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Importance of logistics

Nowadays, logistics forms a huge part of a country’s economy.

If we take the UK as an example, there are 195,000 logistic enterprises and around 2.5 million people working within the logistics industry. See the image below for a visual breakdown of the numbers by region.

A map of the UK divided by region with a breakdown of the proportion of logistics employees and number of logistic enterprises. Scotland 7% employees and 9,590 enterprises. Northern Ireland 2% employees and 5,045 enterprises. North East 4% employees and 4,205 enterprises. North West 12% employees and 22,205 enterprises. East Midlands 10% employees and 17,890 enterprises. West Midlands 11% employees and 22,530 enterprises. Wales 3% employees and 6,100 enterprises. East Anglia 10% employees and 23,160 enterprises. London 10% employees and 28,170 enterprises. South 13% employees and 25,295 enterprises. South West 8% employees and 13,660 enterprises.

The geographical context of trade is key when we consider the economic importance of logistics. The UK’s import/export volumes and trade agreements, like any other country, are central to its economic performance.

Image presenting UK's import and export levels in 2017 - described in the text below.

As we can see from the figure above, the UK exported marginally more to non-EU countries (51%) compared to the EU (49%) in 2017. However, the UK imported more from the EU (55%) than non-EU countries (45%). The UK’s economic performance in the future will depend on its future trading relationship with the EU and the rest of the world. We’ll explore trade agreements later in this short course.

Globally, the costs associated with logistics represent a significant proportion of a country’s GDP, but these can be reduced through proper planning and management. The table below shows the logistics costs to a country as a percentage of their GDP in 2015:

Country Logistics costs as a percentage of GDP
United States 8.5%
South Africa 12.7%
India 13%
Thailand 15.2%
Brazil 15.4%
China 17.8%
Finland 19%
Vietnam 22.5%

(Murphy and Knemeyer 2015)

Your task

Compare your own country with another country of your choosing. Investigate the logistics proportion of GDP for each country, and why one of the two countries has a higher proportion.


References

Murphy, P., & Knemeyer, A. (2015). Contemporary logistics. (10th ed.). Pearson.

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This article is from the free online course:

Introduction to International Logistics

Coventry University