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LSCMS Blog

Blog for updates and happenings in logistics in the Asia-Pacific region

January 30, 2012

Air Asia may be sued in Australia

Filed under: General,Newsletter — admin @ 10:38 pm

In an earlier post, we reported how Air Asia had managed to trump Singapore Inc  by securing approval to fly out of Sydney from April 2012.

In a new development, it was recently reported in the press that the Australian Competition and Consumer Commission were taking legal action against AirAsia, as the airline failed to display its full airfare prices, inclusive of all mandatory charges, which went against the Australian Consumer Law.

AirAsia has reportedly taken “corrective action” to resolve its online airfare lawsuit with The Australian Competition and Consumer Commission (ACCC) and alleged that the inaccurate airfare costs arose due to an IT issue, and that they sought to resolve the matter with ACCC.

“As soon as we became aware of the matter based on the ACCC’s complaint, we have taken corrective action and are focused on ensuring that our customers have all relevant information on our fares,” the carrier reported on its website.

 

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January 20, 2012

Apple tries to clean up their act

Filed under: China,Newsletter,Supply Chain Management — admin @ 8:34 am

Apple has recently revealed its list of global suppliers for the first time, vowing to deal with worker abuses and deflect criticism of its ignorance to poor working conditions in a mostly Asian supply chain.

Unveiling the names of the 156 companies of the company’s supply chain was an unusual move for Apple, which is known to be notoriously secretive.

Its recent supply chain audit also revealed that only 38% of the company’s suppliers adhered to its internal standard of a 60-hour, 6-day work week.

Ishan Palit, CEO of the product services division at TÜV SÜD, a provider of testing, inspection and certification services, shared that this revelation demonstrated the “severity and prevalence of inhumane working conditions within the global supply chains and the drastic requirement for immediate action”.

Yet, this move by Apple also placed the spotlight on the challenges of securing supply chain integrity, recognising that there’s a need to take control.

So what are some lessons that the supply chain industry can learn from this unprecedented move by Apple?

According to Palit “Standards such as SA8000® and BSCI have developed into effective tools to address these issues in a balanced and human manner, allowing organisations to educate the young workers and re-integrate them into society,” he said.

Palit also added that putting in place such a standard to conduct on-site audits to ensure compliance from factories is necessary. Improvements and corrections can then be identified and put into practice, which brings social, branding, productivity and risk management benefits.

“For example, it ensures workers’ health and safety, which helps boosts production efficiency, facilitates further penetration into international markets, and protects brands against the often irreparable consequences of a scandal,” he said.

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January 19, 2012

Canadian Military boxes arrive from Afghanistan filled with sand and stone

Filed under: Newsletter — admin @ 9:21 pm

Shipping containers from Afghanistan have arrived in Canada, filled with rocks and sand instead of the cargo loaded by departing Canadian troops, reports the Ottawa Citizen.

Canadian Forces said the contents of the containers loaded with ammunition and uniforms were not among the missing equipment and the missing items involved were “non-critical” such as tires, tools and tents.

“The Canadian Forces have had and continue to face missing but non-critical equipment in certain sea containers being transported from Afghanistan to Canada, by chartered vessel,” Lieutenant-Commander John Nethercott told the Ottawa Citizen.

“Some containers have arrived in Canada missing equipment, all of which is non-critical. The missing equipment was replaced by rocks and other weight so the loss would not be noticed until the containers were opened,” he said.

Canada’s defence department granted a contract to move the containers from Afghanistan to Pakistan to AJ Maritime, a Montreal-based freight forwarding firm and in what some would construe as a somewhat ludicrous response, AJ Maritime president Alda Rodrigues was quoted as saying that “There is pilfering going on, but that’s normal in that part of the world, I’ve always sent my cargo in convoys with guards, and I’ve always taken care of the cargo, but as I said, you never know. Nobody is safe there.”

It is understood the remaining 446 containers were supposed to exit Afghanistan’s southeastern border post at Spin Boldak, then cross the deserts of Balochistan to the Port of Karachi

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January 18, 2012

Container freight rates gain reprieve

Filed under: Logistics,Newsletter,Supply Chain Management — admin @ 7:19 am

In the latest Drewry report, it was mentioned that shippers should not lose sleep over the recent, short-lived jump in spot rates, but ought instead focus on ways to mitigate the risk of another sudden capacity crunch later in the year, urges Drewry Maritime Research.

Freight rates on east-west trades have been in the ascendancy of late. Drewry’s Hong Kong-Los Angeles container rate benchmark, as published in the Container Freight Rate Insight, leapt 28 percent in the first week of the year. The benchmark rose US$396 to US$1,832 per forty-foot container (FEU) and successfully sustained this level into the second week. Transpacific Stabilisation Agreement (TSA) carriers have been successful in forcing through their intended US$400 per FEU rate increases.

Shipping lines have had similar success on the Asia-Europe trade. The World Container Index (WCI) benchmark rate between Shanghai and Rotterdam soared 41 percent in the first two weeks of January to US$1,335 per FEU. The increase of US$391 per FEU was in line with carriers’ intended peak season surcharge (PSS) of US$400 per FEU. The WCI is a joint venture between Drewry and exchange specialist Cleartrade.

Buoyant shipping volumes in advance of Lunar New Year factory closures in Asia have filled ships to bursting, causing most carriers to roll containers. Some shipping lines have reported load factors in excess of 100 percent, so emboldening aggressive rate hikes.

“The big question on everyone’s minds is how sustained the rates revival will prove and what this means for 2012 transpacific contract rates?” asked Martin Dixon, research manager of Drewry’s Container Freight Rate Insight. “Once the pre-Chinese New Year rush recedes later this month spot rates will retreat back to December levels, unless carriers take action to remove surplus capacity from the trade. Shippers would be well advised to wait a few weeks before commencing contract negotiations.”

Most transpacific freight contracts run from May to April. In 2011 shippers and carriers settled at contract rates at or below the previous year’s level. However, this year shippers can expect to secure much lower shipping costs given the weak state of the container shipping market.

For instance, Drewry’s Hong Kong-Los Angeles container rate benchmark had declined 27 percent between the first week of May and the end of 2011. The spot market is often a strong lead indicator of prevailing contract rates.

“However, shippers should beware,” cautioned Dixon. “Locking carriers into low freight rates today may hinder surety of supply in the future.”

Drewry expects freight rates to rise sharply in the second half of the year as cash-burn forces carriers to slash capacity.

“A repeat of 2010 seems inevitable, when freight rates rose and space availability was highly restricted,” added Dixon. “Drewry strongly recommends shippers look at the benefits of index-linked contracts to mitigate these dangers.”

Prior to the recent bounce in pricing, east-west freight rates had been in free fall. Drewry’s East-West Freight Rate Index, a weighted average across key Asia-Europe, transpacific and transatlantic trade routes, had declined 38 percent in the 12 months to November 2011. However, other indices published in Drewry’s Container Freight Rate Insight suggest that some regions of the world have proved more stable than others. For instance, Drewry’s Intra-Asia Freight Rate Index lost just six percent through 2011 and gained four percent in the four months to November 2011.

“Few trades can claim this level of sustained stability,” observed Dixon. “Despite cascading tonnage from other overburdened trades, rates on Asian regional trades have remained remarkably stable thanks to burgeoning traffic growth.”

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Air Asia succeeds where Singapore Air fails

Filed under: Events,Newsletter,Singapore,Supply Chain Management — admin @ 7:15 am

It took low-cost long-haul carrier AirAsia X four years to secure the right to serve Sydney, and the carrier is now putting the matter behind it following its confirmation it will serve the Australian city from Kuala Lumpur with a daily service from 01-Apr-2012, with the likelihood of a double daily to follow. Another Australian city will later be added, to reach its goal of serving five Australian cities by the end of 2013. Also on the carrier’s expansion list is increased services to its existing Asian destinations, many of which are not served daily.

While the Sydney route progressed in likelihood following restrictions being lifted in Jun-2011, the route became a certainty after start-up competitor and Singapore Airlines subsidiary, Scoot said it would make Sydney its first destination from the middle of this year. The possibility of Malaysia letting a competitor based in Singapore, its fierce rival, serve Sydney before a Malaysian low-cost carrier was simply unacceptable!

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January 17, 2012

Asia Pacific air travel still continues to increase

Filed under: Newsletter — admin @ 9:26 pm

Preliminary traffic figures released by the Association of Asia Pacific Airlines (AAPA) for November showed international air passenger travel continues to increase while air freight markets remain weak.

Airlines based in Asia Pacific carried 15.7 million international passengers in November 2011, a 4% increase as compared to the same month in 2010.

International air cargo traffic demand, however, suffered a decline in November as a result of continued moderation in expert and import markets. A 6.5% decline in cargo traffic for the month of November 2011 was found, compared to last year.

Andrew Herdman, AAPA director general, said, “Given unresolved concerns about the Eurozone debt crisis, and wider uncertainty about the global economic outlook for 2012, Asian carriers are bracing themselves for another tough year ahead. Nevertheless, the region’s carriers are still relatively well placed to benefit from future growth opportunities, and the outlook for the longer term remains positive, as evidenced by fleet expansion plans and the establishment of new business ventures.”

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Filed under: China,Logistics,Newsletter,Singapore — admin @ 9:19 pm

Figures from the Hong Kong Marine Department show the port handled 24.4 million TEU in 2011, an increase of three per cent from 23.7 million in 2010, December’s figures showed a 1.4 per cent increase to two million TEU from the same month the previous year.

Singapore’s Maritime and Port Authority reported a 5.3 per cent increase in container movement in 2011, having handled 29.9 million TEU compared to 28.4 million TEU in 2010. December container volumes are expected to increase 11 per cent to 2.6 million TEU year on year making the island state the 2nd busiest port in the world after Shanghai.

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Compulsory pre-decleration of shipments come April 2013

Filed under: Logistics,Newsletter,Supply Chain Management — admin @ 10:17 am

Singapore Customs will make it compulsory for declarations of all exports to be submitted before they leave Singapore by 1 April 2013.

Known as Advance Export Declaration (AED), it aims to strengthen supply chain security and align its export declaration practices with international norms.

With the implementation of this initiative on 1 April, companies will be given 18 months, till 1 October 2014 to adjust and comply fully with the requirements set.

Presently, only the exports of controlled items or exports by land require declarations to be submitted in advance and this new rule is a big change in the current process where shipment declerations would only need to be made after a shipment has left Singapore.

Singapore Customs’ director general Fong Yong Kian said the AED will help Singapore become a trusted and secure global trade hub, and assist a more effective trade facilitation.

Steven Lee, chairman of the Singapore Air Cargo Agents Association agreed, adding: “The AED will definitely provide additional protection to the aviation industry from the security perspective. It will enhance the status of Singapore as a free port in terms of higher security and safety, which will promote more cargo flows via Singapore as a regional hub.”

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