Globalisation of Logistics & Supply Chains - Coursework Example

GLOBALISATION OF LOGISTICS & SUPPLY CHAINS Introduction In when there was a great intensity of debates about the effect of globalisation, a renowned author, Pankaj Ghemawat, provided an opinion that stood in stark contrast to the prevailing wisdom. In his analysis, Ghemawat noted that England, or the United Kingdom (UK) in general, was not as globalised as people thought it was; this opinion was brought to light in one of his famous publications with the statement, “We’re not nearly as globalized as we think we are” (Ghemawat 2011, p. 3). The perspectives of Ghemawat have taken a while to be appreciated, and effective steps are being discussed to ensure globalisation is embraced in a society that is thought to be at the peak of it. Three years after his perspectives were published; the insights raised by Ghemawat have been instrumental in the development of the Global Connectedness Index (GCI), an initiative run by DHL, the world-renowned courier services company. The GCI, which is now reaching its fourth year, was established as an effective and efficient non-judgmental means to measure different aspects of cross-border integration. One of the primary objectives of this index was to create an analysis of global flows and their power to increase prosperity in the regions they connected.(Worthington & Britton 2003, p. 54). Additionally, the index plays a leading role in offering a realistic and nuanced perspective of the degree to which different trading nations have attained their main developmental goals and objectives. Another important function of the index is to provide an effective understanding and measurement of different cross-border flows that relate to people, information, capital and trading activities happening in various regions. The aspect of connectedness in the report denotes the ability of people to move and interact freely within regions that seem geographically separate. In this case, the need to establish effective transport systems cannot be overemphasised (Rushton, Oxley & Croucher 2000, p. 47). By developing such kinds of infrastructure, other things like trade and communication often emerge automatically. This involves all the different aspects of the trade of various goods and services, foreign direct investments, increased stock market activities and global Internet bandwidths, as well as the increased movements of people and telephone calls. In turn, the greatest beneficiary is often the country or countries undertaking such a decision. This paper examines the process of establishing an HSR system (HS2) as part of the government’s initiative to establish an effective and integrated transport system. The New High-speed Rail in the UK The UK is set to establish an HSR system that will run from London to several other cities and towns, including Birmingham, Manchester and Leeds, among several others. The development of this rail system will enhance transport throughout the UK, bringing most of the cities in Wales and Scotland within a 30-minute proximity to London. Additionally, the creation of this transport system is calculated to come with many economic benefits that total more than £40 billion, with the initial phase of the project estimated to generate more than 40,000 employment opportunities for the people in these regions. In response to this developing story, Cardiff Business Partnership believes that besides electrification, upgrading the Great Western Mail Line (GWML) is necessary in the process of making Cardiff a competitive world-class city in the UK and Europe. The analysis of the project, as completed by one of the most highly renowned audit companies in the world—KPMG—indicates that journey times from Cardiff to London will reduce considerably, from an average of 125 minutes to about 105 minutes, which will have a positive effect on business and other social activities, not only in Wales but in other countries as well. It is important to understand that the development of this massive project requires high expenditures to mitigate many of the environmental effects that will emerge in the development of the HSR system. The Welsh Government must be adequately prepared for proportionate investments into the GWML to mitigate effectively the many economic impacts that will be brought about in Wales and other areas in South West England. The above approach is necessary considering the fact the project will be funded by taxes from Welsh and English citizens. Additionally, the development will be in line with the UK government’s objective of encouraging an even distribution of regional economic growth, which is to happen across the entire UK. Many of the wealthiest nations around the world have been relying on HSR systems to facilitate the faster movement of people, goods and services, thus increasing the level of their economic growth and development. Benefits of High-speed Rail Most governments that have created HSR systems have continued to enjoy continuous benefits, including in both the economic and social dimensions. One of the advantages of HSR transport systems is that they allow for the faster delivery of people and products from manufacturers to customers. This system allows individuals to save time, money, and energy effectively, which can be redirected to other economic activities, benefiting people and country. It is also imperative to acknowledge the fact that HSR is extremely reliable and operates effectively in all weather conditions. This system of transport is rarely affected by congestion, which makes it reliable for both short- and long-distance journeys. One of the reasons why most wealthy nations choose to depend on HSR is the system often spurs the revitalization of towns and cities by encouraging the mixed use and high-density real estate development around those particular stations (Van 2009, p. 24). The rail systems are known to foster a great deal of economic growth and development in most of second-tier towns and cities along the train routes. This process is often achieved by the systems’ ability to link cities and towns, allowing them to operate as strong and independent economies. By developing a link between cities and towns, HSR systems tend to widen labour markets, offering potential employees a larger pool of employers in business and non-business organisations from which to choose. In addition, these transport systems often encourage the development of highly advanced and effective technology clusters that facilitate easy and faster access to different destinations. By enabling easy access and connectivity between towns and cities, HSR systems play an important role in expanding visitor markets—especially for tourists. In the process, they encourage and facilitate increased spending by visitors, which is desirable for the host cities and towns, as well as fosters economic growth and development. The many advantages brought by HSR systems have a multiplier effect, spreading to other towns not linked with these systems, while enhancing the growth and development of other sectors of the economy, facilitating balanced regional growth and development. What Does the Welsh Government Stand to Gain From This Development? Economic Effects It is interesting to note that although the Cardiff Business partnership seems to openly support the initiative of the UK government to establish the HSR system, what has been proposed and ratified does not appear to be an actual representation of the UK’s national network. In fact, at present, the plans that have been ratified seem to ignore completely South West England and Wales (Kendall & Cole 2006, p. 43). Additionally, though the research confirms the actual consultations, as well as offers a compelling business case study of the terms and conditions for the establishment of the HSR system, it does not seem to explore the potential economic advantages of the program for South West England and Wales. Despite the above observations and findings made regarding the planning of the HSR implementation, it is quite evident that any kind of substantive work that may have been done was completed in 2010 under Green Gauge 21 (Branch 2001, 76). Some of the key findings regarding economic advantages that may accrue for the Welsh Government in the implementation of the HS2 system are based on the employment opportunities that will arise from the project. From the report, it is estimated that the implementation of the program will create a boost to the country’s economy of about £17billion and £29billion by 2040 (Rugman & Collinson 2006, p. 23); however, this expectation is wholly dependent on how the program will activate other sectors of the economy that are not directly linked to the system. Additionally, it may also be determined by the capacity constraints that arise and how efforts to overcome emerging problems will be addressed. Therefore, the people in charge of the program will be expected to make a careful assessment of all the economic and social sectors that could benefit from the program directly and indirectly (Long 2003, p. 67), then initiate plans of how to handle them in the most effective way. Generally, there has been a consensus that implementing the HSR system throughout Britain will have the potential to generate more than 42,000 jobs for the people in Wales and other areas of the UK (Mintzberg et al. 2002, p. 87). In any economy, highly active businesses often offer increase wages, which attracts a highly competent labour force to the market. The growth of business in Wales is bound to spur overall business growth and development, which will attract experts and other professionals to work in different sectors in the country (Lowe 2003, p. 28). KPMG has analysed some of the jobs expected to contribute immensely to the growth of the economy in Wales and the UK (BBC News 2013, p. 15). Most jobs that will arise from the setting of this HSR system will emanate from domestic residents, who are expected to be empowered to join the competitive labour market (Lowe 2002, p. 55). Additionally, by attracting foreign investors, it is expected the development will have a further positive effect on the economies of the counties shown in the table below. This table provides estimates for some of the employment opportunities that may arise in Wales following the establishment of the HSR system by around 2040. The figures should provide the government with enough reasons to complete feasibility studies and evaluations of the establishment of HS2 (BBC News 2013, p. 13–14). Table 5. Regional Employment Growth Rates 2021–2040 (Parliament Copyright 2011). Besides the many positive economic effects the HSR system is expected to bring the Welsh Government, there are many other positive externalities associated with the different sectors of the environment, as discussed below. High-speed Rail Lowers Greenhouse Gas Emissions A significant reduction in greenhouse gas (GHG) emissions is one of the most important positive externalities arising from the development of HSR systems by countries that have highly developed infrastructure systems. Across the world, global warming has become an important concern, with many countries being advised to seek and advocate for various sources of energy that do not encourage such emissions because of their adverse effects on the climate (Stone 2014, p. 13). This development has led countries to devise various ways through which they can achieve this important goal, with the establishment of this rail system being one of the most effective alternatives. One of the ways in which this mode of transport reduces GHG emissions is it tends to reduce flying and driving by introducing a means of transport that is both fast and reliable. The system is designed to run on electricity, which can be generated by various means, including power stations fired by coal (McKinnon 2013, p. 75). In this regard, HSR systems produce extremely low greenhouse gas emissions compared to driving or flying. It is thus evident to the Welsh Government that HSR development will reduce the net GHG emissions by about 1.3 million tonnes of carbon dioxide emissions. Out of this, around 1.1 million tonnes will emanate from reductions in plane flights and about 0.2 million from fuel saved from automobile avoidance. In examining the amount of GHG emissions that will be saved by the introduction of HSRs, it is similar to removing about 365,000 cars from the road. The reduction in emissions is said to be valued at approximately £140 million annually beginning the first year after the full development and implementation of the rail transport system. It is important to understand that the savings from pollution are often a result of reduced levels of noise and other forms of atmospheric pollution resulting from the development of HSR systems, as they depend on electricity instead of the petrol used to power cars, conventional trains and buses. In this respect, it is evident that the pollution avoided due to the use of this rail system can be valued at about £4 million per year. High-speed Rail Lowers Accident Costs Research findings from countries that have developed HSRs indicate that this transport system is effective at reducing accident rates by great margins. Even a small reduction in the number of cars on roads makes a significant contribution in terms of savings on medical expenses and lost productivity. When HSRs are developed, many people will use them instead of cars or planes. By establishing the high speed rail, Wales is bound to witness a huge reduction in the number of trips made by other modes of transport throughout the year. People will not be forced to migrate to towns and cities to manage their businesses and careers (Harrison &Van H 2005, p. 89); instead, they will be better placed to manage effectively the same businesses and careers from more distant regions that are connected by the railway. HSR systems have been shown to improve a country’s regional balance, especially for areas closer to the HSR system. Therefore, the inequalities that exist between and among different regions in a country are lessened (Jessop & Morrison 1994, p. 61). This can be well illustrated by focusing on the number of cities that the HSR system must cross in Wales to reach London and other towns and cities beyond. With the development of this rail transport system, it is expected these regions will receive in excess of one million tourists who are expected to visit various towns for the spirit of adventure, as well as for business and investment reasons. Additionally, it is expected that social institutions, including universities, hospitals and religious centres, will also begin to sprout. In many instances, places located far away from major towns tend to have poor socio-economic scores as compared with nearer cities. It is therefore important the Welsh Government create effective systems by which they can conduct important analyses and research for this project to establish how effectively it could be completed for the country’s social and economic development, among other things. Other positive externalities arising from this transport system include operator benefits, i.e. the net profits HSR operators make from surpluses of user charges against the costs incurred. Disadvantages of High Speed Rails With the invention and development of HSR systems, some of the general and common demerits that the Welsh Government is likely to encounter include costs for the construction of railway lines. HSR lines use various kinds of specialised materials and installations that may not be easily available, which can lead to higher costs (Mangan, Lalwani & Butcher 2008, p. 89). Additionally, the rail system has extremely high maintenance costs that will require a substantial amount of investments from taxpayers. HSR systems also require a substantive allocation of land, which the Welsh Government should be prepared to meet. In most cases, the process of acquiring land is tedious and bureaucratic, with some people failing to support the government’s land compensation plan. When the process is not managed well, local politics may hamper its effective and smooth development. Another notable disadvantage that arises from the process of developing HSR systems includes the need for specialised labour, which may not be easily available. Politics and Economics behind High-speed Rail Transit Operative and Construction Costs In any country, before the establishment of any major public policies, many considerations must be made in terms of transport challenges. For this reason, having an effective marketing plan is an important part of the process. Because the development of HSR systems plays an important role in supplementing other modes of transport, the construction and operating costs must be effectively considered (Lowe 1989, p. 91). With the development of this mode of transport, there is often the need to create effective public–private partnerships to smoothen the process. In the development of HSRs, public–private partnerships are necessary to develop practical and highly profitable projects that can benefit all people in the economy (SkyNews 2014, p. 9). The Welsh Government needs to ensure it creates effective and reliable strategies that can enhance a proper public–private partnership for the development of the country’s economy. From an economic perspective, the HSR systems involve enormous technological and operating costs that are based on the quality and standard of construction materials, as well as on their respective application and maintenance (Baily et al. 2008, p. 76). Some of the important costs that must be effectively considered include the length of the railway track needed to construct a particular travel corridor. This also includes the process of evaluating and using the terrain before the construction of maintenance systems and plans. Additionally, the process involves the signalling and laying electrification of effective and reliable tracks (Baker 2010, p. 45). The system also requires specialised labour, which includes construction workers, engineers and technicians. Finally, there is a need for advanced materials that are required in the development of HSR systems (Cole 2005, p. 51). It is important to avoid politics in the development of major public projects aimed at improving the economic and social welfare of the country and its people. Conclusion In conclusion, it is important to note the advantages and benefits arising from HSR systems cannot be overemphasised. Many wealthy nations have benefited immensely from the development of HSR systems (Johnson, Scholes & Whittington 2010, p. 31). Many of the towns and cities in these nations have become closely linked, such that the relative distances between and among them have been drastically reduced. The Welsh Government must perform effective research on the needs and requirements to be incurred in the development of this HSR system (Wild, Wild & Han 2008, p. 77). The benefits to be derived from these transport systems far outweigh the disadvantages; it is important that effective policies be used to ensure the growth and development of these transport systems. Bibliography Baily, P, Farmer, D, Crocker, B, Jessop, D & Jones, D 2008, Purchasing Principles and Management, 10th edn, FT Prentice Hall, London Baker, P 2010, The Principles of Warehouse Design, 2nd edn, ed. Jim Rowley, Institute of Logistics and Transport, Corby BBC News 2013, HS2 will benefit whole UK, transport secretary says, BBC, accessed 5 March 2015, . BBC News 2013, Swansea City: Premier League worth £58m to economy, BBC, accessed 5 March 2015, . Bloomberg, DJ, LeMay, S & Hanna, JB 2002, Logistics, International edn, Prentice Hall. 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