Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
ECONOMIC IMPACTS OF LOGISTICS
Although the logistics discipline today is vastly different from what it was like when the first edition of this
book was published in the 1970s, one thing that remains constant is the economic impact of logistics.
Before defining what logistics is, we believe it is important to discuss the economic aspects of logistics;
you might be surprised at its significant economic impact. From a macroeconomic per- spective, Table 1.1
presents logistics costs in relation to gross domestic product (GDP) for a select group of countries.
Although absolute and relative logistics costs in relation to GDP vary from country to country, logistics is
most definitely an important component in any country’s economy.
More specifically, logistics can play an important role in a nation’s economic growth and devel- opment.
For example, relatively high logistics costs (as a percentage of GDP) in the People’s Republic of China
(China) continue to restrict the country’s economic development; in particular, the high costs of highway
transportation have severely constrained the growth of China’s e-commerce mar- ket.1 In a similar
fashion, the growth of e-commerce sales in India is challenged by logistical ineffi- ciencies to include poor
roads and inferior transportation equipment.2
Apart from the previous examples of macrolevel economic impacts, the economic impacts of logistics can
affect individual consumers such as you. These impacts can be illustrated through the concept of
economic utility, which is the value or usefulness of a product in fulfilling customer needs or wants. The
four general types of economic utility are possession, form, time, and place; logistics clearly contributes
