Global Logistics-September 2008

Building on successful efforts in China, India, and the United Kingdom, FedEx Express is introducing its first domestic offering in Latin America—FedEx Express Nacional.

The new service, which debuts Oct. 6, 2008, provides domestic next-business-day shipping, online tracking and tracing, and a money-back guarantee to businesses across Mexico.

“Adding domestic service to our portfolio of international products increases our ability to further facilitate commerce for shippers doing business in Mexico, demonstrating our continued commitment to the market and our confidence in its future growth,” says Juan N. Cento, president of FedEx Express, Latin America and Caribbean division.

The launch of a next-day shipping solution comes as Mexico’s government continues its efforts to invest capital in the country’s developing transportation infrastructure and soaring fuel costs force U.S. businesses to consider sourcing options closer to home.

FedEx’s commitment to Mexico’s long-term potential should act as a major incentive for U.S. businesses exploring the country’s maquiladora sector for manufacturing and sourcing activities and an expanding consumer market for new sell-in opportunities.

For Mexico’s nebulous transportation and logistics sector, FedEx’s cachet and experience, coupled with speed and service expectations, may stimulate a sea-change in how businesses move product—creating critical mass and leveling standards between the United States and Mexico.

The forecast for global airfreight transportation is markedly clearer with a chance of increasing visibility, thanks to an innovative program spearheaded by the International Air Transport Association (IATA) and growing reception from shippers and service providers alike.

Fraport, which operates Frankfurt International Airport, is the newest member and first airport operator to join IATA’s Cargo 2000 quality system, an initiative involving approximately 60 airlines, forwarders, general handling agents, and information technology providers.

Cargo 2000 is a worldwide uniform management system that measures the quality of the entire transport chain. The program helps air cargo carriers and handlers re-engineer and streamline transportation processes from shipper to consignee.

Members use a common data management platform (CDMP) to aggregate and integrate individual information elements into unified quality reports. Partners can access the same data so that internal process improvements are jointly implemented, especially at interfaces linking partners.

The program offers transparency of quality control data for the entire airfreight industry and ensures ongoing service improvements for cargo customers.

In addition, continuous quality optimization allows airfreight shippers to further reduce costs and increase revenues.

The quality program is being implemented in three phases:

Phase 1 includes airport-to-airport movements and manages shipment planning and tracking at the master air waybill level. Once a booking is made, a plan is automatically created with a series of checkpoints against which the transportation of every air cargo shipment is managed and measured.

Phase 2 manages shipment planning and tracking at the house air waybill level and provides interactive monitoring of door-to-door movement.

Phase 3 manages shipment planning and tracking at the individual piece level, plus document tracking.

Cargo 2000 first published performance data in May 2005. At that time, it measured 148,795 route maps. In June 2008, it measured almost 1.05 million route maps system-wide.

The state governments of the United States and Mexico are working together to devise new protocols for reducing transit times and increasing security that will facilitate commercial traffic across the border.

The joint declaration is the result of collaborative efforts by the Logistics and International Crossings Worktable, a bi-national group of government officials from 10 border states: California, Arizona, New Mexico, and Texas from the United States; and the Mexican states of Baja California, Chihuahua, Coahuila, Nuevo Leon, Sonora, and Tamaulipas.

The Logistics and International Crossings Work Table supports enhanced communications, coordination, and consensus building among the 10 states, encouraging investment in modern and efficient infrastructure at ports of entry to strengthen commercial exchange.

The consortium has proposed three recommendations to help streamline cross-border cargo movements:

1. Support U.S. Customs and Border Protection’s efforts to obtain funding for additional border crossing inspectors and, along with Mexico’s Institute of Migration, use available funding to immediately fill inspector vacancies at land ports of entry along the U.S.-Mexico border.

The consortium has also recommended that both agencies consider current and future staffing needs for expanded hours of operation, peak hours, double-stacked inspection booths, and additional port projects.

2. Reduce border wait times substantially by 2013, and complete bi-national state-to-state regional border master plans among the 10 states within three years. The plans will facilitate regional and infrastructure planning and strategic resource allocation in the U.S.-Mexico border region.

3. Support border states’ requests for a presidential permit for international crossings, such as the Otay Mesa East Port of Entry in San Diego County, which uses alternative financing mechanisms to help minimize border wait times.

Cold Front Blows Into India

Shippers moving perishable goods from Asia to the United States may find themselves rerouting shipments through India’s newest transportation gem, Hyderabad International Airport.

Situated within two hours’ flying time of all major cities in India and three to five hours from all Southeast Asian countries, the recently opened facility expedites perishable cargo movements within India and connects Southeast Asia, the Middle East, Europe, and the United States.

The airport’s Center for Perishable Cargo (CPC), currently under the first phase of construction, will be able to accommodate 16,000 tons of perishable cargo per year. Capacity will expand to 27,000 tons when the second phase of development is completed by 2015.

As the established hub for India’s pharmaceutical and biological industry, and with more than 3,000 tons of import/export cargo expected annually, Hyderabad’s CPC should draw strong demand from research, electronics, and defense industries that require low-temperature storage.

Elsewhere, the airport’s cargo complex is building out infrastructure to increase cargo-handling capacity to more than 1.3 million tons. Ongoing development of a cargo logistics center will provide a fully integrated domestic and global facility for freighter operators, freight forwarders, regulatory agencies, and shippers.

China’s Port Boom Swings Full Speed Ahead

China’s infrastructure boom is in full swing as efforts to expand cargo-handling capacity throughout the country continue at a robust pace and global shipping enterprises dig in for the long term.

One example: The CMA CGM Group, a Marseille, France-based container shipping company, recently signed a 50-year concession agreement to build and operate a container terminal at the Port of Tianjin in North China.

The new terminal, which is expected to be operational in 2011, will feature a 3,600-foot quay and annual throughput capacity of 1.7 million TEUs.

Located less than 100 miles from Beijing in the Binhai industrial zone, Tianjin is the natural maritime link to the Chinese capital. The port currently ranks 16th in the world in container traffic, handling more than 7.1 million TEUs in 2007, a 19-percent increase over 2006. So far in 2008, volumes have grown 22 percent.

CMA CGM also maintains a presence at the Chinese port of Xiamen and has acquired interests in China Rail Intermodal—a project to design, build, and manage a network of 18 railway container stations covering the entire Chinese territory, including Tianjin.

This latest investment secures its strategic base in Tianjin, which is poised to support continuing industrial growth in northern China.

Building a Bridge to China

As yet another example of U.S. motor freight carriers expanding their networks and value propositions to stateside shippers beyond borders, YRC Logistics recently acquired Shanghai Jiayu Logistics Co., one of the largest truckload and less-than-truckload service providers in China.

The agreement strengthens YRC’s position as a global trucker, and helps it capitalize on increasing demand for experienced and capable trucking services in an established manufacturing market and emerging consumer economy, diversify operational interests in light of a sluggish domestic market, and provide U.S. consignees with an end-to-end supply chain solution.

With more than 30,000 customers, 1,800 employees, 200 locations, and a network served by 3,000 vehicles, Jiayu provides a complementary platform for YRC Worldwide to support the needs of both local Chinese customers and large multinational companies with transportation requirements in China.

U.S. shippers and consignees will benefit from having a one-stop, on-the-ground partner in China and the United States that can seamlessly connect point-of-origin and last-mile delivery requirements.

Labor Daze

Labor strife across the globe may give U.S. businesses pause as they consider both potential sourcing locations and supply chain contingency plans.

A week-long transport workers’ strike in Pakistan recently bottle-necked roads with cargo-laden trucks, left ports full of import cargo, and had ships leaving port without loading export shipments.

Workers were demanding a cut in diesel prices in line with world oil prices, compensation against vehicles lost in last December’s riots, and a reduction in motor vehicle taxes.

As a result of the strike, local businesses lost export contracts because of missed deadlines, letters of credit expired as export cargo sat on roads and at ports awaiting entry, and many exporters were forced to air freight cargo to meet delivery obligations, according to The Karachi Chamber of Commerce and Industry.

Elsewhere globally, South Africa’s transport sector recently came to a full halt as the Congress of South African Trade Unions took to the streets to protest soaring food, fuel, and electricity prices.

The day-long strike paralyzed the transport, mining, manufacturing, and retail sectors, though adequate warning enabled industries and businesses to take steps to minimize its economic impact.