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LSCMS Blog

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

February 23, 2013

More ships being laid up after Lunar New Year

Filed under: Newsletter — admin @ 9:29 am

The global idle fleet of containerships has risen within a week to 280 units, from an aggregated 739,000 TEU to 804,000 TEU, led by an increasing number of idle units over 5,000 TEU which is expected to continue until the summer peak season begins.

According to Alphaliner, the slowdown and growth in the idle fleet is attributed to the post-Chinese New Year but will continue to grow against newbuilding deliveries at as much as 400,000 TEU by the end of the first quarter.

Maersk holds the highest number of idle units at 14 without assignment and 12 of over 6,000 TEU. The crippled 15,550-TEU Emma Maersk is now idle due to a flooding of its engine room during a transit through the Suez Canal to Asia and will be out of service for at least a few months while in repair at Palermo.

Vessels over 5,000 TEU are mainly carrier-controlled with only eight out of the 31 units controlled by a non-operating owner (NOO). This is due to an unexpected decline in cargo demand, which created an unexpected capacity surplus.

This has been the case for Maersk’s FE-North Europe AE-9 service which leaves an idle surplus of ten units in the 6,000 to 7,000 TEU range.

In the global cellular fleet there are 23 units between 5,000 and 7,000 TEU and seven between 8,000 TEU and 9,600 TEU.

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February 21, 2013

Food traceability system a boon for food processors and manufacturers

Filed under: Supply Chain Management — admin @ 6:14 pm

Read more…browseThe BalloonOne WMS system simplifies traceability for food processors and manufacturers and provides full visibility of raw material coming into the food warehouse, monitors the movement of finished goods, and tracks products going through the production and packaging area. This removes the difficulty and cost of managing time consuming paper documentation – a boon to food manufacturers globally.

The automatic identification of barcodes on raw materials and finished products ensures a complete electronic trail that can be interrogated instantly whenever required. This will save both time and money through efficiency improvements as the WMS interfaces easily with existing enterprise resource planning (ERP) systems and order management systems – such as SAP Business One, sharing the same database and eliminating the need for data duplication.

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February 20, 2013

The Economic Impact of a War Between Japan & China

Filed under: China,Newsletter — admin @ 8:06 pm

It is said that a picture is worth a thousand words, and this video does just that.

This is an interesting presentation of the break down of the global economic impact of the conflict between China & Japan.

If you can’t see the above video, check out the link at: http://www.youtube.com/watch?v=V7SA3p8ys-s

Courtesy of the Online MBA

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February 19, 2013

MIT case study shows benefits of Combined Distribution Networks

MIT has recently authored a case study that shows cost and greenhouse gas reductions from the implementation of Combined Distribution Networks.

Based on the study, Ocean Spray Cranberries gained a 20 percent reduction in greenhouse gases on top of a 40 percent savings in transportation costs by making smart process changes to one of its primary transportation and distribution routes. The study, conducted by the Center for Transportation & Logistics at the Massachusetts Institute of Technology (MIT CTL), measured the sustainability improvements after Ocean Spray, a $2.2 billion agricultural cooperative and household-name fruit juice and food manufacturer, opened a new distribution centre and partnered with a competitor to improve transportation efficiency.

Ocean Spray’s first process change to reduce transportation costs, shave delivery distances and, ultimately, trim emissions, was to open a new distribution centre in Florida, bringing product supply closer to demand. The company was looking for a more cost-efficient and environmentally sustainable way to transport finished products to the new distribution centre, when they learned of a competing juice company’s New Jersey to Florida back haul opportunity. Ocean Spray investigated whether it was possible to fill the competitor’s vacant rail cars with Ocean Spray product already headed in that direction by truck.

Taking advantage of the back haul opportunity involved working with a logistics partner as intermediary and coordinating shipments with each other’s schedules. With only a modest investment of time and money, Ocean Spray realized both financial and greenhouse gas emissions savings over a 12-month period:

•  A shift of 80 percent of its freight traffic between New Jersey and Florida to a new rail route

•  A 20 percent overall carbon footprint reduction in that lane

•  An estimated 40 percent savings on transportation costs in that lane –about $200 per truckload

•  A savings of 1,300 metric tons of carbon dioxide, a 68 percent reduction–contributing to the overall reduction of 20 percent identified by MIT–the equivalent to saving over 100,000 gallons of fuel

“We recognize the importance of managing our food and juice business in a way that advances our environmental sustainability performance. We needed a more efficient way to haul products south. Our competitor was spending money and energy moving empty rail cars in that direction.  It made good business sense for us to collaborate,” said Ken Romanzi, Ocean Spray’s Senior Vice President and Chief Operating Officer, North America. “Ocean Spray has a history of innovative partnerships, and this case study shows how collaboration in freight operations can boost efficiency and identify opportunities for environmental benefits.”

“This is a great example of how a company can be driving savings to the bottom line and find they’ve improved sustainability at the same time,” said the report’s author, Dr. Edgar E. Blanco, Research Director at MIT CTL.

Companies regularly redesign their transportation networks to better serve their customers. These network adjustments usually translate into cost savings due to reduced mileage or the shifting of transportation modes. As the Ocean Spray case study demonstrates, such improvements also often result in significant CO2 emissions savings since they are related to the same drivers that reduce transportation costs: lower mileage and more fuel-efficient modes.  Ocean Spray is so impressed with the overall benefits of logistics sustainability, it plans to include emissions reduction methodologies in future transport and distribution plans.

Jason Mathers, Senior Manager, Supply Chain Logistics at Environmental Defense Fund (EDF), which sponsored the study, said, “Ocean Spray has shown that concrete and measurable sustainability results can be found within projects that were previously identified for cost savings only. We encourage all companies who identify cost cutting opportunities within their logistics operations to also calculate potential emissions reductions to add greater overall value to their organizations”

The concept of CDN’s or what is termed as horizontal collaboration has real life implementation success but is still to gain traction here in the Asia Pacific region.

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Asia still experiencing manufacturing growth

Filed under: China,General,Logistics,Newsletter,Supply Chain Management — admin @ 6:24 am

Manufacturing output in Asia continues to show signs of expansion, according to HSBC’s latest Manufacturing PMI (Purchasing Managers’ Index) reports.

China witnessed a strong growth rate for the third successive month, posting 52.3 in January from 51.5 in December. This is due to its manufacturing economy seeing improving demand from US and European markets.

Another major Asian market, India also reported manufacturing PMI of 53.2 in January. This was, however, the slowest growth rate in three months, down from 54.7 in December. The reading signaled a continued improvement in the market’s manufacturing sector, despite it being slower due to issues with the supply of power in the market.

PMI readings of Taiwan, Vietnam and Hong Kong also showed economic expansion.

Taiwan rose from 50.6 to 51.5 in January, reporting a ten-month high and the fastest expansion rate since March 2012. The increase in purchasing activity could be attributed to the rising demand from clients in China, Europe and the US.

Vietnam rose to 50.1 in January, after a contraction of 49.3 in December. The growth in purchasing activity in the manufacturing sector is in its third successive month, as companies are witnessing a demand improvement from the domestic market.

Hong Kong also reported an 11-month high growth rate of 52.5, up from 51.7 last month. This is because of greater demand in the private sector and improved market conditions. Furthermore, Hong Kong also witnessed a rise in new business from Mainland China.

Yet, Indonesia and South Korea have experienced a contraction in January. The former posted a 49.7 reading in January from 50.7, while the latter fell slightly to 49.9 from 50.1. Indonesia’s decline could be attributed to the scarcity of raw materials while South Korea is suffering from a fall in new orders.

Despite the continued global economic uncertainty, Asia’s economy is still looking somewhat positive in 2013.

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AA and US Airways to become world’s biggest in US$11 billion merger

Filed under: General,Newsletter — admin @ 6:15 am

The merger of American Airlines and US Airways at US$11 billion will form the world’s biggest airline holding more than 600 new mainline aircraft on order, following talks that began last August.

The deal will create a new company to be based at Dallas-Fort Worth, headed by AA chairman and CEO Thomas Horton, as chairman to the new airline’s board and representative to the oneworld Alliance.

Mr Horton said the merger, which comes a little over a year since AA filed for bankruptcy, brings together two complementary networks.

“The operational and financial strength of the combined airline is expected to enable continued investment in new products and technologies and will create exciting new opportunities for our people, even as we deliver strong cash flow and sustainable profitability,” he said.

US Airways chairman and CEO Doug Parker will take the position of CEO and board member and will supersede Mr Horton at the end of his service.

The combined airline will boast a workforce of 100,000 and maintain existing hubs of each airline. It will offer more than 6,700 daily flights to 336 destinations in 56 countries.

Of the 600 new aircraft on firm order, 517 will be narrow-body and 90 wide-body aircraft

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February 14, 2013

Aircargo outlook for 2013 appears positive

Filed under: Newsletter — admin @ 4:26 am

The International Air Transport Association (IATA), the global airlines industry association, has reported 1.6 per cent improvement November air cargo demand worldwide year on year and 4.6 per cent more passengers travelled in the same period.

“It is premature to consider this a turning point for air cargo, but when coupled with positive economic developments in the US and an improvement in business confidence in recent months, the conditions are aligning to see a return to growth in 2013,” said IATA director general Tony Tyler, former CEO of Hong Kong’s Cathay Pacific Airways.

Asia-Pacific carriers, responsible for almost half the increase in total volumes compared to October, experienced a 6.2 per cent year-on-year rise in demand as they enlarged capacity 2.5 per cent. Thailand’s 2011 floods and slump in air traffic helped make 2012 figures look better than they should, cautioned the IATA statement.

North American November freight volume was up 1.7 per cent, but Hurricane Sandy hit transatlantic routes badly. European airlines’ year-on-year freight traffic was flat, and capacity grew just 0.3 per cent.

Mideast airlines’ November demand was up 10.5 per cent compared to November 2011, and were just behind the top performing Latin American carriers with an 11 per cent year-on-year November growth rate.

Although the Latin American economy suffered from the Eurozone crisis and China’s slower growth last year, strong domestic demand in several major economies has provided continued support to air travel, said IATA. Latin American airlines’ freight grew 4.2 per cent year on year, but capacity grew at more than twice that at 8.5 per cent.

African airlines grew cargo demand 4.4 per cent in the same period. The load factor rose 0.4 percentage points to 64.7 per cent, but remains the lowest of any region. Compared to October, African traffic was up 0.1 per cent.

Mr Tyler also renewed his call on governments to bring down the barriers to connectivity growth. “This can be done by addressing excessive taxation, high infrastructure costs, onerous regulation and improving the capacity and efficiency of airports and air navigation services.”

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Fair winds in the fragrant harbour

Filed under: China,Logistics Social Responsibility,Newsletter — admin @ 4:22 am

In Hong Kong, home of the world’s third largest container port, the voluntary “Fair Winds Charter” has recently been extended until the end of 2013. Introduced in 2010, the charter calls for participating vessels to switch to low sulphur fuel (0.5% sulphur content or less) while at berth in Hong Kong – significantly lower than the official limit of 3.5 per cent.

Seventeen shipping lines participate in this industry-led, voluntary, at-berth fuel switching programme for ocean-going vessels (OGVs) calling at Hong Kong. It is the first initiative of its kind in Asia, and the only shipping-industry led fuel switching initiative in the world.

Shipping is one of the largest contributors to sulphur dioxide (SO2) emissions in Hong Kong. According to Civic Exchange group, if all operators switched all vessels to using low-sulphur fuels, emissions from shipping would fall by 80%, having a significant impact on overall air quality.

In September 2012 the government introduced the Port Facilities and Light Dues incentive scheme to support carriers that voluntarily switch to low-sulphur diesel. Some 570 ships have since been registered for the subsidy scheme, which provides a 50 per cent reduction in port and navigation related charges for ocean-going vessel operators that switch to fuel containing no more than 0.5% sulphur.

The latest development in January is that HKSAR Chief Executive CY Leung announced that his government will bring in new legislation to enforce the requirement to switch to low sulphur fuel whilst at berth in Hong Kong. He said that following consultation with the maritime sector, such proposals will be tabled for the next legislative session and are likely to become approved by the end of this year.

Meanwhile, industry practitioners continue to call for an Emission Control Area (ECA) that embraces the whole of the Pearl River Delta – exploratory discussions amongst Hong Kong, Shenzhen and Guangdong officials are continuing.

 

Mark This post is the monthly contribution by industry thought leader Mark Millar. Mark has been engaged by clients as Speaker, MC, Moderator or Conference Chairman at more than 250 events in 20 countries and is recognized by the Global Institute of Logistics as “One of the most Progressive People in World Logistics”; Mark serves on the Advisory Board of the Logistics and Supply Chain Management Society (LSCMS) – mark@markmillar.com

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15.500 TEU Maersk flagship out of action for 3 months

Filed under: Newsletter — admin @ 4:17 am

Maersk line’s flagship, the 15,500-TEU Emma Maersk, is expected to be out of service for three months after its engine room flooded in 16 metres of water, causing the vessel to be towed from the main channel of the Suez Canal.

Once the damaged thruster has been sealed, containers will removed, giving Maersk time to carry out repairs, said a company spokesman.

The vessel could stay in Egypt for the repairs, though the final decision over whether a drydock is needed has yet to be made, reported London’s Containerisation International.

Water must be pumped out slowly, with experts on hand to deal with exposed machinery. Dismantling, drying and repairing almost every piece of machinery under water will take months to complete, particularly the giant Wartsila engine and the long propeller shaft that sits at the lowest part of the vessel, said the report.

In previous instances of flooded ships, it has been possible to repair the engine, the propeller shaft, ancillary machinery and electronics, if corrosion is kept to a minimum, said the report.

The first job is to seal the stern thruster where the water intake occurred. Emma Maersk has double sets of fore and aft Rolls Royce thrusters to assist in berthing.

Maersk Line vice-president ship management Palle Laursen said that with the cause of the accident unknown, the company is warning its other ships not to use stern thrusters.

Divers inspecting the ship’s hull and found a 20 centimetre by 30 centimetre hole in the shape of a half circle damage near a forward thruster. Mr Laursen said the damage was probably caused while the thrusters were manoeuvring the vessel towards the Suez Canal. The thruster spaces are accessed via Emma Maersk’s 120-metre main propeller shaft tunnel, which opens to the engine room.

After a bilge alarm sounded, it took only an hour for the engine room to be flooded, covering the main engine. The 13-man crew worked the bilge system, but it was just not enough. There was no significant flooding of the cargo holds and containers aboard were not damaged, he said.

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United Airlines wins award for being open to employing homosexuals

Filed under: Jobs,Logistics Social Responsibility,Newsletter — admin @ 4:14 am

United Airlines has earned the 2013 Business Leadership Award from Equality Illinois, a homosexual lobby, for its “vision and leadership” in efforts to achieve equality for “lesbian, gay, bisexual and transgender” individuals.

“United is a global company, and the richness of our different backgrounds, cultures, experiences and ideas brings enormous value to us,” said United chairman and president Jeff Smisek.

“We value inclusion and diversity in our business and in our lives, and it’s important that we take time to celebrate this. On behalf of my more than 85,000 co-workers, we accept this award proudly,” he said.

“From its Illinois headquarters, United Airlines sets a high standard for the entire industry of embracing fairness and diversity. The company consistently leads the corporate world in LGBT [lesbian, gay, bisexual and transgender] workplace equality, and we are proud to honour their work with the Business Leadership Award,” said Bernard Cherkasov, CEO of Equality Illinois in a United Airlines statement.

United offers policies, programmes, benefits, privileges and recognition designed to reward and support the success of its diverse workforce. The airline is equally committed to its multicultural community sponsorships as well as supplier diversity initiatives.

In 2012, for the fifth consecutive year, United received a 100 per cent rating in the 2013 Corporate Equality Index, an annual survey administered by the Human Rights Campaign Foundation, which ranks top companies and law firms based on attitudes towards homosexuals and transgender people. The trend to employ such individuals into workforces in Asia is also on the rise and many governments and companies are now tackling this challenge head-on.

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