Global Logistics—April 2011

The Swoosh Swoops in on China

As a sign of China’s booming consumerism, Nike recently debuted its largest Asian logistics center in Jiangsu province. The U.S. sportswear and equipment maker is preparing for rapid growth in its second-biggest global market.

The 2.2-million-square-foot logistics center in the city of Taicang is the company’s first mega facility in China and sixth worldwide. It handles all inbound and outbound products—including clothing, shoes, and sports equipment—for Chinese consumption. Nike expects the center to reduce distribution time and optimize the overall logistics process, ensuring faster delivery of products to customers all over the country.

The opening of the facility fits the company’s goal to expand revenues in China. Nike says it plans to broaden distribution of lower-priced products in a move to target consumers in smaller cities—all in an effort to boost market share and revenue as competition in big cities intensifies.

Japan Upheaval Shakes Air Cargo

The International Air Transport Association (IATA) assessed the potential impact of Japan’s crisis on global air transport and is coordinating actions with airlines to maximize existing fuel supplies, including voluntary tankering of jet fuel and industry-agreed rationing regimes should supply shortages arise. It is also tracking regulatory measures imposed by governments around the world for flights arriving from Japan.

IATA expects a major slowdown in Japan in the short term. The fortunes of the industry will likely not improve until it feels the effect of a reconstruction rebound in the second half of 2011. The $62.5-billion Japanese aviation market represents 6.5 percent of worldwide scheduled traffic and 10 percent of the industry’s revenues.

UK Tracking India Progress

As India plans to spend $1 trillion on infrastructure development over the next five years, United Kingdom Minister for Trade and Investment Lord Stephen Green recently visited Delhi on a “rail mission”—with the goal of helping British companies seek out new business opportunities.

Rail transport is an important modal link for India’s 1.2 billion people, especially given the meager state of road infrastructure and an impoverished majority. The country’s busiest railway stations handle more passengers than all its airports combined.

The Indian government plans to spend $81 billion developing its nascent rail network into world-class facilities, with specific emphasis on metro and high-speed rail projects. A comparatively paltry $9 billion is earmarked to construct dedicated freight corridors along the eastern and western sides of the country, where hinterland port connectivity and throughput remain a concern.

Lord Green’s effort is largely directed toward providing UK companies the opportunity to sell their expertise and capabilities to help India transform and build out its infrastructure capacity, which is key to driving future economic growth. In July 2010, the UK and Indian Prime Ministers established the Britain-India Infrastructure Group to develop business interests in India’s large-scale infrastructure development program.

Lord Green has also called for greater economic liberalization in India to further the enhanced partnership between India and the United Kingdom.

Global Disaster Triggers Charter Boom

After Iceland’s volcano eruption in 2010 snarled air traffic, charter businesses soared as supply chains looked to circumvent bottlenecks. In the wake of the disasters in Japan, mission-critical shipments have found a similar lifeline.

Russian air charter conglomerate Volga-Dnepr Group has been working with carrier partners and shippers to provide a “cargo supermarket” of solutions to help move critical and oversized cargo.

For example, on behalf of Damco, Volga-Dnepr arranged for an AirBridgeCargo Airlines’ Boeing 747 charter flight to deliver oil rig pipes from Narita Airport in Tokyo to Billund, Denmark.

The flight schedule was affected by the devastation that hit the eastern side of Japan, but all parties worked closely to ensure timely delivery.