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LSCMS Blog

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

December 28, 2013

China eases reforms to exempt foreign carriers from VAT

Filed under: China,Newsletter — admin @ 7:17 am

China has announced that effective January 1st , it will lower its value added tax (VAT) on forwarders and agents engaged in international shipping business, effectively exempting most foreign carriers.

The State Administration of Taxation said the tax bases for China-based freight forwarders and agents will be revenues less freight charges paid to international carriers rather than having their tax based on revenues alone without such a deduction.

The new policy is expected to benefit carriers in 91 countries, including the US, the UK and Japan, which have signed tax treaties with China to waive VAT or the business tax, according to the accounting firm KPMG.

The move follows months of complaints at home and abroad about this ill-conceived and poorly executed programme, and was welcomed by foreign lines as well as Chinese freight forwarders and shippers, according to industry and accounting officials, reports Lloyd’s List.

Foreign carriers were perceived to have lost out in China’s shift from the business tax to VAT, which took effect nationwide on August 1, having needed to establish subsidiaries in China to send out bills related to Chinese trade or charge via agents.

Before the shift in August, those subsidiaries were liable to a five per cent business tax calculated on their net revenues – sale amounts to Chinese shippers, minus freight charges paid to parent companies – and effectively paid little tax.

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Many e-tailers fail to deliver this Christmas

Filed under: Economics,General,Newsletter,Supply Chain Management — admin @ 7:15 am

As has happened in previous years, express delivery companies and e-tailers from UPS, Amazon.com to Kohl’s Corp and Wal-Mart failed to meet “guaranteed” pre-Christmas delivery, reports MarketWatch Wall Street Journal.

Last-minute online orders up 37 per cent year on year, according to IBM Digital Analytics. Forrester Research expects online sales to increase 15 per cent year on year this Christmas as brick-and-mortar retail slows down.

Groupon Inc told disappointed customers to print a picture of their gifts instead of the present itself. “We know it doesn’t make up for not getting it on time,” the email said.

An unexpected surge of online orders in the past few weeks appears to have strained the limits of delivery and fulfillment infrastructure, said the report.

Sheer volume appears to have been the problem, while bad weather, computer glitches and late deliveries from manufacturers contributed, say retail analysts.

United Parcel Service (UPS), which delivers 45 per cent of US packages, experienced a flow of shipments in its air network on Monday, hitting 7.75 million more than expected. On Tuesday, it said it would not be able to deliver some before Christmas, overwhelmed by last minute demand.

“The volume of air packages in the UPS system did exceed capacity as demand was much greater than our forecast,” said spokeswoman Susan Rosenberg.

But UPS also blamed Amazon, saying shipping delays resulted from “not yet receiving the package from the shipper”.

“During the holidays, we reach the limits on the capacity of these retailers,” said Eric Best, CEO of Mercent Corp, which helps facilitate online sales for 550 retailers.

“It’s a double whammy for conservative retailers, which have been burned by excess inventory in the past, and who underestimated demand,” Mr Best said.

Retailers set order deadlines later than last year, having invested heavily in online infrastructure and ended up promising more than they could deliver.

Alabama shopper Andi Burks ordered sweaters for her husband on December 19 from Kohl’s, a day before the deadline for “guaranteed Christmas delivery”.

“I thought that since they had stated on their website that it was guaranteed to arrive on time that I would be okay,” she said. “Apparently, I was wrong.”

Said Kohl’s spokeswoman Jen Johnson: “We are deeply sorry for disappointing our customers expecting delivery in time for Christmas.”

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December 21, 2013

Death sentence for Vietnamese shipping executives

The former chairman of Vietnam’s state-owned shipping group, Vinalines, Duong Chi Dung and former CEO, Mai Van Phuc, has been sentenced to death after being found guilty of embezzlement by a court in Hanoi, as the government revved up its campaign to stamp out corporate corruption.

According to local media reports, Dung went on the run this May when Vinalines defaulted on loans worth more than US$1.1 billion, leading to the group’s near collapse with debts estimated at US$3 billion. He was arrested in neighbouring Cambodia in September, reports Lloyd’s Loading List.

The indictment focused on the defendants’ acquisition of an old, non-functional Japanese floating dock whose technical specifications were falsified. Having been purchased for an inflated price, the dock then ran up huge repair and maintenance bills.

Both men pleaded their innocence and it is not known if they can appeal against the death sentences.

Mr Dung was alleged by the president of the People’s Court of Hanoi, Ngo Thi Anh, to have headed the embezzlement scheme that is estimated to have spirited away more than US$1.5 million.

Two other former Vinalines senior executives were found guilty of embezzlement and violating state regulations on economic management. They were handed prison sentences of 19 years and 22 years.

Mr Dung did accept some responsibility for Vinaline’s enormous level of debt and offered an apology to “the party, state, national assembly, government, people and Vinalines employees.”

Vinalines has a fleet of 140 vessels and its business also spans port management, maritime services and logistics.

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December 20, 2013

ASIA RISING IN 2014

Filed under: Asia Supply Chain Insights,Newsletter — admin @ 10:07 am

“Asia Rising” is one of the most significant developments that will impact transport and logistics in 2014. We will witness an exciting cocktail of new business opportunities in Asia, driving massive increases in trade flows, impacting logistics networks and supply chain ecosystems.

Notwithstanding the recent WTO global agreement achieved in Bali, three major multilateral trade agreements will come into play during 2014 to drive substantial progress in facilitating and empowering growth in international trade for all Asian economies.

AEC – preparation for the regional economic integration of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam into a single ASEAN Economic Community from 2015, will harmonise tariff-free flows of goods, services, people and funds across ten jurisdictions comprising 600 million people.

TPP – the Trans Pacific Partnership will provide Asian economies – Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam – with preferential-tariff multi-lateral access to Canada, Chile, Mexico, Peru and USA markets.

RCEP – the Regional Comprehensive Economic Partnership joins the ten ASEAN nations together with trading partners Australia, China, India, Japan, Korea and New Zealand, forming a trading block containing almost half the world’s population, with USD 21 trillion GDP and 27% of global trade.

The resulting opening of markets in 2014 will coincide with a massive influx of new and increasingly middle-class consumers, spurred by increasing economic prosperity across the whole spectrum, converging with the very efficient and well established local Asian production bases of significant proportions of the world’s consumer goods.

Asia comprises a diverse range of economies across the continuum of emerging, developing and developed markets, with widely varying levels of sophistication and maturity in their supply chain and logistics landscapes, infrastructures and capabilities.

Supply chain practitioners should therefore embrace the complexity, and actively engage the knowledge and networks required to overcome the challenges to capitalise on the smorgasbord of new business opportunities.

Mark Millar MBA, FCILT, FCIM, GAICD provides value for clients with independent, external and informed perspectives on their supply chain strategies for China and ASEAN. He has been engaged by clients as Speaker, MC, Moderator or Conference Chairman at more than 300 events in 20 countries and is recognised 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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Amazon’s German workers strike as Christmas peak season takes off

Some 1,115 German Amazon.com workers went on strike out of a total of 23,000, demanding more pay and better working conditions in a dispute that has simmered for months just as pre-Christmas sales are peaking.

Germany is Amazon’s second-biggest market after the US, with sales growing 21 per cent to US$8.7 billion in 2012, a third of its overseas total, Reuters reports.

Amazon took its most daily orders in Germany last December 16, when almost four million articles were bought, with shipments peaking on December 17.

Amazon employs 9,000 warehouse staff and 14,000 seasonal workers at nine distribution centres in Germany. Thus far there had been no delays to deliveries, the company said.

“Our customers can continue to rely on us for the prompt delivery of their Christmas presents,” a spokeswoman said.

The Verdi union said up to 700 workers joined the strike in Amazon’s logistic centre in Bad Hersfeld, plus 500 to 600 in Leipzig. For the first time, the union also called a strike in Graben, where Verdi said 600 workers took part.

“The Amazon system is characterised by low wages, permanent performance pressure and short-term contracts,” said Verdi spokeswoman Stefanie Nutzenberger.

Verdi has organised several short stoppages this year to force Amazon to accept collective bargaining agreements in the mail order and retail industry as benchmarks for workers’ pay at Amazon’s German distribution centres.

 

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Evergreen sells off shipping containers to plug losses

Filed under: Economics,General,Logistics,Newsletter — admin @ 8:51 am

Taiwan’s Evergreen has sold assets in 32,265 containers from its subsidiary Greencompass Marine to Elevation Development and TG Global at a price tag of US$75.7 million creating working capital of $69.6 million.

The move is an effort to plug losses amounting to TWD2.2 billion (US$70 million) during the first three quarters of 2013 despite Q3 period boosting profit by TWD48.5 million.

The sale will help to support losses of the first nine months of the year in a sale price on average of US$2,348/TEU.

It is the second Taiwanese carrier to sell assets following Yang Ming’s sale of TWD1.4 billion in a leaseback deal of unspecified number of dry containers.

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