Logistics Services Critical for Trade and Economic Development — WTO DDG González

The digitalization of logistics services, accelerated by the COVID-19 pandemic, is helping to facilitate the smooth operation of supply chains and post-COVID economic recovery, Deputy Director-General Anabel González highlighted at a webinar entitled “Digitalization and logistics resilience — lessons learned from COVID-19 and challenges ahead” held virtually on 15 October. “As trade is more and more organized through value chains, be it global or regional, logistics services are the “glue” that holds value chains together,” she said.

DDG González’s full remarks are available below.

Dear distinguished speakers, dear colleagues, ladies and gentlemen,

Welcome to this seminar. The subject of today's seminar is timely and highly important for post-COVID economic recovery and global trade.

The critical role of logistics services in trade and economic development can never be overemphasized. As trade is more and more organized through value chains, be it global or regional, logistics services are the "glue" that holds value chains together. Numerous studies have shown that a country's competitiveness highly correlates with its logistics performance which relies on not only infrastructure, so-called hardware, but also software, namely the ability to supply cost-effective logistics services and the enabling environment. This is particularly important for developing countries as their logistics services are usually underperforming and LDCs suffer most from logistics constraints. Developing countries urgently need to improve their logistics capacity in the pursuit of development goals.

The COVID-19 pandemic has highlighted again that logistics is the lifeblood of economy. It was international logistics operations from transport, storage, distribution to delivery that kept smooth cross-border flows of medical supplies, food and other essential goods when most of the world was in lockdown during the pandemic. Thanks to the efforts of logistics providers, now everyday millions of COVID vaccines are transported and delivered to all over the world to save people's lives. No need to mention that the production of vaccines also relies on the transportation and delivery of inputs sourced globally.

The unprecedented pandemic has also brought digitalization of logistics services to the fore as a result of COVID restrictions and explosion of e-commerce. If traditional economic incentives were not enough for the logistic sector to transition to a "digital" form, COVID-19 has made such a transformation virtually inevitable. The pandemic has largely accelerated digitalization in the logistics sector. To address deepened complexity and increased uncertainty in business, digitalization is now seen as a must for any logistics operation and supply chain management. For example, the quick deployment of Internet of Things allows better track and trace shipment and enables the rapid exchange of information between all parties involved along a supply chain. The building of logistics resilience in post-COVID recovery cannot do without embracing automation and digitalization.

As digitalization is accelerating and expanding, various challenges lie ahead for the logistics industry, such as trade protectionism, new regulatory environment, cybersecurity, unintended fragmentation and lack of interoperability between the systems/platforms of stakeholders, just to name a few. Logistics services providers are also under tremendous pressure to meet customers' ever-increasing demand. For example, the world is expecting a quick solution to supply chain bottlenecks such as rising shipping rates, container shortage, port congestions, which are also some of the serious consequences of the COVID-19 pandemic.

Given the importance of logistic services in trade and economy, policy making should be informed of the digital transformation and the challenges facing the logistics industry. Many issues covered in ongoing trade negotiations within and outside of the WTO such as paperless trading, market access, interoperability, digital platforms, etc. are all crucial for the future of the logistics industry. Policy makers would appreciate having more clarity on how digitalization is transforming logistics services and where new challenges arise as governments are promoting digitalization and at the same time strengthening logistics resilience.

The speakers of today's seminar are all experts from the logistics industry covering express delivery, freight forwarding, e-commerce logistics, port operation, and digital standards. They will share experience and exchange views on what lessons have been learned from COVID-19, what challenges lie ahead, and what kind of policies can help address those challenges. Information on the ground and insights from the business are always valuable and inspiring for our work in the WTO. I want to thank all the speakers for your support.

Finally, I wish you an informative and enlightening seminar.