October 2013 | News | Global Logistics

Global Logistics—October 2013

Tags: Global Logistics

DHL worker sorting packages

DHL Express believes that trade between the United States and Sub-Saharan Africa is set for continued growth.

Sub-Saharan Africa Targets U.S. for Growth

With constantly changing regulations, poor transportation infrastructure, and unstable governments, one might think cross-border trade with Sub-Saharan Africa is just too difficult to pursue.

DHL Express doesn't see it that way. The express courier company, which has been operating in Sub-Saharan Africa for 35 years, recently invited Inbound Logistics to meet with Charles Brewer, managing director for DHL Express Sub-Saharan Africa, while he was visiting the United States to promote commerce between the two regions.

Brewer confirms that logistics management in Africa is often complicated. "One morning, I checked my email and saw that the Nairobi Airport was on fire, and fighting had broken out in the Central African Republic," he says. "Just a typical morning in Africa."

But the gains outweigh the challenges, he says. DHL Express sees opportunity for continued trade growth between the United States and Africa, thanks to the recent Presidential Policy Directive to achieve sustainable development through increased investment and trade.

Economic activity is expected to expand by five percent in 2012-2013, similar to the expansion that occurred in 2010-2011, according to the IMF's Regional Economic Outlook for Sub-Saharan Africa. More developed economies such as Nigeria, South Africa, Kenya, Ghana, Angola, and Ethiopia are experiencing strong double-digit growth in import and export trade volume.

Smaller markets—including Somalia, Mayotte, Guinea-Bissau, and South Sudan—are reporting huge increases in American imports, while South Sudan, Eritrea, Comoros, and Liberia are also finding significant demand for exports to the United States.

To do its part to help Africa grow, DHL Express offers international trade and operations training to small and medium-sized enterprises (SMEs) through its Certified International Specialist program. In addition, the expediter works with bank partners to help customers get funding for new projects and expansions.

These efforts, combined with the company's 40,000 customers and 4,000 employees in Sub-Saharan Africa, illustrate the impact DHL Express has had on African markets. "Africa's future depends on DHL and many other companies creating sustainable jobs and economies," says Brewer.

Since 2001, trade with Asia, as well as intra-African trade, has increased significantly. The next target for growth is the United States.

"Both governments are committed to trade growth, and these figures will continue to rise," says Brewer. "It is now the role of the private sector and the thousands of SMEs looking for opportunities to take advantage of this growth, and build success in this lucrative trade lane."

China Seeks Investment

Following India's 2012 decision to ease foreign direct investment for single- and multi-brand retailers, the Chinese government hopes to suspend laws governing foreign investment in proposed free trade zones. The move suggests the country is looking to stimulate more domestic competition.

China's cabinet is seeking consensus to amend laws and regulations governing both foreign-owned companies and joint ventures between Chinese and foreign companies in free trade zones, including Shanghai.

China attracted $38.3 billion in foreign direct investment in the first four months of 2013, up 1.2 percent from the same period in 2012.

At the same time, Shanghai is looking to test yuan convertibility and cross-border capital flows in the free trade zone pilot program. City officials hope to boost the currency's use in trade, and support wider financial reforms, especially as it faces stiffer competition from rival financial centers such as Hong Kong and Taiwan.

Mexico Gets Onboard Rail

As Mexico's economy continues to develop, the government is making a concerted effort to ensure the necessary infrastructure is in place to accommodate growth. New plans include the allocation of $100 billion toward rail, road, telecom, and port projects over the next five years, including Mexico's first high-speed rail links.

The modernization and construction of four airports, seven seaports, and about 3,350 miles of highway are among the projects in the works. Additionally, the government aims to strengthen fiber optic networks, expand broadband Internet access, and speed freight train service.

Bridge Failure Deters Canadian Consumers

The I-5 Skagit River Bridge collapse in May 2013 became a symbol of U.S. transportation infrastructure woes. Now a ripple effect is being felt—cross-border retail business is taking a hit.

Canadian consumer activity at retail destinations along the heavily trafficked I-5 corridor that connects Vancouver, British Columbia, with Washington State has dropped noticeably, according to the Border Policy and Research Institute at Western Washington University. The long-term project was intended to investigate the economic impact of how changes in exchange rates and sales taxes influence cross-border shopping. Then the bridge failed.

Counting the number of Canadian license plates in the parking lots of major retail destinations both before and after the collapse, researchers discovered retailers south of the bridge were significantly affected.

For example, the Costco wholesale store in Marysville, Wash., about 30 miles south of the Skagit River Bridge, hosted 80 percent fewer Canadian-plated vehicles from March to June, according to the report. Also in Marysville, discount retailer Ross suffered a decrease of more than 70 percent in Canadian customers; Walmart experienced a 50-percent decline. Most retailers north of the Skagit River Bridge were not impacted.

"We would normally be hesitant about discussing a time-series study consisting of just two sampling events, but in this instance there are stark differences between the March and June data, supporting some general conclusions," researchers explain.

Military Truckers on a Mission

The United States has recently passed laws directed at the trucking industry to increase safety on the nation's roads and highways. But halfway around the world, in Afghanistan, there is a whole different set of rules.

Members of the 32nd Transportation Company, 157th Combat Sustainment Support Battalion call themselves The Mavericks, and operate in support of Task Force Lifeliner. They bring a new perspective to the phrase "securing the supply chain."

Their mission is to ensure supplies get to remote forward operating bases (FOBs) by traveling some of the most dangerous highways in the world. It's not your typical long-haul trucking gig.

"We provide FOBs with the food and supplies they need to keep fighting," says Sgt. Carlos Ortega, a key leader for The Mavericks. "We also remove supplies they don't need so the enemy can't get their hands on them."


Truck drivers in Afghanistan travel in multi-truck convoys and prepare extensively prior to leaving the safety of a military base. The Mavericks primarily provide security for loads being transported by local Afghan counterparts. This gives them a dual role as logisticians and security guards for the commodities they are hauling.

The Mavericks never hit the road without extensive training and insight into what is going on in local areas, according to Ortega. Soldiers need to be conscious of more than the route and scheduled stops. The convoy must be aware of enemy action, washed-out roadways, or celebrations in Afghan cities along the way.

"We prepare for every contingency—from traffic and improvised explosive devices to small arms fire and rocket-propelled grenades," says Ortega.

The Mavericks also follow a methodical process before they drive their trucks onto the dangerous Afghanistan roads. Before leaving, they perform essential maintenance to keep vehicles moving on long missions, where an unscheduled stop could mean life or death.

"We go through a quality assurance process with maintenance personnel. They check our vehicles to ensure nothing is wrong with them, and fix them if there is," says Sgt. Michael Edmonds, The Mavericks' mission commander.



With the drawdown of troops in Afghanistan moving forward, The Mavericks can see light at the end of the tunnel.

"The finish line is in sight," Edmond says. "We're staying motivated and accomplishing these missions so we can all get home." 



—SFC Mary Rose Mittlesteadt

Where Are the Most Expensive Logistics Real Estate Markets?

The rapid growth of e-commerce and expanding third-party logistics activities are two factors driving competition for warehouse space, according to real estate services company CBRE Group's most recent quarterly report on the top 10 global industrial real estate markets.

Tokyo remains the most expensive market, followed by London and Singapore (see chart). Rents in eight of the top 10 most expensive markets were stable during the second quarter of 2013. Values in Hong Kong grew 2.6 percent due to exceptionally tight supply of available space, while Tokyo's 2.2-percent growth is attributed to demand from e-retailers and third-party logistics providers. Singapore also faced a shortage of quality facilities amid strong demand.

Prime rents in most European markets—including London, Paris, Stockholm, Moscow, and Helsinki—held steady despite a challenging economic environment. Demand for highly specified, well-situated warehouses, however, remains robust. Occupiers looking to expand have limited options, prompting many to remain in their existing premises.

One trend of note: the Australian cities of Brisbane and Perth are two new entrants on the CBRE list. Mega tenants looking to consolidate multiple large warehouses into distribution super-sites are shaping the country's industrial real estate transformation.

Annual Logistics Real Estate Costs
SOURCE: CBRE Research, Q2 2013
Market US$/Sq. Ft.
Greater Tokyo 20.02
London 19.12
Singapore 17.13
Helsinki 16.58
Stockholm 14.22
Hong Kong 13.65
Moscow 13.01
Brisbane 10.92
Paris 10.89
Perth 10.33