What will be the effects of trends such as regionalization or digitalization on logistics and global trade? The effects of the trends strongly differ and do not affect all industries equally. In some cases, digitalization replaces the physical flow of goods by digital flows (e.g. films, games, books and magazines). Relatedly, the emergence of online platforms such as Upwork, Amazon’s MTurk, Slack, Skype, and others enable a digital market for talent and teamwork across the globe. These effects of digitalization will lead to less transportation. E-commerce, in contrast, will most likely increase transportation as it generates new demand for physical goods and services (consider Ebay, Amazon, or Alibaba).
Regionalization, i.e. giving preference to products and services produced locally, is a trend we currently observe in the food industry and a few others. This trend certainly has the potential to reduce transport.
However, when designing policies and regulations that shall encourage regionalization across a variety of industries, we need to be careful. Such regulations are designed with the best intentions and targeted at solving one problem. However, they may unexpectedly cause another problem.
Consider the fashion and apparel industry. Fashion companies heavily rely on fabrics and finished items produced in Asia (China, Bangladesh and so forth). It is possible to shift their production to other countries that are closer to the point of sale. For instance, for most European countries, Eastern Europe would probably be a geographically ‘nearer’ target market.[i] However, this would imply that goods that are currently shipped using large container vessels that can carry up to 28.000 containers will then need to be transported using inland waterways, rail or road. Inland waterways require small vessels. One train can carry 50 containers and one truck only one. Hence, if trade volumes remain constant, chances are that GHG emissions from transport increase rather than decrease because of lower batch sizes and associated increased transport frequencies – despite shorter distances. Not to speak of available capacities for within continent transport…
[i] Manyika, J., J. Bughin, S. Lund, O. Nottebohm, D. Poulter, S. Jauch, and S. Ramaswamy. "Global Flows in a Digital Age: How Trade, Finance, People, and Data Connect the World Economy." edited by Mc Kinsey Global Institute. New York, NY: McKinsey, 2014.