May 2007 | News | Global Logistics

Global Logistics

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To find proof that shopping is good for the economy—and for logistics providers—businesses need only look to Russia.

Retailers in the former Soviet Union are expanding rapidly, and bringing active logistics development along with them, finds a new study from global consulting firm Capgemini.

The study, which examines Russia's logistics and infrastructure capabilities, reveals several interesting trends driving supply chain development in Russia.

It also includes the Logistics Map of Russia, which details the country's major transport connections, logistics developments, and the retail trade potential of its main cities and regions.

Russia's retail market is spanning out from Moscow and the central region deeper into the country, finds Capgemini. While logistics development to support retail initiatives was initially concentrated in Moscow and Saint-Petersburg, other areas of the country are following suit.

Siberia's largest cities, for example, are now constructing logistics and transport infrastructure to accommodate the growing needs of expanding retail chains.

Other large Russian cities armed with potential to become central regional logistics hubs include Nizniy Novgorod, Kazan, Samara, Rostov, Volgograd, Irkutsk, and Khabarovsk.

Russia's push to develop logistics capabilities is part of its overall strategy to become a gateway for goods moving between Asia and Western Europe.

The country recently established the Federal Program of Transport Modernization, a guideline for Russian transport development through 2010. The program aims to spur economic activity to develop transit corridors, increase the flow of goods moving throughout the country, support investments in multimodal complexes, and improve the quality of transport services, reports Capgemini.

U.S. to Foreign Ships: Go Green

From last month's high-profile Earth Day celebrations to Al Gore's award-winning global-warming documentary, and the appearance of "green" products everywhere, environmental initiatives are enjoying newfound popularity.

The transportation and logistics industry is in on the green action as well.

U.S. port authorities are taking steps to reduce air emissions by retrofitting cargo-handling equipment, using cleaner fuels such as emulsified diesel and biodiesel, and enforcing operational changes to reduce truck idling and improve efficiency.

Foreign vessel emissions, however, are one hindrance to U.S. ports' environmental efforts.

"Ports cannot control emissions from foreign-flagged oceangoing vessels, which represent an unregulated source of port-area emissions," explains Kurt Nagle, president and CEO of the American Association of Port Authorities (AAPA).

With this in mind, AAPA supports the recent passing of a bill in the U.S. House of Representatives that will strictly limit air emissions from foreign ships visiting U.S. ports.

The Maritime Pollution Prevention Act of 2007—co-sponsored by Congressmen James L. Oberstar (D-MN) and Elijah E. Cummings (D-MD)—will institute the legal changes necessary for the United States to join the International Convention for the Prevention of Pollution from Ships (MARPOL Convention), Annex VI.

This international treaty, created in May 2005, sets limits on sulfur oxide emissions from ship exhausts, and establishes specific Sulfur Emissions Control Areas, with stringent guidelines.

Until the United States officially signs the international treaty that sets emissions standards on ships plying international waters, it has no federal authority to limit emissions from visiting ships.

Once Congress approves the U.S. becoming a party to MARPOL Annex VI, the U.S. government gains the right to sanction and/or fine ships that exceed international air quality emissions standards when calling U.S. ports, explains AAPA.

Complying with MARPOL will help improve the air quality in many U.S. port communities, says Nagle.

"Federal legislation is what we need to join the international community in addressing emissions from oceangoing vessels, especially considering today's bigger ships and the rapidly growing volume of trade crossing America's docks," he notes.

Freight Forwarders Flying High

Thanks to global trends such as the development of extended supply chains, and the move to integrate global manufacturers, suppliers, and retailers, international trade volumes are growing rapidly.

One beneficiary of these increasing volumes is the freight forwarding industry.

The international freight forwarding market reaped stellar growth in 2006, shows Global Freight Forwarding 2007, a new report published by global research organization Transport Intelligence.

Steady economic growth in Europe boosted Asia-Pacific trade, while intra-Asian trade became a growth force, and the focus of many forwarders' development strategies, in 2006.

Given the boom in Asia trade, it is not surprising that ocean freight forwarding saw the highest increase in 2006, growing by 15 percent, only slightly lower than its year-on-year growth in 2005. Airfreight forwarding revenue matched last year's performance, rising by 12 percent, according to the report.

"The freight forwarding industry is enjoying a period of unparalleled growth and prosperity, and the potential for future profits is high," says the report's author, John Manners-Bell.

But the industry also faces uncertain times ahead, he warns, citing "a challenging macro-economic environment, security issues, fuel costs, and fluctuations in carrier capacity," as evidence that only agile forwarders will continue to prosper.

Perhaps because of the industry's two-sided prospects—high profit potential coupled with business-threatening challenges—it has experienced rampant merger and acquisition activity.

Over the last few years, mega carriers have gobbled up many competitors, and they now sit at the top of the industry. By overall forwarding revenue—from air, ocean, and customs brokerage business—the report ranks DHL Global Forwarding as the largest global freight forwarder, followed by Kuehne + Nagel and Schenker/BAX Global.

Hola e-Manifests

While the proposed pilot expanding U.S.-Mexico cross-border trucking operations made news recently, another U.S.-Mexico ruling with a more immediate impact has just passed.

As of April, the U.S. Customs and Border Protection Agency (CBP) requires all truck carriers passing through the U.S.-Mexico border to utilize e-manifests—electronic submissions detailing cargo and carrier information—before arrival at any southern U.S. land-border port of entry.

Since January 2007, e-manifest filing rates at Arizona, California, Texas, and New Mexico land-border ports have grown steadily—from about 5,500 e-manifests filed in January to more than 32,000 in March, according to CBP.

Requiring manifest information to be submitted electronically reduces the potential for errors and improves efficiency, resulting in faster border crossings for legitimate carriers, says CBP.

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