New User Join AA Premium

Asean Affairs

Premium – Just for you, all ASEAN information at your fingertips in one place. Why waste time searching Plus exclusive interviews, columns just for our Subscribers

    Daniel J. Brutto
Column  Updates
November 4' 2010

Globalization 4.0: Trade’s New Center of Gravity

            How logistics and other key elements are helping ASEAN members thrive in today’s rapidly changing global marketplace.

In the wake of the economic downturn, global trade is entering a new phase – an era I call “Globalization 4.0.” This era is distinguished by an uptick in trade, but a distinct shift in its center of gravity from developed nations like the U.S. to emerging economies.

As the hard-hit developed economies recover and consumer spending in the U.S. is weak, trade lanes are growing in emerging economies, particularly in Asia. Over the past seven years, trade within Asia has risen 75 percent faster than its trade with Europe and the United States. In fact, trade with developed economies is now half that of intra-Asian trade.

Eras of globalization

1.0: Late 19th Century-1960s. A long era of trade between neighboring nations, such as trans-Atlantic trade in the West; often marked by periods of protectionism.

2.0: 1980s-1990s. A trade growth era when markets opened after the Berlin Wall fell, the Internet and mobile phones boosted global commerce, and trade agreements grew.

3.0: Late 1990s-early 2000s: The “flat world” era, as described by author Tom Friedman, when China entered the WTO, India became a technology and services powerhouse and BRIC nations emerged The U.S. was a big global growth driver.

4.0: 2010-? An era of trade growth following the economic downturn driven by emerging economies as the hard-hit west pulls inward.

In the last several years, emerging nations made trade agreements with each other and lowered tariffs. ASEAN has been a free trade agreement leader. In fact, when the ASEAN FTA was signed with China earlier this year, it created the largest free trade area in terms of population (1.9 billion people) and the third largest free trade zone in economic size, (a cumulative gross domestic product of US$5.8 trillion).

But as trade-oriented ASEAN nations drive more global growth, other countries – especially in Western Europe and North America – are pulling inward. With high unemployment and slow growth, major developed nations are threatening to raise barriers to commerce. The United States is a case in point. Troubling signs of protectionism include tariffs on Chinese aluminum. Major U.S. trade agreements with South Korea, Colombia and Panama are stuck on the docket, and a few industry-specific disagreements are blocking legislation that would boost U.S. trade and growth. These moves threaten to impede U.S. exports and imports, and even increase the risk of a trade war in which everyone loses.

The second factor of Globalization 4.0 is investment in transportation and technology infrastructure. This is an area where Asia also leads the way. After the ASEAN-China agreement was signed, Indonesia, one of the largest exporters of raw materials in South East Asia, pledged to triple spending on ports and airports this year to support trade. And in China, the government is building new highways to open western provinces to development and bring even more people into the global economy. Contrast that with the United States' crumbling transportation infrastructure, which hasn't seen a major influx of investment since the 1960s.

Another critical part of the Globalization 4.0 story is logistics, which underpins all global trade. Logistics is the art and science of moving something exactly where it needs to be, exactly when it needs to be there. Logistics is the key to ensuring that global trade continues to expand and thrive, and helps companies compete.

Logistics is a rapidly changing practice. Under old-style logistics, firms tended to develop capabilities internally, and shipments often got bogged down in paperwork as they moved through different networks and across borders. But under the new logistics, shipments often are handled by third-party global transportation companies, taking advantage of their global assets.

Shipments are traced electronically, and businesses have clear transparency of product movement. This levels the competitive playing field: large businesses can outsource logistics costs and tap into a single global network that allows them to stay nimble. And small businesses can compete in new markets by tapping the same global logistics network the big guys use.

Take for example, AliExpress, a China-based Web site and growing small business e-commerce company. It matches buyers and sellers in a global B-to-B marketplace with wholesale prices. AliExpress is powered by UPS logistics. In addition to shipping, UPS helps connect sellers in China with global buyers through sophisticated technology that makes shipping across borders and tracking easy. As a result, global trade becomes simpler, and customer satisfaction improves.

a) The possibilities for enterprising businesses like AliExpress, and for nations like China and the 10 ASEAN member states, to complete in Globalization 4.0 era are limitless. In the future, the most competitive businesses and nations will do what emerging economies are doing now: pursuing trade agreements, building up infrastructure, and harnessing the power of logistics to help them succeed. For countries and companies geared toward trade, the future is bright.

As president of UPS International, Dan Brutto is responsible for all international package, freight forwarding and logistics businesses, as well as U.S. international package services. He is a member of UPS's Management Committee, which is responsible for the day-to-day management of the company.

<font color="#000e51">

Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below




1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

November 4, 2010
Globalization 4.0: Trade’s New Center of Gravity
How logistics and other key elements are helping ASEAN members thrive in today’s rapidly changing global marketplace.  More

Login AseanAffairs Premium
Log in AA Premium

Log in AA Premium



Forgot Password?

Home | About Us | Contact Us | Special | Features | News | Magazine | Events | TV | Press Release | Advertise With us

Our Products | Work with us | Terms of Use | Site Map | Privacy Policy | Refund Policy | Shipping/Delivery Policy


Time Media

Version 5.0
Copyright © 2007-2011 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand