Download A Better Understanding of the International Trade Supply Chain and

A Better Understanding of the
International Trade Supply Chain
and the Express Delivery Industry
Matt Vega
Senior Counsel
Federal Express Corporation
A Better Understanding of the
International Supply Chain and EDS
Foundational Concepts of Access
 Functional Components of Access
 Time
 Space
 Information
 Beneficiaries of Access
 People
 Businesses
 Nations
f (T, S, I) = A
 Opportunities Generated by Access
 To participate
 Choose
 Improve
A Better Understanding of the
International Supply Chain and EDS
The Access Generation
 Regardless of what country you live in:
 Today, 20% of all goods consumed crosses a border
 By 2020, 80% of all goods consumed will cross a border
 Why is that important?
 The world is irreversibly committed
to global trade
 Dependent on fast cycle logistics
 Creating a supply chain revolution
A Better Understanding of the
International Supply Chain and EDS
Fast Cycle Logistics (2 key ingredients of)
 Express Delivery Services (EDS)
 Rapid, reliable, customs-cleared, time-definite, door-to-door transport and delivery,
usually within just one or two business days
 EDS connects more than 90% of the world’s GDP in 24 or 48 hours
 High-value / low-weight: only 3% of cargo is shipped by air, but air cargo accounts for
40% of the value
 Global Supply Chain Logistics
 Advanced methods
 Information technology
A Better Understanding of the
International Supply Chain and EDS
New Supply Chain Models
 Changing the World’s Business Models:
 Global Sourcing
 Build to Order Systems
 “Just-In-Time” (JIT) Manufacturing
 Vendor-Managed Inventory (VMI)
 Reducing costly inventories
 Increasing speed to market
 More than 40% of US economic activity is JIT
 Average amount of inventory stocked in US reduced by nearly 20%
 Inventory carrying costs in the US have gone from 7.2% of GDP in 1982 to 2.7% today
 Frees up capital for R&D and other more useful expenditures
A Better Understanding of the
International Supply Chain and EDS
Consumer Revolution
 E-Commerce
 On–line sales in the US are growing at 25% per year
 E-bay
 Consumer expectations will never be the same
A Better Understanding of the
International Supply Chain and EDS
National Economic Growth
 SRI Study
 Ranked 75 countries
 According to 22 indicators of Access
 Results
 Greater Access associated with enhanced trade and greater economic growth
 Top 10 countries experienced 22 percent growth
 Bottom 10 countries experienced 14 percent growth
A Better Understanding of the
International Supply Chain and EDS
Policy Implications
 Time (express overnight or time-definite, retail business)
 Take the unique business model into consideration
 Threat-based, risk managed solutions only
 Keep the retail customer and small to medium businesses in mind
 Space (global linehaul network)
 Global harmonization needed for interoperability, training and compliance
 “Single window” concept intra-country just as important
 Mutual recognition will leverage benefits of greater Access
 Information (advance information, track & trace)
 Supports Custom’s advanced cargo manifest systems
 Requires “just in time” information window approach
 Remember all information has significant associated costs
A Better Understanding of the
International Supply Chain and EDS
“In the global economy, the concept of
distance is no longer a factor in decision
making. What matters is the time.”
Gene Huang,
FedEx Chief Economist
A Better Understanding of the
International Supply Chain and EDS
“Information about a shipment is as
important as the shipment itself.”
Fred Smith,
Chairman & CEO FedEx
A Better Understanding of the
International Supply Chain and EDS