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LSCMS Blog

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

February 26, 2014

Growing Online Retail Industry a Boon for Logistics Companies

Filed under: Newsletter,Technology — admin @ 3:02 pm

eccommerce-concept-1-1415244-mThe race to sort, package and ship products in India heats up for the Indian logistics industry.

he race to sort, package and ship millions of products that Indians are buying online is becoming a hotly contested one in the Indian logistics industry as several companies launch innovative services to grab the growing business.

Typically companies that offered plain vanilla courier services found themselves called upon to provide rapid delivery for shipments ranging from books to electronics and furniture. “Initially logistics companies were not able to meet the requirements of online companies,” said Sanjiv Kathuria, 50, who set up DotZot last year to offer logistics only for ecommerce firms. “That is now changing.”

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February 20, 2014

FedEx Brand Rises on Global ‘Most Valuable’ List

Filed under: Logistics,Newsletter — admin @ 3:06 pm

fedex-hidden-message-logoMemphis-based FedEx (NYSE: FDX) rose to its new rank on Brand Finance’s Global 500 list from No. 87 in 2013.

At $13.5 billion, FedEx Corp.’s brand value in 2014 comes in at No. 82 in the world, according to a new report.

The valuation is based on estimated future cash flows attributable to the brand, according to a release. FedEx’s brand value was $10.6 billion in 2013 and – at No. 83 in the world – $10.1 billion in 2012.

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February 11, 2014

Focus from Physical to Finance Supply Chains in Asia

Filed under: Newsletter — admin @ 10:36 am

As supply chains stretch across the globe with multinational buyers on one side of the equation and a diverse spread of suppliers in emerging markets on the other, businesses have become concerned with the viability of their supply chains, particularly after the tragic event at Fukushima and widespread flooding in Thailand.

During recent years the focus has moved from the physical supply chain to the financial side with suppliers having insufficient working capital and having poor access to credit opportunities from local banks. In fact, direct lending from financial institutions in Asia has decreased since the financial crisis began. Hence businesses understand the need to step in to reduce disruptions and inject liquidity in their supply chain by leveraging their creditworthiness.

Strong demand in Supply Chain Finance

The arguments in favour of Supply Chain Finance have proven to be prescient. The clear and present need for improved liquidity management and diversification of funding sources has translated into a heightened interest in Supply Chain Finance programs. Such programs allow buyers to extend their payment periods for supplier invoices (increasing Days Payable Outstanding), while shortening the payment collection period for their suppliers (reducing Days Sales Outstanding), thus resolving the conflicting interests of each party concerning payment periods.

Compared to a few years ago when Asian companies were awash with liquidity, many Asian companies today find themselves operating in a very different environment. This trend is reflected in strong growth rates in Asia Pacific, which are expected to be in the double-digit range, since Supply Chain Finance is a relatively new financing solution in the region. In addition, there was little incentive for Asian companies to explore Supply Chain Finance solutions as they had relatively cheap access to bank credit in the past. This attitude has changed, however, against the backdrop of credit ‘rationing’ in areas of China and South East Asia where local suppliers have become much more receptive to joining Supply Chain Finance programs.

Especially in China with the appreciation of the renminbi, and with the government and central bank tightening onshore lending, the cost of funds is increasing in dollars, there is strong demand from the local suppliers in Supply Chain Finance as a way to ease working capital.

Multi-bank platforms managing Supply Chain Finance programs

Supply Chain Finance has been widely explained as a method to help reduce inefficiencies and mitigate financial risks in the supply chain. However, many market participants argue that the use of a single, proprietary banking platform is not completely addressing these issues. Gone are the days of a corporate having a relationship with just one bank. Shrinking balance sheets have made it harder for corporates to source funding and the retreat of some banks from Supply Chain Finance has resulted in corporates setting up many facilities with different banks.

This however raises issues in terms of efficiency and complexity around the implementation of different Supply Chain Finance platforms, the handling of legal documentation and the onboarding of suppliers. The new paradigm in Supply Chain Finance centers on the rapid deployment of programs managed by open platform providers that provide multi-bank funding for the corporate while preserving customer standardization a single platform. The recent financial crisis has proven to be a reminder of the importance of ensuring multiple sources of liquidity and avoiding over-reliance on any single bank for funding. Therefore, corporates are increasingly recognizing the value of multi-bank platforms such as PrimeRevenue including the centralized coordination of liquidity within the SCF program. Adopted by a rapidly increasing number of corporates globally and supported by a growing number of financial institutions, multi-bank platforms solve the problems associated with closed, bank-proprietary solutions giving buyers the control and flexibility required to unlock more cash from their supply chains.

As businesses look to offer opportunities on a global level, there is a growing trend for independent multibank platforms such as PrimeRevenue to be set up with different banks funding the program in different jurisdictions throughout the Asian region and beyond.

This and other interesting and relevant topics will be discussed at LogiSYM next month. To find out more, log on to www.logisym.com. This article was contributed by PrimeRevenue. PrimeRevenue provides cash flow to more than 13,000 buyers and suppliers through their OpenSCi platform which offers the control and flexibility required by organizations to optimize their working capital and reduce costs and risks throughout the financial supply chain. Headquartered in Atlanta, PrimeRevenue also has offices in London, Paris, Frankfurt and Prague, as well as in Melbourne and Hong Kong, and operates some the largest supply chain finance programs for clients around the globe. For more information or to contact us, please visit http://www.primerevenue.com

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Changing Landscape of China’s Supply Chain

Exploring the key dynamics impacting low cost manufacturing in China . . .

As China continues its impressive development path of the last twenty years, it has now become two economic markets that are interconnected and converging – its Global market which is driven by mass production for export to developed countries, and its local market which revolves around rapidly expanding domestic consumption.

Multi-national companies first came to China to take advantage of low-cost labour and Special Economic Zones. Nowadays they remain in China to sell products to Chinese consumers in the local market. One development has fuelled the other. As quoted by the Economist ‘foreign firms came for the workers, now they stay for the shoppers’.

The logistics emphasis is therefore no longer just on transporting products from the factories to the ocean ports on the eastern seaboard for export to the west. Nowadays there is just as much emphasis on distributing goods within and throughout the domestic China market in order to reach the increasingly prosperous consumers located all over this vast country.

Amongst the many dynamics influencing shifts in China’s production landscape, Labour related challenges are one of the key driving forces for change:

Labour Shortages – the migrant labour force in the coastal areas, in the range of 200 million workers, is reducing in size. There is now more work available in the inland provinces, where workers can live at home with their families, instead of in a cramped dormitory at a coastal factory. Some migrant workers who have worked away from home for 20 years or more may have saved enough money that they do not need to work in the factories anymore. Living costs in the developed coastal cities are continually rising, so in many cases the lower cost of living in a rural province more than offsets the lower wages, resulting in more actual spending power from the workers’ net disposable income.

Labour Costs – in coastal areas the cost of labour is becoming more expensive, with the minimum wage increasing by an average of over 18% last year. Local governments are committed to raise workers’ wages, with Guangdong province having a mandate to increase the minimum wage by 20% for each of the next five years. This reflects national priorities to increase domestic consumption and thereby reduce the economic dependency on exports.

Labour Unrest – there is emerging unrest and dissatisfaction amongst factory workers in the coastal cities. Historically these migrant workers had little choice but to accept the poor working conditions in the factory complexes. However, the latest generation of young migrant workers are better educated and technologically enabled. They are much less willing than previous generations to put up with the hardships of factory life. As digital natives they are constantly connected through technology and thus become more organised and vocal in their protests for higher wages and improved conditions.

Supply and demand economics thus come into play, whereby the reduced supply of labour commands a higher price. In Guangdong province, there are currently one million vacancies for production workers, even with most factories offering salaries above the minimum wage. These labour challenges, together with government incentives to attract investments into the provinces, and potential cost savings in the region of 40% on land and 50% on labour, are resulting in some of China’s production moving inland.

To address these dynamics and capitalise on the rapid emergence of inland consumption, companies will need to adapt and adjust their business models accordingly – reconfiguring their supply chain ecosystems to focus on the expanding domestic markets throughout China.

Businesses that successfully address this challenge will become empowered to gain competitive advantage and drive profitable business growth – accessing the knowledge and networks that provide independent and informed supply chain insights will be critical to your success.

Mark Millar provides value for clients with independent, external and informed perspectives on their supply chain strategies in China and Asia. Clients have engaged Mark as Speaker, MC, Moderator or Conference Chairman at over 300 events in more than 20 countries. The Global Institute of Logistics recognised him as “One of the most Progressive People in World Logistics”.  Based in Hong Kong, Mark serves on the Advisory Board of the Logistics and Supply Chain Management Society (LSCMS) 

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February 7, 2014

Supply Chain Key to Success in China – Outlook 2014

Filed under: China,Newsletter,Supply Chain Management — admin @ 11:36 pm

20140207-153545.jpgChina is struggling, but making progress, to morph into an economy that is driven by domestic consumption, but the logistics infrastructure to enable this transformation is a major challenge.

Supply Chain in China was once an afterthought or was only thought of in terms of the MAKE and SHIP processes include din manufacturing in China. But as China becomes not only the factory of the world but the “mall of the world” this can no longer be true…

Read more…

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February 4, 2014

Compulsory Advance Export Declaration for Non-Document Shipments

Filed under: General,Logistics,Newsletter,Resources,Singapore — admin @ 3:58 am

20140207-153833.jpgAs of 1 April 2013, Singapore Customs requires each non-document shipment to be accompanied with an Advance Export Declaration (AED).

The purpose of this regulation is to help boost Singapore’s standing as a secure and globally trusted trading hub.

The AED must be submitted to Singapore Customs before a shipment can take place. It is in the interest of the shipper to ensure that all the information required in the declaration be fully furnished so as to avert any delay due to non-compliance. There are  a number of questions in the AED such as:

  • Country of final destination
  • Country of origin by item
  • Sender’s Company Name
  • Item Description
  • Singapore HS Codes
  • Total FOB value of goods and currency
  • Item net weight (kg)
  • Item Quantity
  • Consignment Number
  • Receiver’s company name
  • Total gross weight (kg)
  • Total packages
  • Senders Full Address
  • Receivers Full Address
  • Delivery company full details

Air and sea shipments valued at under SGD1000 are exempted from the AED. Documents or goods that are exempted from permit requirements such as personal effects. Shippers should also note that the regulations governing exports to sanctioned countries and of strategic goods are not affected by the introduction of the AED.

Singapore Customs has provided a grace period of up to 30th September 2014 for companies to integrate the AED into their Supply Chain processes

More infromation about the AED can be founbd at the Singapore Customs website at www.customs.gov.sg

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