Global Logistics—February 2011

Global Logistics—February 2011

Largest Airlines Target Asia, Latin America

The world’s five largest airlines now hail from Asia and Latin America, reflecting industry’s shift away from U.S. and European markets to higher-growth countries, according to a recent report by the International Air Transport Association (IATA). The data suggests that airline expansion for both freighter and passenger activity will likely follow new opportunities in emerging countries.

Air China has a market capitalization of $20 billion, followed by Singapore Airlines with $14 billion, and Hong Kong-based Cathay Pacific with $12 billion.

China Southern has a market cap of $11 billion, as does LATAM, the Latin American airline recently created from the merger of Chile’s LAN and TAM of Brazil. U.S. carrier Delta and Germany’s Lufthansa follow with market capitalizations of $10 billion each —combined, they match that of Air China.

Strong growth in developing countries and a rebound in North America are largely responsible for the industry’s recovery, according to IATA. Airlines saw net profits of $15.1 billion in 2010. Asian carriers contributed $7.7 billion to the global total, while North American airlines earned $5.1 billion. Europe, with estimated net profits of $400 million, lags behind the Middle East ($700 million) and Latin America ($1.2 billion). African carriers contributed $100 million last year.

Reds Cross

Switzerland and China officially launched free trade agreement negotiations during the 2011 World Economic Forum in an effort to boost business ties. The countries signed a memorandum of understanding that addresses intellectual property rights and import barriers, among other issues. The machinery, precision instrument, energy, pharmaceutical, and chemicals industries stand to benefit the most from continuing talks. 

A feasibility study published in 2010 reports that Switzerland’s gross domestic product could be boosted by 0.23 percent, while companies could gain annual savings of $304 million per year if trade barriers are lifted. China is Switzerland’s most important trading partner in Asia, with exports totaling $5.52 billion.

Still, Switzerland has been cautioned to proceed carefully on the thorny issue of civil rights during negotiations. Social concerns will be discussed only if they are directly related to trade between the countries.

Alibaba and a Tale Of 32 Million Square Feet

Alibaba Group, China’s equivalent to, will spend $4.6 billion to create a nationwide chain of warehouses for speeding product delivery in the country. The company is looking to locate 32 million square feet of distribution space near Beijing, Shanghai, and Guangzhou during the next five years. The expanded network will help Alibaba meet a 10-year goal of delivering any online order in China within eight hours.

Warehouse construction will focus on the regions around the northern cities of Beijing and Tianjin; the Yangtze River Delta in eastern China, which is near Shanghai; and the Pearl River Delta in southern China, near Guangzhou.

Alibaba hopes to mobilize other partners to join in this effort and create an integrated logistics platform that will help elevate the quality of service to Chinese consumers and allow merchants to meet rapidly growing domestic consumption needs.

Apart from expanding warehouse capacity, the company’s strategic roadmap consists of three other key parts. First, its online subsidiary,, will develop its supply chain management platform to help merchants handle inventory and create standards for logistics service providers. Second, Alibaba will establish an integrated logistics platform that brings together all players, from warehousing to transportation. Finally, will provide warehousing facilities to support small Chinese exporters.[ ]

Honda Treads Green

Japanese carmaker Honda is mandating that global suppliers follow its Green Purchasing Guidelines, an effort that reveals how some industries and companies are beginning to force environmental compliance across the supply chain.

Honda first released its procurement protocol in 2001 and disseminated it among Japanese suppliers. Now, the company is extending these guidelines to all global parts and materials suppliers (see chart below).

With the new guidelines, Honda is striving to create a unified standard to track and reduce greenhouse gases and other aspects of its environmental footprint over the entire lifecycle of Honda products— including the business activities of its suppliers.



Promote purchasing of environmentally responsible products


CORPORATE STRUCTURE. Introduce environmental management system (ISO 14001 by primary suppliers)

PRODUCTION. Manage environmental footprint during production (amount of CO2 emissions)

Product. Manage use of chemical substances

Subject of these guidelines: Suppliers in Japan (and all suppliers that use chemical substances)



Promote purchasing of environmentally responsible products

Add environment as a supplier evaluation item —quality, cost, delivery, development, environment


MANAGEMENT. Establish environmental management system for all areas of product and corporate activities

CORPORATE ACTIVITIES. Manage environmental footprint in all areas of corporate activities (amount of CO2 and other greenhouse gas emissions)

Product. Improve product fuel efficiency

Manage use of chemical substances

Subject of these guidelines: All suppliers around the world

Source: Honda