Lack of Transport Infrastructure – Obstacle to Economic Growth (Switzerland)

Deficiency in transport and communications infrastructure is one of several supply chain barriers that act as obstacles for speeding up global economic growth.

That is the conclusion of a report entitled “Enabling Trade: Valuing Growth Opportunities”, prepared by the World Economic Forum (WEF) in collaboration with the World Bank, and Bain & Company, a Boston-based global management consulting firm.

The report was made public at the opening of the 11th Annual World Economic Forum in Davos, Switzerland.

The report highlights a variety of identified supply chain barriers – ranging from poor physical and technical infrastructure to border controls, customs paperwork, lack of coordination between national agencies and regulations favoring local products over imported ones.

“This report makes clear that transportation infrastructure investment can have a very positive and immediate impact on trade growth and economic and social development, particularly in emerging market areas”, notes APM Terminals CEO Kim Fejfer, a participant in the gathering of the world’s political and business leadership in Davos.

A.P. Moller-Maersk, the leading Danish transportation and energy conglomerate and parent company of APM Terminals, is an active participant in the World Economic Forum that prepared the report.

The WEF estimates that global trade would increase by an estimated $1.6 trillion, or approximately 15%, while global GDP would rise by $2.6 trillion, or approximately 5%, if every country improved two key supply chain barriers just halfway to the world’s best practices: improving inadequate infrastructure and adopting modern communications technology such as electronic freight releases, and by streamlining and simplifying border administration procedures.

APM Terminals, one of the world’s leading global operators of container terminals and inland services, has invested $3 billion in new infrastructure over the past two years, including major new port and expansion projects in West Africa, Central and South America, the Middle East and Asia.

“Addressing infrastructure requirements to facilitate global market access is a relatively straightforward process when strong local partnerships can be forged. We share a common interest in creating modern port and inland transportation facilities so local communities can benefit from trade-driven development,” said Mr. Fejfer.

The authors of the World Economic Forum study examined the effects of trade barriers by contacting approximately 90 internationally active companies representing combined annual revenue of $800 billion. Of these targeted companies, 35 companies provided input, with 21 of these participating in preparing 18 case studies representative of major industries, barriers and supply chain functions.

The telecom and transport infrastructure components were defined by the report’s authors as the availability and quality of transport infrastructure; the availability and quality of transport services; and the availability and use of information and communication technologies. Increased operational costs, increased demands on investment and working capital, and cargo delivery delays were found to be the consequences of inadequate infrastructure, discouraging individual company trade growth and participation.

[mappress]

Press Release, January 24, 2013