LSCMS Blog

The ports of Singapore and Shanghai are again neck and neck for the world’s top container port title with the latest first quarter figures putting them each at 7.5 million TEU.

Singapore had the title until 2010 when its container throughput was eclipsed by Shanghai’s. But in March alone, Singapore’s box volumes reached 2.6 million TEU, compared with 2.5 million TEU in the corresponding month last year.

Shanghai container volume in the first quarter was slower year on year, according to the Shanghai International Port Group (SIPG), which did not divulge comparative growth figures.

Chinese shipping industry officials have warned of slowing box throughput at Shanghai port this year, forecasting that turnover in the world’s largest container port will be hurt by sluggish trade because of the European debt crisis, weak overseas demand and the development of alternative ports in China.

Although rumours have been circulating over the future of US-based global forwarder BDP International, the company has moved quickly to deny it is up for sale. A news story had earlier appeared on Reuters quoting a source close to the company as saying it was looking for a buyer.

However, the Philadelphia-headquartered company has issued a rebuttal, saying that BDP’s ownership, the Bolte family, believes in the company’s future and is exploring opportunities with private investors to raise capital. The statement went on to say that it was seeking additional funds that would enable it to build on its technology and expand its global presence. BDP has revenues in the region of $1.6bn.

Management commented that, “The infusion of capital through outside investment is a normal course of activity for privately owned companies. In essence, our owners are working to make BDP a stronger and even more effective force in the international logistics sector for our customers. BDP will continue to be owned and operated by the Bolte family and incumbent management team.”

Over the past couple of years, BDP has followed a strategy of expansion, developing a presence in key emerging markets as well as in Europe. It positions itself as a specialist in the chemical industry, and on the back of the sector’s development in markets in Asia and the Middle East, it has established a series of joint ventures and partnerships; including in India, Bahrain and Vietnam. Over the last 6 – 12 months BDP has seen quite a high number of senior management changes in it’s Asia Pacific operations.

The company has preferred an asset-light, low risk approach to global growth, seeking to build partnerships with established local companies, rather than to develop its own operations. Despite this, BDP has not totally eschewed acquisition, buying companies in Germany, France, Belgium, Spain and the UK in the past decade.

Mergers and acquisitions activity in the transport and logistics industry is recovering following the Eurozone crisis in 2011. According to Thomson Financial, deals in the first quarter of 2012 were at a higher level than at any point in 2011. With balances high and a more certain economic environment predicted, further consolidation in the express and logistics industry is likely.

Apple and Microsoft have lodged a patent war against Google’s Motorola Mobility, resulting in the European Commission launching two antitrust investigations.

Apple and Microsoft has accused the American telecommunications company of blocking product competition with the unfair use of its patents. Both tech giants alleged that Motorola is abusing its market position by filing lawsuits against them, AFP reported.

Microsoft and Apple accused Motorola Mobility of not being fair, reasonable and non-discriminatory in licensing its standard essential patents on competitors.

The European Commission has since acted on these accusations, opening two formal investigations on Motorola to check if it has indeed abused its dominant market position by violating competition rules.

In a press statement, the Commission said it will investigate Motorola “by seeking and enforcing injunctions against Apple’s and Microsoft’s flagship products such as iPhone, iPad, Windows and Xbox on the basis of patents it had declared essential to produce standard-compliant products.”

“The commission will assess whether Motorola has abusively, and in contravention of commitments it gave to standard-setting organisations, used certain of its standard-essential patents to distort competitions,” it added.

A similar investigation was conducted with Samsung in January this year

The Logistics Society will this year once again be a supporting organisation of LogiChem Asia.

LogiChem Asia is the only event specifically for those working in the chemical supply chain area. Featuring over 250 attendees, 70 speakers, 14 hours of roundtables and five streams, LogiChem Asia is the only event around able to give you the in-depth chemical specific supply chain analysis you need.

Eddy Setiawan, President, South East Asia of Dow Chemical will open our focus day on sustainability and discuss how sustainable supply chains impact directly on your bottom line.

LogiChem Asia will also devote individual roundtables to China, India, Vietnam, Indonesia, Singapore, Thailand and so much more.

The entire Asian chemical logistics supply chain will be here. A few speakers are listed below, for more check out our website www.logichemasia.com.

· Eddy Setiawan, President, South East Asia, Dow Chemical

· Berthold Alfes, Managing Director and Senior Vice President of Supply Chain Center APAC, Bayer MaterialScience Ltd

· Mary Scheibner, Global Supply Chain Director, BASF

· Adam Balarin, Vice President, Supply Chain, Unilever Vietnam

South Africa’s Competition Commission has fined Singapore Airlines ZAR25.1 million along with South African Airways ZAR18.8 million (US$2.35 million) for price-fixing on routes between Johannesburg and Hong Kong.

The fine settles another investigation into South African Airways, which was accused of collusion over domestic fares and international freight rates during the 2010 football World Cup, citing a statement from the anti-trust authorities, reported Agence France-Presse.

“SAA has offered its full cooperation to the commission in its ongoing investigations and prosecution of both the matters,” the statement said.

“Similarly, Singapore Airlines undertook to do the same with regards to the Far East matter.”

No separate ruling was made against South African Airways in the World Cup enquiry, however, the Competition Commission was cited as saying that the fine will settle the matter.

Amazon.com, Inc. has announced that it has reached an agreement to acquire Kiva Systems, a developer of mobile-robotic solutions that automate eCommerce order fulfillment and warehouse operations.

“Amazon has long used automation in its fulfillment centers, and Kiva’s technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow,” said Dave Clark, vice president of global customer fulfillment for Amazon.com. “Kiva shares our passion for invention, and we look forward to supporting their continued growth.”

“For the past 10 years, the Kiva team has been focused on creating innovative material handling technologies,” said Mick Mountz, CEO and founder of Kiva Systems in a statement. “I’m delighted that Amazon is supporting our growth so that we can provide even more valuable solutions in the coming years.”

Following the acquisition, Kiva Systems’ headquarters will remain in North Reading, Mass.

Under the terms of the agreement, which has been approved by Kiva’s stockholders, Amazon will acquire all of the outstanding shares of Kiva for approximately $775 million in cash, as adjusted for the assumption of options and other items. Subject to various closing conditions, the acquisition is expected to close in the second quarter

UPS has agreed to pay US$6.77 billion in cash to acquire TNT Express about one month after TNT Express shareholders rejected UPS’ earlier offer of $6.4 billion.
The offer would create a per-share price of slightly less than $12.50. But the deal is subject to approval from European anti-trust regulators, reported Rosewell, Georgia’s Air Cargo World.

“The combination of UPS and TNT Express will create a global leader in the logistics industry, with annual revenues of more than EUR45 billion [US$60 billion] and will deliver significant benefits for the shareowners, customers, employees and other stakeholders of both companies,” said UPS.

The deal has been approved by the supervisory and executive boards of TNT Express and PostNL, with the latter agreeing to tender its 29.8 per cent stake to UPS.

The deal is expected to help UPS gain a bigger share of business outside the US as 36 per cent of total group revenues will be generated outside the US, up from UPS’ current 26 per cent.

UPS said it will finance its offer with $3 billion in cash from its balance sheet and the remainder will come from new debt arrangements.

UPS expects its acquisition to boost profits in the first year and realise annual pretax cost savings of between $525 million and $725 million by the end of the fourth year after the deal is closed.

The combined company will control about 17.3 per cent of the European express market, placing it just behind Germany’s DHL Express.

In a great marketing coup, TNT has launched in Hong Kong two 3.5-tonne electric delivery vehicles, making the company the first player in the territory’s express market to have electric vehicles in operation with “zero emission” as the most significant feature of the electric cars.

“As a good corporate citizen, TNT is working together with customers, suppliers and subcontracts to continuously improve our overall CO2 efficiency to fight against climate change,” said TNT China express chief Peter Langley. “We are proud to play a leading role in spearheading electric vehicles in Hong Kong.”

TNT’s current project is being supported by the Pilot Green Transport Fund under the Hong Kong Government’s Environmental Protection Department (EPD).
“We applaud the Hong Kong Government’s Environmental Protection Department (EPD) for providing support to TNT to trial electric vehicles in the territory,” added Edward Lau, managing director of TNT Express Hong Kong.

“The transport sector can make a significant difference by adopting new technology to reduce carbon emissions and roadside air pollution. We hope that TNT’s innovative initiative will inspire other companies to follow suit to do their part to improve Hong Kong’s air quality,” said an EPD statement.

Steep increases in freight rates and surcharges by shipping lines on key trade lanes are forcing Vietnamese exporters to suffer profit loss, reports VietNamNet Bridge news agency.

As of March 1 container rates will increase by more than US$500 per TEU in freight for those containers to the Middle East, an increase of $400 more from April 1. Rates for freight to America will increase by $300 per TEU from March 15 and $400 per TEU from May 1.

Hapag-Lloyd has raised its shipping fees for routes to South America by $600 per TEU and routes to Panama and Caribbean by $560 per TEU and $800 per FEU. Hong Kong’s OOCL will increase its rates $600 per TEU on its routes from Vietnam to North European and Mediterranean countries along with CMA CGM, Maersk and NYK increasing rates by $800 per TEU to $1,000 per TEU.

Crippling freight rates are biting into profits for exporters of fresh fish companies like Hung Vuong Seafood Company already paying as much as $10,400 in additional costs for 13 containers of its frozen tar fish products shipped to Europe, America and South America on a monthly volume of 500 TEU.

This works out as a shocking $800 to $1,000 per container in fees which adds to per kilo costs for the tar fish products, said its general director Duong Ngoc Minh, the news agency reported.

Port fees on services and surcharges are up, accounting for 70 per cent of a sum for one garment business with more costs loaded on trailer transit from port to factory from March 10 at VND200,000 (US$9.60) to VND300,000 per trailer.

Since February we have seen a number of carriers embarking on RRP’s (Rate Restoration Programmes) and GRI’s (General Rate Increases). The feedback from shippers have understandably been negative but the response from carriers have been that current rates, given increased bunker and operating costs is untenable to long term operations.

What will happen next is hard to say. The indication is that we can expect to pay more for Asia Pacific origin cargo from March along these lines

• Asia – India – $150 – $300 per container
• Asia – Australia – $300 – $600 per container
• Asia – Middle East – $50o per container
• Intra-Asia – $50 – $100 per container