Contribution of logistics to the economy is important. The term “logistics” first appeared in English during the early 19th century, with the meaning of “the branch of military science dealing with supply and distribution.” The term was later adopted by other branches of the military.
Logistics, or supply chain management, is the discipline concerned with planning, coordinating, and controlling the movement of any manufactured or other product from the point where it is produced to the point where it is consumed. Logistics involves planning, organizing, training, and equipping to ensure that products are delivered to their destination on time, at a cost that meets expectations and within legal requirements.
Although logistics can be considered an independent field within business management, it also has strong interconnections with many other fields such as economics, engineering, and finance. In addition to these disciplines, logistics is closely related to operations management and marketing because it involves planning for all aspects of supply chain management including production planning, transportation optimization (warehousing), inventory control/management, and customer service delivery.
To the present day, the logistics industry plays a very important role in maintaining the balance between trade and commerce throughout the world. One of the critical areas that are directly affected by logistics is the economy. Almost all the time, these two will always have a relationship with each other. This article will aim to explore the relationship between the two and how the logistics industry directly affects the world economy.
Logistics generates jobs
Considered to be one of the biggest industries in the world, freight forwarding is one of the biggest job generators in the whole world. In the United States alone, the logistics industry employs millions of people. In 2021, even when the economy is still recovering from the COVID pandemic, job posting sites estimated a total of 70,000 new job openings for individuals who want to join the logistics industry.
The logistics industry is also considered to be one of the best career choices in this decade. The Bureau of Labor Statistics in the United States projects a 4 percent growth of jobs related to logistics in the next ten years. This figure agrees with the trend expected from other major industries in the country.
This means that the logistics industry is one of the few fields that will need more talent in the coming future. Unlike other sectors such as food and beverage and finance which showed a decline in employment opportunities over the last 5 years, the logistics industry shows a more promising future.
Logistics is a very important part of the retail sector
With more and more people engaging in online shopping for almost everything that they need, the demand for freight movers will only increase in the coming years. Right now, people are gradually moving towards subscription-based consumer goods. These purchases are those kinds where produce or fast-moving goods are delivered to your home at predetermined schedules. This and the increased demand for online shopping will only cement the need for more logistics players to help the retail sector.
But even before e-commerce became a thing, freight companies have already been an important part of the retail economy. It will be very impossible for the retail market to exist without a robust and dependable logistics industry working seamlessly in the background. Back when the world was still starting worldwide trade, people had been relying on trains and ships to move different goods across the whole world. The practice established the retail market that we are familiar with today. Developments in logistics technology enabled different companies to offer their goods and services to a wider market, therefore, making the price better for the consumers.
Logistics enables worldwide trade
It would be impossible for a truly worldwide trade to exist without the logistics industry. If your country is relying heavily on exports and imports, it will cause a very big issue if the logistics trade suddenly ceases to exist. Many states rely on different products that they import from other producing countries to sustain the food of their people. For example, countries in Asia export coconut oil to western countries since coconut trees cannot thrive well in their climate. This is just one example of how logistics can help in enabling a truly worldwide trade where products can be made available everywhere.
It’s important to understand how logistics helped in making global trade successful. The development of modern methods for transportation has transformed how goods are transported globally. However, this development also created challenges for businesses due to the high costs involved in shipping goods across oceans and continents.
The rise of containerization made it possible for companies to ship goods efficiently and reduce costs by removing the need for manpower during loading and unloading
operations at ports. It also made it possible for companies to send multiple containers on one ship, which reduced turnaround time from months to days.
Contribution of logistics to the economy
The logistics industry is a key part of the economy, even though it is often undervalued. It has been around for centuries but it is only in recent years that it started gaining popularity because of its contribution to economic growth. The logistics industry plays an important role in the global economy as it makes sure that goods from one country reach their destination as soon as possible.
Logistics helps in making sure that every product gets to its destination without any delays or losses during transportation. In this way, we can conclude that logistics plays an important role in making sure that the global economy continues to be successful.