Professor Milorad Kilibarda, PhD – Logistics is a key factor in market integration

The development of transport infrastructure, logistical resources and capacities are key prerequisites for attracting investments and facilitating economic development.
Professor Milorad Kilibarda, PhD Head of Logistics Department Faculty of Transport and Traffic Engineering, University of Belgrade

Logistics is a key factor in market integration, economic development, cost-effective business and competitiveness. Today, products are made in several locations, countries and continents, and they are consumed everywhere in the world. All this cannot be imagined without efficient supply chains, global and regional logistics and transport networks. It is rightly claimed that logistics is a prerequisite for spatial, market and economic integration. Logistics knows no borders and it has the task of overcoming all borders, obstacles, space and time as efficiently as possible.

Logistics has the greatest potential for reducing costs, generating savings and improving the business of any company, regardless of its activity, size and market position. Research and global experience show that logistics costs account for 8% to 15% of GDP, depending on the development of individual national economies. These costs account for 25% to 40% of the total operating costs, and they make up to 20% of the product price, depending on the industry. Logistics is an industry that generates and carries significant costs, but at the same time, creates space for saving and boosting business efficiency. Consulting practice and experience clearly show that only through the improvement of existing logistics processes, it is possible to achieve savings of between 15 and 20% of total logistics costs, without significant investments.

In addition to realistic cost-cutting possibilities, logistics needs to be viewed in the context of increasing competitiveness and creating added value.

In addition to realistic cost-cutting possibilities, logistics needs to be viewed in the context of increasing competitiveness and creating added value. The quality of logistical services, efficient distribution and delivery of products are today key competitive advantages in the market. Logistics should be seen as an activity that creates new value. Through value-added logistics services (storage, packaging, repackaging, marking, refining, finishing, etc.) additional value is created and products are prepared for the market and delivery to end consumers. Today, the finalization of the production of certain products is moving from factories to logistics centres and systems.

The importance of logistics and transport for the economy and society was clearly shown during the Covid-19 pandemic. In the first months of the pandemic, it was of vital importance for the society to have a regular supply, primarily of medical equipment, pharmaceutical and food products, but also of consumer goods. Transport and logistics played a crucial role in this and have largely fulfilled that task. At the same time, the pandemic caused great problems in the logistics industry and showed all the vulnerability of global supply chains. However, this very tough and resilient sector quickly adapted to the new circumstances and began to recover. The biggest problems remained in transport in the global market and major intercontinental routes. The consequence is an enormous increase in transport costs (up to 10 times on some sea routes), which inevitably leads to an increase in product prices and higher stock levels.

Logistics is a labour-intensive activity and requires a large and skilled workforce. The need for logistics staff has been between 10-15% per year. When it comes to drivers and warehouse workers, the needs are growing much faster and there is a serious shortage of this kind of worker on the market. It is justifiably said that logistics is the profession of the future. We need to continuously work on educating new workers and on the innovation of knowledge. The University of Belgrade’s Faculty of Transport and Traffic Engineering Belgrade educates logistics and transport following the latest global standards and market needs. Despite the significant human resources potential, we still do not have enough experts with the necessary logistical know-how, skills and competencies.

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