Summary

 

As the first of it kind, the study estimates the so-called hidden costs of trade stemming from long and unpredictable lead times and manifest themselves as idle costs, penalties, storage and inventory costs as well as lost orders and eventually lost customers. For India, the results indicate that the hidden costs can be as high as the direct costs and as such be important barriers for India’s foreign trade.

 

Client testimony

 

Maersk Group has worked with Qbis on a number of impact studies in key markets, including China and India. Qbis has a good ability to engage with our business in identifying and assessing, in a fact-based and balanced way, key socio-economic indicators capturing how our businesses contribute societal value. The study outputs have been useful platforms for our businesses to engage with stakeholders, particularly on solutions to enable trade and growth by facilitating more efficient transport and logistics.

 

Lene Bjørn Serpa

Head of Governance and Research

Group Sustainability

A. P Moller-Maersk

 

Project background

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The objective of the study was to investigate how the Maersk Group can support India in unlocking its socio-economic growth potential, both as a local employer, but also as an important enabler of trade through the provision of efficient transportation and logistics services. The study estimates the total transport and logistics costs with particular emphasis on the hidden costs accruing from delays and long lead times which add significantly to the costs of trading for importers and exporters in India. Across four industry sectors, the study finds that these hidden costs amount to as much as 40–50% of total transport and logistics costs. The study suggests ways to reduce these costs by optimising existing global supply chains. Together with the Confederation of Indian Industry, Maersk has used the results to engage in dialogues with customers and Indian authorities about the possibilities and potentials of reducing transport and logistics costs.

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