China Report: International Freighting Weekly

International Freighting Weekly has a 3-part China Report available online at its website. It can be accessed here.

The report is divided into 3 sections:
1. “The cost of the China way of doing business”

The sector is also stretched to breaking point. The total handling capacity of China’s coastal ports is already more than a billion tonnes and increasing quickly – but not quickly enough.

Speaking in January, Shen Yihua, vice-director of the commerce ministry’s Waterway Transport Planning Institute, said China could not expand port facilities quickly enough to meet rising demand. In 2005, the turnover capacity of coastal ports was officially 2.5bn tonnes, but 3.4bn tonnes were actually handled.

2. “Painting the Economic Future”

Worries linger over the policy measures China has in place to keep such perceived “excesses” under control. The surging trade surplus may lead to rising tensions with China’s trade partners, Oxford Economics warns.

GDP growth was reported to be stable at close to 10.5% in the second half of 2006, easing back from a Q2 peak of 11.5%. “This 10%+ growth looks unlikely to change in 2007, or 2008, ” says the company’s overview.

3. “Carriers must get the balance right.”

These concerns are heightened by this winter’s relatively weak peak season out of the Far East, including China. A regional air freight director of one top-five forwarder describes this winter season from the Far East as a “blip” rather than a peak, and a number of carriers and forwarders have warned that air freight has lost traffic to ocean freight, in part due to improvements in logistics and forecasting processes by shippers and forwarders and improvements in service levels from shipping lines.

Read the whole thing.

Profiles of Asian supply chains

World Trade magazine has a handy article this month profiling Asian supply chains. As the title suggests, they list the ins & outs of a number of Asian origins, including Singapore, Thailand, Vietnam, Malaysia, and Indonesia.

In the pursuit of lower costs and increased margins, many companies have looked to Asia for product sourcing. Yet, low cost labor doesn’t always translate to low cost goods if a company ends up scrambling to meet delivery timelines. For businesses looking to source offshore, be it Asia or elsewhere, a realistic assessment of the logistics market conditions needs to been undertaken.

“Besides price, consideration needs to be given not just to the local expertise and capability of the service provider, but also the extent of the network from Asia to the rest of the world. Logistics is largely a network game, and each node within the Asia Pacific network serves a critical role in determining the strength, versatility and scalability of the entire chain,” says Karl-Heinz Matthes, CEO, Schenker Asia Pacific.

Also included are a couple of handy sidebar articles on China, one titled “Importing, Exporting, and Investing in China”, by Alfred Ho:

China has substantial infrastructure challenges and any company seriously considering doing business there needs to closely inspect and rationalize the structural conditions for impact on their business. For example, there are differences in rules and regulations between regions that are constantly changing with the legal and judicial systems quite different and not as developed as in the U.S. The same is true for the accounting, banking and logistical systems such as ports, roads and rail.

and a profile on Zebra Technologies efforts in China.

The next big thing in Logistics

What is the next big thing in logistics? Having been in the logistics industry for quite sometime now and having seen some major strides (but nothing earth shattering) over the past few years, this is a question that I constantly ponder.

According to an interview on Forbes.com by Robert Malone and Adrian Gonzalez; Adrian mentions that he believes the next big thing in logistics will center around solving data quality issues.

It is solving the data quality issues that continue to plague most companies, a problem that will only get worse if companies don’t address it seriously today. Whenever I ask companies what was the most difficult or time-consuming part of a software implementation process, “Collecting and cleaning up the data” is almost always the answer I receive. And when companies fail to achieve the expected benefits from a software application, poor data quality is often the culprit. These answers haven’t changed in the eight years that I’ve been with ARC, which is very discouraging.

I found his thoughts interesting on the topic of what he believes has been the biggest thing to happen to logistics industry. Even though we have seen some major developments over the past few years, he believes that the biggest thing to impact the logistics industry was the invention and standardization of the shipping container by Malcolm McLean.

The impact on port productivity in the decades that followed was dramatic. Simply stated, global trade as we know it today would not be possible if the time to load and unload a ship was still measured in weeks instead of hours.

Hard to argue with that. If you are interested in learning more about the history of the ocean container, I would suggest picking up a copy of the “The Box – How the shipping container made the world smaller and the world economy bigger”.

Follow this link for the entire Robert Malone interview.

Top Cargo Airports in Asia

Here is a link to a list of the top 11 cargo airports in Asia. No surprise that HKG holds the top spot in Asia and the number 2 spot worldwide after tonnage increased 5.3% in 2006. The airports with the largest percentage increases are Shanghai (16.3%) and Beijing (32.9%).

Any bets on how many years it will take SHA to overtake HKG as Asia’s top cargo airport?

Source – Air Cargo World

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