Global Logistics—July 2014
For more than 53,000 warehouse and manufacturing facility operators and equipment buyers, CeMAT 2014 was the ultimate shopping expedition. At the biennial event—held in Hannover, Germany, from May 19 to 23, 2014—1,025 exhibitors showed off 4,000 state-of-the-art warehousing, packaging, and inventory management solutions.
Occupying 1.3 million square feet of display space—including several outdoor pavilions, meeting areas, and product showrooms—the event demonstrated the vitality of Europe's intralogistics industry. Germany alone accounts for 19 percent of the global export market for products such as lift trucks, conveyor solutions, and picking systems.
Inbound Logistics attended CeMAT 2014 and came away with six prevailing themes.
- E-commerce is everything. "E-commerce is the driving force in the materials handling industry," noted Martin Mossinkoff, director of logistics systems, sorting and distribution technology for Beumer Group, a Germany-based manufacturer of conveying, loading, palletizing, packaging, sortation, and distribution systems. At CeMAT, Beumer demonstrated its BS 7 BT belt tray sorter, suitable for handling the variety of product sizes and weights e-commerce fulfillment operations require.
Customer demand for quick order turnaround, and guaranteed availability on high volumes of small orders, is driving a need for efficient and accurate order picking. "These demands need to be reconciled with other—sometimes conflicting—requirements, such as greater storage density, freezer storage capability, increased efficiency, and guaranteed rapid access," explained Harrie Swinkels, CEO of logistics technology provider SSI Schäfer, based in Germany.
- There's no end to innovation. Trade shows often serve as launching grounds for the latest and greatest products. Both Beumer Group and Austrian warehouse logistics solutions provider Knapp demonstrated wearable devices similar to Google Glass, while Stuttgart-based automated materials handling systems company Viastore showed off a new iPad app for designing customized warehouses.
Toyota Material Handling Europe (TMHE), headquartered in Sweden, showcased its I_Site fleet management system, designed to gather and analyze truck and driver performance data. Fleet managers can also monitor truck and driver operations remotely via an iPhone and iPad app. For example, the app provides instant notification if a truck is involved in an accident. The manager can review the situation, and remotely put a hold on the truck so the driver can't operate it until the manager corrects or retrains the worker.
In addition, built-in pre-operation checks ensure machines are in good working order, and help optimize maintenance cycles. Fleet managers can also analyze truck data to identify opportunities for improving fuel efficiency.
- Safety still comes first. Protecting workers from injury and products from damage is essential to maintaining a profitable and efficient warehouse operation. Helsinki-based cargo handling equipment manufacturer Kalmar introduced its Personal Proximity System, designed to alert operators of potential obstacles. When the system detects a worker within a specified range of the vehicle, it provides audible and visible signals to make the driver and worker aware of each other.
One intralogistics solutions provider, Still, based in Hamburg, equips its lift trucks with the RFID Safety driver assistance system. Transponders placed on the floor in key locations signal the truck's control system to reduce speed in danger zones such as aisle intersections and narrow passages. The system can also prevent a truck from traveling into specified areas, such as entering one-way aisles from the wrong direction.
- Flexibility for the future. Many manufacturing and distribution facility operators are wary of installing expensive materials handling systems that meet their needs today, but may not be able to adapt to new products and customer demands. Swiss warehousing solutions provider Interroll addresses this problem through modular systems that can be reconfigured to accommodate changes in throughput speed demands, product weight and size, and item mix.
For example, its roller conveyor can be built with motorized rollers to increase processing speed, and components can be removed or added to change the sorter's length. Adding belts and turning wheels allows the system to shift and divert products to set up new zones and sorting paths.
- Striving for efficiency. With customers demanding faster fulfillment, warehouse and DC operators are eager to save time wherever possible. As part of Knapp's Zero Defect Warehouse initiative, image recognition tools allow workers to perform quality checks during the picking operation, rather than as a separate process.
Hamburg-based materials handling equipment company Jungheinrich displayed lithium lift truck batteries that offer opportunity charging, so workers don't have to wait until the battery runs out completely. "The ability to recharge whenever it is convenient for the worker improves uptime, and reduces the number of batteries the company has to purchase," said Jan Kaulfuhs-Berger, corporate communications, Jungheinrich. The batteries charge in 1.5 hours, versus the eight hours required by standard batteries.
Taking tasks out of human hands can also help increase productivity. TMHE's automated vehicles follow workers as they're picking, so they just have to pull items, not operate the truck. When the pallet is full, a new truck automatically replaces it so the worker can keep picking.
- Service is king. A common theme among the companies represented at CeMAT was their evolving role in the market. "Materials handling companies are transitioning from being product suppliers to solutions providers," said Mossinkoff.
Offering a full solution makes purchasing decisions easier for warehouse operators. "As customer needs change, many companies want to buy materials handling equipment from a single source," said Kaulfuhs-Berger. "This enables them to streamline the process, and focus more on their core business."
Because same-day delivery for lift truck repair and maintenance parts is vital, Jungheinrich opened a spare parts center in Hamburg for customers in the European market. "The most expensive truck is a truck that doesn't work," said Kaulfuhs-Berger. "If equipment is broken, we need to quickly supply the parts needed to help the customer get back to business."
At CeMAT, TMHE introduced the Toyota Service Concept (TSC), a customer support program based on the world-renowned Toyota Production System (TPS). Components of the Toyota Service Concept include TPS hallmarks such as continuous improvement and eliminating waste, as well as emphasis on providing real-time information and responsiveness.
"With TSC, our technicians and backup staff are always online, and deal with up-to-the-minute information," explains Nick Duckworth, senior vice president, services, TMHE. "It means a technician can work on any truck, anywhere, and be fully informed and supported with, for example, truck history data."
Efficiency and convenience that support productivity head every warehouse operator's wishlist, and CeMAT 2014 attendees discovered a wealth of products and services to put them on the path to success.
Chinese e-tail giant Alibaba Group's announcement that it will invest $249 million and take a 10-percent stake in Singapore Post (SingPost), Singapore's national postal provider, rattled virtual storefronts in Asia. The Asia-Pacific e-commerce market is fast becoming the world's largest, with sales expected to top $1 trillion by 2020, according to research firm eMarketer.
Alibaba and SingPost also signed a memorandum of understanding to negotiate an international e-commerce logistics joint venture.
SingPost maintains regional operations in 13 countries, with access to a global postal network of more than 220 countries and territories. The courier is well positioned to provide end-to-end e-commerce solutions such as warehousing, delivery, and returns management. Alibaba is the largest online and mobile commerce company in the world in terms of 2013 gross merchandise volume.
The strategic alliance also taps into other e-commerce opportunities in Southeast Asia by boosting access to SingPost's global logistics capabilities, infrastructure, and delivery networks, as well as end-to-end solutions for Alibaba customers and merchants. The partnership leverages core competencies from both companies to advance the e-commerce ecosystem and create logistics solutions for international e-commerce. It also creates a new growth market to help SingPost balance a declining domestic postal business.
While the European Union reconsiders some of its progressive green mandates, some areas are increasing environmental regulations.
In Paris, for example, officials recently proposed reducing the speed limit within the city to 19 miles per hour to curb pollution emissions and traffic accidents. The plan is already operational in some areas, reports French daily newspaper Le Parisien. Major roadways in and out of the city would be exempt from the new law.
While other European cities have entertained similar speed limits, Paris would be one of the largest to implement such a system.
Reducing speed limits cuts fuel consumption and emissions as much as 12 to 18 percent in certain simulations, suggests European Environment Agency research, while more realistic scenarios indicate two- to three-percent savings. But these findings are applied to higher speed limits than those proposed for Paris. It remains to be seen how these new regulations could impact the city's congestion and freight flows.
Brazil is one of the few nations that the United States exports more goods to than it imports from. In the first quarter of 2014, the U.S./Brazil trade balance had more than a $4.2-billion surplus in exports over imports.
Source: Zepol Corporation
Latin America was the world's fastest growing software market in 2013, and that trend is projected to continue, according to market intelligence firm IDC.
Software growth in Latin America is expected to hit 10 percent in 2014—up from 8.2 percent in 2013—far surpassing that of the Americas (6.4 percent), Europe (6.2 percent), and Asia Pacific and Japan (3.3 percent).
Despite this explosive growth, Latin America remains the smallest market for software purchases. Revenues for 2013 were $13.5 billion, accounting for just 3.7 percent of the global share. The current weakness of Latin American currencies against the U.S. dollar may affect the region's 2014 software growth in dollar terms, projects IDC.
Enterprise applications, particularly in areas such as customer relationship management, enterprise resource management, supply chain management, operations, and manufacturing applications are driving this growth.
Latin American markets are also gearing up when it comes to big data, with revenues expected to hit $871 million in 2014 and to continue growing exponentially, reaching $6.6 billion in 2018.
Following the 2013 Lac-Mégantic crude train derailment in Ottawa, Canada's railroad industry has come under the microscope. In April 2014, Transport Minister Lisa Raitt banned 5,000 of the most dangerous DOT-111 tankers from carrying flammable liquids on Canada's rail lines. The remaining tens of thousands of DOT-111 cars built before 2011 must be removed from service by 2017.
Rail shippers have been compliant with the new rules since their implementation—which is a good thing, given Canada's energy renaissance.
Crude oil exports by rail hit a record high of 160,000 barrels per day in the first quarter of 2014, according to Canada's National Energy Board—a 50-percent uptick from the same period in 2013.
The crude-by-rail boom has been gathering pace over the past two years, as producers seek alternatives to congested export pipelines that leave crude bottlenecked in the oil-rich province of Alberta, which ultimately impacts pricing.
As Africa's trade competitiveness continues to mature, its leading economy is looking to create a national shipping line. Nigeria recently made waves by asserting its need to resurrect the defunct Nigerian National Shipping Line (NNSL), which went bankrupt in the mid 1990s because of poor management.
After several starts and stops to reinstate a national carrier, Nigeria's government has proposed partnering with the country's private sector to avoid past pitfalls—welcome news to shippers who feel they are incurring extra costs because of this void.
Nigerian President Goodluck Jonathan has tasked the Nigerian Maritime Administration and Safety Agency (NIMASA) with ensuring that a national carrier is brought back during his administration.
"When the NNSL was liquidated, it was because it was managed by government. So, in the next six months, we will work with the private sector to get our shipping line back," says Ziakede Patrick Akpobolokemi, director general of NIMASA.
China's growing appetite for consumables has been well documented. Where the country was once the leading location for offshore manufacturing, it's now the target for entrepreneurial sellers looking to tap the world's largest middle class. Consequently, food exports into China are becoming a profitable enterprise.
A recent Bloomberg News report confirms this trend. China's per-capita income is expected to double by 2020. More telling, its urban middle class is projected to grow to more than 75 percent of the total population by 2022, compared to four percent in 2000, according to a McKinsey & Co. report.
China's middle class is consuming more imported high-end foods than ever before—everything from Norwegian salmon to French wine. Because these product categories often require special care—temperature- and time-sensitive transport—it means a major shift in airfreight capacity.
Finland's biggest airline, Finnair, expects to double shipments of salmon to China and Japan by 2020. Fish is trucked in from Norway, which doesn't have direct flights to Japan or China. It is then flown to Asia.
Fresh fish is also Air France-KLM Group's number one export to China. But wine is not far behind. Chinese consumers bought more than 200,000 bottles of Beaujolais Nouveau in 2012, making it the world's sixth-largest market, ahead of Switzerland, Italy, and the United Kingdom, according to Ubifrance, France's export promotion agency.