June 2009 | News | Global Logistics

Global Logistics

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Ademand-driven logistics strategy can help companies save considerable time and expense flowing product through the supply chain. It can also save lives.

Wayne, N.J.-based MAQUET Cardiovascular, a newly acquired division of German parent company MAQUET Medical Systems, recently expanded its relationship with third-party logistics provider Menlo Worldwide Logistics in Europe to manage inbound transportation for products manufactured in the United States.

MAQUET Cardiovascular develops and manufactures intra-aortic balloon pumps, and vascular grafts and patches, in its Fairfield and Mahwah, N.J., facilities. The company previously managed its own transportation and distribution to European customers, but following its acquisition, decided to pull U.S.-manufactured medical devices through MAQUET's European distribution base in Eersel, Netherlands.

"Incorporating MAQUET Cardiovascular products into our operations at Eersel allows us to leverage our existing global supply chain, as well as Menlo's expertise and IT platform," says Rob Stoopman, managing director, MAQUET, Netherlands. "And we will achieve annual outbound transportation cost savings of 30 percent."

Under the expanded relationship with MAQUET, San Mateo, Calif.-based Menlo manages all inbound airfreight from the manufacturer's New Jersey production plants to its multi-client warehouse in Eersel. The partnership will ultimately include transportation management for outbound orders, using parcel delivery services to customer destinations in seven European countries.

By utilizing Menlo's multi-client warehouse management solution, MAQUET also gains management and labor infrastructure, requisite equipment and assets, a flexible contract commitment length, and an extensive global network of pre-configured warehouse operations.

Air Cargo Forecast: Cloudy

The global air cargo industry is beginning to show signs of improvement, but economic jetlag is likely to keep the industry in a holding pattern for the near future, according to recent data from the International Air Transport Association (IATA).

Air cargo demand dropped 21.7 percent in April 2009 compared with April of last year, but IATA reports that airfreight demand appears to have found a solid footing with a fifth consecutive month at more than 20 percent below previous year levels.

"We are not out of the woods yet," says Giovanni Bisignani, IATA's director general and CEO. "Freight remains at shockingly low levels."

While the worst may be over, he adds, there are no signs that recovery is imminent. Business confidence is improving, but until current high inventory numbers adjust to more normal levels, airfreight volumes will likely bounce along the bottom.

With the challenges brought on by the global recession, flexibility has never been more important for the air transportation industry. But there's not enough flexibility as airlines are still constrained by old rules that restrict basic commercial freedoms such as access to markets and capital, Bisignani says.

"Much of the cost base remains out of our control—from volatile fuel prices to monopoly infrastructure charges," he adds. "And many governments simply don't understand the need for urgent change. We need a change in mindset. To manage through this ongoing crisis, every player in the air transport value chain must be prepared to drive change."

Next-Generation Messaging

A proof of concept test between Solace Systems, a messaging middleware and content networking hardware provider; Japanese telephone carrier Softbank Telecom; and the city of Kobe, Japan, is making local parcel delivery more reliable. The project, funded by Japan's Ministry of Internal Affairs and Communication, aims to develop a next-generation logistics platform to increase parcel delivery efficiency.

Softbank Telecom implemented the Ottawa, Canada-based company's messaging appliance as the foundation of the system. Identical codes are assigned to the sender, the package, and the recipient of a particular delivery. Solace's content routers then enable real-time communications among senders, delivery agents, and recipients, ensuring delivery to the appropriate destination.

The experimental system makes it possible for senders and/or recipients to update the desired place and time of delivery. In its pilot phase, the platform has significantly reduced the number of undeliverable packages.

"Everyone who has received a 'sorry we missed you' notice when awaiting a delivery knows the value of efficiency innovations," says Crispin Clarke, Solace's senior vice president, Asia and Latin America. "The Kobe City deployment also showed that next-generation messaging technologies can create time and fuel savings that could lead to significant cost reductions for logistics providers."

Ships Gain, Despite Economic Pain

Even with over-capacity and under-valuated shipping rates, the world's ocean cargo fleet is expected to grow as deliveries and new shipbuilding orders pick up later this year, according to the Shipbuilding Market Forecast for Container and Roll-On Roll-Off (Ro-Ro) Ships, released by Lloyd's Register-Fairplay Research (LRF), an England-based maritime research company.

By any measure, the current picture for containership owners and operators is grim, with a severe imbalance in supply and demand exacerbating sluggish economic conditions worldwide. Some steamship lines are quoting spot rates as low as $250 to move a container from Hong Kong to Rotterdam, compared with $1,400 one year ago.

This imbalance has left ships high and dry and forced steamship lines to reassess sailing schedules and frequencies and shift assets to better match capacity with demand.

Nonetheless, the LRF Research report predicts an upturn in 2009 toward modest levels. New shipbuilding orders have not dropped precipitously, and thus far there has yet to be a rush to cancel existing orders at shipyards.

The global containership fleet stands at 4,671 ships with a total capacity of 12.4 million TEUs. It is expected to grow by 13 percent in 2009, as new ships ordered during the boom years are delivered to their owners. The growth rate will slow to 9.3 percent annually through 2013.

But what is telling is the size of new vessels coming on line. The growth rate will be highest for ships larger than 8,000 TEUs; they will achieve an average growth rate of 25 percent through 2013.

Normally, jettisoned ships help keep a fleet in balance as older vessels are scrapped to make room for new ones. In the case of the current containership market, however, a large percentage of tonnage is relatively new, and removals are only expected to erase some 904,000 TEUs from the fleet over the next five years.

Empires Strike Pact

Canada's colonial ties to Europe are well entrenched in its government and culture, but now that the United States' neighbor to the north has signed a bilateral open skies agreement with the European Union, its trade allegiance opens up new avenues for North American shippers to route cargo. The pact enables European carriers to operate direct flights to Canada from any European point, thereby deregulating cargo services and gradually removing restrictions on foreign investment.

"These agreements make the EU-Canada aviation market one of the most open in the world and a milestone for EU-Canada relations," says Antonio Tajani, European Commission vice president responsible for transport. "It is an important sign in the current economic turmoil that the EU and Canada are acting ≠ not to close down their markets, but to remove barriers and improve links between people and businesses."

In March, the European Council (EC) unanimously endorsed the bilateral air transport agreement with Canada to replace a patchwork of separately held agreements with European states. The agreement "removes all restrictions on routes, prices, or the number of weekly flights between Canada and the EU. Other traffic rights will be liberalized gradually in parallel with the opening up of investment opportunities," reports the EC.

Moving forward, both governments expect even greater opportunities for bi-directional investment, where European Union nationals would be able to establish operations in Canada and "freely invest in Canadian airlines and vice versa," the EC says.

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