Archive for February, 2007

A five-day/five-cities tour will bring together experts and practitioners to discuss the latest in supply chain management in China in an interactive series of half-day seminars. These are industry driven. Not seminars brought in by a professional seminar company making a dollar.

Max Henry, Founder & Executive Director of the Global Supply Chain Council, said, ‘Many China-based executives are wondering how supply chain management will impact their business this year. There are a lot of questions about SCM, and this Roadshow is designed to provide specific answers to all their questions.’

This series of non-profit seminars run for half-a-day each. Each stop is scheduled for half-a-day afternoon seminar featuring four to five speakers. The roadshow will stop at the following cities: Tianjin, Monday, June 4; Beijing, Tuesday, June 5; Chengdu, Wednesday, June 6; Guangzhou, Thursday, June 7; Shenzhen, Friday, June 8.
Source: Press release

China’s highways carried 227 million passengers during the past Spring Festival holiday week which probably sets some sort of world record. The fact that the transport system did not totally collapses — compare with Britain when it snows or Sydney in Australia where the arrival of the Queen Mary II brought the city to a total standstill — says much for the Chinese infrastructure.

The number of travelers rose 11.6% from the same period of last year, with the passenger flow exceeding 50 million per day on Friday and Saturday. As in two and a half time the population of Australia traveling at the same time. Or on Sunday when it peaked at 62.8 million passengers, 23% up year on year.

The highway division of the ministry said a major part of the passenger flow came from rural migrant workers traveling from inland provinces like Henan, Jiangxi, Sichuan and Anhui to Beijing, Tianjin and major cities in the booming eastern and southern coastal regions.

The government has made 24-hour highway traffic information available on the Internet and provided weather forecast for highway travelers.

Meanwhile, latest official figures show tourist areas around the country received 92.2 million visitors in the holiday week, 17.7% more than the same period of last year.

Tourism brought the country RMB43.8 billion ($5.48 billion) of revenues in the holiday, 19 percent up year on year.

According to the Ministry of Railways during the holiday, the daily average passenger flow on railways hit a record high, reaching 3.75 million in one day.

In the period, 5 million passengers traveled by water, 6 percent up year on year, while the country’s airlines carried 3.71 million passengers, a surge of 21%.

In one sense it is wonderful that the Chinese transport infrastructure managed to survive. In another, it is plainly daft that a whole country comes to a standstill and jams all transportation for such a brief period. Despite every tradition that fights against it inevitably Chinese New Year will have to become a movable feast. Perhaps extending over a longer period. (That would be traditionally acceptable.) Perhaps taking place in different provinces at different times.
Source: English EastDay

According to the China Logistics Information Center demand in the logistics sector will rise 15% year on year in China in 2007.

The sector turned over RMB59.7 trillion ($7.65 trillion) in 2006, up 17.1% over the previous year in comparable prices, mainly because of fast growth in shipping of industrial products and imported goods.

Industrial products contributed RMB52 trillion, up 16.4%, while imported goods added RMB6.5 trillion, up 25.2%.

Expenditures on shipping were estimated at RMB4 trillion ast year, up 13.2%. The costs are expected to grow at least 11% in 2007 due to rising oil prices and increasing labor costs.
Source: China View

AMB Property has leased more than half the AMB Jiuting Distribution Center in Shanghai, to Decathlon. This is a global designer, manufacturer and retailer of sporting goods headquartered in France. (Note the spelling of the name. It is very easy to get it wrong and spell it ‘Decathalon’which is the Olympics sport.) Decathlon has 374 stores throughout Europe, Asia and South America and operates its dedicated logistics division in the recently developed distribution complex which is Jiuting Distribution Center.

Guy Jaquier, AMB’s president, Europe & Asia, said, ‘China is Decathlon’s retail entry into Asia, and we are proud that they rely on the efficiency of AMB facilities as part of their Asia logistics operations. The delivery of the right product, to the right place, at the right time is a key component of Decathlon’s commitment to retail customers.’

AMB Jiuting Distribution Center is near Hongqiao Airport.
Source: Earth Times

A report by the Chinese Academy of Sciences states what has been obvious for some time to people in the industry: China is still lacking in logistics professionals despite the rapid expansion of its logistics industry and development of training for logistics professionals.

This shortage impacts on both domestic and foreign-funded companies who have difficulty finding qualified logistics professionals in China.

Feng Gengzhong, CAS researcher, said, ‘Qualified professionals not only include senior managers engaged in management but also well-trained logistic workers.’ In 2001, only one university in China offered a specialized course in logistics. By 2005 the number had grown to 165. And that number is expanding.

However, the universities focus on academic studies and lack opportunities for practical experience, thus students graduate with diplomas but without any real experience. Thus this shortage continues.

Feng Gengzhong suggested the strengthening of on-the-job training or other kinds of vocational training for personnel engaged in logistics. Note that this is not a problem just in China. It is an almost world wide epidemic. Universities are turning out graduates who are big on theory, short on practical experience.
Source: Xinhua

Always interesting to see China being held up as an example for another country to follow — this time Australia. The world’s biggest freight locomotive contract has been let in China, while Australia’s federal and state governments go to war again on road funding.

China’s Ministry of Railways has ordered 500 electric freight locomotives capable of hauling full loads at 120 km/h.

The US$1.4 billion contract with Dalian Locomotives and Rolling Stock and Canada’s Bombardier will be manufactured in Europe and China with delivery from 2009 to 2011. The Kiruna locomotive with 9600 kW power is the most powerful electric freight loco in the world.

China has a similar length of freight railways to Australia but carries far, far greater volume. Bombardier China president Jianwei Zhang says the ‘cutting edge design and technology would contribute to the reliability and efficiency of China’s rail capability’.

Back in Australia the federal and state governments have begun arguing whether the whole second tranche of Auslink, the total federal contribution to national highways and freight routes over five years from 2009, should or should not exceed $15 billion.

The politics are complex as Australia has a bicameral system for each state as well as for Australia. And they all want to get their snouts in the trough.
The states are trying to push the negotiations ahead, in part for the state of NSW to claim some credit (and shift blame for the state’s poor infrastructure to the Commonwealth before the state election). The state government suspects, with good reason, that the federal government is planning a major infrastructure announcement either in the May federal Budget or ahead of the federal election.
The Australian Freight Transport Logistics Strategy was first developed in 2001/02. It has never been fully implemented and is, yet again, being reviewed. That review will provide data and industry input on which to base the strategy and funding for the second round of Auslink, the contribution to national highways and freight routes.
The China railway deal (just one of many) equals 13% of the entire federal roads and rail funding over five years for Australia. So in Australian magazines and newspapers China logistics are held up as an example for Australia to follow.
Source: Supply Chain Review

China Southern Airlines — the world’s 10th largest airline — has announced plans for an international expansion during 2007. New air routes to eight Asian nations, including Cambodia, India, Japan, Laos, United Arab Emirates, Nigeria, and Angola are slated to open in 2007.

This announced expansion comes on the heels of China Southern’s recent opening of new service from China to Lagos, Nigeria and Kathmandu, Nepal.

President of China Southern Airlines, Si Xian Min at a news conference. ‘We plan to add 68 new modern jet aircraft to the China Southern fleet by the end of 2007 — with the goal of 440 aircraft.’

International routes slated for opening in 2007 include Dubai, Luanda, Sendai, Sapporo, Katmandu, Delhi, Siem Reap, Phuket, Yangon and Vientiane.

When these ten new routes are launched, international outbound routes from Guangzhou will nearly double from the current 18 to 26. Weekly international frequencies will increase from the current 136 to 182 flights — an increase of more than 30%.

By the end of February 2007, China Southern Airlines will operate 82 international and regional services. Guangzhou and Beijing will serve as its major airport hubs, with regional airports in Urumqi in China’s northeast and Shenyang in the northwest serving as an air network covering all of Asia, with connections to Africa, Australia, Europe, and the United States.
Source: Logistics Management

Transportation and logistics services provider Schneider has officially been granted authority to set up shop as a domestic carrier and logistics services provider in the People’s Republic of China. The name for the company is Schneider Logistics (Tianjin) Co. Ltd but we will use Schneider.

It is the only North American truckload provider to establish a domestic business in China. It has had a representative office in Shanghai since May 2005 while it was in the early part of the learning curve.

Since that time the company has actively been looking for China-based investment opportunities in three areas: domestic distribution, trucking and warehousing services; port services such as drayage, transloading, and warehousing; and freight-forwarding.

Now Schneider domestic transportation, logistics (warehousing, crossdocking and third-party logistics) and other related services. The company added it will build these services through a combination of organic growth and acquisition in China. It also mentioned that it plans to provide customers with international logistics services, which are still under development.

The company has established a new office location in the Tianjin Economic Technological Development area.
Source: Logistic Management

According to a government report from the Ministry of Science and Technology China will develop its own magnetically levitated (maglev) trains that can travel at speeds of up to 500 kilometers per hour. A 30-kilometer-long test line will be built before 2010.

If and when they come into service these trains will be, by a long stretch, the fastest passenger trains in use in the world.

Wang Xiaofang, director of the ministry’s planning bureau, said the maglev trains are listed in the ‘national scientific and technological support projects’ of the 11th Five-Year Plan period (2006-2010) that aims to ’solve crucial science and technology problems that hamper China’s economic and social development.’

China built a 30-kilometer-long maglev link from Shanghai to the city’s main airport, Shanghai Pudong International Airport, in 2003 using German technology. 15 of its new ‘bullet’ trains helped deal with the Chinese Lunar New Year’s Day. The current ‘bullet’ trains have a maximum speed of 200kph.
Source: China View

China now accounts for 8% of global exports and recently overtook Japan as the world’s third-largest country in terms of foreign trade volumes. Exports have more than doubled over the last five years and are expected to double again by 2010, accounting for 11% of the global total.

According to the China Federation of Logistics and Purchasing (CFLP), logistics industry revenue grew 20% in 2002, 27% in 2003, 30% in 2004 and 33% in 2005. Which is pretty snazzy and shows amazing growth. But the picture is far from perfect.

According to Business Week the industry in China is still dogged by inefficiency, with CFLP figures showing that logistics costs accounted for 21.6% of GDP in 2004.

Given that logistics costs come to 9% of the United States GDP and 11% of Japanese GDP, it could be argued that China wastes around one-tenth of its total GDP through logistical inefficiencies.

This seems to be a fair assessment and matches other available figures.

The total handling capacity of China’s coastal ports is already over one billion tons, and capacity is increasing quickly. But not that is not quite enough.

Speaking in January, Shen Yihua, vice director of the commerce ministry’s Waterway Transport Planning Institute, said that China cannot expand port facilities quickly enough to meet rising demand. In 2005, the turnover capacity of coastal ports was officially 2.52 billion tons, but 3.38 billion tons were actually handled.

He said, ‘In the next 10 years, the development of port construction should be faster than economic growth.’

David Oldridge, an associate at consultancy JHK Hong Kong, suggested where the main problems lie: ‘institutionalised bureaucracy.’ Up to five government organizations are involved in the logistics function in China, many of which operate on a provincial level.

Jaime Bolton, Greater China and North Asia supply chain management lead for consultancy Accenture, said, ‘I guess in any country those types of processes can be streamlined. If you look at the facts and you see that logistics is double the cost of elsewhere, I think there are certainly opportunities for streamlining.’
Source: Businessweek