August 2011 | News | Global Logistics

Global Logistics—August 2011

Tags: Global Logistics

China Bridges Concerns

The chief engineer of the world's longest sea-bridge, which recently opened in China, is denying claims that construction was rushed in order to meet the 90th anniversary of the Communist party in the People's Republic.

China has a reputation for finishing big infrastructure projects on time and under budget—notably the Three Gorges hydroelectric dam—but officials say the new Jiaozhou Bay Bridge is safe and secure. Secondary projects will continue over the next few months to "tighten the bolts" on aesthetic features.

The 26.3-mile-long bridge, which has received worldwide media attention, links the eastern coastal city of Qingdao to the suburban island of Huangdao, in Jiaozhou Bay. The span makes it about three miles longer than the previous world-record holder—the Lake Pontchartrain Causeway in Louisiana.

And because the country loves to outdo itself, China already plans to construct a newer and longer sea-bridge connecting the southern Guangdong province with Hong Kong and Macau by 2016, soon rendering the Jiaozhou Bay engineering feat obsolete.

Still, China's Danyang-Kunshan Grand Bridge, at 102 miles in length, remains the longest bridge of any kind in the world. In total, the country lays claim to 11 of the 15 longest spans in the world, followed by the United States with three and Thailand with one.

Canadian Shippers Paying More for Freight

The cost of ground transportation for Canadian shippers increased markedly between March and April 2011 due to increases in carrier base rates and fuel surcharges, according to data recently published by the Canadian General Freight Index (CGFI).

The CGFI Total Freight Cost Index rose by 1.7 percent in April, the largest one-month gain since July 2010. The Base Rate Index, which excludes the impact of fuel surcharges assessed by carriers, increased 1.1 percent during the same period. Additionally, average fuel surcharges rose from 18.8 percent of base rates to 19.9 percent, and contributed significantly to the rise in overall freight costs.

The increase marked the seventh consecutive month of rising fuel surcharges, which have reached their highest point since November 2008.

Logistics Services Trend North in Western Europe

The cost of ground transportation for Canadian shippers increased markedly between March and April 2011 due to increases in carrier base rates and fuel surcharges, according to data recently published by the Canadian General Freight Index (CGFI).

The CGFI Total Freight Cost Index rose by 1.7 percent in April, the largest one-month gain since July 2010. The Base Rate Index, which excludes the impact of fuel surcharges assessed by carriers, increased 1.1 percent during the same period. Additionally, average fuel surcharges rose from 18.8 percent of base rates to 19.9 percent, and contributed significantly to the rise in overall freight costs.

The increase marked the seventh consecutive month of rising fuel surcharges, which have reached their highest point since November 2008.

Logistics Services Trend North in Western Europe

Spending on logistics services by manufacturers and retailers in Western Europe—both in-house and outsourced—is set to increase by almost $46 billion over the next five years as the size of the outsourced logistics market expands 26 percent, according to England-based market intelligence company Analytiqa.

Among findings in Analytiqa's latest report, Western European Logistics 2011:

  • The United Kingdom, Germany, and Italy are set for the greatest growth.
  • Some markets won't recover lost revenues until 2013.
  • Automotive and high-tech logistics sectors will record the largest growth rates over the next five years.

While growth opportunities exist for 3PLs, given careful targeting of customer and country markets, they also face challenging times. Increasingly sophisticated customers, tighter security, environmental standards, and globalization's changing dynamics require that they constantly evaluate their value propositions, states the report.

China Cashes In on Change

The wave of offshore manufacturing to China over the past two decades precipitated a consumer boom in the United States as low-cost labor and cheap manufacturing deflated U.S. prices. Now that tide is turning.

The costs of imported goods are beginning to climb, which is triggering inflationary pressure on U.S. companies and consumers still sourcing and buying goods made in China, says a Wall Street Journal report.

For example, China currently supplies 90 percent of house slippers imported into the United States; 78 percent of footwear; 71 percent of ties; 55 percent of gloves; and 50 percent of dresses and baby clothing, according to Commerce Department data.

As China's middle class consumes, expands, competes for goods, and places upward pressure on global prices, U.S. consumers will continue to pay more for sundry goods. Some American companies still sourcing a lion's share of product from China may see these changing demographics as an opportunity to begin exploring cheaper offshore markets.

Indian 3PLs Primed for Growth

India's third-party logistics industry pales in comparison to more mature outsourcing markets in the United States and Europe, where 3PL services dominate the transportation and logistics space. But the country is beginning to develop its own pedigree beyond business process outsourcing, according to RNCOS's latest research, The 3rd-Party Logistics Market in India.

The current state of 3PLs in-country is still developing, with multinational companies in all industries among the most likely users of outsourcing services, reports the India-based consultant. Big domestic companies in leading industrial sectors, however, have also begun outsourcing basic logistics functions.

Companies are concentrating on managing their supply chains to deepen market penetration, which explains this recent surge, according to the report. Continuous improvement in transportation infrastructure and increasing awareness of logistics best practices have encouraged Indian companies to leverage 3PLs as a means of controlling both internal and external business processes.

Compared to more developed areas, the Indian 3PL market is full of opportunities because of infrastructure development and the increasing connectivity and rising significance of logistics services in the country, the report notes. As a result, RNCOS forecasts the market to achieve a 26-percent compound annual growth rate between 2011 and 2013.

Doublestack Attack

APL Logistics' recent debut of IndiaLinx, a doublestack container train service in India between the Port of Mundra and an inland container rail terminal at Kishangarh, near Delhi, represents a new mile marker in the country's expanding transportation roadmap.

Doubling freight capacity on trains follows Indian Railways' recent decision to allow stacked-train access along the entire rail corridor. The development is part of the rail authority's bigger project to provide a freight-dedicated railroad network with doublestack train access connecting key gateway ports and major North Indian industrial centers by 2016. APL Logistics, in turn, plans to expand its stacked train service network as more rail corridors are allowed access.

"Double-stack trains help ease congestion at ports where rail corridor capacity constraints exist," says Amitabha Chaudhuri, managing director of APL IndiaLinx. "Shippers also stand to benefit from improved connectivity between key gateway ports and major industrial centers in North India."

U.S. Imports Rise Despite Political Uprisings

The number of TEUs being imported by vessel to the United States from North African and Middle Eastern countries has actually increased since the start of political uprisings in some regions. Imports dropped in February 2011, but have now surpassed levels seen before the uprisings. Oman and Egypt, specifically, have recently experienced large increases.

US-Middle East Import Graph

Source: Zepol Corporation