DHL chooses Shanghai over Inchon

Via All Roads Lead to China:

Over the last few years, much has changed in China, and the express carriers have been no exception. to date, I would have to say that FedEx’s move of buying up their remaining shares of Datian has been the strongest investment I have seen to date, and while they may not be fully utilizing the lanes yet, they are able to provide next day morning deliveries to 32 cities… something the others cannot match.

But.. as the tortus and the hare taught us as kids, FedEx will have to keep running hard in order to remain ahead. UPS has also committed to a Shanghai hub, and they have been quite active on establishing their retail presence too…. and I have yet to even mention the Chinese and HK players that are also investing.

He also talks about CMA-CGM’s investment in Xiamen’s port. There’s more on that here as well.

NAFTA Trade Continues to Grow

2006 saw a record number of shipments cross our Northern and Southern borders. Trade between the U.S., Mexico increased 10% over 2005’s numbers to a record $866 billion.

The vast majority of the trade between NAFTA partners was carried by trucks (62 percent). Rail freight was the second most favorite mode of transport at 15 percent. Busiest port of entry/exit was the Windsor-Detroit border crossing, with US$115 billion in road shipments.

In the last few years, I have seen many logistics companies bolster their operations at the borders by implementing teams and regions dedicated to the Northern and Southern border. Forwarders trying to secure a piece of the pie have setup warehouses, transload facilities, customs brokerage operations, and key partnerships to service the needs of importers and exporters.

With talk of the , look for this trend to continue over the next couple of years.

New World Alliance cutting capacity due to higher fuel costs

Via Logistics Today:

APL, Hyundai Merchant Marine, and Mitsui OSK Lines, all members of The New World Alliance (TWNA), jointly announced that in the face of an unprecedented rise in operating costs, the carriers would withdraw more capacity than in previous years and do it sooner than in the past. The immediate winter reduction in Transpacific capacity will be around 10%, and this will be followed by a further reduction of 5% to 10% of its joint capacity from early December. The withdrawal may also run longer than in past years, said TWNA.

The current Weighted Average Fuel Price is 519.12 per ton, a nearly 27% increase from a month ago, when it was 410.02, which is already a huge increase from the beginning of the year. The TWNA claims they have sufficient capacity to handle current volumes, and so far my company hasn’t seen any disruptions (we use one of the carriers in the TWNA). It will be interesting to see if the carriers have enough clout to stick their key customers with a floating BAF next year or if their key customers will get away with a fixed BAF again.

Is SFO changing their attitudes about cargo expansion?

Having previously worked the SFO air cargo market for years, I can attest to the decades-old facilities and lack of available space for air cargo expansion, although we always managed to move cargo back and forth ok. Now there’s news from Air Cargo World that perhaps officials at SFO are changing their attitude about air cargo facilities:

In addition to Southwest, SFO has welcomed Virgin America and combination carrier Aer Lingus. Cathay Pacific Airways will soon add an additional Hong Kong flight. And the airport is negotiating with two international carriers with significant belly cargo capacity which want to serve India, according to one SFO official.

Next year, United Airlines will begin daily service between San Francisco and Guangzhou in the busy industrial region of Southern China. The award is part of an accord signed last July between the United States and China that calls for doubling the number of daily flights between the two countries over the next five years.

But shippers and third-party developers remain guarded about whether the growing attention to passenger flights will find its way to the cargo side. They point to the 48-year old facilities that have yet be rebuilt or replaced, and an ongoing lawsuit involving a third-party developer.
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The airport says it’s more flexible these days, but remains short on available real estate. “Because of land constraints, we’re looking at developing a common use cargo facility run by a third party [common-use handler],” said Gary Franzella, associate deputy airport director for San Francisco International Airport.

SFO and other California airports are in the midst of a massive contradiction. California would rank as the world’s eighth-largest economy if it were a country, and its one of the world’s largest exporters of agricultural products.

But for the state’s major air gateways, the one precious commodity in short supply is space for expansion. From the San Francisco Bay to the Los Angeles Basin, California’s most familiar airports are hemmed in by packed highways, mountains and sprawling suburbs. State officials and private developers have tried to push some of the economic growth to alternative gateways, including former military bases, but only with limited success.

Read the whole thing.

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