Archive for October, 2006

Logistics giant Schenker says it is enjoying a 20 per cent growth in its China trade this year with more than 211 flights into Europe and the US. It will move nearly 500,000 TEU out of China this year.

(A reminder: one definition of a TEU is a unit of measurement equal to the space occupied by a standard twenty foot container. Used in stating the capacity of container vessel or storage area. One 40 ft. Container (FEU) is equal to two TEU’s.)

Schenker management board member Dr Thomas Lieb, responsible for the global air and sea cargo for the group, said the firm’s staff growth in China has risen at the same rate to more than 3,000 and are spread through 70 offices, managing over 200,000 square meters of logistic centre space across the country.

Dr Thomas Lieb, said, ‘If you are a growth company, you don’t have to cut people. But looking at costs, you have to take care to increase market share and educate employees. We do that by developing training and educational systems. We have an exchange program where we send young Chinese to Germany and train them there.’

He said, ‘I think development of the country relates directly to global volume. We will handle 1.2 million TEU this year worldwide — maybe more.’ He saidhalf of Schenker’s business was Asia-related and a third of the whole of it was China-based.

Schenker came to China in the 1960s, setting up first in Hong Kong and then venturing into Guangzhou. In 1982, the firm opened in Beijing.
Source: Shipping Online

Cathay Pacific Airways has added Beijing to its freighter network starting November 15. The airline gained approval from the Chinese Government to launch a new twice-weekly service.

The new service will give a further boost to Hong Kong’s position as a leading freight and logistics hub and gateway to China. Cathay will use a Boeing 747-200 freighter aircraft for the service operating every Wednesday and Thursday from Hong Kong.

Cathay Pacific already operates a freighter service to and from Shanghai, currently with 12 flights a week.

Source: Air Cargo News

Brian Lutt, President of global supply chain leader, APL Logistics has said that companies moving cargo from China to the U.S. must adopt a more collaborative approach to improving the efficiency of their supply chains.

His comments were made during a recent address to the annual Conference of the Council of Supply Chain Management Professionals in San Antonio, Texas.

He identified a number of key issues U.S. companies face when adding the China link to their supply chains, including:

Compliance needs
Cultural issues
Congestion — particularly in inland transportation
Connectivity between coastal and inland areas
Shipment security
Securing sufficient ocean and air transportation — particularly in periods of high demand
The complexity of managing multiple currencies

He said, ‘Since China is the starting point of an enormous — and growing — number of global supply chains, companies seeking to optimize the efficiency of their individual supply chains must focus closely on improving access to best-practice logistics capabilities at the China end.’

He said companies must first understand the current realities of managing a China-linked supply chain. They must work with all stakeholders involved, including their overseas vendors, government agencies, and 3PLs in a collaborative framework to improve China’s logistics capabilities and ensure their own supply chain success.

Brian Lutt said, ‘The need for partnership is made more urgent by the steady shift in the commodity mix in imports from China towards higher value segments, and imports from China continue to grow at a rapid pace.’

APL Logistics began operating in China in 1988 and became the first foreign logistics company to receive wholly foreign owned enterprise (WFOE) status. Today, it operates a total of 40 offices and has access to more than 1.5 million square feet of distribution space throughout China.
Source: Logistics Quarterly

The Wall Street Journal reports that Schneider National’s chief executive, Chris Lofgren, has said the company has plans to enter China’s trucking market. He said the country’s road network has developed sufficiently to make operations there feasible.

He also said Schneider is likely to make investments worth tens of millions of dollars in China within a year. Chris Lofgren said that its preferred method is to acquire companies rather than form joint ventures.

He said, ‘Our view on China is it’s incredible, exciting, dynamic, in many cases very similar to the US logistics environment in the 1950s. We want to maintain ownership. We would look to potentially make one or two acquisitions to give us an infrastructure and base, but look to invest equipment, train people and build organically.’

Source: Forbes

Bolt on. Remember that term. It seems to be coming into use in the area of logistics. For example, Logistics provider Toll Holdings Ltd (basically operating as an Australian company but now working throughout Asia) wants to expand in Asia and is looking for ‘bolt-on’ acquisition opportunities in China to add to its new Toll Asia business.

What does ‘bolt on’ mean?

In this context, a company of small to medium size that fits in and extends what already exists.

Paul Little, Toll chief executive told reporters after the company’s annual general meeting last week, ‘We’re very keen to work with our Australian-based companies to assist them putting in place this seamless logistics service out of China into Australia. At the present time, we’ve got a couple of the parts of the logistics chain that we need that aren’t there and we’re talking to some prospective acquisitions in that regard now.’

How big will these acquisitions be? Not very big.

Paul Little said, ‘They’re only bolt-on, they’re not significant in scale, but they’re very significant in the value-add that they’ll bring.’
Source: The Age

This story contains four essential and, perhaps, inter-connecting facts.

• Airbus is now basically a French company and is in some strife because of the late delivery of its super-jumbo which may mean orders will be cancelled and deposits returned and other strife.

• French President Jacques Chirac is visiting China on a state visit.

• China and Airbus have signed a framework agreement and a letter of intent for 150 Airbus A320 aircraft and 20 Airbus A350 airplanes. The agreement and letter of intent were signed by Airbus President and CEO Louis Gallois and Li Hai, general manager of the China Aviation Supplies Import and Export Group Corp.

Chinese President Hu Jintao and visiting French President Jacques Chirac attended the signing ceremony at the Great Hall of the People.

• Airbus has signed a framework agreement with the Chinese authorities to build its first aircraft assembly plant outside Europe, at Tianjin.

So President Chirac returns to France with signed deals (more expressions of intent than total commitments) worth more than $10 billion and China did not lock itself in to any order and China gets a new aircraft factory.
Source: Xinhua and research.

Guangzhou Baiyun International Airport, in the Huadu District of Guangzhou, came into service in 2004. It is now one of the major airports of China. Baiyun Airport has seen a 100 percent growth in international air cargo volume. Partly this is because FedEx has chosen this area to build its Asia Pacific region transition center.

Long Yongtu, General Secretary of Boao Forum for Asia, who might be a tad biased on the subject of this airport, said:

Compared with the other two major airports of China, Capital Airport in Beijing and Pudong Airport in Shanghai, Guangzhou New Baiyun Airport may be the best.
The key to airport economy is logistics. As we know, logistics cost in China accounts for 20 percent of GDP, while in west countries only 4 percent.
If logistics cost could be reduced in China, then 10 percent of GDP might be saved, which could represent about RMB1,800 billion RMB.

Liu Zijing, President of Guangdong Airport Management Group and ex-president of Guangzhou Baiyun Airport, said:

In 2005, the New Baiyun Airport handled 601,000 tons of cargo with an increasing rate of 20 percent year on year, which included a doubled amount of international cargo volume, 120,000 tons.
We expect, in 2010, our air cargo throughput at Baiyun Airport will be two million tons, as we break into the top 15 busiest airports in the world.
With a transfer rate of 30 percent, half of which is international cargo, we are evolving into a comprehensive air cargo hub of the Asia-Pacific.
We will establish an international neutral terminal with a surface area of 800,000 square meters. The construction will be completed with ten cargo stands available at the same time. Designed annual throughput of air cargo is 520,000 tons.

He also said the airport logistics bonded area will come into service soon, with eight square kilometers in the plan of the first phase, and 20 square kilometers in the future plan.
Source: Air Cargo News

CN WorldWide is a Dutch company with its headquarters in Rotterdam, Netherlands. Now it has launched its international freight forwarding operations in China with offices in Shanghai, Beijing and Shenzhen.

These offices will help manage its international freight forwarding services between North America, Europe and Asia.

Anita Ernesaks, vice-president and global managing director of CN WorldWide, said: ‘China is a key driver in CN WorldWide’s freight forwarding business. Our presence here enables us to better serve our customers in China and support the increasing trans-Pacific trade. This company was built based on fulfilling the customers’ needs first and foremost — it is only natural that we wish to be close to our customers in one of the world’s biggest export markets.’

Why the illustration of the horse riding? CN Worldwide sponsors several showjumping contests. This one in the United States. And it is more interesting than the normal picture of docks and ships.
Source: Canadian Transportation and Logistics

In the first quarter of next year China’s first airport-based bonded logistics center will begin operation in Beijing. The idea is that it will become an important Northeast Asian air cargo transportation hub. The bonded area, essential for international air cargo, is a key part of a 3-square-kilometer airport logistics park. The plan is that this will be fully operational by the end of next year. Total investment in the logistic park is RMB3.6 billion ($456 million).

Desmond Shum, chief executive officer of the Airport City Logistics Park Company responsible for planning, developing and managing the park, said, ‘The logistics park, together with the ongoing third expansion of the Beijing airport, will serve the 2008 Beijing Olympic Games. Beijing could rank No 1 in terms of air transport connectivity in major airports of Northeast Asia, but it falls behind airports in South Korea and Japan in terms of cargo transportation.’

South Korea’s Incheon International Airport handled 2.15 million tons of cargo last year and was ranked the fifth-largest cargo airport but most of this was trans-shipment. Beijing airport transported 782,066 tons of cargo last year.

The logistics park, located at the north end of the airport’s second runway, will bring much of the business back from South Korea to China. The logistics park will provide ‘one-stop customs clearance’ for companies doing international trade.

Zhang Junkuo, a senior researcher at the Development Research Center of the State Council, said, ‘The logistics park would directly create RMB7.4 billion ($937 million) in gross domestic product for Beijing and the airport-related economy would contribute 5.49 per cent of Beijing’s GDP in 2015.’
Source: Xinhua

Australia Post is not as other post office services. It will do anything to make a dollar. In Australia if you go on the Internet to do your shopping with ShopFast — a most excellent service — the next day Australia Post trundles up with your groceries.

Australia Post as a title is misleading. Basically it is in the logistics business and letters and postcards are but a part of that. It makes serious profits — think $200 million plus a year — and is one of the stars of the government organisations.

The most important part, Post Logistics, grew more than 75 percent last year. The Logistics division provides supply chain services including Customs clearance, freight forwarding and warehousing to corporate exporters and importers. And it is pretty damned efficient. Australia Post claims a 99.7 percent on-time rate for Express Post items, and 96.2 percent for large and small parcels.

Now its joint-venture with China Post, Sai Cheng Logistics International, has opened new logistics hubs in Shanghai and Shenzhen. As far as is known it has not yet got to home-delivery of groceries throughout China. But give it time.
Source: Supply Chain Review