Global Logistics-January 2009
It’s not easy gold-mining new business prospects offshore. For small companies without the capital, resources, and partners to survey the globe, stake a claim, and dig in, making cultural inroads and chasing business contacts presents a challenge.
FedEx knows a thing or two about spanning the world and helping small and medium-size businesses (SMBs) expand their global mindshare. So the Memphis-based expeditor partnered with the U.S. Commercial Service, the trade promotion unit of the International Trade Administration, to launch a series of fact-finding trips—beginning with India this past November—to help SMBs make the leap into emerging markets.
“Together with the U.S. Commercial Service, FedEx chose India as its first trade mission because of the country’s large and growing consumer culture and the value of creating a networking opportunity for businesses,” says Jill Brannon, senior vice president of international sales, FedEx, and one of the company’s lead representatives and presenters on the trip.
From Nov. 9 to 14, 2008, the public-private partners hosted 12 U.S. companies, from a broad range of industries, interested in entering or expanding in the Indian marketplace. Participants were ferried around India’s three leading business enclaves—New Delhi, Hyderabad, and Mumbai—to absorb networking opportunities and market intelligence that might support future interests.
“Playing in this market is especially challenging for SMBs,” Brannon tells Inbound Logistics. “With FedEx’s global brand, and the government’s backing, we can help small companies seize what is often a nebulous opportunity.”
FedEx and the U.S. Commercial Service are complementary alliance partners. The expeditor possesses the transportation, logistics, and supply chain expertise and resources, while the government arm flexes relationships with companies in India that can help U.S. importers and exporters find distributors.
For businesses such as Kaydon Filtration, a Lagrange, Ga., company that builds filtration products for power plants and other industries, an opportunity to break through the bureaucracy of India’s market was welcome after recent failed efforts.
“It’s a difficult proposition to create a need without an entrance into the country—someone to arrange meetings and business connections,” says Mike Smith, vice president, Kaydon Filtration, who was among the mission participants. “Our initial efforts looking for international sales people working in India were very unscientific. If you don’t know how to do business in these areas, you’re at a disadvantage.”
The objective of the trade mission is to help businesses target export growth potential in India. Kaydon, specifically, is exploring potential markets—including India and China—where crude oil prices have become commoditized both domestically and globally.
You Can’t Muscle Progress
“We have been working with the U.S. Commercial Service in China,” says Smith. “But coordinating the logistics to make inroads is difficult. We’ve had better success with our activity in China because we’ve been there longer. It’s difficult to muscle progress.”
In India, Kaydon is looking to partner with companies that can promote and support its product line. The country is a fast-growing market for power-driven industrial equipment.
Trade mission participants met face-to-face with decision-makers from Indian businesses, U.S. business executives operating in India, members of business organizations, government officials, trade specialists, and others. The mission also helped delegates find partners, distributors, agents, and buyers in India through pre-screened matchmaking appointments.
As proof of its networking value, Kaydon came away with two outstanding business contacts and some other interesting opportunities, notes Smith.
While targeted at helping U.S. businesses identify export possibilities, other companies approached the trade mission with an open agenda. Raj Narayanan, a marketing representative for Sawyer Composite, a Ft. Worth, Texas, aerospace company that designs, manufactures, and prototypes advanced tooling and composite parts, was looking at both sell-in and sourcing prospects.
The Promise of India
“The barriers to entry are significant,” he explains. “The Asian aerospace market is tough to crack if you don’t know the right people within the organization. Because time and resources are limited, we needed a focused effort, which the FedEx trade mission provided.”
India holds great promise for Sawyer Composite, which also happens to be a FedEx supplier. The company makes tools used in manufacturing components for FedEx’s new 777 aircraft.
“Aviation travel is picking up rapidly, so engineering development is increasing and we’re getting involved in that market,” Narayanan notes. “Aviation is a global business and India is getting play in that field by manufacturing and developing aircraft systems and commercial aviation networks.”
Sawyer Composite, which currently sells exclusively in the United States, is exploring opportunities to sell, as well as manufacture, product in India. “We have looked at the potential for manufacturing some components in India, where there are opportunities to utilize its labor market and technical expertise, and bring them back to the United States,” he adds.
While all the trade mission participants had selective interests for joining the delegation, the concepts of corporate management, and India’s inherent hurdles, reach across all vertical boundaries. Beyond business-mining objectives, both Narayanan and Smith appreciated the cultural awakening they experienced meeting with Indian representatives and their peers.
“You can’t imagine the importance of going to a dinner reception with the ambassador to India and other high-level business contacts,” Smith explains. “There are some exponential factors above what we think is important in the United States. The personal connection is critical to breaking in and understanding how to do business in India.”
Narayanan shares a similar perspective. “Person-to-person contact is very important in India,” he notes. “But the United States is a fast-food world ≠ after you make a connection, you may never see that person again.”
For information on future FedEx trade missions, email: [email protected]
Europe Tracks Change
Rail freight transport is a critical link in Europe’s supply chain, serving as a high-volume conduit between its ports and hinterlands. Ongoing investment in equipment and infrastructure is laying down tracks for more efficient cargo movement.
Deutsche Bahn Pilots Long Train
Deutsche Bahn has successfully demonstrated the feasibility of using longer trains to more efficiently move freight in and around Europe’s congestion-choked port facilities.
The German railroad, in cooperation with Netherlands-based infrastructure operator KeyRail, recently tested a 3,280-foot-long freight train on the Betuweroute between Oberhausen, Germany and Rotterdam. Financed by the Federal Ministry of Economics and Technology, Project GZ1000 is exploring the limits of transport capacity on Deutsche Bahn’s current network in order to relieve bottlenecks on seaport routes.
The purpose of the trial is to evaluate the technical, operational, and economic viability of deploying longer freight trains, as current Deutsche Bahn systems can only accommodate equipment with a maximum length of 2,460 feet.
The Betuweroute is the first rail line in the Netherlands exclusively dedicated to rail freight traffic. As a hinterland link for Dutch seaports, shippers have a stake in using longer freight trains to mediate congestion and increase rail velocity and throughput.
France Sets Sights on Rail
President Sarkozy’s government has raised the importance of infrastructure development as a means toward steering France’s economy in a new direction, focusing on structural problems rather than fleeting concerns. His vision appears to be gaining traction on the transportation side and may serve as an example for government closer to home.
Given chronic road congestion and fluctuating fuel costs, rail freight transport presents a competitive alternative to over-the-road options. Measure for measure with broader European Union (EU) directives to liberalize freight transport, the French government has proposed increasing the percentage of non-road freight from 14 percent to 25 percent by 2012—an effort that would also reduce carbon emissions 20 percent by 2020.
France’s railroad sector was deregulated in March 2006, and a newly created Railway Regulatory Commission will be responsible for ensuring open access to all European operators. Developing intermodal infrastructure is critically important to the country’s prospects for attracting more economic development interest from foreign business and cementing transportation synergies with EU partners.
The country’s progressive development plans come as neighboring countries invest in and expand their own transportation infrastructure. The opening of the Perpignan-Luxembourg rail link and the Swiss AlpTransit project will provide improved north-south rail links though the Lˆtschberg and Gotthard transalpine railway tunnels. Complementing these endeavors, France’s planned Lyons-Turin rail tunnel will provide a key link in the European railway transport network, connecting Barcelona, Budapest, and many points in between.
John Deere Pulls it Together
Across the world, businesses are pulling back and leaning out their supply chains to account for a wide-spreading economic malaise. In Brazil, they’re pushing toward the coast.
Anticipating a need to consolidate and optimize its logistics assets and processes, agricultural machinery manufacturer John Deere plans to merge two of its Brazilian distribution centers ≠ one in Catal„o and another in Horizontina ≠ with the help of CEVA Logistics, a global third-party logistics provider. The new DC, sited 100 miles from the coast in Campinas, Sao Paulo, intends to facilitate more efficient resource use and replacement part movement.
The new venture isn’t CEVA and John Deere’s first rumble in the jungle. The two global organizations have worked together during the past six years on projects including the two distribution centers now under consolidation.
The game plan for the DC merge started with adopting CEVA’s Lean program, which strives for efficiency, intelligence, and elimination of waste. In addition to its proximity to the coast, the new DC offers other transportation benefits.
“The distribution center in Campinas is strategically positioned next to the Viracopos airport and the Santos Dumont highway,” notes Giuseppe De Vincenzo, managing director for CEVA.
Historically poor modal connectivity between inland points and Brazil’s productive port complexes may have added further incentive for John Deere to shift its assets closer to the coast and the country’s more developed transportation links. The manufacturer’s new location puts it in good company. A number of multinationals—including Avon, General Motors, and Intel—operate distribution centers near Campinas.
Russian Retailer Gets Hooked Up
Leading global manufacturers including Kraft Foods, Nestle, and Procter & Gamble, along with German-based retailer METRO Group, are expanding their use of the Global Data Synchronization Network (GDSN) in Russia.
The GDSN is an Internet-based network of interoperable data pools and a global registry that allows companies to exchange standardized supply chain data with trading partners.
METRO Group’s suppliers are leveraging the GDSN to marry line-item data at the point of sale with available supply chain inventory to synchronize product catalogs. This connectivity allows all parties involved to realize supply chain benefits such as reduced paperwork and improved service levels thanks to faster new-item setups and more accurate product data.
Enabling active GDSN connections in Russia is a milestone for the data-synchronization industry, given the country’s dynamic market conditions. As one of the fastest-growing European economies, Russia offers significant potential for suppliers and retailers to grow across all sectors. This GDSN connection provides a faster and more cost-effective flow of information and goods in a country where electronic master data exchange is still evolving.
“By synchronizing product data with METRO Group in Russia, we are able to get real-time inventory updates from its stores in the region,” says Janna Kouchina, director sales, Kraft Foods Russia. “This gives us the ability to get our products to the store shelf faster.
“We hope that more retailers will adopt this process, giving us the ability to experience similar benefits across our global supply chain,” Kouchina adds.
Moving forward, METRO Group is looking to synchronize item data with all its global suppliers, beyond efforts already underway in Russia, Germany, Poland, and the United Kingdom.