Logistics in political economy: old notion in new applications

After several decades of successful use in transportation and business management, logistics is slowly entering political economy’s spheres, and most recently in the energy sector. Thus, political economy has acquired a specific “logistics sphere” as part of a general instrumental arsenal in a national development, with long- and short-term tasks in modern sustainable growth proceedings. A new usage of the term can serve in better coordinating complex interactions of political and economic priorities in growth patterns. 

There are several common aspects in traditional use of logistics and that of political economy. For example, generally, the logistics’ process includes that of planning, implementing and controlling the most efficient flow and storage of goods, services and related resources from their point of origin to the point of final consumption in order to satisfying customer requirements. And so is political economy, which defines the ways political forces influence the economic outcomes. The interaction goes both ways: in economics, the resources are generated to sustain political guidance; in politics, “a group of individuals” (generally, political elites) formulate a national development priorities and guidance for socio-economic progress.
Logistics is a major theoretical component of modern production and distribution systems and a key contributor to micro- and macro-economic development. Comprehensive logistics costs represent approximately 10% of GNP in developed countries, and even more in less-developed ones. Beyond its costs, logistics efficiency or inefficiency affects the whole production and exchange process.
Source and references to: https://www.yourdictionary.com/logistics and https://www.soas.ac.uk/cedep-demos/000_P527_PEPP_K3736-Demo/unit1/page_13.htm

Basic logistics and transforming usage…
Logistics is basically used to ensure that all needed material, physical and financial resources are available (so-to-say, in the right place and at the right time) to accomplish a desired project, business objective and/or development strategy.
Thus, in business, logistics represent an optimal management of “the flow of things”, resources, goods and services between “the point of origin” to the “final destination” in order to satisfy the needs of companies and customers; quite often it is equal to the issues of supply chain management. The latter is a management science used to plan, execute, report and coordinates the movement of goods/services; it often includes suppliers, production and manufacturing, packaging, as well as distribution and customers’ service.
More in: https://blog.intekfreight-logistics.com/definition-of-logistics.

From the point of view of economic history, the notion is derived from the late nineteenth century; e.g. French word logistique (loger, means to lodge) was first used by Baron de Jomini (1779-1869), a Swiss officer who served as a general in French and Russian military. Some say that the word comes from the Greek λόγος, which means ‘reason’ or ‘speech’, and λογιστικός, which means ‘responsible for counting’ or ‘accountant’.
Reference to: https://marketbusinessnews.com/financial-glossary/logistics-definition-meaning/

There are, generally, three main families of definitions in logistics: the first one consists of a range of physical operations concerning “changing location of goods” in space and time, and comprising transport, handling, packaging, sorting, and warehousing. Secondly, logistics is used to denote a branch of management sciences, i.e. considering relationships between firms as a system of flows (e.g. flows of products and flows of information), allowing a comprehensive monitoring and steering of global/regional “supply chains”.
Thirdly, logistics is being actively used in non-traditional science sectors (including social sciences), in new manufacturing and industries, gathering several traditional professions into a single integrated one (i.e. logistics of service’s providers), including real estate, freight market and delivery, etc. For example, freight transport roughly represents half of total logistics costs; hence, often specialists in logistics are just called “strategists”…
All three definitions of logistics can be used in specific circumstances; as a rule, it is necessary to combine them rather than choose a suitable one.

As it was initially, the biggest logistics’ sphere of activity originated from the transport industry: still presently, a substantial share of logistics activity continues to be carried out inside agricultural, industrial or commercial firms. However, recently a growing attention to sustainable development goals and global challenges has been strongly impacted by logistics.
Thus, public policies to reduce pollution are generally oriented towards industry and transport (the latter alone is emitting about one-quarter of global greenhouse gas); but the policies also include city planning, road conditions, goods’ packaging and handling, warehousing, etc.
In reducing local pollution and incurred risks, the “hazardous goods logistics” is used: it is not only a transport policy but also “freight logistics” and surrounding territory’s management.
For example “city logistics” has become a specific part of the environmental problems, with numerous and contradictory external effects; it is becoming an unavoidable part of urban and regional planning/logistics, particularly in metropolitan areas.
Source: Logistics as a political issue by Michel Savy in Transport Reviews, Volume 36, 2016 – Issue 4, pp. 413-417. https://www.tandfonline.com/doi/full/10.1080/01441647.2016.1182793

Towards “new logistics”: from traditional to modern application
Logistics is increasingly becoming an “organizational force” and a political discourse cutting across political entities and institutions by performing specific tactical functions in implementing nation-wide decisions. Being involved in political and economic domain, the “new logistics” is transforming and re-organizing the formation of modern hybrid institutional settings cutting across the geopolitics of nation states, the process that some called “politics of corridors”. Logistics is being analyzed through its implications for a critical assessment of transformations in national and global politics. Thus, the politics of corridors is dealing with such global projects as “One Belt, One Road” strategy adopted by China, the infrastructural projects in India and the formation of trans-European networks (so-called TENs) in transport and energy, which is offering an insight into the logistics of globalization and contemporary global governance.
More in: https://corsi.unibo.it/2cycle/GlobalCultures/seminar-grappi

Scholars in political economy have been trying to understand the inherent connections between the economic and political goals as well as consequences for formation of effective and accountable governance structures. Thus, the empirical analysis of “dominance”, i.e. either a “logistics economy” over the “logistics of politics” or vice versa, can contribute to the creation of an effective national and global governance systems.
References to ideas expressed in: https://academic.oup.com/afraf/advance-article/doi/10.1093/afraf/adac024/6634268

Besides, modern use of logistics can have strong implications for an understanding of the transformations of national sovereignty and the state socio-economic priorities. Thus, modern strains in global production value chains and energy networks, which started to emerge recently, are a visual reflection of imbalances between the supply and demand of certain goods/services, which are creating problems for the ongoing global and European recovery and resilience programs.
Strains in global production networks, also commonly referred to as supply bottlenecks, are a multifaceted phenomenon. Problematic recovery during post-pandemic period has been unprecedented, reflecting the massive shifts in demand and supply triggered by the closing and reopening of economies, amid considerable monetary and fiscal strains associated with a high level of accumulated revenues and savings, especially in advanced economies.

     “Modern logistics” applications are numerous; among most vivid examples are those of the global SDGs implementation, digital and green transition in the EU and present energy crisis.
= The universal United Nations’ SDG-strategy, which since 2015 included 17 sustainable development goals to be reached by 2030, is very suitable for the logistics’ application. The logistics help to further develop multi-modal and more sustainable means of transport; particular focus is given to trains and railways, to the expansion of sustainable public transport in cities. Besides, improvements in access to employment (especially for youth), in reducing unemployment, in increasing education quality, in preparing new skills and re-training are just a few directions of a new “sustainable logistics”. To properly deal with SDGs, new and transformative leaders are to be prepared to master such spheres as city planning and waste management, innovative entrepreneurship and digital “design”, new product developing and changing people consumption towards sustainable behavior.
= The digital and green transition in the EU cannot be reached without a proper logistical approach: thus, digital component includes digitalisation process in society and economy, while “green component” requires both new national economies’ structures (creating new green sectors”) and preparation of “green workforce”. Green transition is used, in particular, in “green energy” production, in reduction of carbon emissions, in environmental infrastructure, biodiversity conservation, green spaces, risk management and sustainable urban mobility measures, etc. Besides, improving energy performance of residential and public buildings and developing renewable energy sources and smart energy systems is also within the logistics approach. Appropriate governance’s efforts will reduce energy consumption and carbon emissions and support the decarbonisation of the energy sector. Just to note, Estonia and Lithuania are among 18 EU member states to complete by the end of July partnership agreements with the EU funds for national recovery and priority’s sectors due to success of political-economic logistics.
= Present energy crisis is an example of a clear lack of logistics application in energy sector, in particular in Europe during last decades. For quite a long historic period, the European states used numerous fossil fuels products (mainly gas and oil) imported from Russia under favorable price level. The successful implementation of double North-Streams from Russia to Germany, which involved a number of Western companies, is showing a complete violation of basic logistics concepts. Everybody knew that the decade-old 40-50 percent European dependence on Russian oil and gas would sooner or later turn into a political weapon, which has happened already in 2014 with the annexation of Crimea… For example, Lithuanian government has shown a perfect example of logistic usage in sustainable energy: during last decade it prioritized bio-fuel strategy in energy mix (with sufficient use of EU funds). Besides, it has built a LNG terminal and so, presently, it has been the first EU state to abandon now its dependence on Russian gas import.
These and other examples are showing that with only with a proper use of “new logistics” the national and regional politico-economic governance can tackle growing number of challenges…

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