FedEx in China

FedEx’ Express division in China has cut its prices by up to 40% in recent months. Technically it is not quite certain that it can be called dumping — as FedEx claims it has massive excesses it needs to use? But the result, according to the The Economic Observer, is a substantial growth in market share and a monthly loss of RMB50m.

FedEx has reduced its prices for shipments three times in 12 months, with the result that since its last cut in June, its market share has risen and volume has quadrupled. So let us call it dumping.

Chinese competitors, who see their existence in danger, are now reportedly urging the government to start an anti-dumping investigation.

China’s Ministry of Commerce and the China Federation of Logistics and Purchasing have been urged by Chinese express companies to support a proposal that the government launch an anti-dumping investigation into FedEx’ pricing strategy.

China Post’s EMS and S.F. Express, the country’s largest private express delivery, say these price cuts are putting a lot of pressure on their companies, could eliminate the existence of small and middle sized express firms and could fundamentally change China’s express market in the next five years.
Source: BizChina Update

Unit Load Device

A test of compact cargo containers shows how China’s railways can improve shipment security while dramatically cutting transit times for small loads.

This is a long, detailed yet fascinating article.

As consumer demands have become more diversified and personalized, mass production has taken a backseat to smaller production lots and faster delivery times.

This trend toward manufacturing small, frequent batches, along with the resulting need for faster, door-to-door transportation, has fueled the development of the express industry since the 1980s.

This is true not only in North America and Europe but also—more recently—in China.

By 2006, China’s express freight market totaled close to RMB45 billion and boasted a sustained annual growth rate of more than 20%. This level of growth is likely to continue because the volume of high-value, express delivery items is still increasing.

More and more, logistics service enterprises are seeing demands from customers for fast and timely delivery of small-batch, multiple lot-size, and high-security shipments.

The key is the unit-load device. Unit-load devices enable a logistics process that is based on the multimodal use of cargo units.

These units may be attached to a pallet or they may be standalone units. In either case, the sizes of the SCCU and the pallet must be standardized and compatible with each other. By every measure, integrated cargo-unit transportation has been a great success.

The full story HERE. It is not a quick read but well worth it if a tad technical.
Source: DC Velocity

TNT in China

Global express company TNT (it started as an Australian company with the initials standing for Thomas Nationwide Transport) will add eight new branches to its international express network in China by the end of the year.

The eight new branches will mostly be located in the Pearl River Delta area and the Yangtze River Delta area, China’s key manufacturing and export hubs.

In addition, another four TNT International Express branches will be set up in Nanning, Wenzhou, Kunshan and Shanghai Pudong by the end of the year.

This will bring the total number of TNT International Express branches in China to 34.
Source: CargoNews Asia

Chongqing Marine Shipping

Chongqing Marine Shipping will extend its existing Pusan-Taicang/Jiangyin loop to include Kyushu. The service, which is the first for the company in the Japan-China market, will have additional calls at Moji and Hakata making it the first direct service to Japan from Jiangyin.

There is much competition.

Pan World Logistics, Centrans International Marine Shipping and Qingdao Marine Noah’s Ark Shipping all recently became players in this market.

The new Chongqing Marine Shipping fixed-day weekly service will deploy a 332 teu (where teu means a container) vessel.
Source: Seatrade Asia

Evergreen International

The U.S. Department of Transportation has named  Evergreen International Airlines as a new all-cargo entrant in the U.S.-China aviation market.

Evergreen, if granted final authority, will operate six round-trip flights per week to Shanghai from New York with additional traffic stops in Chicago, Dallas/Fort Worth and Columbus, Ohio.

The department said Evergreen would offer the first scheduled U.S.-carrier all-cargo service to China from both New York and Columbus. It also noted Evergreen was the only applicant that would use the entire capacity of its aircraft for China services. In addition, the Department cited Evergreen’s experience operating in the U.S.-Asia market, including its U.S.-China charter services.

Note that all restrictions on scheduled U.S.-China all-cargo services will be lifted in March 2011.
Source: 7th Space Interactive

Work on a major railway connecting Lanzhou, capital of northwest China’s Gansu Province, with the southwestern city of Chongqing, has begun.

The 820-km, double-line electrified railway, co-invested by the Railway Ministry, Gansu and Sichuan provinces and Chongqing Municipality, is expected to open to traffic in 2014.

The railway will cut the distance on the route from 1,466 km to 820 km and the travel time from 22 hours to less than 7.

Trains are expected to run at 160 km per hour, with a daily capacity of 50 trains.

RMB2 billion ($293 million) will be spent in environmental protection, about 2% of the total cost.

The May 12 earthquake had a minor effect on the railway. Huang Yanbin, chief designer siad the railway designers used a detour around geologically dangerous areas.
Source: China View

Agility logistics expands

Agility Global Logistics is buying Baisui which is a Shanghai-based domestic logistics company that focuses on providing intra-city, regional and long-haul transport and warehousing, mainly to the chemicals, automotive, and FMCG sectors.

The company has more than 15 locations throughout China, including Shanghai, Shenzhen, Tianjin, Wuhan, Nanjing and Chongqing, and manages eight logistics centres with more than 130,000 sq m of warehouse floor space.

In addition the company has a fleet of its own trucks and works with over 75 trucking companies on a regular basis for its regional distribution needs.
Source: CargoNews Asia

Vietnam Seaport

Normally this would not be covered here because it is about Vietnam. But it has a direct bearing on the logistics of China.

Vietnam faces an extra cost of more than US$1.7 billion as the lack of port logistics leads local companies to have their shipments transshipped via ports in Hong Kong and Singapore.

The country now has 114 seaports, most of them small, but only 14 are considered internationally acceptable.

Nguyen Tuan Hoa, deputy director of the Development Study Center under the HCMC government said logistics expenses in the United States made up 9.5% of GDP, 11% in Japan, 16% in South Korea, 21.6% in China and 25% of GDP in Vietnam.

He said logistics played a major role in the economic development of a country which depends heavily on exports.

Which is fascinating.

First it tells us that Vietnam has a serious problem in attracting industry to move from China until it gets its logistics straight. And that the percentage of GDP ascribable to logistics expenses in China, if true, is still more than double that of the United States.
Source: Vietnamnet

Totally unfair. Quite amusing.

There is a perception that labor in China is cheapest, but leading strategist George Zhibin Gu (in his new book: China and the new world order) is on the opinion that labor in India is by and large 50% cheaper than China — but that still China rules. And he answers the question as to why that should be.

In his book he says that although India may be the world leader in outsourcing IT and software services field  in manufacturing China is by far the clear winner.

Firstly, when India does not have a logistics chain complete with infrastructure in place. China, on the other hand, over last 26 years, has built up a complete logistical business chain.

He uses an example the logistics of consumer electronics being made in Guangdong where you have available more than 10,000 component makers. Sony alone has more than 3,000 China based component makers.

The suppliers may be multi-nationals but they are all in one province with short and effective — compared to India —  logistical chains in place. The book suggests that this kind of effectiveness and efficiency which you find in China does not, as yet, exist even in a basic form,  in India.

George Zhibin Gu has, for the past two decades, been an investment banker and business consultant. His work focuses on helping international businesses to invest in China and helping Chinese companies to expand overseas.
Source: Cleveland Indy Media Center

RFID poster

RFID (radio frequency identification devices) are vital to logistics because it makes it very easy to track goods as they are being shipped.

Advanced ID Asia Pacific will acquire Shenzhen DDCT Technology Company, a China-based RFID manufacturer.

DDCT is involved in the development, production, and sales of RFID/UHF hardware, including UHF readers, and antenna tags in Asia.

Advanced ID and DDCT expect to finalize the deal with respect to Chinese and U.S. laws  by the end of this year.

AIDO President and CEO, Dan Finch, said, ‘It is no secret that China is the most senior player in the Far East, and possibly in the world, relative to adoption of RFID and UHF tags and readers.’
Source: TMCNet.com