The article which has been chosen for this particular assignment is named The threat of global gridlock. It’s written by George Stalk, Jr. George is a senior advisor to The Boston Consulting Group, and adjunct professor of strategic management at the University of Toronto.
In this article George is talking about his views, according to which the world is about to face a major crisis in transportation because of not meeting the demand of the global economy. George believes that currently the threat has been masked away but it’s imminent and if the prerecession trend reappears it would be a serious problem with the lack of infrastructure and the rising prices of oil. According to George there are four basic means of transportation that are by truck, train, ship or air.
Drastic increase in traffic has out spaced the road construction in most of the areas in Europe and the USA. The lack of construction of new highways has made the traffic system very congested. George supports this claim with the facts that were posted by the US Federal Highway Administration. Research shows that the US highway system has only slightly increased ever since 1990 while the traffic has grew up to half and it’s very unlikely to go down.
An alternate to trucking could be railroads which can reduce some pressure from the roads. However the there are some constraints that are creating hurdles in this way. According to the association of American railroads, the number of track miles fell before the down turn while the traffic rate rises constantly eventually resulting in delayed shipments.
Cargo passing through ships has also being effected with the increase in volume of shipments through containers. Three of the largest European ports experienced capacity limits in recent years.
The last source of transportation is identified as through air, but unfortunately there is not much difference in that also. No new airports are in the plan and it would take around a decade to approval of new run ways. George believes that with the advent of these new air ports gradually thing would get better.
In the second part George presents the idea that how organization are getting affected by this transportation turmoil. According to the author from the beginning when this business started manufacturing, sourcing, distributions and other functions were performed with very little hustle due to the declining cost of logistics, improved means of transportation and stable fuel costs. Now days the supply chain and the distribution mechanism has become more complex and the increasing cost of logistics has made very difficult for organizations to get benefit from cheap labor areas. The congestion and blockages has made the supply chain process problematic, longer and inconsistent (Stalk, 2009).
Identification of new concepts
George has classified cost into two categories, the obvious cost and the less obvious costs. By obvious cost what we mean to say is the rising fuel prices which cannot be ignored. It has resulted in making the logistics from oceans away very unappealing and as a result the overseas business has suffered dramatically. The less obvious costs include the transportation infrastructure which costs extra fuel consumption while passing through metropolitan area of the city.
Apart from the above mentioned direct costs there are some indirect costs on which the writer has thrown light. The time that these good take in process of reaching their desired destination is another vital factor in increasing cost (Craig, 1997). The longer it takes to reach the longer the companies responsibility would be held alongside the shipment. This overcrowding hurts an organization big time both in terms of monetary value and time value.
Neglecting the hidden cost
According to George there are some hidden costs that are often neglected by the retailers. This includes the consumers for a particular product. If the supply and distribution system is not swift it might be possible that the product become unwanted by the customers because of any reason. Another reason could be not having products that the customer wants to buy due to slow transportation. The resulting factor of these elements can be selling at market down prices and loss of immediate sales. Both of them have tremendous effect on the organization’s overall image and reputation (Burnson, 2009).
As far as defective or faulty reasoning is concerned it was quiet difficult to find, reason being that the author has given facts and figures throughout the article where ever it was needed. The sources of the facts are very reliable and cannot be more comprehensive. As far as the biasness part is concerned the author’s opinion about the air freight seems a bit unfair when he states that no new airports are under consideration. Most of the literature provided in the article is based on assumptions and understanding of the author and could be considered as the personal judgment of the author which is made upon prediction and not necessary to be true. It’s a hypothetical assumption that has been made by the author and it needs careful consideration before implementation.
The major strength that I found while preparing this review was the author’s anticipation and forecasting skills towards an upcoming issue which most of the executives have failed to address, or they are not aware of the magnitude of the challenges they are about to face I the near future.
As an entrepreneur the most important thing that I learnt through this article was foreseeing the future and preparing for it in advance. This is a skill of intuition which can be built with experience. Another thing which is very crucial in small businesses is the hidden costs that normally don’t look big enough but they hurt the organization’s overall productivity and effectiveness very badly. In short we can say anticipating the near future and having definite strategies to tackle them.
What I would remember from this article is the advancement approach, and the forward looking skill that the author has used throughout the article. The in depth knowledge and the command over the topic has provided different horizons to this topic. Another very important thing that I would take out from this article is that the art of predicting the future and then scheming the strategy accordingly. Apart from that another key issue that I learned is the importance of keeping an eye on the current external environment and the competitors’. This is important so as to be well prepared to counter any aggression from the competitor and the dynamic environment. Overall the article has provided a greater inside regarding the freight industry; also it has given a new way of thinking and analyzing the situation to the best of its use.
Burnson, P. (2009, september 6). Air cargo/global logistics: IATA issues bleak earnings report. Web.
Craig, T. (1997, May). Logistics–Five Key Issues for Logistics Effectiveness. Web.
Stalk, G. (2009). The Threat of Global Gridlock. Harvard Business Review, 1-6.