LSCMS Blog

Maersk Line is testing algae-based biofuels to see if they are successful as a means of cutting emissions from a vessel. The testing will be on a shipping route from northern Europe to India.

The Maersk Kalmar container ship will be making a 6,500 nautical mile, month-long voyage, and will be testing different blends of biofuels in its auxiliary test engine.

During the journey, it is expected that the Kalmar will use up to 30 tonnes of biofuel. Onboard engineers will analyse emissions data on nitrogen oxides, sulphur oxides, CO2 and particulate matter, along with effects on power efficiency and engine wear and tear. The tests are scheduled to conclude this month with results following soon after.

Commncing Monday 20th February, the Logistics & Supply Chain Management Society will be featured on Channel News Asia’s, Invest In Me show that airs at 8.30 p.m. Singapore time with repeat telecasts being shown throughout the week. Episodes can also be downloaded from the Channel News Asia website.

In this programme, the Society shows its support in helping social enterprises in the region by providing Logsitics advice and hands on expertise to an events company with Logistics issues. Follow us as we make this journey with the Society’s President, Raymon Krishnan and other individual and corporate members towards resolving some of the common Logistics issues faced by SME’s.

In line with what most MLO’s are doing, Singapore Neptune Orient Lines (NOL) has announced that its container shipping arm, APL, will begin phasing out its US fleet of container chassis during the first half of 2012.

The carrier is expected to complete the disposal of the fleet by 2014, a statement said.
Chassis are the skeletal truck trailers used to haul shipping containers over the road. The shipping line said it will turn its fleet over to organisations that specialise in providing chassis to drayage companies.

“This is the direction the container shipping industry is moving,” said Americas president Gene Seroka from the company’s US headquarters in Scottsdale, Arizona. “By relying on providers who specialise in chassis management, equipment is deployed more efficiently.”

Disposal will begin with a pilot programme at terminals in Denver and Salt Lake City, which could begin as early as March. Chassis will be phased out at most of the company’s inland terminals by the end of this year, then extended to US east coast seaports in 2013, and is expected to be completed nationwide by early 2014.

Amazon is opening a 1 million-square-foot fulfillment center in Middletown, Delaware, which is the e-commerce giant’s second facility in the state. Amazon says that the new center will create 850 full-time jobs, and will cost $90 million.Amazon’s fulfillment centers enables the company and third-party merchants to store inventory and fulfill orders.

The Middletown center joins Amazon’s New Castle fulfillment facility, which was opened in 1997. Amazon says that the New Castle center currently employs “hundreds of full-time workers,” but it sounds like the new facility will be larger.

The Middletown facility is expected to be complete this fall. In December, the Delaware Economic Development Office awarded the company $3.47 million from the Delaware Strategic Fund to support the expansion, of which $2.12 million will help create new jobs at the site. The fund will also contribute to the company’s infrastructure investment, equal to 3 percent of the total capital expenditures, or a maximum of $1.35 million. A separate grant for up to $4 million from the Delaware New Jobs Infrastructure Fund will be used to build extensions of public roads to serve the project, improve traffic flow and provide access to additional properties for future economic development. Amazon will also benefit from a real estate tax abatement from the town of Middletown for the next 10 years.

Amazon has been ramping up the development of its fulfillment centers over the past year. In 2011, the e-commerce company opened 15 new centers worldwide. As of last July, Amazon had roughly 65 centers worldwide. And this year, the company opened a new center in India and in South Carolina.

Reports out of Europe are stating that Netherlands-based TNT NV, a provider of mail and courier services and the fourth largest global parcel operator, rejected an offer by UPS for TNT’s express business.

Bloomberg reported that the unsolicited bid was for $6.43 billion ($4.89 billion euros), which is 42 percent above TNT’s stock price. The report said that this offer was turned down by TNT’s board, citing a company statement, which added that the companies still remain in discussions.

UPS officials confirmed in a statement that in February 11, following discussions with TNT, it made a revised, increased and comprehensive proposal to acquire the entire issued share capital of TNT for EUR9 per share in cash.

Like TNT, UPS confirmed that the discussions between the companies remain ongoing, although there is currently no certainty that any agreement will reached. UPS added that further details will be provided when appropriate.

These developments represent a change of heart for UPS to a degree. In December 2010, shortly after TNT first announced its plans to sell off its Express unit, it indicated it would not be a potential buyer of the unit.

UPS Chief Financial Officer Kurt Kuehn told a German newspaper, the Boersen-Zeitung, at that time that the UPS did not intend to make any large acquisitions in the future. But he did say that the company may be more inclined to focus on small and medium-sized acquisitions in Europe rather than buying TNT’s Express unit.

Using DPWN DHL as an example, Kuehn explained that expanding too quickly into a region—as DPWN DHL did when DHL Express acquired Airborne Express in 2003 to establish a U.S. domestic presence—can be dangerous. DHL Express eventually pulled out of domestic operations in the U.S., due to severe financial losses and facing myriad challenges keeping up with the more established and larger UPS and FedEx.

In December 2010, TNT announced its plans to it plans to “demerge” operations by separating its Express and Mail operations into two independent companies, effective January 2011. Company officials said that the main reasons for an internal separation were the increasingly divergent strategic profiles of the two units and the limited existing synergies between them.

In May 2011, TNT NV’s shareholders approved the spin-off of its Express unit. As a result of this initiative, TNT NV said it would demerge Express and only focus on Mail activities, and will retain a 29.9 percent financial stake to cover separation agreements, which will be returned to shareholders.

Industry pundits all agree that the deal is not dead yet and look forward to further developments to be announced.

VietJet Aviation Joint-Stock Co., the budget carrier that began flights in Vietnam last month, may double its fleet to six planes by the end of the year as it lures passengers from bus trips taking as long as 40 hours.

The carrier’s 122-seat Airbus SAS A320s are 90 percent full on its first route, Ho Chi Minh City-Hanoi, said Chief Operating Officer Pritam Singh. The average fare including taxes is 1.03 million dong ($49) one way, according to the airline. That’s about 25 percent less than the cheapest ticket offered on Vietnam Airlines’ website.
VietJet also intends to challenge the state-owned carrier on international services as soon as the third quarter as an economic growth rate that the government expects to reach 6 percent this year spurs travel demand. The number of Vietnamese living in poverty declined to about 11 percent in 2010 from 58 percent in 1993, based on U.S. government figures.

“The market for a budget carrier has to be developed, but it’s there — if they have enough capital and run a good marketing campaign,” said Paul Stoll, who helped set up the Vietnam Tourism Association and is the chief executive officer of Celadon International Hotel Management Joint-Stock Co. Still, “it will be tough.”

On the Ho Chi Minh City-Hanoi route, a VietJet flight takes about two hours compared with 30 to 42 hours by rail and 34 to 40 hours by bus. A one-way rail trip in mid-February costs 486,000 dong for a hard seat, according to the website of the Hanoi train station. The cheapest ticket on a bus operated by Vinamotor Investment Joint-Stock Co. is about 400,000 dong.

“Many people think an airplane has to be expensive, and that a bus will be much cheaper,” said Singh on Jan. 27 by phone. “We are trying to reach out to this segment, to introduce the idea of using an airline instead.”

VietJet also intends to start services by April to Danang, the biggest city in central Vietnam.

VietJet flies from Hanoi to Ho Chi Minh City three times a day. Other operators on the route include Jetstar Pacific Airlines Joint- Stock Aviation Co., a Vietnam Airlines-Qantas Airways Ltd. venture, and closely held Mekong Aviation Joint-Stock Co.

As the carrier expands overseas, possible destinations may include Singapore, Kuala Lumpur or Bangkok, Singh said.

The airline, which has leased planes from Kuwait-based Aviation Lease & Finance Co., expects to be profitable by 2014 and it may list on Ho Chi Minh City’s stock exchange within the next few years, Singh said. Losses before the carrier breaks even are expected to exceed $10 million, he said.

The government procurement process is once again under scrutiny with the current cases involving former Singapore Civil Defence Force (SCDF) Commissioner Peter Lim and former Central Narcotics Bureau director Ng Boon Gay.

Both cases are allegedly linked to tenders awarded to a company that supplies IT-related products and services to several government agencies.

However, the Ministry of Finance assured the public that there aren’t any issues with the procurement rules and guidelines for the public sector.

“The review affirmed the public sector procurement rules and guidelines were fundamentally sound,” a spokesperson told TODAY newspaper a Singapore daily.

He added that government agencies are required to put in place adequate internal controls and segregation of duties when appointing officers to carry out procurement function.

Despite this, some agencies have tightened their procurement the rules and guidelines set by MOF.

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.

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.

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