Mark Miller presents at CILT International Convention 2019 in Manchester

1. www.ciltinternational.org1 International Convention | Manchester | UK
Globalisation Stalled?
Exploring the shifting landscapes
of 21st century supply chains
Mark Millar, FCILT
Author
Global Supply Chain Ecosystems

2. © www.markmillar.com2
Mark Millar MBA, FCILT, SCOR-P, FHKLA, FCIM, GAICD
Speaker, Moderator, Advisor, Author
Mark Millar leverages over 30 years global business
experience to provide value for clients with informed
and independent perspectives on their supply chain
strategies in Asia.
Acknowledged as an engaging presenter who delivers a
memorable impact, Mark has completed more than 450
speaking engagements at corporate events, client
functions and industry conferences across 28 countries.
A Visiting Lecturer at Hong Kong Polytechnic University,
Mark is recognised as one of ‘Asia’s Top 50 Influencers in
Supply Chain and Logistics’; in the USA listing of 'Top
Pros-to-Know in Supply Chain‘ and 'China Supply Chain
Top 20' .
Mark’s book “Global Supply Chain Ecosystems strategies for
competitive advantage in a complex, connected world”
was commissioned by leading business publisher Kogan
Page of London.
www.markmillar.com

3. © www.markmillar.com3
Globalisation Stalled? Exploring the shifting
landscapes of 21st century supply chains
1. Globalisation Stalled
2. Shifting Landscapes
3. Logistics Implications

4. © www.markmillar.com6
1. Globalisation Stalled?
1. Globalisation Stalled

5. © www.markmillar.com7Source: ICC
Globalisation Generation – 3 Key Drivers…
3 decades of Globalisation resulted in todays Global Supply Chains
• Outsourcing: Who
• Off Shoring: Where
• Un-Bundling: How
• Cross-border movement of goods ~40% of global GDP
• One-third of all Goods Produced are traded Cross-border

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Trade becoming concentrated within Regions
- Proximity to Customers, Speed to Market
Source: McKinsey: Globalisation in Transition 2019
Intra-regional trend is most pronounced within EU-28 and Asia Pacific regions
Share of Intra-Regional goods trade by region
Percent of trade (imports and exports)

7. © www.markmillar.com10Source: IMF 2019
% of
Global
GDP
Developing & Emerging
Advanced Economies
Globalisation impact:
- reduces Advanced Economies share of Global GDP
- benefits Developing Markets..

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Populism
Developed Markets Fractured
”Economic Prosperity and Social Cohesion are Not one-and-the-same”
Source: Global Supply Chain Ecosystems, WEF Davos
Protectionism
Left BehindAnti-Establishment

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Emerging Markets Developing…
Source: Focus Economics, IMF 0419
Emerging Markets’ Trade:
46% is with other Emerging Markets
Developed Market Exports:
30% go to Emerging Markets
2019 GDP Growth
Global 3.3%
• Developed 1.8%
• Emerging 4.4%

10. © www.markmillar.com14Source: BBVA Research, IMF
Asia-Centred World
Economic Centre of Gravity continues to shift East
Regional Contribution to World GDP Growth, 2015-2025
Global Growth concentrated in Asia = 61% of GDP Growth 2015 through 2025
Asia: Full Spectrum of Economies, Internal Tensions, Economic Dependencies

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The Asian Century:
One Region, Multiple Markets, 3 Mega Markets
India
ASEAN
China
3 mega markets comprise ~ 3,000,000,000 people…
Year 2030
China + India
= 35% of global
population

12. © www.markmillar.com16
Globalisation Stalled? Exploring the shifting
landscapes of 21st century supply chains
1. Globalisation Stalled
2. Shifting Landscapes
3. Logistics Implications

13. © www.markmillar.com17
Shifting Landscapes
Uncertainty & Fear!
Global economic
ramifications of a
prolonged trade
war between the
two economic
superpowers…

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Export Manufacturers
200 companies surveyed
37% had transferred production in past year
33% plan to do so in next 6-12 months
Trade War Impact
US Retail
Tariffs reduce 2019 Retail Sales by US$40bn
Lead to the closure of 12,000 stores in USA
- 7,150 US Retail Store closures already announced
- Last year, >5,500 US stores closed
Source: UBS 0519; Survey 1118

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US Import Substitutions
– alternative sources to China

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Shifting Landscapes
Brands Relocating Production

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US Companies in China…
- Survey of 250 companies, May 2019
✓ 35% adopting “In China, for China” Strategy
✓ 33% delaying / cancelling Investment Decisions
✓ 20% experience Increased Customs Inspections
✓ 19% experience Slower Customs Clearance
✓ 40% considering / have Relocated Manufacturing
- to South East Asia 24%; Mexico 10%; USA <6%
Source: AmCham’s in China, 0519

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China Implications
1. China plus One
2. In China, for China
3. Domestic Market
4. No Mass Exodus
5. Labour intensive,
less sophisticated
FOR CHINA
China plus One

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Cherries
- China imposed Tariff on Cherry Imports
• US largest Origin
• China largest Destination
• 65% China’s imports
come from USA
• China’s Cherry Tariffs
impact 18,000 tonnes of
air cargo pa
Source: Seabury
? US Export alternatives? - to Korea, Japan, Taiwan, Hong Kong
? CN Import alternatives? - from Chile, Australia, New Zealand

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Trade War Winner: Vietnam
• Q1 Exports to USA + 40% YoY
• 2019 forecast 6.7% GDP Growth
• FDI 2019 through May +69% YoY
• Automated Customs Management 2019
• Textile sector exports f/c 15% growth in 2019
• FTA – CPTPP, EU-VN, within ASEAN
• High wage growth driving Private Consumption
• 98m px, SEA’s fastest growing middle class
BUT
• Labour Productivity
- esp in Apparel, Leather, Footwear
• Infrastructure, Capacity, Inflation

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Trade War Winner: India
• Large Pool of Engineers
• Young Labour Force
• Low Wages v China, SEA
• Gov Policies
• Tax Reforms, IPR,
• Made in India
• FTA’s including ASEAN
• Domestic Consumption
BUT:
• Complex Regulations
• Infrastructure
• Red Tape

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Washing Machine Story 2013-2018
US Washing Machine Imports
2013 US tariffs on imports from Korea
Korean brands moved production to China
2016 US tariffs on imports from China
Korean brands moved production to SE Asia
2018 US tariffs on ALL imports
US Consumers pay more
Korean brands announce set up factories in
USA
Source: Seabury

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What or Who is Next?
Source: SCMP
Withdraw GSP Benefits
Lose $190m Tariff Savings

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What or Who is Next?
Source:

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Polarized World Bromance
De-Coupling
Shifting Landscapes
4
2
Source: Global Supply Chain Ecosystems
1
Stalled
3

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Globalisation Stalled? Exploring the shifting
landscapes of 21st century supply chains
1. Globalisation Stalled
2. Shifting Landscapes
3. Logistics Implications

27. © www.markmillar.com36
3. Logistics Implications
Regional Supply Chains
1
Ground Networks
2
City Logistics
3

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Regional Trade drives Regional Supply Chains

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Regional Supply Chains – Business Benefits
Proximity of Production to Consumption
✓ Shorter Distance
✓ Lower Cost
✓ Easier to Manage
✓ Closer to Market
✓ More Responsive
✓ Less Risk

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Multimodal Connectivity
Modal Shifts
More Moves
Regional Supply Chains - Freight Impact…
3
Source: Global Supply Chain Ecosystems
4
2
Less Miles
1

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3. Logistics Implications
Regional Supply Chains
1
Ground Networks
2
City Logistics
3

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Ground Networks – proven benefits, when…
1. Large Contiguous Land
Mass
2. Advanced Road & Rail
Infrastructure
3. Low-Friction Internal
Borders

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Key Criteria:
1. Large Contiguous
Land Mass
2. Advanced Road &
Rail Infrastructure
3. Low-Friction Internal
Borders
Ground Networks – Developed Markets
- efficient Road & Rail Freight Transport solutions
Source: Global Supply Chain Ecosystems

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Ground Networks – Emerging Markets
- NOT so efficient Road & Rail Freight Transport
Source: Global Supply Chain Ecosystems
Asia Region Infrastructure Investment USD 880bn pa
Domestic Network,
w internal borders
Domestic Network,
w internal borders
Shanghai to Singapore
Multiple
Border
Crossings

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Multiple Border Crossings
Eurasia Road & Rail Network

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3. Logistics Implications
Regional Supply Chains
1
Ground Networks
2
City Logistics
3

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City Clusters drive need for City Logistics…
Scale & Density together with Technology & Sustainability
- will drive new City-Centric business models for downtown distribution
2. Leading Economies pursuing Smart Cities
1. Populations Concentrating in Mega Cities

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Smart City + City Logistics? = Smart Logistics!
- leverage Sensors, IoT, Cloud Connectivity
- optimise both Distribution and Liveability
Source: Mark Millar whitepapers

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Globalisation Stalled? Exploring the shifting
landscapes of 21st century supply chains
1. Globalisation Stalled
2. Shifting Landscapes
3. Logistics Implications

40. © www.markmillar.com55
Uncertain
Connected
Digital
Tomorrows World – even more…
3 4
2
Source: Global Supply Chain Ecosystems
Complex
1

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With Uncertainty
comes Opportunity
He or she that SEES opportunities,
- is best positioned to SEIZE opportunities
Source: Mark Millar whitepapers

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It’s not about Predicting,
- it’s about Preparedness
Source: Mark Millar whitepapers

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Are YOU Prepared??
• Embrace Uncertainty?
• Seize Opportunities?
• Harness Power of Digital?
• Tomorrow's World?

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Global Supply Chain Ecosystems - strategies for
competitive advantage in a complex, connected world - by Mark Millar
✓ Commissioned by leading business publisher Kogan Page of London
✓ View Endorsements & Reviews from Industry Leaders
✓ Order online from the Mark Millar Digital Library