TNT Asia Expansion

TNT continues it’s expansion in the APAC region by creating Asia’s first integrated road network delivery service. The service will initially begin serving Malaysia, Singapore, and Thailand with plans to expand into China, Cambodia, and Vietnam over the next couple of years.

Said Michael Drake, regional managing director of TNT Asia: “From a customer’s point of view, I think the essence of it is we are now offering a choice. Maybe they can move things by sea freight, by air freight or express but no one is offering something in the middle – which is a fully integrated road network.

“So it is a choice, an alternative, which means they can re-engineer the way they move their goods.”

TNT says countries in Asia spend between 20 to 30% of GDP on logistics.

This is more than twice that in the US and Europe where logistics costs are typically under 10%.

And that has a lot to do with the utilisation of road transport.

“About 80% of European and American freight is moved by road, but in Asia that figure is only 20%. And as the region expands and matures, we’ll see a similar level – it may not reach 80% but certainly 40% to 50% of the freight will be going by road,” said Drake.

TNT has so far invested S$4 million in depots, trucks and other infrastructure to kick off the service.

Its vision is to build a 4,000-kilometre road network from Singapore to China, linking 120 cities.
Source- Channel News Asia

Seems like a very ambitious undertaking given the complexities involved in handling road freight in China.

Additional Hawaii Rate Increases

Following Matson Line’s lead, Horizon Lines has announced rate increases to Hawaii effecitve January 2, 2006.

The Charlotte-based shipping and logistics company says increases will vary depending on factors such as direction and transportation mode.

Shipments from the U.S. mainland served by truck will increase $125 per container. Rates for shipments from the mainland served by rail will increase $385 per container.

Rates from Hawaii to the mainland served by truck will increase $75 per container. Rates for shipments from Hawaii served by rail will increase by $335 per container.

Horizon, which went public in late September, says it needs the increases to offset higher barge and inland expenses, labor costs and capital spending on the company’s container fleet and terminals.

In addition, the company will increase its terminal handling charge by $60 per container for shipments to Hawaii and $30 per container for shipments from Hawaii. Source – Charlotte Business JournalAmerican

Quick News : Tuesday 29 Nov 2005

The U.S. Department of Transportation (DOT) released a report yesterday detailing the top 10 U.S. International Gateways in terms of value. Who was number 1 ? JFK International :

John F. Kennedy (JFK) International Airport in New York was the top international freight gateway by value in 2004, displacing the Port of Los Angeles, which was the top gateway in 2003, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS).

Here is the full list of the top 10 gateways :
1. JFK Airport, NY
2. Los Angeles, CA Seaport
3. Long Beach, CA Seaport
4. Detroit, MI (Land)
5. Ports of NY/NJ (Ocean)
6. Laredo, TX (Land)
7. LAX Airport, CA
8. Buffalo/Niagara Falls, NY (Land)
9. Houston, TX Seaport
10. Port Huron, MI (Land)

There is growing pressure from members of Congress and the public to do more about screening air cargo :

Only 900 Transportation Security Administration workers oversee private-industry security workers who screen a fraction of the 23 billion pounds of goods transported within the U.S. on passenger and cargo planes.

This “is a disaster waiting to happen,” said Representative Christopher Shays, a Connecticut Republican who’s co-sponsoring legislation to improve cargo security. “We’re checking luggage but not cargo? It only takes a pound or two of explosives” to blow up a plane.

More than four years after the Sept. 11 terrorist attacks, critics such as Shays, as well as industry groups, say mismanagement, a multibillion-dollar price tag and pressure from airlines and shippers are preventing the U.S. government from adopting stricter air-cargo inspection rules.

I believe that more needs to be done to screen air cargo that is put on passenger planes, but would have to agree with Andrea McCauley :

While the percentage of cargo currently screened is classified, examining every box and crate — some as big as 12 feet long and 8 feet high — would cost an estimated $3.6 billion over 10 years, said Andrea McCauley, a spokeswoman for the transportation agency. Most of this expense would be borne by airlines such as AMR Corp.’s American Airlines, freight companies such as United Parcel Service Inc., cargo-scheduling companies known as freight forwarders, and their customers.
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The transportation agency is aware it must tighten cargo security, McCauley said. “We know we need to do more,” she said. “We’re working on it.”
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Stephen Alterman, president of the Cargo Airline Association, a Washington-based cargo-carrier trade group, said companies were trying to help, not hinder, efforts for better security. “You can’t put a one-size-fits-all regulatory scheme on it,” he said. Alterman said his group supports an overhaul of the cargo-inspection system and the administration was to blame for the delays.

McCauley said the delays in beefing up security have more to do with the difficulty in screening different-sized packages carrying everything from frozen fish to machine parts and medical products without slowing down commerce. “It’s a monumental task,” she said.

Cargo theft is a growing problem everywhere in the world, but apparently Chicago is serving as a center for cargo theft.

Ok, so we have outsourced manufacturing to China and call centers to India. What’s next ? Outsourcing distribution centers :

There is a rush to build distribution centers (DCs) in China, following the recent massive manufacturing surge. But there may be one more important reason for this movement. The cost of warehouse workers in China is $2 an hour, while in the U.S. it’s $14 to $15 an hour.

Global shippers such as UPS (nyse: UPS – news – people ), FedEx (nyse: FDX – news – people ) and DHL are making big moves in China. DHL has 16 distribution centers there and is spending $110 million on its hub and sorting facility in Hong Kong alone. UPS Supply Chain Solutions, which has 40 DCs in China, is adding ten more this year.

These centers are located adjacent to major manufacturing centers and are often used to sort and directly ship a lot of merchandise that would ordinarily have been resorted on arrival in the U.S. Some retailers are even building their own centers and, as with Wal-Mart Stores (nyse: WMT – news – people ), these also serve to stock their stores in China.

Other retailers and manufacturers are not building their own distribution centers in China. They are using third-party logistics providers to process and sort those goods there.

“They are skipping a couple of steps in the supply chain and doing the same work at a fraction of the cost,” says Bill Zollars, CEO of Yellow Roadway. “The retailers can do the sorting by store in China. Their products can go into a shipping container and all the way to a store in Boise.”

Quick News : Friday 25 Nov 2005

The E.U. and U.S. are working to create an “open skies” deal to expand international competition in air travel :

But a final agreement hinges on a separate U.S. decision to relax current tight rules against European airline investment in U.S. airlines, which could result in a flow of new money into the ailing U.S. airline industry. For Europe, by far the most significant breakthrough was an agreement that would eliminate requirements that force European airlines to take off from their home country when going to the United States. British Airways could fly to Denver from Madrid, for example, adding to airline competition and giving passengers greater choice. The European Union would essentially become one country for the aviation world. John Byerly, U.S. deputy assistant secretary of state for air transportation, said the final document could take effect in time for the winter travel season in October 2006.
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Friday’s deal would allow much greater cooperation between the continents on airline security. U.S. and European security officials could visit airports on the other side of the Atlantic and work on ways to harmonize security rules. The aim is to make security more efficient for airports and less burdensome for the passenger.

A committee of U.S. and EU representatives would also be established to arbitrate disputes between countries and airlines on both sides of the Atlantic. The panel could deal with anything from complaints about routes being flooded to concerns that normal capacity restrictions are too tight. Unaffected would be U.S. agreements with carriers to provide aircraft for military movements in an emergency. Also unchanged are U.S. government rules requiring governmemnt employees to fly internatioinally on U.S. airlines whenever possible.

All of these changes, however, hinge on a decision by the United States on whether to change the law limiting foreign investors to 25 percent voting equity in a U.S. airline. The United States is planning to change a mass of interpretations of the law that have piled up to the point that foreign investment in U.S. airlines by non-U.S. carriers becomes so bureaucratic, burdensome and restrictive that non-U.S. airlines have sometimes withdrawn their investments.

In not-again-but-no-surprise-here news, France faces yet another rail strike by drivers of the state-run SNCF rail network, which is expected to disrupt travelers and commuters alike :

Four unions representing train drivers called the walkout to protest restructuring, job cuts, pay and what they see as creeping privatization of the train operator.

Transportation Minister Dominique Perben, hoping to defuse the conflict between labor and management, sought to quell fears among some unions that the rail operator could one day be privatized.

“I have emphasized my desire not to privatize the SNCF,” he was quoted in weekly Journal du Dimanche as saying. “Today, unions want a written confirmation — and I’m ready to give it to them.”

Perben said he would not yield on unions’ demands for an end to private-sector financing for new lines, saying that abandoning it would only stall development of the TGV network.

About 1,000 SNCF workers joined thousands of other public sector workers who marched in Paris on Saturday to protest against government efforts to privatize some public services.

Memphis has identified “biologistics” as a specialized, unique service to the biotech industry and recommends increasing its share of the “biologistics” industry :

According to the study presented to the Regional Logistics Council, 2005 annual sales of biomedical products in the U.S. is estimated at $294 billion, supported by biologistics services of $13.8 billion. By 2015, biomedical sales are expected to grow to $682 billion, which will necessitate biologistics services of $32 billion.

Currently, Memphis has an estimated 3.8% of the American biologistics services market, and researchers recommend the region should increase its share to 5.6% by 2015.
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Biologistics jobs are expected to pay more than logistics jobs and require more advanced skills.

“Packaging and shipping cell tissues is not like shipping refrigerator parts or even pharmaceuticals,” says Steve Bares, president and executive director of Memphis Bioworks Foundation, a non-profit organization dedicated to promoting biomedical technology.

The cost of biomedical products, the speed in which they need to be delivered, along with the federal regulatory guidelines their handling requires, make biologistics a highly specialized industry, he says.

“Biologistics was never thought of as a segment of its own,” Bares says.

He emphasizes that this is the first biologistics market study in Memphis and that more studies need to be done. However, this study shows there is enough potential in Memphis to make economic development efforts that will attract biologistics companies and departments to the region, Bares says.

Very interesting article, read the whole thing.

We have talked quite a bit recently on container line pricing, this article points out that most carriers’ customers have little knowledge about how the many surcharges are calculated :

The research, commissioned by the ELAA and undertaken by the Center for Maritime Economics and Logistics of Erasmus University Rotterdam (MEL), sought to ascertain understanding of and attitudes towards terminal handling charges among both terminal operators and shippers and consignees. It also reviewed with cargo owners the system of adjustment factors for currency and fuel costs.

“This part of the consultation process which we have initiated reveals uncertainty and divided opinions among the transport community,” commented Chris Bourne, ELAA executive director. “People just aren’t clear on how their interests can be best served in the future.”

According to ELAA, terminal handling charges, for long a contentious issue among shipper representatives, are not generally understood by cargo owners, their forwarder intermediaries or the terminal operators themselves, while their future treatment drew mixed views. Terminal operators favoured these charges becoming a part of terminals’ income and instituting direct dealings with cargo owners for recovery, but shippers resisted the idea.

Regarding currency and bunker fuel adjustment factors, the MEL study found “hardly any knowledge of how CAF and BAF surcharges are calculated”. There was not perceived to be much correlation with the underlying costs and shippers in particular felt the surcharges were “meant as an additional money maker for the lines”.

Forwarders apparently had fewer objections to the surcharges, though they were keen to see both surcharges and terminal handling charges included in the ocean freight, on which they traditionally are paid by commission.

I have long complained about the laundry list of surcharges that accompany any freight bill from the steamship lines. Often, the long list of surcharges can add up to cost more than the oceanfreight charge itself.

Here is yet more evidence to support my contrary view that, despite ever larger vessels coming on line in the next 2 years, container line pricing will rise, not fall :

The Transpacific Stabilization Agreement carrier group said in a statement Monday that its members would add at least $150 per 40-foot container for shipments to the U.S. West Coast, $350 per container to inland destinations and $400 to East Coast ports.

The freight rate increases do not include fuel, terminal handling, Panama Canal transit and other costs covered by separate charges.

TSA said bookings indicated a strong demand in December and January ahead of the Chinese New Year, with carriers expecting continued strong traffic growth in 2006. Its lines will retain a $400 per container peak season surcharge next year, effective from mid-June to the end of November.
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TSA is a grouping of 12 liners in trans-Pacific trade. Its members include Taiwan’s Evergreen Marine, Singapore’s Neptune Orient Lines, Germany’s Hapag-Lloyd and Nippon Yusen of Japan.

It predicted earlier this month that U.S. inland rail and trucking costs could rise by 25 percent next year, while the cost of returning empty containers to ports could rise by 11 percent.

Organisations such as the TSA and its counterpart covering the Asia-Europe route, the Far Eastern Freight Conference, do not agree on container freight rates but look at factors such as economic conditions and fuel prices and then recommend price adjustments at regular intervals.

Emirates Sky Cargo is offering expanded service to New York :

With the launch of Emirates’ double-daily service to New York, the multi-award winning Emirates SkyCargo will now serve the city with twice the existing belly-hold capacity. The new service will pump up Emirates SkyCargo’s capacity to New York from 330 tonnes to 435 tonnes, an increase of more than 30 per cent. Emirates SkyCargo now serves the city with twice-weekly Boeing 747 freighter services offering a total capacity of 225 tonnes; and belly-hold capacity in the double-daily Airbus A340-500 aircraft that has a capacity of 15 tonnes.
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The new service is expected to considerably boost Emirates SkyCargo’s transport of time-sensitive consignments to New York. The night flight from Dubai allows the cargo division to carry mail, parcels and courier packages from integrators and post offices at the end of the working day from around its route network in the Middle East, Indian subcontinent, Far East, Australasia and Africa. The flight arrives in New York in the morning, the shipments ready for onward delivery to companies and customers on the same day.

Emirates SkyCargo launched its successful service to New York more than two years ago, in September 2003, with a Boeing 747-200F freighter. With demand growing multi-fold, it added a Boeing 747-400F freighter service on the route in November 2003, and in June 2004 it launched belly-hold services in the airline’s daily services with the A340-500.

In the much hyped OffPeak program at the ports of Los Angeles/Long Beach, no one seemed to bother wondering if the drivers would mind working late night hours and being away from their families :

At a time when record imports are pouring in from Asia, the truckers who work the largest U.S. seaport complex say they are struggling because of the strain of longer work hours and the pain of high diesel prices. With truckers in short supply nationwide, a steady loss of experienced drivers could threaten the ports’ recent return to smooth operations, some warn.

OffPeak, the program to push port traffic away from peak daylight hours to reduce congestion, wasn’t designed to make port work more lucrative for drivers, who don’t receive extra pay for night hours. Officials had hoped that it would shorten the lines into the port, providing more loads per shift.

Short-haul port drivers like Gutierrez occupy the bottom rungs of the trucking industry, lacking the higher incomes and union clout of long-haul truck drivers. Usually independent owner-operators, they can afford only the oldest, least fuel-efficient and most polluting trucks.

The average port trucker will earn $50 for moving a loaded container to or from the port and $35 for an empty one. A typical haul will include both a pickup and a drop-off, so, on a good night, a driver can collect $340 in gross income.

But most nights aren’t trouble free and drivers say that they can face delays when a paperwork snafu interrupts a haul. And there are other hardships.
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No one knows exactly how many drivers have stopped working the ports. An informal survey by the Marine Exchange of Southern California, which tracks ship movements at the ports, found that hundreds had thrown in the towel during the worst of the congestion in 2004.

Several of Gutierrez’s friends have quit. Some work in the construction industry. Others have taken jobs at supermarkets. None of them, he said, misses the ports.

Bob Curry, president of California Cartage Co. of Wilmington, said that he employed two full-time employees who do nothing but recruit drivers to maintain a pool large enough to keep cargo rolling, something he would never have dreamed of having to do just a few years ago. More disturbing, Curry said, is that the drivers he managed to find all come from other trucking companies.

“No one is going out and buying a truck with the idea of working at the ports,” Curry said.

Bruce Wargo, chief executive of PierPass, a nonprofit organization set up to administer the OffPeak program, said that the ports had successfully navigated most of the busy holiday shipping season. But he acknowledged that the thinning ranks of port drivers was worrisome.

“Historically we have always looked at drivers as a part of the process that is necessary and that would always be available,” Wargo said. “The fact that they are leaving the industry should cause us quite a bit of concern.”

It’s already a pain to find available trucks for hauling containers in Los Angeles, the steady decline of available drivers will only add to the problems and delays in getting containers out of the ports.

Dubai is planning to make Jebel Ali the world’s largest airport.

This is just embarrassing. Air Zimbabwe has grounded its national airline due to a lack of fuel :

Hundreds of passengers were affected and calls to Air Zimbabwe at the Harare airport went largely unanswered late on Monday.

The vice-chairman of the Air Zimbabwe board, Jonathan Kadzura, issued a brief statement apologising to customers and pledging “full commitment to address the critical operational issues affecting service delivery for the national airline”.

Furious passengers in both the domestic and international sections of the airport were unable to find out whether they would be accommodated on other airlines for foreign destinations, or whether Air Zimbabwe would resume operations.

Earlier this year Air Zimbabwe introduced flights to Dubai, Singapore and China as part of President Robert Mugabe’s new Look East policy. One flight to Dubai attracted just one passenger on a 200-seat aircraft.

Top executives and board members are regularly sacked from Air Zimbabwe, accused of incompetence and corruption.

Is it really any surprise ? Just another embarrassing news item for Zimbabwe.

We’ve talked before about theft problems in Kuala Lumpur International Airport, now authorities are ordering forwarders to increase security :

After 14 cases of theft at the Kuala Lumpur International Airport cargo village this year, Malaysia Airports Holdings Berhad wants the 300-odd freight forwarders to hire security guards to help them secure the village.
“The move is not only to serve as a deterrent but also ease the burden placed on MAHB,” said Malaysia Airports (Sepang) Sdn Bhd general manager Azmi Murad.

“The freight forwarders are taking the call positively as it will be for their own good as they can readily keep an eye on their goods which are worth millions of ringgit.

“They will provide a backup service to the overall security provided by us,” Azmi told reporters after the passing out parade of 168 security assistants at the Bunga Raya complex today.

Malaysia Airports, Azmi said, would continue to conduct surprise spot checks and carry out drills to enhance security at KLIA.

Uh oh. Thanks to the “successful” implementation of extended hours at the ports of Los Angeles/Long Beach, Vancouver is now talking about implementing a similar program there to reduce congestion :

“Extending gate hours will not only increase capacity, it will help alleviate congestion at the terminals, which will also speed up transaction times,” said Captain Gordon Houston, President and Chief Executive Officer of the Vancouver Port Authority. For this initiative to be successful the port will have to work closely with all stakeholders, including local municipalities and the provincial government. “Extended hours of operations will also make more efficient use of the region’s road networks, by spreading truck traffic over a longer period, reducing congestion during traditional peak times, while also reducing emissions,” said Houston.

The recent ‘Task Force Report on Transportation and Industrial Relations in the Ports of Vancouver’ identified congestion at truck gates as a significant concern shared by the ports, terminal operators, truckers, trucking companies and shippers. The report stated: “The implementation of regular extended truck gate hours at container terminals has emerged as the single most effective method for reducing delays for trucks accessing the terminals.”

Just be sure to talk to the drivers too guys.

Thailand and Singapore expect to boost trade between their countries under plans for a “strategic partnership roadmap” :

Thailand and Singapore expect to double bilateral trade and investment under a “strategic partnership roadmap” over the next five years.

The spur for growth would be new incentives and programmes developed through the Singapore-Thailand Enhanced Economic Relationship (Steer), Deputy Prime Minister Somkid Jatusripitak said yesterday.

The two countries yesterday signed seven agreements leading to some three billion baht in additional investment in the IT, software, electronics, auto parts, transport and logistics sectors.

As well, the two sides plan to develop roadmaps on trade and investment in addition to tourism, education, real estate and the capital market to accelerate economic value as planned.

Liberalising trade, removing barriers, offering special investment incentives and setting mutual standards will be the main focus.

Last year, bilateral trade between Thailand and Singapore was worth US$11 billion, and investment $600 million.

France wants to add taxes to airline tickets to combat poverty in the world :

If approved by parliament, the tax would be levied starting July 1, 2006. The first funds would go toward fighting pressing problems including AIDS, President Jacques Chirac told Cabinet ministers.

Airlines, including France’s national carrier Air France, have said the measure would hurt business as well as tourism — a large source of revenue in the developing world.

The levy would apply to tickets for departures from France, adding a $1.17 tax to economy class tickets within Europe and $4.70 for travels outside European airspace. France estimates the measure could raise $234 million a year.

The head of the National Federation of Freight Aviation, Jean-Pierre Le Goff, said the tax could scare off 600,000 to 1 million clients and affect 3,000-4,000 jobs.

Despite the misgivings, the solidarity tax is expected to win final approval by the end of the year, as Chirac’s party has a strong parliamentary majority.

France — which hopes its national program will prove the bill could work on a larger scale — is among the countries that has made the case at the United Nations for a similar program at the international level. The United States has opposed the idea.

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