LSCMS Blog

Apple is rumored to have a $799 MacBook Air in the works and you can thank the company’s supply chain clout should that price come to pass.

In the end, Apple’s pricing has everything to do with its supply chain. MacBook Air rides with solid-state storage and Apple has those supplies locked up. After all, the iPad, iPhone and iPod Touch use a lot of Flash supply. Meanwhile, Apple can call its shots with screens too.

It’s quite possible that Apple is just passing along some of its savings on the MacBook Air bill of materials. In any case, a less expensive MacBook Air is going to squeeze the ultrabook market.

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A Qantas flight between Sydney and Adelaide on April the 13th used a 50-50 mix of conventional fuel and refined cooking oil. The biofuel costs far more than conventional fuel, partly due to its importation from the United States but Qantas says it is absorbing the one-off cost because it is keen to highlight the need for an Australian biofuel source, at a time when airlines and passengers around the world are dealing with high jet fuel and carbon emission costs.

John Valastro of Qantas says the flight is a commercial first in Australia. “It’s actually really significant because it’s the first commercial flight to be powered by sustainable aviation fuel in Australia and that’s a big step for this country,” he said. He says the flight will produce far less carbon emissions than if conventional jet fuel were used. “We’re talking about a 60 per cent reduction in the overall life cycle of the fuel, so that’s a substantial improvement,” he said. The biofuel component of the fuel used for the flight is from refined cooking oil.

Biofuels are sometimes criticised for cutting into potential food supplies but Qantas says it has used a product that is not a food crop. The oil came from and was refined in Houston before it was shipped to Australia. It has cost more than four times an equivalent flight using normal fuel, partly because of the shipping distance involved. Mr Valastro went on to say that passengers are not paying a surcharge. “We’re actually using this opportunity to highlight what needs to be done, getting people on board,” he said.

Aviation industry analyst Tom Ballantyne says Qantas and other airlines want governments to invest in the biofuels push. “We know we can make them, we know they’re exactly the same as jet fuel and have absolutely no impact on the operation of the aircraft,” he said. “The trick is making enough and building the infrastructure to provide that. “What is actually needed is money. A lot of the big airlines’ argument is that governments should invest money in the refineries which are required to produce these biofuels. They argue that very strongly, but so far many governments have been a bit slow in coming forward.” The hope is that biofuels will eventually cost about the same as current jet fuel. Peter Zurzolo heads the Future Farming Co-operative Research Centre. At Narrogin, south-east of Perth, he and others are trialing whether the common mallee eucalypt is a viable biofuel source. “Not only is it a common tree but it’s well understood. In WA alone, we know there’s about 13,000 hectares on about 1,000 farms,” he said. “We’re providing what we’re hoping is a long-term sustainable and regionally-based feedstock supply that can be competitively grown into different processing units, hopefully around regional Australia,” he said.

In a country already plagued with high costs, trucking operators will pay almost 7 cent more for diesel from July 1, 2014 under the Federal Government’s carbon tax package.

Unveiling the reform recently, Prime Minister Julia Gillard announced that the trucking industry would be exempt for two years when the tax begins on July 1, 2012.

The scheme will begin at $23 per tonne of carbon, rising to $24.15 the following year and $25.40 in July 2014 before moving to a market-based emissions trading scheme in 2015.

The $25.40 tax will increase diesel prices by 6.85 cents through a reduction in the fuel tax credit rate, which will continue to decline as the cost of carbon increases.

Once implemented, trucking potentially faces a double whammy on diesel prices from July 2014 because the fuel tax credit is reduced at the beginning of each financial year to account for government expenditure on the road network.

These costs could be further compounded by higher wages as CPI will move upwards as cost of food and other items will increase. Overall sad news for the competiveness of Australia’s trucking industry.

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.

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

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.