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q DEFINING WASTE IN THE WAREHOUSE ENVIRONMENT 24
q ASIA’S CONTRACT LOGISTICS ON THE MOVE 28
q USING TRADE DEALS FOR NON-MEMBERS 32
q MANAGING SUPPLY CHAINS PART 2 36
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LOGISYM MAGAZINE MAY 2015
3
contents
28
24
32
features
24
28
32
36
regular
From the Editor
A Word From the President
Air News
Maritime News
Logistics News
Supply Chain News
e-Commerce and Technology News
04
06
08
10
12
20
24
Defining Waste in the Warehouse
Environment
Asia’s Contract Logistics Market on the
Move
Using Trade Deals for Non-Members
Managing Supply Chains Part 2
36
4
LOGISYM MAGAZINE MAY 2015
from the editor
on the way...
Dear Readers,
We would like to thank all our readers
for the great feedback we have received
to the publication of the first issue of The
Magazine for Supply Chain Executives,
the brand new industry journal, that
brings you the latest developments in the
logistics and supply chain industry. We
are also pleased to have added another
100 new subscribers to the circulation
list since the first launch. Should you
know anyone who would like to receive a
copy of the publication, simply send your
request to [email protected]
This month we launch the 1st issue
of the Digital format of the magazine. It
is expected to reach 80,000 subscribers,
making LogiSYM one of the most widely
distributed magazines of its kind. The
content will follow the same structure of
regular news updates, industry features
and one-on-one interviews with leaders
in the supply chain industry.
I am pleased to introduce new
contributors to this issue. Industry
experts who bring some very interesting
insights to what is going on in the Asia
Pacific Region. They bring views that will
help us understand the impact of the
changes in the supply chain dynamics.
There are 2 articles on China. A report
features the evolution of Contract
NGO THANH MINH
Executive Publisher
FRANK PAUL
Publisher
PETER RAVEN
Deputy Publisher
JOE LOMBARDO
Editor
ANH THU
Digital Editor
Manufacturing and how India is gaining
a bigger share in this space. And a report
on the Complexity of the Logistics sector
in China where operators and shippers
need to continuously stay alert.
A focus on environmental concerns
and the constant attention on the supply
chain eco-footprint will have a regular
space in our magazine. Last month we
featured an article on Green Logistics
in Asia highlighting the challenges &
opportunities. This month we feature
an article on Defining Waste in the
Warehouse Environment – a reminder
that there is always more that we and
should do for the environment.
And we also have Part 2 of the
regular Series on The Supply Chain
Management Challenge which will
feature – Understanding the Value of a
Supply Chain Structure. Our mission is
to bring a new dimension of information
and knowledge to our readers, which will
differentiate us from the many already
existing publications. If you feel that you
have something to share, do not hesitate
to put pen to paper and send us your
contribution. We hope that you enjoy
reading the articles in this issue, as much
as we have enjoyed putting it together
for you.
Joe Lombardo
International Editor
CONTRIBUTORS
Deborah Elms
Cathy Roberson
Petros N. Zenieris
Joe Lombardo
LUONG THACH ANH
Layout
FAUZI LEE
Art Director
NGUYEN THI THANH
Production Manager
ADVERTISING
Asia: Frank Paul
Email: [email protected]
Telephone: +66 857843627
Middle East/Africa - Brian
Cartwright
email: [email protected]
Telephone: +971 50 892 9937
GENERAL ENQUIRIES
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Tel. +65 6746 2250
Fax. +65 6746 2251
Email: [email protected]
Website: www.logisym.com
COPYRIGHT
All material appearing in LogiSYM
Magazine is copyright unless
otherwise stated or it may rest with
the provider of the supplied material.
LogiSYM Magazine takes all care to
ensure information is correct at time
of printing, but the publisher accepts
no responsibility or liability for the
accuracy of any information contained
in the text or advertisements.
Views expressed are not necessarily
endorsed by the publisher or editor.
6
LOGISYM MAGAZINE MAY 2015
A Word From The President
A Word from the President
Just yesterday, I was in a social setting where I
was told that a past client is now looking at ‘new’
ways to handle reverse Logistics issues in India.
This was a project that I worked on more than 10
years ago and it seems that this same client is
now re-inventing the wheel and almost starting
from scratch. Great if you are a consultant but
not really encouraging to see if you are a supply
chain professional.
Raymon Krishnan
Dear Readers,
Time flies. Over the last few weeks we have been
receiving excellent feedback, input and ideas
on how to improve on the first edition of the
magazine and whilst “digesting” and working on
these, I received a reminder that it would soon be
time to send out our May edition.
Overall, given our diverse backgrounds, expertise,
and geographic spread, the team has done an
excellent job of getting the first edition of the
magazine out to our readership in the Middle
East and the Asia Pacific region. Success that we
hope to build on.
The supply chain is the engine that drives,
supports and enables any economy. Our industry
therefore is always going though many disparate
changes and is impacted by happenings
around the globe. The recent developments (or
lack thereof) of the Trans Pacific Partnership,
equipment and drayage issues in North America,
earthquakes in Nepal are just some of the topics
that members have raised at LSCMS events and
forums. How we deal with these issues is always
interesting and oftentimes thought provoking.
Sadly though, it seems that with the body of
knowledge and the skills and expertise that
exists, we do not seem to learn much from past
experiences.
At Logisym 2015, we had an excellent and in
depth presentation on disaster Logistics but
given everything we are reading about the supply
chain issues, disaster recovery teams are facing
in Nepal, it would seem that almost none or at
least very little of the learnings we gained in the
Tsunami’s, earthquakes and typhoons in the
past decade has been retained, modified and
used in Nepal.
Through our various conferences, events and
this magazine in particular, we hope to re-inforce
the body of knowledge that is already out there
and available to professionals in our industry whilst at the same time also being a platform for
the promulgation of new ideas. If the message
and information is readily available, chances are
that more people will have access to and be able
to use it.
This is an important role that publications like
LogiSYM plays in our industry and it is only
possible with your support. Thank you for
making this idea of a magazine for the industry a
reality and we hope to see this support continue
to grow in the weeks and months ahead.
Raymon Krishnan
President, The Logistics & Supply Chain
Management Society
8
LOGISYM MAGAZINE MAY 2015
Virgin Atlantic Cargo has awarded a cargo
handing contract to dnata in Australia covering
Sydney,Melbourne and Brisbane airports.
U
nder the terms of the new contract,
dnata will handle cargo carried
onboard Virgin Australia’s daily flights
to and from Sydney and Brisbane and
Los Angeles, and the airline’s three
flights a week connecting Sydney and
Abu Dhabi. Virgin Atlantic is contracted
to Virgin Australia and manages all of
the airline’s long haul international
cargo capacity.
Virgin Atlantic Cargo’s team in Australia
is relocating to dnata’s cargo terminal
in Sydney as part of the deal. In 2014,
Virgin Atlantic generated 18,000
tonnes of cargo for Virgin Australia, a
21% increase on the previous year, and
this positive trend continued in the
first quarter of 2015.
Neil Vernon, Virgin Atlantic’s Vice
President Sales International, said:
“With the growth in business we are
generating for Virgin Australia, as
well as our own onforwarding traffic
to and from Australia that connects
with our network over Los Angeles,
it is important that we ensure our
customers receive the highest levels
of service. dnata is an established and
proven partner to Virgin Atlantic in the
UK and we are confident they will meet
our high expectations in Australia. I
would also like to take this opportunity
to thank Qantas for all of their support
in the past.”
Daniela Marsilli, CEO, dnata Australia,
said: “Virgin Atlantic is a key partner
of dnata’s at many airports across
our international network. We already
support their operations in the UK, and
Dubai, and I know we will exceed their
expectations in Sydney, Melbourne
and Brisbane. This contract is a vote of
confidence in our teams’ ability to work
efficiently and safely, across Australia
and the world.”
LOGISYM MAGAZINE MAY 2015
9
Air
The 10th freighter destination of Turkish Cargo
in Africa is Dakar (Senegal).
T
urkish Cargo strengthens its
presence in Africa as well with the
launch of freighter services to Dakar.
As one of the most prominent cargo
airlines with its spectacular network
growth, Turkish Cargo currently serves
up to 43 destinations throughout
Africa. While continues its expansion
plans for Africa, it marked the 10th
dedicated freighter service to the
continent with the launch of weekly
freighter services to Dakar as beginning from May 18th 2015.
These all-cargo flights will supplement
the already substantial Cargo capacity
currently available on the multiple
passenger flights to the city as well.
Turkish Cargo provides the most
efficient connections to the leading
production and commercial centers
across the globe. Turkish Cargo
serves to 268 destinations, including
51 freighter destinations, in 109
countries by its 10 freighters and the
belly capacities of Turkish Airlines’ 264
passenger aircrafts.
By expanding to new destinations,
Turkish Cargo brings its network and
quality service to even more customers, meeting the needs of its clients
with a careful attention to detail
that is part of all aspects of Turkish
Airlines.
Dakar freighter flight schedule:
FLT NBR
DAYS
DEPARTURE
ARRIVAL
TK 6323
1.....
IST 07:10
12:05 LOS
TK 6323
1.....
LOS 13:35
16:00 DKR
TK 6323
1.....
DKR 17:30
03:40 IST
AIRCRAFT TYPE
A330F
* All times are LMT.
Turkish Airlines, Inc.Media Relations
About Turkish Airlines:
Established in 1933 with a fleet of five
aircraft, Star Alliance member Turkish
Airlines is a 4-star airline today with
a fleet of 274 (passenger and cargo)
aircraft flying to 268 destinations
worldwide with 225 international and
43 domestic. According to Skytrax
survey of 2014, Turkish Airlines was
chosen “Europe’s Best Airline” for the
fourth and “Best Airline in Southern
Europe” for the sixth consecutive time.
Having won in 2010 the world’s “Best
Economy Catering Service” and in 2013
the world’s “Best Business Catering
Service” awards, Turkish Airlines was
this year awarded the world’s “Best
Business Catering Service” and “Best
Business Class Lounge Dining” prizes
in the Skytrax survey. More information
about Turkish Airlines can be found on
www.turkishairlines.com.
About Turkish Cargo:
Turkish Airlines, which has operated its
first international air cargo shipment
in 1936, is a 4-star airline company
operating flights to 268 destinations
around the world by its fleet comprising
of 274 aircrafts (airliners and freighters)
at the present. The Company, which has
been maintaining its cargo services and
operations under the sub-brand Turkish
Cargo since the beginning of the 2000s,
stands as the internationally fastestgrowing brand offering air cargo service
to the highest number of countries
around the world. Detailed information
about Turkish Cargo is available on the
website
www.turkishcargo.com .
About Star Alliance:
The Star Alliance network was established
in 1997 as the first truly global airline
alliance to offer worldwide reach,
recognition and seamless service to the
international traveller. Its acceptance
by the market has been recognized by
numerous awards, including the Air
Transport World Market Leadership
Award and Best Airline Alliance by both
Business Traveller Magazine and Skytrax.
The member airlines are: Adria Airways,
Aegean Airlines, Air Canada, Air China,
Air India, Air New Zealand, ANA, Asiana
Airlines, Austrian, Avianca, Brussels
Airlines, Copa Airlines, Croatia Airlines,
EGYPTAIR, Ethiopian Airlines, EVA Air, LOT
Polish Airlines, Lufthansa, Scandinavian
Airlines, Shenzhen Airlines, Singapore
Airlines, South African Airways, SWISS,
TAP Portugal, Turkish Airlines, THAI and
United. The integration of Avianca Brasil
is currently in progress. Overall, the Star
Alliance network currently offers more
than 18,500 daily flights to 1,316 airports
10
LOGISYM MAGAZINE MAY 2015
Maritime
If improved schedule reliability
is one of the desired benefits
of container line alliances, the
jury is still out on whether the
latest two alliances have met
that goal.
Research from SeaIntel shows that while
schedule reliability was down overall
across the industry during March, the
performance of the individual alliances
varied greatly across trade lanes and
alliances.
The 2M alliance between Maersk Line,
individually the top performer on the
Asia-Europe trades, and MSC, which
was often found in the lower end of
rankings in these trades, ranked as the
best performer in the total east-west
schedule reliability, according to SeaIntel
– but only just.
2M’s 67.5% schedule reliability put it
slightly ahead of the CKYHE alliance’s
65.8%. But the other newcomer, the
Ocean 3 alliance of CMA CGM, UASC and
CSCL, could only muster 61.1%, putting it
just behind the G6 alliance at the bottom
of the pack in March.
Viewed over the period in which the
two new alliances have been operating,
however, the data gives a slightly different
picture of performance. The performance
of the 2M alliance fell by 11.8 percentage
points from just under 80%, whereas the
Ocean Three carriers leapt 5.9 percentage
points from 55% reliability.
SeaIntel says it is still too early to
determine whether Ocean Three’s
performance was hampered by start-up
issues in January and will continue to
improve, or if this is the level at which it
can be expected to perform.
On individual trade lanes the picture
varied. Transpacific services to the west
and east coasts of the US were best
served by the G6 and CKYHE alliances,
both of whose performance increased
over the period from January to March.
The 2M alliance again slipped over the
period, again by more than 11 percentage
points, down to 24.1%.
The Ocean Three alliance, too, saw some
improvement, but from a base level from
which it would be hard to get worse.
None of its schedule transpacific services
arrived on time in the January/February
period, but one of its 46 vessel calls, or
2.2%, arrived on schedule in February/
March.
Early start-up issues and US west
coast port congestion make it hard to
draw any conclusions on Ocean Three’s
performance, and reliability across all
alliances on this trade lane was dire. The
industry average for all carriers was only
40% of vessels arriving within a day of
their scheduled arrival.
On the Asia-Europe trade lane, the 2M
alliance was the best performing across
the whole period, although the CKYHE
alliance snuck ahead by 0.5 percentage
points at the end of March, according to
SeaIntel.
“Before Maersk Line entered the 2M
alliance, their average performance in this
trade lane was 96.7% from March 2014 to
December 2014, and in January to March
2015 it has been 91.1%,” SeaIntel said.
“For MSC, the comparison looks much
better, as their performance on average
used to be 61.5%, but rose to 91.1% like
Maersk Line. So clearly MSC has gained
a much higher performance by entering
into partnership with Maersk Line, while
Maersk Line has seen a small drop.”
It was too soon to tell whether this decline
is due to temporary start-up challenges
or is the new normal for Maersk Line,
SeaIntel added.
Container throughput at Hong
Kong in April tumbled 11.7 percent year-over-year, the second
month of double-digit declines,
data from the government’s
Port Development Council
showed.
Hong Kong handled 1.7 million 20-foot
containers during April, the 10th straight
month the port has recorded falling
throughput.
In the first four months of the year, Hong
Kong handled more than 600,000 fewer
containers than during the same period
last year, a decline of almost 9 percent
year-over-year.
The Kwai Tsing container terminals had
a throughput of 1.37 million TEUs during
April, down 10.5 percent year over year.
Mid-stream and river trade containers
reached 330,000 TEUs, which was a sharp
16.5 percent drop, according to the Port
Development Council.
It is a disturbing trend for a port that not
too long ago was the world’s busiest.
Once the first choice of shippers in the
Pearl River Delta as the exit point for
direct exports, the port cargo is now
more than 70 percent transshipment
containers as neighbouring Shenzhen
terminals are closer to the factories and
cheaper.
The Cosco-HIT joint venture with
Hongkong International Terminals saw
throughput slide 6.6 percent in April as
it handled 10,000 fewer TEUs that during
the same month last year.
Shenzhen is also suffering from China’s
slowing exports. Yantian International
Container Terminals throughput was flat
in April while Cosco Pacific’s PRD volumes
fell 2.1 percent during the month.
But the worry is that the sustained
volume declines in Hong Kong reflect a
structural change. The terminals’ 16.2
percent drop in March volumes was a
negative percentage that hasn’t been
seen in years. And with more than 70
percent of the containers passing through
Hong Kong classed as transshipment
cargo, the boxes are counted twice,
making the drop in actual containers
even more significant.
This shift in the cargo mix from direct
exports to transshipment is challenging
the terminals’ ability to move huge
numbers of containers around the port.
Serving large shipping alliances requires
thousands of inter-terminal moves
to reposition containers, and the port
cannot cope during peak times, resulting
in chronic congestion.
Container terminals have been asking
the government to help in providing
more yard space that will allow the
port to increase its handling ability and
improve port productivity, a critical factor
in the servicing of the 18,000 TEU-plus
vessels. These giant ships create surges
LOGISYM MAGAZINE MAY 2015
11
Maritime
in volumes with every port call and place
immense pressure on the terminals.
The reaction from the Hong Kong
government has been sedate, but despite
the government sponsored studies,
industry reports and consultancy papers,
the port’s future is no clearer than it was
11 years ago when the first master plan
was published.
Last year, the Transport and Housing
Bureau commissioned its “Study on
the Strategic Development Plan for
Hong Kong Port 2030”. Compiled by
consultants BMT Asia-Pacific, it found
that weak volumes would continue for
many years, negating the need for a 10th
terminal. The bureau said CT10 was “not
viable financially or economically.”
Still, it took more than 10 years for the
government to reach that conclusion,
during which time the need for additional
container yard space at Hong Kong port
has grown exponentially. Critical levels
of congestion were experienced during
the last quarter of 2014, challenges that
the industry believes could be addressed
through government action.
The Hong Kong Container Terminal
Operators’ Association (HKCTOA) raised
the issue last year in a white paper, which
urged the Hong Kong government to to
create a Kwai Tsing Port Zone. HKCTOA
chairman Jessie Chung said the needs of
the port had evolved with the changing
cargo mix.
“There has been a long-term structural
change in the throughput handled
in the port of Hong Kong, with a lot
higher volumes of barge traffic and
transshipment between ocean going
vessels, while the truck segment has
been shrinking,” Chung said.
“Our priority recommendation to the
government is an optimal use of the
existing land sites adjacent to the port
areas capable of increasing container
storage capacity and also constructing
additional barge berths,” she said.
The problems and most achievable
solutions have been clearly identified and
pressure is mounting on the Hong Kong
government to do more than compile
port studies. Decision-making, however,
is not one of the government’s strong
points, even though logistics has long
been considered one of the pillars of the
city’s economy.
Neptune Orient Lines recorded
an $11 million net loss in the
first quarter as both revenue
and container volumes carried
by its liner division, APL, declined sharply, accompanied by
falling revenue per box.
The group revenue dropped 13 percent
compared to the first quarter of last
year, reaching $1.98 billion in the threemonth period, a result of freight rate
erosion, planned capacity cuts and
the impact of U.S. West Coast port
congestion.
Almost 40 percent of APL’s revenue
exposure is on the trans-Pacific and the
carrier was hit hard by the congestion
that created huge bottlenecks and
delays. The port complex of Los
Angeles-Long Beach continues to deal
with the aftermath months after labor
unions and the terminals reached an
agreement.
“The goup’s container shipping business
continued to operate in a challenging
environment. Nonetheless, APL has
reduced its losses through capacity
management, and improved cost and
operational efficiencies,” said NOL
Group president and CEO Ng Yat Chung.
“While congestion in the U.S, West Coast
is easing, the liner industry continues
to face persistent over-capacity and
uncertain global economic prospects.”
But it was in the container volume
area where the biggest surprises lay.
APL carried 118,000 fewer 40-foot
containers in the first quarter compared
to the same period in 2014. It was a
stunning year-over-year decline of 15
percent.
After a string of losses, the carrier has
been focused heavily on cost savings
and an indication of its success on that
front was evident in the results, said
APL president Kenneth Glenn.
“APL eliminated unprofitable capacity
for better yield in the first quarter of
2015. We extracted cost savings from
lower bunker cost and through more
efficient land and terminal operations
as well as vessel and voyage operations.
These efforts help mitigated the impact
of lower volumes and freight rates that
we saw in the first quarter,” Glenn said
in a statement.
He said APL would continue to improve
profitability by managing capacity,
network design and cargo selection.
“Network design will help to reduce
complexity in our business, lower slot
cost and improve reliability; and better
cargo selection will improve roundtrip
profitability in our key trades.”
NOL does not give the net profit of each
of its units, but reported APL’s core
earnings before income tax of $13 million,
a huge improvement on the first quarter
of last year when the carrier recorded a
core EBIT loss of $82 million. Another
example of the cost management is that
the earnings improvement was achieved
even with cost of sales per FEU falling 8
percent year-over-year.
The group’s supply chain management
business, APL Logistics, achieved
a stable first quarter result, with
revenue of $406 million and core EBIT
of $18 almost the same as the first
three months of last year. This came
despite strong headwinds generated
by a strong U.S. dollar, as most of the
logistics unit’s business is transacted in
non-U.S. dollar currencies.
“Despite a challenging environment,
APL Logistics maintained a high level
of business activity in the first quarter
of 2015,” said APL Logistics president
Beat Simon. “We remain focused on
seeking growth opportunities through
the verticals of automotive, consumer,
industrials and retail in high growth
markets.”
This could be one of the last times
APL Logistics will be included in the
financial results of the NOL Group. NOL
shareholders approved the sale of APL
Logistics to Kintetsu World Express
on April 15 and subject to regulatory
approval the sale will go through by
mid-2015.
12
LOGISYM MAGAZINE MAY 2015
Logistics
Philippines’ logistics market is set for
surging growth if reform agenda is pushed
through
The Philippines is poised to become a major growth market for logistics service providers over the next year,
according to a new report by Transport Intelligence. But this will only happen if its political rulers take steps
to improve trade flows, not least by investing heavily in the archipelago’s outdated infrastructure.
The
Philippines
currently
lags behind
its regional
competitors in South East Asia in
terms of its logistics performance.
However, Ti’s latest report - Philippines
Transport & Logistics 2015 – argues
that if policy changes can be made
that encourage inward investment by
manufacturers, and if this is supported
by more investment – especially from
the private sector – in infrastructure,
then contract logistics and forwarding
demand will surge.
“Ti believes that if the Philippines can
overcome many of the infrastructure
difficulties it currently endures at its
ports and airports and, especially, on
Luzon’s blocked highways, then it has
every chance of becoming a major
growth region for manufacturers to
migrate towards,” said Michael King,
Ti’s Head of Operations in Asia.
“It boasts a fast growing economy and a
thriving consumer market driven by its
growing middle class, remittances and
the off-shoring of back office functions
by many knowledge and financial
institutions. As such, by removing
existing logistics performance issues
and the many obstacles to doing
business in the country, Ti believes
it is well placed to become a growing
market across the various logistics
sectors.
“A lot will depend on the determination
of whichever candidate wins the
looming Presidential elections to drive
through policy reform.”
Ti’s market sizing analysis looks at each
key logistics sector using three growth
scenarios over 2013-20. The realisation
of a scenario (low, medium or high) is
dependent on the Philippines’ Logistics
Performance Indicator reaching a
certain threshold. Vast differences in
growth rates are predicted when LPI
scores differ.
At the upper range of LPI improvement,
we believe the size of the Philippines’
contract logistics market increase from
€478m in 2013 to €1,412 by 2020. The
latter sizing would represent a CAGR
of 16.7% over 2013-2020. However,
should its political leaders fail to pursue
business-friendly reforms, instead this
would see its CAGR over the period
increase by 10.5% to total €962m.
Many of the same drivers of contract
logistics market expansion will
determine growth rates for forwarding.
Ti concludes that the total freight
forwarding market can grow by a CAGR
of 15.1% over 2013-2020 under our
‘high’ LPI increase scenario, but only by
9% under our ‘low’ forecast.
“Ti believe that if the next Philippines’
government embraces policy change
to address is current LPI performance,
then it will become a major regional
growth engine for both contract
logistics and forwarding,” said King.
“The trend could be further enhanced
by the free trade options that will
become possible as the ASEAN
Economic Community takes shape
and current trade and population
movement restrictions are removed or
reduced.
“All of this should boost economic
growth and transport demand. But the
Philippines will only see the benefits of
this if it takes steps to improve trade
flows.”
LOGISYM MAGAZINE MAY 2015
13
Logistics
Blue Dart Express, India’s
leading air express and logistics
services provider, reported its net
earnings in fiscal year 2014-15,
which ended March 31, remained
relatively flat compared to the
profit in the previous year, despite
significant revenue growth.
Group Management changes further sharpen
GAC’s business focus
Dubai, 4 May 2015 – Global shipping, logistics and marine services company,
GAC, is further strengthening its strategic focus on the worldwide energy
sector with the appointment of William Hill as its Executive Group Vice
President – Oil & Gas.
Group President Bengt Ekstrand says
bringing a specific senior management
focus on Oil & Gas is a clear signal
of GAC’s intent. “Our aim is to be
more strategic, more active and more
successful in this sector.”
“Over the decades, GAC has built up a
broad suite of assets and skills in Oil &
Gas,” he adds. “With Hill’s appointment,
we will expand our footprint and impact
as a global provider to this dynamic and
demanding industry.”
Hill joined the GAC Group in 1984
and held marketing and business
development roles in Kuwait and Dubai
before serving as Regional Manager for
Asia Pacific from 1995 to 2001. Before
his appointment as Executive Group
Vice President – Commercial in 2009, he
was Group Vice President for Logistics
Services.
His former duties as Group Vice
President – Commercial are being taken
over by Christer Sjödoff, previously
Group Vice President – Solutions.
Sjödoff’s appointment brings his
accountability for Group IT and the
eco-friendly underwater hull cleaning
system HullWiper under Commercial.
Sjödoff has more than 25 years of
experience in shipping, logistics and
marine and has been with the GAC
Group since 1993. After holding
management and operations posts in
the Middle East and Asia, he served as
Regional Director for Asia Pacific and
the Indian Subcontinent for five years
from 2002. In 2007, he was appointed
Group Vice President – Solutions, to
develop strategic partnerships to meet
the needs of the international maritime
community.
Ekstrand says: “The position of Group
Vice President – Commercial is a good fit
with Sjödoff’s energy and entrepreneurial
flair. With him at the helm, we shall bring
together under a single umbrella all the
essential tools we need to develop our
business products and services to serve
the changing needs of our customers.”
Both appointments are effective from 1
May 2015.
00 Fiscal 2014-15 net profit was Rs.
126.84 crore (about $20 million), up
from Rs. 124.4 crore ($19.5 million),
Blue Dart said in a filing to the Bombay
Stock Exchange.
The company said its income from
operations soared 17.3 percent yearover-year in fiscal 2014-15 to $356.15
million on a consolidated basis.
“The macroeconomic situation in
the last two to three years has not
been encouraging to support growth.
Despite an adverse external situation
and challenges, the company has
been able to deliver a reasonable
performance, aided by our clear focus
on the e-commerce vertical, although
the core verticals have not shown much
traction,” said Anil Khanna, managing
director, in a written statement.
Operating expenses for the full year
totaled $328 million, up 16.7 percent
from $281 million, the company said.
In the last quarter, from January to
March, the company made a net profit
of $5.5 million, up 13 percent yearover-year from $4.8 million. Quarterly
revenue increased 13.5 percent to $90
million.
“We all have to work as one team to
increase revenue, reduce cost and
improve efficiency, productivity and
service quality. We are an insanely
customer centric and highly people
focused company,” Khanna said.
Blue Dart, part of the Deutsche Post
DHL Group, currently has a fleet of five
Boeing freighters, and covers nearly
34,500 locations in India. The company
has warehouses at 72 locations
across the country, as well as bonded
warehouses at Ahmedabad, Bangalore,
Chennai, Delhi, Mumbai, Kolkata and
Hyderabad.
14
LOGISYM MAGAZINE MAY 2015
Logistics
Logistics Executive Group COO Darryl Judd
recognised as one of Asia’s Top 50 Influential
leaders in Supply Chain & Logistics.
G
lobal Executive Search and
Corporate
Advisory
firm
Logistics Executive Group is
pleased to announce that
Chief Operating Officer Darryl Judd has
been recognised as one of Asia’s top
50 influential leaders in Supply Chain
& Logistics by SCM Logistics World .
Mr Judd has 20 over years of executive
experience in Aviation, Supply Chain
and Logistics Transport Industry. He
has held executive positions within
the airline & aircraft leasing/charter
industry, major logistics organizations
and is regularly called upon to manage
key human resources consulting
projects, supporting business to drive
change, particularly around M&A
activity and international executive
management.
The prestigious award recognises
professionals and practitioners from
the Supply Chain & Logistics sector who
have shown strong commitment and
contribution in pushing boundaries to
help raise standards, expectations and
the profile of their companies within the
industry.
Darryl has been a Director with Logistics
Executive, leading from the front
with his trademark enthusiasm and
commitment since 2002. This award
acknowledges his passion, innovation
and contribution to the industry as a
whole Darryl is an outstanding industry
professional and role model for our
younger generation, he inspires and
motivates those around him to scale
new heights in personal growth” said
Kim Winter, Global CEO for Logistics
Executive Group.
services.
Situated to the southeast of the
Indochinese peninsula and with a 3,200
km coastline, Vietnam depends heavily
on sea freight transportation for its
external trade.
With commercial and manufacturing
activities developing much in the south,
the ports along the Mekong River Delta
and in HCM City have traditionally been
the mainstay of Vietnam’s transport
and logistics industries.
LOGISYM MAGAZINE MAY 2015
15
Logistics
Logistics Executive Group releases the
2015 South East Asia Salary Guide for
Logistics & Supply Chain Industry.
Marking 10 years in Asia, Logistics
Executive Group has announced the
release of its 2015 South East Asia
Salary Guide for Logistics & Supply
Chain Industry.
The annually released report is the
industry’s most comprehensive salary
guide covering ASEAN’s five critical
growth markets of Singapore, Thailand,
Vietnam, Malaysia and Indonesia.
“We thank our clients and the market
place as this report has been compiled
with their goodwill, covering a breadth of
salary bands, positions and geographical
territories in South East Asia. The
analysis in this report, which covers
Singapore, Thailand, Vietnam, Malaysia
and Indonesia, comes from in-depth
interviews with our clients, our annual
EMS survey and statistical reference
to our global databases” commented
Carmel Perales, General Manager South
East Asia.
The release of the South East Asia
salary guide comes hot on the heels
of the India report which was released
early in April and shows similar trends
in upward salary
pressures. The salary guide found that
remuneration across the Asia-Pacific
has increased on average by 6-7 percent
with the highest increases being noticed
in supply chain, trade compliance, sales
and marketing related roles and supply
chain planning activities.
“Much of ASEAN continues to enjoy low
unemployment and rising job vacancy
rates. We expect that the shortage
of talent across the supply chain will
continue for the best part of 2015 and
early 2016 said Ms. Perales. “Ensuring
employees remain loyal, proactive and
engaged is an important factor, which
cannot be overlooked, if employers wish
to achieve a return on the investment
they make in offering employees
skill based training programs and
in developing ‘home-grown’ talent”.
“Employee engagement and skill
development is still the most vital link
to successful organisations retaining
staff” said Mr Darryl Judd, Group Chief
Operating Officer for Logistics Executive
Group. He went on to say, “providing
an emotional connection between
employees and their organisation
leads to improved performance (both
individually and company), increased
productivity, better staff retention,
improved customer service and greater
staff loyalty”.
Acknowledging the need for hiring to be
linked to career development as an
employee evolves the career within an
organisation, Logistics Executive Group
recently launched its world-class
training platform, Logistics Academy.
Logistics Academy brings together
some of the industry leading education
bodies such as CSCMP, Australian
Logistics Academy, Chartered Institute
of Transport and Logistics Singapore,
Swiss Management Centre and LSCMS,
providing logistics professionals with
an extensive range of pathway learning
programs on one single
technology platform.
“Developing talent from within is still
one the best way to retain staff and
keep a competitive edge and feedback
from our students and employers on
their experience inside the Logistics
Academy portal has been extremely
positive” commented Mr Judd. He added
“We’re finding that more and more
organisations are drawing on Logistics
Academy’s extensive range of programs
from the CSCMP quick courses to
accredited
certification
programs,
degree qualifications and supply chain
MBA’s as part of a holistic approach
when developing their existing teams or
mapping out career plans as part their
hiring of new staff”.
In summary, salary indicators are
indicative of robust growth seen in the
SEA region in 2015. The challenge for
leaders in the region is to build on this
success by creating improving on the
skills and aptitudes of their workforce
in order to stay competitive with their
global counterparts in Supply Chain and
Logistics across the board.
The report can be downloaded from
http://www.logisticsexecutive.com/
news_and_insights/media_and_
articles
16
LOGISYM MAGAZINE MAY 2015
Logistics
A weak performance by DHL’s Global Forwarding, Freight division
weighed upon otherwise solid first-quarter results published
recently by Deutsche Post DHL, with the world’s largest postal,
forwarding, and logistics group announcing it will review the
reorganisation that is already underway within its forwarding
business.
The group reported market-share losses in both its air and ocean freight
businesses, with the company’s ocean freight volumes rising by just
2.3% in the first three months, while air freight volumes remained flat, at
approximately the prior-year level (+0.3%).
D
escribing it as a “stillchallenging
market
environment” for its Global
Forwarding, Freight division,
reported revenues increased by 7.6%
to €3.8 billion, although adjusted for
currency effects, revenue increased
by just 2.7%. In contrast, the division’s
operating profit experienced a sharp
decline to €17 million in the first quarter,
down almost two-thirds compared
with the €49 million achieved in the
first quarter of 2014.
DHL said this was due to “on-going
margin pressure in the overall
market, as well as direct and indirect
costs related to the transformation
programme. In the wake of the weak
development, the new management
of the division will intensively focus on
improving the operating performance.
“In parallel, the results from the
countries that have piloted the
transformation programme, as well
as the impact of the worldwide
organizational alignment implemented
as part of the transformation, will
be reviewed in detail. Based on this
review, the future implementation
approach will be defined,” DHL said.
This “new management of the division”
comes following the decision late
last month to part company with the
division’s former CEO, Roger Crook, who
“stepped down with immediate affect,
for personal reasons”. Although the
company declined to give any further
explanation for his departure, the poor
performance by the group’s freight
forwarding division in the run-up to
his exit suggest that his departure was
more likely to have been for business
reasons than personal reasons.
Pending
the
appointment
of
replacement for Crook, Deutsche
Post DHL Group CEO Frank Appel
has taken on the responsibilities in a
dual role, although for the operational
management of the DHL Global
Forwarding business, Renato Chiavi,
has been named interim CEO, while
Amadou Diallo remains CEO Freight,
responsible for the group’s Road
and Rail Transport services. Chiavi
previously led the Ocean and Air Freight
business of DHL Danzas between 1995
and 2006.
Looking at the performance of the
Global Forwarding business unit,
revenue grew by 10.7 % to €2.791
billion, although excluding positive
currency effects of €170 million,
the increase was 4%. Gross profit,
meanwhile, improved by 2.4 % to €587
million, although no figure was given
for adjusted gross profit.
DHL said air freight margins continued
to be low compared with historical
averages. “In light of the falling oil
price, major customers engaged in
aggressive competitive tendering in
the second half of the prior year,” it
said.
“Moreover, a number of new products
were introduced to the consumer
goods market. This caused transport
capacity utilisation and rates to
increase on the very busy routes from
Asia.” Air freight revenue in the first
quarter of 2015 grew by 11.9 %, while
gross profit increased by just 0.5 %.
It said the 2.3 % rise in ocean freight
volumes was “mainly a result of new
business gains in the second half of
2014.” It continued: “Asia remains the
largest growth engine. As in previous
years, a short-term volume increase
was again experienced just before the
beginning of the Chinese New Year
holiday. Ocean carriers continue to
LOGISYM MAGAZINE MAY 2015
17
Logistics
control capacity effectively.”
Ocean freight revenue grew by 12.2 %
in the reporting period, but gross profit
fell by 11.6 % “due to increased price
competition”.
Meanwhile, the division’s industrial
project
business
saw
weaker
performance compared with the prioryear quarter, with its gross profit
declining by 7.7 % compared with the
first quarter of the previous year.
Commenting on the performance of
the division, CFO Larry Rosen said: “Our
Global Forwarding, Freight division
registered a weak performance in the
first quarter against the backdrop of
its ongoing, complex transformation.
Despite the fact that the overall market
environment is still challenging, we
are naturally not satisfied with this
development.
“The new management team will
therefore be strongly focusing on
improving the operating performance
of the business. At the same time,
there will be a thorough review of
the transformation programme, in
particular looking at the results from
the pilot countries and the impact of
the organizational alignment. This will
allow us to carefully map out the right
implementation approach and decide
on our next steps.”
Revenue in the group’s Supply Chain
division increased by 12.4% in the first
quarter of the year to EUR 3.9 billion
(2014: EUR 3.5 billion). Adjusted for
currency effects, revenues rose by 0.8%
over the prior-year period.
The division was able to conclude new
business contracts with a volume of EUR
260 million (annualized), particularly in
the Automotive, Consumer and Life
Science & Healthcare sectors. EBIT
declined to EUR 53 million in the first
quarter (2014: EUR 85 million).
Planned, non-recurring costs for the
Supply Chain optimization program
were chiefly responsible for the
decrease. The division intends to take
advantage of the optimization program
to increase margins to 4% to 5% by
2020 through further standardization,
greater efficiency and improved
utilization of economies of scale.
Meanwhile, the group’s Express
division significantly increased both
revenue and earnings in the first three
months of the year. Revenue climbed
by 12.5% in the first quarter to EUR 3.2
billion (2014: EUR 2.9 billion). Adjusted
for currency effects, the increase
amounted to 2.3%, held back by lower
fuel surcharges. The main driver of the
sustained positive trend in the Express
division was further strong growth in
the time-definite international (TDI)
business, where first-quarter volumes
rose by 7.1% compared with the prioryear period.
The division performed even better with
respect to operating profit: EBIT rose
by 20.3% to EUR 332 million (2014: EUR
276 million). This again demonstrates
the positive effects of volume growth.
The EBIT margin increased to 10.2% in
the first quarter compared with the
prior-year figure of 9.6%.
“To continue leveraging the division’s
strong position, Express will continue
to invest in its global aviation and hub
network,” DHL said.
And revenue in the group’s Post eCommerce - Parcel division increased
by 3.6% in the first quarter to EUR 4.1
billion (2014: EUR 4.0 billion). EUR 1.5
billion of that figure was attributable
to the eCommerce - Parcel business,
which continued to register dynamic
growth to achieve an improvement of
13.7% over the prior year.
The increase, including positive
currency effects, reflects revenue
growth of 25.8% in eCommerce, 12.1%
in Parcel Germany and 4.8% in Parcel
Europe.
“This positive trend demonstrates that
Deutsche Post DHL Group continues to
benefit from its successful positioning
in the high-growth e-commerce, parcel
market. Innovations such as parcel
boxes for apartment buildings and
the recently piloted car drop delivery
service continue to advance the
Group’s leading position in the market,”
the company said.
In contrast to eCommerce - Parcel,
revenue in the Post business decreased
by 1.7% in the first quarter to EUR 2.6
billion, once again illustrating the impact
of structural change as the mail market
shrinks. Operating profit in the PeP
division rose by 0.8% to EUR 399 million
(2014: EUR 396 million). This reflects the
higher revenues in eCommerce - Parcel,
which were partially offset, however, by
lower Post volumes, higher staff and
purchased goods and services costs as
well as expenses especially related to
the international expansion of the Parcel
business.
The Deutsche Post DHL Group as a whole
further increased revenue in the first
quarter of 2015. Revenue grew by 8.8%
over the prior-year quarter to EUR 14.8
billion (2014: EUR 13.6 billion). Adjusted
for positive currency effects, revenue
also grew, with improvements in all
four divisions contributing to an organic
increase of 2.1%.
It said this development reflected
sustained growth in revenues and
volumes in the international express
business as well as in the German parcel
business. The Group’s operating profit
slightly decreased by 1.0% in the first
quarter to EUR 720 million, primarily due
to the weak performance registered by
the Global Forwarding, Freight business
and planned, non-recurring restructuring
costs in the Supply Chain division.
“We saw a moderate start to the year, as
we expected,” said Frank Appel, CEO of
Deutsche Post DHL Group. “Our strategy,
aimed at growth in e-commerce and
the emerging markets, in particular, is
progressing.
“At the same time, as we transition from
Strategy 2015 to our new Strategy 2020,
we are now consciously undertaking
a number of specific measures. These
measures will allow us to build a strong
base to bring our strategic priorities
forward. We are investing significantly
to ensure that our four divisions are
optimally positioned, even though this
is having a temporary impact on our
performance, as we previously discussed.
Our overarching focus today is on the
sustainable, profitable growth of our
business.”
18
LOGISYM MAGAZINE MAY 2015
Logistics
The Perfect Logistics Disaster
After a series of massive earthquakes, as
many as 300,000 people were at risk in
late May as Nepal entered its monsoon
season, according to one senior UN
official.
There was a lack of food, equipment,
porters, funds and shelter to enable
those most at risk to be helped.
While working in Nepal earlier in the
crisis, I realized the severity of the
logistics shortfall and how this might
play out when the rains made reaching
vulnerable people and moving aid around
this Himalayan country more difficult.
I also interviewed Suman Khadka, an
extraordinary 19-year old who has taken
it upon himself to feed and shelter the
586 families in his home village of Palchok
in the Sindhupalchowk region.
Working with a number of local and
international volunteers all paying their
own expenses, we have helped Suman
help his village start erecting shelters
And we have sent lorry loads of rice and
medicine with trained practitioners.
But more is needed - at the end of May,
Palchok had not received any help from
the UN or any government despite the
road being open since 28 April, just three
days after the first huge quake.
I will be leading a third trip to Palchok on
5 June to help buy more food and shelter
so Suman can help his village.
If you would like to help read more about
Suman or the unfolding tragedy in Nepal
please click here
http://www.gofundme.com/suman_story
Or here..
https://www.facebook.com/sumansstory
- Michael King
Outlook looking bright for freight forwarders
T
he Stifel Logistics Confidence
Index for May indicated some
improvements from April’s
decline. In particular, the six-month
outlook appears bright as air freight
gained 2.8 points to 63.4 and sea
freight increased 2.1 points to 62.9.
Overall, the total index increased 1.1
points to 57.4. Even though this is
by Cathy Roberson
down 0.6 points from one year ago,
it is still 6.7 points higher than May
2013.
Air freight continues to lead the
optimism for both the six-month
outlook as well as for the present.
Sea freight however, remains
troublesome for the present and
while some ports have settled labour
issues, other issues such as the
rise of the mega-vessel and larger
shipping alliances are straining
port operations. Congestion is a big
problem for many ports and perhaps
air freight is currently benefiting
from the misfortune of ports.
LOGISYM MAGAZINE MAY 2015
Logistics
Air Freight
For the present, favourable currency
rates probably helped boost the Europe
to Asia and Europe to US trade lanes both
noting big gains from April, up 7.0 and 3.0
points respectively (58.2 and 62.7). The
only declining trade lane for the month
was recorded for Asia to Europe, down
2.0 points to 52.6. The US to Europe lane
was up 0.7 points to 48.1 to complete the
trade lane list. This marks the second
month in a row for contraction along the
US to Europe lane, most likely due to the
strong US dollar.
By trade lane the outlook is positive for
all, with Asia to Europe gaining the most
points, 3.5 from the previous month to
67.1. Europe to US gained 3.0 points to
63.8 while Europe to Asia increased 2.5
points to 64.7 and US to Europe up 1.6
points to 56.7.
StifelLogisitcs Confidence Index: Total
Stifel Logistics Confidence Index: Air Freight
Sea Freight
The present situation for sea freight
noted a worrisome decline of 2.6 points
to 47.7. This is the first time since
October 2013 that the present sea
freight sub-index fell below the 50-level.
Furthermore, three of the four trade
lanes we track are currently below this
50-level, which means contraction.
For the tradelanes Europe to Asia and
US to Europe, this marks the second
consecutive month of contraction. While
the Europe to Asia lane actually noted a
slight increase, 0.2 points to 47.6, the US
to Europe lane declined even further, 5.0
points to 41.5. Meanwhile, Asia to Europe
slipped below the 50-level for the first
time since October 2013. It fell 4.7 points
to 48.9. Europe to US remained the only
lane above the 50-level but also declined,
0.9 points to 52.0.
The six-month outlook was a bit more
positive with all lanes noting gains.
Europe to Asia noted the biggest gain at
3.0 points to 66.2 followed by Europe to
US, up 2.7 points to 65.7. Asia to Europe
was up 1.9 points to 64.0 and finally US to
Europe increased 0.7 points to 4.7. For
all lanes, the six-month outlook for sea
freight was up 2.1 points to 62.9.
Stifel Logistics Confidence Index: Sea Freight
19
20
LOGISYM MAGAZINE MAY 2015
Supply Chain
Labour shortages hold back Vietnam’s
logistics industry
T
housands
of
logistics
entrepreneurs are struggling
with a serious shortage of
employees since a rapid
increase of services demands, the
Vietnam Logistics Institute (VNLI) has
said.
About 300,000 business entrepreneurs
are involved in logistics services,
providing jobs for nearly 1.5 million
labourers across the country, of whom
40 per cent are from HCM City.
However, these employees could
only meet 40 per cent of the sector’s
demand in Vietnam, so the country was
facing a serious shortage of workers in
the next three years, the institute has
reported.
In the next three years, those
companies providing logistics services
would need more than 18,000 workers,
while other firms that provide their
own logistics services would need
more than a million more employees, it
said earlier this week.
A lack of vocational training and
information was hindering the
employment process for the sector,
experts warned.
Dr Le Van Bay, a logistics lecturer, said
education and training in colleges and
universities had ignored the sector so
only a few students studied logistics.
Bay said the HCM City University of
Transport and the Vietnam Maritime
University had opened logistics faculties,
but they faced increasing obstacles to
improve the quality of training due to a
lack of experienced lecturers.
The logistics service industry in Vietnam
has seen impressive progress in both
speed and quantity, despite a shortage
of capital, equipment and infrastructure.
However, most logistics companies in
Vietnam say they lack highly qualified
staff.
A logistics employer from HCM City
complained his company was struggling
to expand due to a shortage of highskilled workers.
He said most experienced logistic
workers preferred part-time work, while
new graduates were not qualified for
the positions due to a lack of soft skills,
including communication and foreign
languages.
A recent survey by a HCM City
development research institute said
53.3 per cent of logistics companies in
the city faced a shortage of high-skilled
workers.
About 30 per cent of those companies
complained they had to re-train their
employees and only 6.7 per cent
were satisfied with their labourers’
qualifications.
Fast growing
While the Vietnamese logistics sector is
only in the early stages of development,
demand for such services is growing
fast, a development spurred by the
country’s continued inflow of foreign
direct investment (FDI).
Following Vietnam’s 2007 World Trade
Organisation accession, the country’s
FDI level has been rising steadily.
Accounting for more than half of
the total accrued FDI, investment in
manufacturing in particular has been
driving the country’s demand for
international transport and logistics
services.
Situated to the southeast of the
Indochinese peninsula and with a 3,200
km coastline, Vietnam depends heavily
on sea freight transportation for its
external trade.
With commercial and manufacturing
activities developing much in the south,
the ports along the Mekong River Delta
and in HCM City have traditionally been
the mainstay of Vietnam’s transport
and logistics industries.
LOGISYM MAGAZINE MAY 2015
21
Supply Chain
Global logistics industry sees rise in mergers, acquisitions
L
arge-scale
mergers
and
acquisitions in the global
transportation and logistics
industry posted year-over-year
increases in value and number during
the first quarter of 2015, PwC US
reported.
In the first quarter of 2015, there were
54 announced transactions worth $50
million or more, for a total value of
$27.2 billion. Those numbers compared
with 44 transactions worth $17.7
billion in first quarter of 2014, and 62
deals worth $21.6 million in the fourth
quarter of last year.
Transactions of more than $1 billion
accounted for almost 55 percent of
the total deal value for the quarter,
PwC reported in Intersections, the
firm’s quarterly analysis of global deal
activity.
Five $1 billion-plus deals in the first
quarter totaled $14.9 billion and
were largely driven by acquirers from
Asia and Oceania. As a result of the
substantially larger deals being done,
average deal value increased by 46
percent over the fourth quarter of
2014.
“The transportation and logistics
industry got off to a strong start in
the first quarter this year as deal value
and volume continued its steady climb
back from recent historic lows,” said
Jonathan Kletzel, U.S. transportation
and logistics leader at PwC.
“The financial marketplace is booming
with overall M&A at record levels
and surging capital markets, which
may make this a favorable time
for transportation executives to
consider acquisitions. The strong
dollar making acquisitions cheaper
for U.S. acquirers looking to invest in
targets abroad, continued recovery by
advanced economies and low global
fuel costs are all good indications
that the environment may be ripe for
transportation M&A in the year ahead.”
PwC said Asia and Oceania accounted
for the majority of deal value and
volume in the first quarter. Driven by
activity involving China, Australia, Japan
and Singapore totaling $13.5 billion,
the region accounted for more than 90
percent of total value of mergers and
acquisitions of more than $1 billion.
Reversing a recent trend, crossborder transactions gained significant
momentum in the first quarter,
accounting for almost 43 percent
of all deals. Most of these involved
acquirers from advanced nations. Most
cross-border activity was driven by
strategic acquirers looking to improve
geographic reach and increase longterm growth, PwC said.
“While trucking deals dipped slightly
in the first quarter, we expect them
to remain an area of focus for the
industry given the highly fragmented
nature in that mode of transportation
and the prevalence of smaller players
that are ripe for consolidation as bolton acquisitions,” Kletzel said. “As the
industry seeks greater efficiency, and
large to medium-sized companies
look for growth rates higher than can
be achieved through strategic means,
these smaller companies may be prime
targets for the larger players.”
Singapore Customs introduced Advance Export Declaration (AED) on April 1st 2013, with full enforcement from October
1st 2014, and the ramifications continue to be felt. The 18 month transition period was intended to give shippers and
forwarders time to reconfigure processes, adopt new systems, and align with supply chain partners. Not all businesses
took advantage of this concession.
Some shippers accepted the challenge
and hit the ground running on April
1, 2013. Others adopted a wait and
see approach, and are slowly and
somewhat painfully realising that the
change is here to stay and they must
comply.
Rather surprisingly, some have buried
their head in the sand. This latter group
must either be hoping that Singapore
Customs are sleeping on the job
(which they most definitely are not), or
that somehow their broken customs
arrangements are magically going to
fix themselves. Either way they’ll be
disappointed.
Insanity: doing the same thing over
and over again and expecting different
results. - Albert Einstein
Many shippers who are proving
Einstein’s famous idiom time and time
again will have already had friendly
reminders, warning letters or fines
from Singapore Customs. Nevertheless
we still hear of far too many cases
where the forwarder is charged with
making a customs declaration, but
the documents only arrive after the
shipment has departed.
The message to these shippers is
very simple: you can outsource the
responsibility, but the accountability
rests with you. If your idea of compliance
is handing a pile of documents to your
declarant when the container is on the
way to the port then you should not be
surprised if and when your shipments
are held up for inspection, or even
rejected.
There is still hope, however. We are
seeing a rising tide of shippers approach
us for solutions, and we regularly deploy
robust and reliable customs compliance
regimes on a single-broker basis, which
place the shipper in the driving seat,
and the costs under control.
By creating a single compliance
environment (all forwarders, all modes,
all declaration types, all in one place),
TNETS delivers to your business the
customs process control, the trade
reporting and analysis, and global trade
advice you need to keep your business
flowing.
22
LOGISYM MAGAZINE MAY 2015
Australia’s wine exports to China rose
20 percent in the 12 months ending
March as China continued to shrug
off austerity measures imposed in
2013 as part of Beijing’s corruption
crackdown.
E
xports to China grew to 44
million litres in the past year,
valued at $193 million, with
bulk exports increasing 77
percent to 5 million litres while bottled
exports experienced record growth, up
15 percent to 39 million litres, according
to data released by the Australian
Grape and Wine Authority (AGWA).
“There are a number of factors that
have contributed to the growth we’ve
seen in the last 12 months,” said
AGWA Chief Executive Andreas Clark.
“Certainly, the depreciating dollar
has an effect but we’re also reaping
benefits from the commencement of
the Japanese free trade agreement, a
rebound in the Chinese market from
their austerity measures and improved
economic conditions in two of our
biggest export markets, the U.S. and
the U.K.”
China remains the No. 1 destination
for premium Australian wines, with
bottled exports above $6 per litre
increasing 12 percent year-over-year
to 7 million litres. But the lower priced
segment was also booming and rose
by 25 percent compared to the last
fiscal year to 24 million litres.
“‘Some of the strongest growth is seen
in the premium price segments,” Clark
said. “While the above A$7.50 ($6) price
segment accounts for just 5 percent of
total export volume, the value share is
considerably higher at 27 percent.”
Asia continues to be a key driver of
growth with more than half of exports
in the $6-plus per liter segment
shipped to Asian markets, rising 13
percent compared to the previous year,
with the average value of exports to
Asia standing at $15 per liter. Clark
said the biggest Asian market was still
China but Japan also recorded strong
growth, as did emerging Asian markets
such as Thailand, Malaysia, Taiwan and
the Philippines.
Exports to Japan grew 20 percent to
a record 11 million litres as exporters
made the most of the Japan-Australia
Economic Partnership Agreement
(JAEPA). Under JAEPA, the first of the
bottled wine tariff cuts came in to
effect on Jan 15 and the second cut
was implemented on April 1, reducing
the tariff to 11.3 percent, down from 15
percent.
The tariff on bottled wine will be
eliminated entirely within seven years
while the tariff on bulk wines was
immediately reduced to zero. This
zero percent tariff on bulk wine was
reflected in the growth of its exports
to Japan in the first three months
of the calendar year, up 414 percent
compared to the same period in 2014.
All the Asian markets experienced
double-digit growth in the last 12
months up to the end of March.
Thailand was up 47 percent to a record
3.6 million litres valued at $11 million,
Malaysia had record volume up 10
percent to 3.2 million litres and value
up 25 percent to $30 million, Taiwan
was up 33 percent to 1.7 million litres
while value grew 66 percent to $12
million, and the Philippines exports
were up 22 percent to 1.2 million litres,
growing in value by 19 percent to $4.4
million.
Damco’s reduced first-quarter loss came at a price as the
Maersk Group’s ‘Supply Chain’ unit ceded more market share
to its rivals.
T
he loss narrowed to $9 million
from $10 million in the first
three months of 2014 as
revenue shrank 9 percent
year-over-year to $683 million largely
because of exchange rate movements.
Damco “is on the same level as last
year,” Maersk CEO Nils Andersen said
as he announced that the Danish
shipping and energy group’s firstquarter net profit grew to $1.6 billion
from $1.2 billion, helped by a share sale
and a sharply lower tax bill.
Damco remained the group’s worst
performing business, with the rate of
return on invested capital deteriorating
to a negative 11.2 percent in the quarter
from 9.3 percent a year ago while the
group’s overall figure improved to 13.8
percent from 10 percent.
The company’s loss of market share
accelerated in the quarter, with ocean
freight volume dipping by 2 percent
and air freight traffic collapsing by 19
percent. The supply chain management
business bucked the trend with
volumes rising 6 percent.
Damco’s ocean and air cargo figures
are in sharp contrast to its leading
rivals who increased their volumes in
the first quarter. Panalpina’s ocean
traffic grew 5.1 percent, and air freight
traffic edged 0.6 percent higher.
Kuehne + Nagel’s ocean traffic shrank
by 0.7 percent as it put profit ahead of
volume and air freight traffic grew 6
percent. Deutsche Post DHL increased
ocean shipments by 2.3 percent and air
cargo, 2.3 percent. Ceva’s ocean and air
traffic grew 5 percent and 5.2 percent,
respectively.
Damco’s negative figures followed a 6
percent drop in ocean traffic in 2014,
when the market grew by around 4 to
5 percent, and a 16 percent dive in air
freight in a market that expanded by 3
to 4 percent.
Andersen said Damco expects to make
progress in cutting costs through the
rest of the year, but it also needs to
increase volumes.
The focus in 2015 will remain on
driving commercial competitiveness
and capturing targeted productivity
improvements “through a number
of ongoing select initiatives,” the
company said.
A return to profit likely would place
Damco among Maersk’s potential
divestments as it focuses on four core
businesses — container shipping,
port terminals, oil production and
exploration and drilling — according to
industry analysts.
24
LOGISYM MAGAZINE MAY 2015
Technology
CDM Software Adopts
Descartes’ Global Logistics
Network(TM) to Offer
Comprehensive Air Cargo
Connectivity and Messaging
Services
E
scartes Systems Group (Nasdaq:DSGX) (TSX:DSG), the global leader in
uniting logistics-intensive businesses in commerce, announced that
CDM Software Solutions, a provider of cloud-based operations and asset
tracking software for freight forwarders, export packers, exporters and other
logistics services providers, is using Descartes’ Global Logistics Network (GLN)
to provide its customers comprehensive air cargo connectivity and messaging
services.
“The ability to electronically exchange
air waybills, house bills and status
messages enables our customers
to further automate and streamline
processes,
meet
expanding
carrier electronic communications
requirements, increase visibility and
improve performance. Customers
benefit from simple and fast
activation on Descartes’ GLN from
CDM Software Solutions’ e-Commerce
friendly software platform,” said
Darrell Ortiz, CEO and founder of CDM.
“Descartes’ GLN also provides our
users with connectivity to air carriers
around the globe to help them meet
IATA’s electronic air waybill (e-AWB)
initiative. Developed in collaboration
with stakeholders across the air cargo
industry, e-AWB aims to eliminate the
majority of paper-based air waybills by
2016.”
Descartes’ GLN is an industry leading
solution for multimodal, inter-
enterprise electronic data exchange.
CDM is able to seamlessly connect its
customers to the GLN and offer them
value-added services to:
*
standardize and automate
air cargo and freight management
operations;
*
provide real-time shipment
status monitoring;
*
improve
service
by
transmitting accurate and timely
tracking updates to customers;
*
meet
global
trade
requirements;
*
reduce transportation costs
by minimizing carrier charges for
security and documentation services;
and
*
participate in key air cargo
industry
initiatives,
including
eFreight and Cargo2000.
“We’re pleased to partner with
technology providers, like CDM
Software, to augment their air cargo
connectivity capabilities to better serve
customers,” said Scott Sangster, Vice
President, Global Logistics Network
at Descartes. “Today, the electronic
movement of data between logistics
parties can be as important as the
physical movement of cargo itself.
Using air cargo connectivity solutions,
such as the GLN, enables more reliable
planning and delivery of air cargo.”
About CDM Software Solutions
CDM Software Solutions, Inc. was
founded in 1988 to provide fast,
efficient, user friendly software
products, services and support for
the international trade community,
specifically
freight
forwarding,
NVOCC, export packers, importers and
exporters. CDM Software Solutions, Inc.
is an U.S. Customs CERTIFIED Software
Application Provider and IBM Business
Partner, Descartes, Inttra and GT
Nexus Partner that thrives to provide
the most comprehensive and efficient
cloud based software solutions to
the international trade community.
CDM Software Solutions, Inc. provides
software solutions for Air Freight
(Import, Export and Domestic), Air
Freight Consolidation, Ocean Freight
(Import and Export), Ocean Freight
Consolidation, Truck/Inland Freight,
Rail Freight, Export Packing, Global
Asset Tracking with GPS, Logistics and
Customer and Carrier e-Commerce
(EDI/XML).
CDM Software Solutions’ Global
Compliance Module provides a
comprehensive, cloud-based certified
software solution for shipments
departing and arriving to the United
States, European Union, Canada, Japan,
Singapore and China. CDM Software
Solutions, Inc. is headquartered in
Houston, Texas with sales offices in
Chicago, Hong Kong and Singapore.
Learn more at www.cdmsoft.com.
About Descartes
Descartes (TSX:DSG) (Nasdaq:DSGX)
is the global leader in providing ondemand,
software-as-a-service
solutions focused on improving the
productivity, performance and security
of logistics-intensive businesses.
LOGISYM MAGAZINE MAY 2015
25
Technology
Descartes has over 200,000 connected
parties using its cloud based
services. Customers use our modular,
software-as-a-service solutions to
route, schedule, track and measure
delivery resources; plan, allocate and
execute shipments; rate, audit and
pay transportation invoices; access
global trade data; file customs and
security documents for imports and
exports; and complete numerous other
logistics processes by participating
in the world’s largest, collaborative
multimodal logistics community. Our
headquarters are in Waterloo, Ontario,
Canada and we have offices and
partners around the world. Learn more
at www.descartes.com.
This release contains forward-looking
information within the meaning of
applicable securities laws (“forwardlooking statements”) that relate
to Descartes’ solution offering and
potential benefits derived therefrom;
and other matters. Such forwardlooking statements involve known
and unknown risks, uncertainties,
assumptions and other factors
that may cause the actual results,
performance or achievements to differ
materially from the anticipated results,
performance or achievements or
developments expressed or implied by
such forward-looking statements. Such
factors include, but are not limited to,
the factors and assumptions discussed
in the section entitled, “Certain Factors
That May Affect Future Results” in
documents filed with the Securities
and Exchange Commission, the Ontario
Securities Commission and other
securities commissions across Canada
including Descartes most recently
filed management’s discussion and
analysis. If any such risks actually
occur, they could materially adversely
affect our business, financial condition
or results of operations. In that case,
the trading price of our common shares
could decline, perhaps materially.
Readers are cautioned not to place
undue reliance upon any such forwardlooking statements, which speak only
as of the date made. Forward-looking
statements are provided for the
purpose of providing information about
management’s current expectations
and plans relating to the future.
Readers are cautioned that such
information may not be appropriate for
other purposes. We do not undertake
or accept any obligation or undertaking
to release publicly any updates or
revisions to any forward-looking
statements to reflect any change in our
expectations or any change in events,
conditions or circumstances on which
any such statement is based, except as
required by law.
26
LOGISYM MAGAZINE MAY 2015
Defining Waste in the Warehouse Environment
Solutions - Success:
The vital pair in any business activities, which will ensure continuity and
progression of dealings in the market place.
Petros N. Zenieris, is a Singapore-based management consultant and trainer;
ACTA certified.
He established The Business Criterion in 2010 and provides consulting &
training services to SMEs and Entrepreneurs in Singapore & within the S.E.
Asian Region.
Petros N. Zenieris
His professional career covers over
25 years accumulated management
experience from Europe, W. Africa (Ghana
& Nigeria) and Asia (China, Singapore and
Malaysia).
Petros currently designs his own
seminars & workshops for Customer
Services, Supply Chain Management
(Warehousing-Inventory) as well as
for selective Marketing topics (i.e.
Competitors’ Analysis). His seminars
& workshops have been conducted in
Singapore, Malaysia, Dubai, Bangkok,
Shanghai & Manila.
His articles have been published in The
Straits Times newspaper and business
magazines such as “Today’s Manager” of
Singapore Institute of Management (SIM),
“Entrepreneur’s Digest” of Singapore
Association of SMEs (ASME) & LOG Dubai
- Middle East, a Logistics & Supply Chain
magazine.
He conducts workshops & seminars
with the Singapore Malay and the Indian
Chamber of Commerce & Industry
(SMCCI) & (SICCI) as well as with the MDIS.
He is also an associate lecturer of STEi
Institute of Singapore for the Diploma &
Advanced Diploma in Logistics & Supply
Chain Management.
DEFINING WASTE IN THE WAREHOUSE ENVIRONMENT
It
has been described that the
correct application of the Lean
process in the warehouse
environment will not only ensure
the optimisation of the three very
important elements in any warehouse
such as space, equipment and
personnel, but it will also provide
the needed assistance for achieving
warehouse excellence by the continued
elimination of the waste.
An essential component in the
application of Lean Process towards
the warehouse excellence would be
the ability to identify ways for the
continuous elimination of the waste,
which will lead to the improvement of
the entire warehouse operation.
DEFINE WASTE:
It could be defined as:
* any activity that does not add
value to the product,
* any material or resource
beyond what the customer requires
and is willing to pay for,
* any material (finished, semifinished or raw & packing) which
unnecessarily occupies vital space in
the warehouse.
We usually identify two types of waste:
1. Visible waste - these are items we
can easily see, monitor and identify.
2. (i.e. wrong, rejected or damaged
goods) in any warehouse,
3. Hidden waste - these
are things we cannot easily
see, monitor or identify
immediately and at a glance
in the warehouse operation.
In most cases hidden wastes
may be more significant
and costly elements for the
optimum operation in the
warehouse environment.
According to Taiichi Ohno
(the father of the Toyota
Production System) (Ohno -
1978) there are seven types of hidden
wastes, as per below picture.
Although these seven hidden wastes
were
initially
aimed,
designed,
established and applied in the
manufacturing environment, they
could easily be applied to other
essential areas as well such as in the
warehouse operational environment.
LOGISYM MAGAZINE MAY 2015
27
Defining Waste in the Warehouse Environment
1
. OVERPRODUCTION
It occurs when more than needed
products are produced or produced
earlier than they are required.
Overproduction ties up money and
warehouse space, as excess stock
produced has to be kept in the
warehouse and it could remain unsold
for longer periods of time (which could
lead to having close to expiring date
stock!).
Produce only what the customer wants
and when they want it. (JIT) - Just In
Time approach.
2
. INVENTORY
It refers to finished and semi-finished
goods or raw & packing materials.
Any kind of stock with additional
quantity than it is needed for a
smooth progress from production to
distribution to sales to the customer.
Excess stock kept in the warehouse
could easily create other types of
wastes; as such stock might require
peoples’ extra time & effort to move
it around, to count it and to keep it
in good and saleable condition. It
could also occupy vital space in the
warehouse for other products that are
actually needed by customers.
Do not hold “comfort stocks”, those
that do not add value to your business.
Stocks can easily go obsolete due to age
related deterioration, change in design
or fashion, new trends, preferences etc.
3
. WAITING
It refers to instances where people are
waiting for a work cycle to be completed
before a new one is to commence.
•
People are waiting for pallets
to place products on,
•
Products are waiting to be
transferred to a pallet or to be moved
away,
•
Bulk stacking or palletised
stock to be re-arranged before new
stock can be placed on it.
Waiting is a productivity killer
and represents a major source of
aggravation among customers in any
warehouse operation.
If some waiting is unavoidable, use the
time to do some 5S work.
Do Not Just Sit Around! - Utilise
Effectively & Efficiently Your Time…
4
. MOTION
It refers to all unnecessary movements
of people during any warehouse
operation. Most times it is confused
with the waste of transportation.
•
During delivering or supplying
times,
•
Work which involves lots of
stretching or climbing on a bulk stack
of products,
•
Unnecessary movements in
trying to locate equipment (forklifts,
hand pallet trucks etc) left by other
people in non-designated areas. Minimise fatigue by arranging people
and their respective tools & equipment
around the work station in such way so
as to minimise unnecessary motion.
5
. TRANSPORTATION
It refers to the unnecessary movement
of materials, products and information
within an operation.
•Unnecessary
distance
between products’ release for loading
or unloading and documentation
point(s).
•
Collection of print outs or
copies of invoice(s) from different
offices.
•
Vehicles’ parking lots placed
far from the unloading or loading bay.
28
LOGISYM MAGAZINE MAY 2015
Defining Waste in the Warehouse Environment
“Under-utilised talent of workers”.
Liker in 2004 used a similar phrase such
as “Unused employee creativity”.
A great number of sources, mostly in the
USA have now established the eighth
waste and have labelled this as the
“Unused human potential”.
8
.
UNUSED
POTENTIAL
HUMAN
It refers to the unused employees’ minds
and creativity.
In other words it refers to the underutilisation of peoples’ skills and expertise.
Determine how you could better involve
your people in the warehouse continuous
improvement process and how you could
possibly make best use of their valuable
time in your effort to provide excellent
results.
CONCLUSION:
6
7
It refers to activities representing a
duplication or replication of a process.
Incorrectly packaged goods, damaged
products, wrong invoicing, wrong
stocks’ documentation etc. (i.e. half
empty sealed cartons at the end of a
batch production, individual containers
containing less than the described
volume etc)
Preparing and loading a customer’s
order with wrong products would lead
to stock returns, hence it would involve
a re-work.
It refers to a warehouse process beyond
any necessary standards.
•
A long chain of labourers passing
or stocking products in the warehouse.
•
Doing activities in a complicated
rather than a more simple way.
•
Moving a pallet with the hand
pallet truck for some distance and then
handing it over to a forklift for further
transportation within the warehouse
area.
More recently in 2009, Bodek established
and defined the eighth waste and called it
. RE-WORK
. OVER-PROCESSING
All seven or eight (as per your
preference) wastes mentioned above
represent a real threat to your optimum
& successful warehouse operation if
proper care is not applied.
A careful and systematic application
of Lean Process and especially the
correct identification and elimination
of all wastes from your warehouse
environment will ultimately provide
the needed solution for your long-term
optimum operation.
Over the period of years, it has been
observed that more companies (SMEs
and MNCs) have adopted the Lean
Process and the application of the seven
wastes in their warehouse operation
and by doing so they have achieved
significant long-term results.
It has been said and it is worth
mentioning again that in any warehouse
operation there are two distinct options
for the team to choose from;
•
Either organise your warehouse
in a lean and well functioning way, which
will lead you to better managing your
space, equipment and personnel and
generate more profits for the company,
•
or ignore the above and just
generate more waste…
30
LOGISYM MAGAZINE MAY 2015
Asia’s Contract Logistics Market on the Move
Asia’s Contract Logistics Market
on the Move
Cathy Robertson
Based on Ti’s latest
report, Global
Contract Logistics,
the global contract
logistics market
increased 5.4% in
2014. The market
was one in which
saw considerable
economic
improvement in
the US and Europe
but one of slowing
economic activity in
China.
S
till, China and the rest of
Asia-Pacific continue to see
an increasing demand for
logistics activity. In fact, the
region is the second largest
contract logistics market in the world
with an estimated 32% of the total
market share. By 2018, its share is
forecasted to increase even more and
will surpass Europe to become the
largest contract logistics market.
An interesting finding from Ti’s report
indicates that China’s accounted for
over 57% of Asia-Pacific’s growth
followed by India with 11.4% and
Japan with almost 6%. By 2018, China
is estimated to represent almost 41%
of the region’s total contract logistics
market.
While much of the activity is centered in
these countries, supply chain networks
are spreading into other parts of the
region such as Vietnam, Indonesia,
and Malaysia, all noting double-digit
growth, and creating a unique intraAsia supply chain network.
As China’s economy moves away from
one of dependent on exports, some
migration in manufacturing has moved
into neighboring countries. Such
examples include Microsoft’s Nokia
unit which moved its manufacturing
from China to Vietnam and also
some Chinese manufacturers are
outsourcing some of its production to
near-by countries as well.
As a result, logistics providers are
expanding services into such countries
as Vietnam, Indonesia and Malaysia to
address these needs but in addition
providers are also moving further into
China to participate in not only the
growing intra-Asia network but also
to address China’s growing domestic
needs.
In 2013, UPS became the first global
express delivery company to be
wholly-owned in Vietnam. Since then
other providers have moved into this
Southeast Asian country. Also in 2013,
DHL Supply Chain announced plans
to invest €10 million to expand and
build new facilities by 2015. Since then,
numerous logistics providers have
expanded and/or opened new offices
in Vietnam including Logwin, Yusen
Logistics, Dachser, CEVA, Rhenus, DB
Schenker and just recently US-based
C.H. Robinson.
Malaysia and Indonesia have also
seen an increase in logistics providers
moving into these two countries
as well. Logistics activity includes
Menlo Logistics and CEVA expanded
warehousing solutions in Malaysia
and Kerry Logistics and Puninar
Logistics establishing a joint venture in
Indonesia.
As logistics providers move into
various countries to support specific
needs
within
those
countries,
solutions to connect these countries’
supply chains with each other are
also on the rise. Among the growing
solutions includes NYK’s expansion
of its sea freight service linking Japan,
Thailand and Vietnam. The company
plans to use three of its 2,700 TEU
containerships for this service. On the
air side, DHL launchedan intra–Asia
express air freight service to connect
Thailand, Vietnam and Hong Kong,
through Bangkok, Hanoi and Hong
Kong respectively. In addition, in late
2014, DB Schenker introducedits ‘Asia
Landbridge’ which offers road freight
transport across the entire Asian
region including China and the ASEAN
countries of Singapore, Malaysia,
Thailand,
Myanmar,
Cambodia,
Vietnam and Laos.
As Asia’s supply chain networks grow
and connect, China remains a hub
of activity. Its shift from an exportdependent economy appears to be
a difficult one but logistics providers
LOGISYM MAGAZINE MAY 2015
31
Asia’s Contract Logistics Market on the Move
continue to invest more in this country
and the way in which providers are
now investing appears to be changing
to meet the shift away from export
dependence. Earlier this year, UTi
Worldwide and Changjiu Logistics Co.,
an independent automotive logistics
company in China, formed a strategic
partnership. The partnership was
established to serve the logistics
requirements of global automotive
original equipment manufacturers and
suppliers in the automotive market in
China. In addition, CEVA announced
it had expanded its relationship with
BP Zhuhai Chemical Company Limited
(BPZ), a chemical company formed in a
joint venture between the BP, a global
oil company, and Zhuhai Port in China.
Since 2002, CEVA has managed The BP
Zhuhai warehouse.
Japan’s contract logistics market is the
second largest and perhaps the most
mature in Asia. Representing almost
28% of the region’s logistics market
share, its growth was slow at 1.9% in
2014. The country has faced economic
problems for several years and has
witnessed much of its manufacturing
leave the country in search of lower
cost locations. Also, the effects of the
2011 earthquake and tsunami are still
impacting economic decisions.
As a result, Japan has looked to
connect its supply chain to other Asian
countries and to other countries such
as Mexico and the US where much of its
automotive industry has established
facilities.
Among the recent logistics activity
in Japan includes a joint venture
between Pantos Logistics and Seino
Transportation, a Japanese ground
transportation company, to expand
its international small parcel delivery
business. SP EXPRESS Co., Ltd., is
expected to be fully operational in
Japan by the end of April 2015 and will
be responsible for the import, customs
clearance and delivery of small parcels
shipped from China to Japan. Also,
Lufthansa Cargo AG and All Nippon
Airways (ANA), a Japanese airline,
have entered a strategic air cargo joint
2014 Global Contract Logistics Market - €177,631m
2014 Asia-Pacific Contract Logistics Market - €56,879m
venture on routes between Japan and
Europe.
But what is perhaps most interesting
concerning the Japanese contract
logistics market is the fact that
two of its providers, Japan Post
and Kintetsu Worldwide Express
have made significant acquisitions
this year by acquiring Toll and
APL Logistics respectively. These
acquisitions appear to indicate the
beginning of consolidation in the
global logistics market and indeed we
have seen additional acquisitions in
the European market following these
two announcements with FedEx
announcing its intentions to acquire
TNT Express and XPO Logistics’
acquisition of French-based Norbert
Dentressangle. Who’s next is anyone’s
guess.
India’s contract logistics market is the
third largest one in Asia-Pacific and
representing 8.2% of the region’s total
contract logistics market. For 2014,
32
LOGISYM MAGAZINE MAY 2015
Asia’s Contract Logistics Market on the Move
India experienced strong growth in its
contract logistics market growing an
estimated 13.8%. Logistics costs remain
high in this country as infrastructure
continues to be a huge concern.
Government initiatives are introduced
on a regular basis but the actual output
from these initiatives continues to
be lacking. Still, such industries as
automotive and retail are experiencing
demands for logistics services.
Menlo
Logistics
expanded
its
automotive logistics operations in the
country as it opened a 3,846 square
meter after–sales spare parts facility in
Dharuhera, near New Delhi in Haryana
state.
Another logistics provider expanding
its solutions in India is APL Logistics.
It, along with its joint venture partner,
VASCOR, introduced AutoLinxSM, a
rail–based finished vehicle logistics
solution. AutoLinxSM runs fortnightly
services between the Indian cities of
Chennai and New Delhi. As demand
grows more destinations are expected
to be added and the service´s frequency
increased.
Retail, perhaps more specific, B2C
e-commerce, is gaining strength in
India. Many e-commerce companies
such as Flipkart and Snapdeal have
invested in logistics services such as
fulfillment and last-mile delivery. In
addition, Deutsche Post DHLannounced
in 2014 that it had chosen India to
pilot its e-commerce business model
for the Asia Pacific region. Its plans
included investing more than €100m
in the country over the next two years
to create an efficient infrastructure.
Also, through its subsidiary, Blue Dart
Express Ltd, DHL’s business unit, DHL
eCommerce, would develop fulfilment
centres, as well as options for delivery
and payment. About 15 e-fulfilment
centers are anticipated to be built
to facilitate e-commerce business
in metro areas including New Delhi,
Bangalore and Mumbai.
The global contract logistics landscape
is changing rapidly to meet the shifting
needs of business and consumers.
Domestic and regional demand are on
the rise in Asia but at the same time
global consolidation efforts within the
logistics market appear to be underway
which will further change the AsiaPacific contract logistics landscape.
LOGISYM MAGAZINE MAY 2015
33
Managing Supply Chain
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LOGISYM MAGAZINE MAY 2015
Using trade Deals for Non-Members
Using Trade Deals for
Non-Members
Deborah Elms
B
ecause they are producing
products out of Vietnam
and Malaysia, I asked about
whether the firm has been
following the Trans-Pacific Partnership
(TPP) negotiations. Both countries
are members of the TPP and many of
the company’s final consumers can
be found in other TPP members like
Singapore and Japan.
“No. We are a European company, so
we didn’t think we could use the TPP.”
This is actually a common answer,
but it is not necessarily true. Many
firms can take advantage of the TPP’s
benefits, regardless of the location of
company incorporation.
Rather than worry about the
ownership structure of the company,
firms need to consider whether they
“substantially transform” products in
TPP members or deliver services or
hold physical investments in member
countries. This is not unique to the
TPP, as the same thing holds true for
other trade agreements like the ASEAN
Economic Community (AEC), bilateral
deals, and future regional agreements.
Admittedly, this can be complicated,
but the potential benefits to firms from
getting this right can be significant.
Other companies can also get cheaper
supplies and inputs from using
agreements like the TPP. Consumers
in member countries can receive a
greater variety of products at different
price points as well.
I met recently with a European company.
Their firm has an extensive global footprint,
including factories in Vietnam, Malaysia,
Thailand and Indonesia.
Go back to the European firm. The
factories in Vietnam and Malaysia
make extensive or even exclusive use
of raw materials sourced domestically.
These inputs are then used to create
the company’s final products.
Trade agreements come with rules
(Rules of Origin or ROOs) that are
designed to keep non-member
firms from taking advantage of the
preferences granted by the deal. After
all, if a non-member could simply
trans-ship items through a member
and get better benefits, the purpose
of the trade deal would be lost for
member country firms.
Companies cannot just engage in
simple repackaging, minor assembly,
break down bulk shipments into
smaller quantities or add several
items together in a package to make
a different item, to gain access to the
agreement either.
Instead, items
must be substantially transformed in
a member country to qualify under the
rules for preferences.
Here is where life can get complicated.
Each trade agreement has different
rules for what constitutes substantial
transformation. The two main rules
are value content (VC) and change in
tariff heading or tariff classification
(CTH or CTC).
For
most
ASEAN
agreements,
governments have used regional value
content (RVC) rules. This requires a
certain percentage of the final good
LOGISYM MAGAZINE MAY 2015
35
Using trade Deals for Non-Members
to be made with content (materials
and labor) from member countries.
Generally, the percentage is set at 40%
or greater.
In other words, what matters is
not whether or not the company is
registered in Holland or Bangladesh,
but whether the final good contains at
least 40% content sourced from within
ASEAN.
The final item has to be shipped to a
member country. A firm cannot create
products with ASEAN content for
shipment under ASEAN preferences
back into Holland or Bangladesh, since
these preferences (benefits like lower
tariffs) only apply within member
states.
A second method of qualifying for
preferences involves a change in tariff
heading. Again, this can be slightly
complicated, but put simply if the
raw materials and other components
or inputs are considered one type of
product and end up being exported
into other member countries with an
entirely different tariff heading, the
product can qualify for benefits even if
the value content is not above 40%.
As an example, consider the production
of beer. If the agreement allows the use
of CTC or CTH rules, the raw materials
of water and hops and so forth are
transformed into a different product—
beer. Since water, hops and other
items are classified differently than
beer, the product can be eligible for
benefits under the trade agreement.
It does not matter whether the company
producing beer is headquartered in the
country of production. What matters is
the location of the factory (in a member
country), the ingredient sourcing for
RVC or transformation in tariff heading
rules, and the final destination of
the products (for sale in a member
country).
What sounds relatively simple can
36
LOGISYM MAGAZINE MAY 2015
Using trade Deals for Non-Members
be unnecessarily complicated at the
outset, of course, as firms have to
comb through agreements to see what
rules apply for which products into
which markets. For example, even CTC
rules can vary as officials may select
different levels of aggregation in tariff
headings (2, 4 or 6 digit level changes in
tariff classifications are required).
For the European firm I was meeting,
however, no matter how the rules
are calculated, production with nearly
100% local content combined with final
products that should qualify under CTC
rules no matter how such tariff rules
are calculated, the company ought to
have no problems taking advantage
of the TPP once it is signed and enters
into force.
Hence the company ought to be
taking an active interest in, and
planning ahead for, the entry into
force of the TPP. Despite being a
European company in registration and
brands, the local factory production
from Malaysia and Vietnam should
be eligible for the lower tariff rates
coming in the TPP. In the sector for
this firm, these benefits—particularly
tariff reductions from current levels—
should be substantial as well, since
this industry faces substantial tariff
obstacles in most countries in the
region.
Deborah
ELMSis
Executive
Director of the Asian Trade Centre
in Singapore. The Asian Trade
Centre works with governments
and companies to design better
trade policies for the region.
She is also a senior fellow in
the Singapore Ministry of Trade
and Industry’s Trade Academy.
Previously, she was head of the
Temasek Foundation Centre for
Trade & Negotiations (TFCTN) and
senior fellowof international political
economy at the S. Rajaratnam School
of International Studies at Nanyang
Technological University, Singapore. Her
current research involves the TransPacific Partnership (TPP) negotiations,
the Regional Comprehensive Economic
Partnership (RCEP), the ASEAN
Economic Community (AEC), and
global value chains. She has provided
consulting on a range of trade issues to
governments including the United Arab
Emirates, Sri Lanka, Cambodia, Taiwan,
and Singapore. Dr. Elms received a PhD
in political science from the University
of Washington, a MA in international
relations from the University of
Southern California, and bachelor’s
degrees from Boston University.
38
LOGISYM MAGAZINE MAY 2015
Managing Supply Chains Part 2
Understanding the
Value of a Supply Chain
Structure
Joe Lombardo
Introduction
In Part 1 of this series, you may
recall how we discussed some of the
common challenges attributed to
managing supply chains effectively.
We have recognised, that a key
factor for dysfunctional supply
chains, is themisalignment between
the business strategy. The level of
adequate and competent execution
capabilities in the organisation, as
another contributing factor that was
identified in part 1.
Managing the corrective actions in such
situations, will involve a structured
review process of the organisation, the
vision and mission statements and
the management approach to driving
company wide integrated programs.
This is a major process andwould
undoubtedly create a high degree
of disruption to the organisation. It
will also present management with
a formidable challenge and requires
decisive leadership in the organisation
to initiate and sustain such a programs.
Whilst one might feel that this
sounds so familiar, they will be
hearted to know, that their company
or circumstances, are not alone in
facing such issues. Surprisingly there
are many organisations that fail to
embrace the knowledge and science
of managing supply chains. This is also
manifested in the HR statistics of how
few companies haveinvested in supply
chain competencies and strategic
management education and training in
a consistent manner across the whole
organisation.
By cherry picking and applying
snippets of supply chain practises,one
does not really harness the full supply
chain methodologies, thatare able
to integratethe supply execution
capabilitiesto the business strategy.
In this part of the series, we will examine
the value of deployinga supply chain
structure into the business model,
irrespective of size, market sector or
the goods or services involved. Most
business leaders are very familiar with
business strategies, business models,
product strategy, marketing strategies,
investmentstrategy and many other
strategies relevant to the business
functions. But these strategies,
campaigns, product launches and the
like, are plans on what and when to
do something that will bring revenue
and profit to the Enterprise. But what
about the how ?
The Business Strategy
What is crucial to achieving the goals
ofthe business strategies, is the
implementation and execution of the
strategic plans.The various strategies
need to be executed in a coherent
and synchronised manner or will be
ineffective in their deployment. The
more the strategies, and the increased
business complexity, the more critical
will be the timing, methodology and
accuracy of the execution model.
Managing the execution processes
of a company business strategy, and
sustaining the business model, would
suggest the need of an overall “super”
strategy to make it all happen. This
would seen quite evident, but it is not
always clear on how it would be done
and who would be responsible for
theexecutions of this activities.
This is in fact the 1ststep to appreciate
the Value of a Supply Chain function
LOGISYM MAGAZINE APRIL 2015
39
Managing Supply Chains Part 2
within an organisation, aclearly defined
and structured system to enable the
execution of the business strategies
and model.
In the illustration below, is illustrated
a traditional business structure, in
the classical chain of command.
The introduction of a supply chain
function would seem quite easy to
bring it into organisation, which could
be a dedicated supply chain function
working with all the other functions –
as show below.
This approach would be easy to
implement and create the path of
least resistance, disruption and
cost. A solution that many in the
organisation would well subscribe
to, as it involves minimal change to
their departments, authority and
responsibilities. But before too long,
managing sucha structure would prove
to be very difficult, yield low results and
eventually collapse. It will fail because
the only change made, was to create a
new horizontal functional layer into the
existing organisation, and give it the
name of supply chain. The expectation
that the existing vertical organisation
would follow the directives and
coordination of this new function, is a
dream and not sustainable.
Note: All the charts are designed for
illustration of the point of principle
and are not intended to represent
the optimum supply chain model or
structure.
What is a Supply Chain ?
At this point, we should pause to reflect
on the definition and components of
what makes up a supply chain and
then to appreciate how it becomes
relevant to an Enterprise.
There are many interpretation and
definitions of what is a supply chain.
Some imagine it to be a complicated
methodology
where
you
need
tohave highly skilled and intellectual
graduates to understand it and work it.
Whilst others confuse or interchange
terminologies, to make simple things
sound more sophisticated than what
they really are.
The simple and unambiguous definition
of a supply chain, can be described
as,A series of tightly interconnected
& related processes that form the
backbone of an Enterprises’ capabilities
to transform and deliver its revenue
generating goods and servicesto its
Customers.
To
illustrate
this
fundamental
definition, let us consider atypical
business model.
It starts, with a Customer order, and
ends with a Customer delivery, and in
between we have an internal process
of transformation. In chart below we
show this business model, as having 3
major blocks in the company business
cycle.
As this model is fundamental to
understanding the basics of the
supply chain management, we must
focus all the company activities that
revolve around the 3 major blocks of a
company’s businesscycle.
When one can visualiseacompany
business cycle, modelledin this manner,
it will be clearer to see how the business
strategy, can be effectively executed.
Creating a logical structure around the
company business cycle,will enable all
the organisational functions to better
identify their roles in the model. The
processes and mechanisms to connect
the 3 major blocks of the business
cycle, becomes the supply chain
execution model.
Having set-up the fundamentals
of the supply chain model,each of
the major blocks will have a clear
visibility of where and how their
operational functions are linked
and contributeto the overall supply
chain. By re-focussing the company
vertical functions in this manner,
we are now able to better definethe
processes,monitor the effectiveness
and measure performance of the
supply chain.
Connecting the key points of the
business model
Put very simply, the supply chain is
the “Blood Line” that connects in a
structured manner,the activities of all
the relevantfunctions of an Enterprise
in coherent and interconnected flows.
However, these supply flows, do not
happen by chance, nor work on their
own in isolation. But they are driven
by vital stimuli to sustain the overall
performance.
It is the synchronised coherence to
the business strategy that creates
the positive supply chain flows. The
business functions in the supply chain,
are the basic enablers and will provide
the operating capabilities to execute
the business strategy.
40
LOGISYM MAGAZINE MAY 2015
Managing Supply Chains Part 2
The value and benefit from a
structured supply chain function.
In the chart below we show the revised
Enterprise chart, where we put at the
centre, the business cycle and the
supply chain execution model. Wethen
connect the execution model to the
vertical functional organisation and to
the business model, that supports the
business strategy.
If the enablers are aligned, balanced
and driven by a competent leadership in
all functions, it will bethis momentum
that will lead to an effective and
successful execution of the business
strategy.
An effective supply chain structure
should not be complicated nor
mysterious in its design and operation.
The value of the supply chain should
include all the elements relevant
to the business model, scalable in
its deployment, agile to adapt to
changes in the business and operating
conditions, whilst able to consistently
deliver the required supply chain
performance targets relevant to the
business strategy.
Note: The charts contained in this
series, are designed for illustration
of the points of principle and are not
intended to represent the
optimum supply chain model or
structurefor any specific company or
industry
Complicated
organisation
charts,
elaborate job titles and strange job
positions,that have evolved over time,
sometimes also due to legacy reasons,
often confuse and distort the real
supply chain functions. When reviewing
a supply chain structure, it would be very
productive, to discard all the elaborate
organisation charts, job titles and
thepeculiar job positions andimagine
what the organisation could be if we
applied the basics that we described
above. This approach will facilitate
and engage the management and key
decision makers,in a complete re-think
of a relevant functional organisation.
Anorganisational focus,must be made
on the core functions, that are relevant
and mandatory to create the necessary
capabilities to deliver the results. These
are the resources and competencies
that should be embedded into the
organisation, that can create the
capabilities necessary to achieve the
Enterprise’s deliverables.
In Part 4 of this series, we will discuss
in more detail optimising people
and competencies in supply chain
organisations.
Understanding and using the
business cycle &supply chain
model overview, we are now able to
developa more effective organisation
and functional sub-organisations
This would synchronisebetter the
existing resources and remove the
non-contributing elements from core
supply chain activities. A structured
approach also enables a better
alignment of relevant resources and
will also reduce operating costs and
improve overall profitability.
The cost reductions that we expect
from this process, will be the
elimination of overlapping activities,
wastages in time & effort but also
create a leaner more responsive
organisation able to adapt to changes
in market conditions.
This will enable the management to
identify the critical processeswithin
each contributing function, which can
be defined, measured andcontrolled.
The result would give a more
visible supply chain model, with
performance indicators in a coherent
structure.
It is the collective optimised KPI
results of each business block, that
gives the comprehensive visibility of
the overall company performance.
Part 6 of this series will be dedicated
to Performance Management of the
supply chain where we will expand
the above discussion points further.
In part 3 of this series, we will be
looking at Building and Sustaining
an Enterprise Supply Chain Model.
This will be relevant to all companies,
large and small, mature and growing,
as the business models are never
static, and so are supply chain
continuously evolving. It is crucial
that refreshing the supply chain
effectiveness can only be derived by
sustaining the necessary capabilities,
that are relevant to delivering the
Enterprise’s goals.
42
LOGISYM MAGAZINE MAY 2015
June
SUPPLY CHAIN LOGISTICS
PROFESSIONAL NETWORKING
JUNE 11TH, 2015 (6.00PM – 8.00PM)
HONG KONG
[email protected]
September
FIATA WORLD CONGRESS
SEPTEMBER 8-13TH 2015
TAIPEI, TAIWAN
www.fiata2015.org
SCM LOGISTICS WORLD 2015
JUNE 23-25TH 2015
SINGAPORE
www.terrapinn.com/scm
6TH GLOBAL SUPPLY CHAIN ‘THOUGHT
LEADERSHIP’ SUMMIT
SEPTEMBER 29TH-30TH 2015
ATHENS, GREECE
www.2015gscs.com
PROCURECON ASIA 2015
JUNE 23 – 25TH 2015
SINGAPORE
procureconasia.wbresearch.com
CSCMP’S 2015 ANNUAL CONFERENCE
SEPTEMBER 27-30TH, 2015
SAN DIEGO, USA
www.cscmp.org/annual-conference
13TH ASEAN PORTS AND SHIPPING
2015
JUNE 24 - 25 2015
JAKARTA, INDONESIA
www.transportevents.com/
ForthcomingEventsdetails.
aspx?EventID=EVE116
MODERN WAREHOUSE OPTIMISATION
AND PERFORMANCE MANAGEMENT
JUNE 11 – 12TH 2015
MELBOURNE, AUSTRALIA
August
CHINA PHARMACEUTICAL SUPPLY
CHAIN MANAGEMENT SUMMIT 2015
AUGUST 20-21, 2015
SHANGHAI, CHINA
www.bmapglobal.com/pscm2015
SUPPLY CHAIN LOGISTICS
PROFESSIONAL NETWORKING
AUGUST 20TH, 2015 (6.00PM –
8.00PM)
HONG KONG
[email protected]
16TH QUEENSLAND SUPPLY CHAIN
AND LOGISTICS CONFERENCE
AUGUST 20-21ST, 2015
Brisbane, Australia
www.qldscc.com
October
GLCS LOGISYM MALAYSIA 2015
OCTOBER 7-8TH 2015
KUALA LUMPUR
www.glcs.logisym.com
INDONESIA TRANSPORT SUPPLY
CHAIN & LOGISTICS
OCTOBER 7 – 9TH 2015
JAKARTA, INDONESIA
www.transport-supplychain-logistics.
co.id
INTER AIRPORT EUROPE 2015
OCTOBER 6 – 9TH, 2015
MUNICH, GERMANY
www.interairport.com/europe
CHINA INTERNATIONAL LOGISTICS
AND TRANSPORTATION FAIR 2015
OCTOBER 14-16TH, 2015
SHENZHEN, CHINA
www.scmfair.com/en
SUPPLY CHAIN LOGISTICS
PROFESSIONAL NETWORKING
OCTOBER 15TH 2015 (6.00PM –
8.00PM)
HONG KONG
[email protected]
November
SUPPLY CHAIN LOGISTICS
PROFESSIONAL NETWORKING
NOVEMBER 17TH 2015 (6.00PM –
8.00PM)
HONG KONG
[email protected]
BIOPHARMA INDIA CONVENTION 2015
NOVEMBER 3-4TH 2015
MUMBAI, INDIA
www.terrapinn.com/conference/biopharma-india
ASIAN LOGISTICS AND MARITIME
CONFERENCE
NOVEMBER 17-18TH 2015
HONG KONG
www.almc.hk/en
POWER LOGISTICS ASIA 2015
NOVEMBER 18-19TH 2015
SINGAPORE
www.powerlogisticsasia.com
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