The operating challenges of global logistics system vary significantly in each major global region. Example: a.North America – an open geography with extensive and flexible transportation options and limited need for cross-border documentation b.European – compact geography involving numerous political, cultural, regulatory and language situations; infrastructure is also quite congested because of population density c.Pacific Rim – island base which require extensive water and air shipment to transcend vast distance

Decisions regarding global sourcing and marketing require more complex trade-off analyses than traditionally required for domestic logistics While transportation, inventory and warehousing costs are very substantial for global operations, other cost components including tariffs, duties, documentation and import restrictions can also make an impact to total cost Besides that, major qualitative considerations include relationship management, infrastructure consistency, production and transit reliability, economic changes and security

A recent report highlighted that Malaysia has the opportunity to create an additional value of about RM9- 11 billion over the next decade, which contributes approximately 12.1% to the GDP, if the supply-chain competitiveness is improved through more efficient transport and logistics services Various incentives have also been introduced by the government. One of the incentives is Integrated Logistics Services (ILS) incentives. The purpose is to encourage logistics service providers to consolidate or integrate their activities to include other services as well as encouraging them to venture into business abroad

Lack of follow up actions and coordination Lack of sophisticated management techniques among the supply chain companies The problems with Information Technology (IT)/Electronic Data Interchange (EDI) Lack of skilled and trained manpower Lack of dissemination of information with regard to the development and expansion of the logistics industry No single established source of logistics data and information Lack of assistance to local service providers (LSP) Lack of research and development (R & D) of the industry Lack of regulatory forms to facilitate the industry Source: Rosena M.A. et. Al. (MUTRF 2008)