is one step in a changing commercial environment that is remaking the landscape of trade and, in a larger sense, the nature of the world economy.

The implications for logistics in such a shift are enormous and, it's evident in even reading an excerpt in the Times, only now beginning to be felt in the transportation world.

He writes of the convergence of a series of major global trends, many driven by technology but also by economic and political events, around 2000 that "created a global, Web-enabled playing field that allows for multiple forms of collaboration on research and work in real time without regard to geography, distance or, in the near future, even language."

Transportation and logistics is central to the economic drivers, Friedman writes, and even provides a historical model for the impact of enormous investment in technology that is feeding globalization. The drive to build technology networks mirrors what he calls the "overinvestment in railroads" in the United States in the 19th century, which "turned out to be a great boon for the American economy."

Now, technology allows for what he calls supply chaining: "I create a global supply chain down to the last atom of efficiency so that if a sell an item in Arkansas, another is immediately made in China."

It's what has helped make Wal-Mart the world's largest retailer, although Wal-Mart was a behemoth long before the company itself ranked as China's eighth largest trading partner. It also has helped drive change at UPS, a company Friedman has spent time studying as it has responded to the move towards Globalization 3.0 that Friedman describes.

As Friedman puts it, UPS is expert at "insourcing," the ability to take over an entire logistics operation for a manufacturer, an increasingly important role as shippers find their supply chains stretched across borders. But even UPS finds that information sent without regard to time, geography or language still is tied to goods that are very much concerned with time and geography.

To us, that suggests that the successful transport and logistics companies in this "flat world" will be those that are best able to respond to Globalization 3.0 by making movement of the goods look as seamless as the flow of information.

They may be the ones who will be around for Globalization 4.0.