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Navigating the Complex Relationship Between Logistics and Politics



Logistics is a crucial aspect of modern production and distribution systems, having a significant impact on the macroeconomic development of countries (TandFonline, 2016). It refers to the management of the flow of products and information between firms, allowing for comprehensive monitoring and steering of supply chains (TandFonline, 2016). Politics, on the other hand, is related to the regulations and policies that governments implement to control various business activities . The relationship between logistics and politics is complex, as political factors can have both positive and negative effects on supply chain management.

Political Instability and Its Impact on Global Supply Chains

Political instability is defined as the propensity for regime or government change, political upheaval, or violence in society, as well as instability and uncertainty in government policy, such as regulatory, tax, property, or human rights law (Kettering University Online, 2016). When it comes to international logistics, political stability is a critical determinant for the success of global business supply chains (Political Cortex, 2021.). Stability ensures that all aspects of the supply chain run smoothly, minimizes the risk of unforeseen disruptions, and maintains the normal operation of all supply chain processes (Political Cortex, 2021).

Economic and Political Trends Affecting the Transportation Industry

Economic and political trends can have a significant impact on the transportation industry. Tariff wars and trade wars, for example, raise the risk of an economic recession, which could negatively affect the industry worldwide (Trinity Logistics, 2019). Political clashes between countries can also disrupt international trade, as seen in the historical and ongoing tensions between the U.S. and China (Inside Out Economics, 2021).

Logistics as a Political Issue

Logistics is not only an essential component of modern production and distribution systems, but it is also a major political issue. Comprehensive logistics costs represent about 10% of GNP in developed countries and even more in less-developed ones (TandFonline, 2016). The efficiency or inefficiency of logistics systems can significantly impact a country's economy, making it a critical political issue.

Politics and the Supply Chain: Steps to Address Political Instability

Manufacturers and businesses can take several steps to address political instability in their supply chains (TBM Consulting Group, 2017). These steps include:

  1. Diversifying the supply chain: By sourcing materials and products from various suppliers in different countries, businesses can minimize the risks associated with political instability in any single location.

  2. Implementing contingency plans: Companies should have contingency plans in place to quickly adjust their operations in response to sudden political upheavals or changes in government policy.

  3. Staying informed: Businesses must stay informed about potential political risks and changes in the countries where they operate, allowing them to anticipate and adapt to new regulations and policies.

In conclusion, the relationship between logistics and politics is complex and deeply intertwined. Political factors can significantly impact the efficiency and effectiveness of supply chain management, making it crucial for businesses to understand and address the potential risks associated with political instability and changes in government policy.


References:

  • Fernie, J., & Sparks, L. (2016). Logistics: Changes, Challenges and Opportunities. In Retail Logistics (pp. 3-20). Routledge. https://doi.org/10.1080/01441647.2016.1182793

  • Fernie, J., & Sparks, L. (2016). Logistics: Changes, Challenges and Opportunities. In Retail Logistics (pp. 21-38). Routledge. https://doi.org/10.1080/01441647.2016.1182793

  • Schrage, M. (2016, June 14). Impact of Political Instability on Global Sourcing. Kettering University Online. https://online.kettering.edu/news/2016/06/14/impact-political-instability-global-sourcing

  • Meyer, J. (2021, November 16). Supply chain politics takes center stage at House hearing. Roll Call. https://rollcall.com/2021/11/16/supply-chain-politics/

  • Global Logistics Experts. (2022.). Impacts of Politics on the Logistics Industry. TGL Global Logistics. https://tgl.co/impacts-of-politics-on-the-logistics-industry/

  • Koenemann, K. (2017, August 18). Politics and the Supply Chain: 3 Steps You Can Take Now. TBMC Group. https://www.tbmcg.com/resources/blog/politics-and-the-supply-chain-3-steps-to-address-political-instability/

  • Political Cortex. (2021). Ways Political Instability May Affect International Supply Chains. https://politicalcortex.com/ways-political-instability-may-affect-international-supply-chains/

  • Gruneberg, D. (2012, January 17). Commentary: Why logistics and politics need to mix for the economy's sake. Material Handling & Logistics News. https://www.mhlnews.com/archive/article/22032959/commentary-why-logistics-and-politics-need-to-mix-for-the-economys-sake

  • Trinity Logistics. (2019, September 17). Economic and Political Trends Affect Transportation Industry. https://trinitylogistics.com/economic-and-political-trends-affect-transportation-industry/

  • Inside Out Economics. (2021, March 5). How does trade relate to geopolitics? Do political alliances or rivalries affect the trade between nations? https://insideouteconomics.com/2021/03/05/how-does-trade-relate-to-geopolitics-do-political-alliances-or-rivalries-affect-the-trade-between-nations/

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