Global—March 2012

Global—March 2012

New Zealand Port Tries to Strike Labor Balance

As yet another reminder of how global labor strife can impact supply chains, the Ports of Auckland is trying to ease the pressure of three week-long strikes by the Maritime Union of New Zealand during the country’s busy export season. With an impasse expected to run through March 2012, the Ports of Auckland has already lost $25 million in business.

The first strike began in February 2012, and impacted 11 ship calls, six of which were managed through the port’s multi-cargo operations and Fergusson Terminal. The other ships were diverted to alternate ports. Authorities are strengthening on-port operational capacity and working with shippers to plan contingencies and circumvent further work stoppages.

The strikes’ impact would be much more severe if the port did not employ a mix of non-union staff who have been keeping facilities operational during the standoff.

Three for Tea

Tetley, the tea subsidiary of India-based Tata Global Beverages, awarded French third-party logistics provider Norbert Dentressangle a three-year storage and distribution contract to manage a collaborative project between Kellogg’s and Kimberly-Clark in England.

The 3PL will move Tetley’s warehousing from Newton Aycliffe to its site in Trafford Park, which will be shared with Kellogg’s. The facility will consolidate products from Kimberly-Clark’s northern distribution center in Chorley before delivery to retail and wholesale customers throughout Great Britain. The transition is expected to net efficiency, cost, and environmental benefits for all parties.

"By making it possible for us to collaborate with Kellogg’s and Kimberly-Clark, Norbert Dentressangle’s solution increases our delivery frequency and improves service to customers," says Steve Eastham, vice president of operations, EMEA, for Tata Global Beverages.

The collaborative effort also maximizes warehouse space and transport utilization, which will reduce road miles and fuel bills, helping to minimize the effect of increased costs both in the supply chain and elsewhere in the business.

Amazon’s Indian Gambit

Following the Indian government’s decision to allow more foreign direct investment (FDI) for single and multi-brand retailers, Amazon has received permission to set up a wholly owned subsidiary in-country to provide courier services to the domestic market. Observers see the multinational company’s gambit as a first step toward tapping India’s $10-billion e-commerce industry.

As India takes a more liberal stance on FDI, domestic retailers and e-tailers fear a siege on their consumer domains—especially online. Amazon recently launched comparison-shopping site, which aggregates products from domestic online and brick-and-mortar retailers while similarly plugging in Amazon’s existing global e-commerce channels. The company says the new Web site will provide 10 million products from more than 14,000 Indian and global brands.

But unlike its U.S. model, Amazon cannot sell product directly to consumers. Because of India’s FDI rules, shoppers are directed to unique sellers to finalize transactions, much like online travel search engines.

Still, all indications suggest Amazon’s interests are focused on providing the back-end transportation and logistics backbone and expertise currently lacking within India. As further proof, rumors are circulating that the multinational is setting up a logistics facility in Mumbai to help domestic companies manage fulfillment.

Euro Rails Speed Crossings

Compared to the United States, rail freight integration has always been a challenge within Europe’s economy—a consequence of unique countries, processes, protocol, and standards. Passenger transport has always held sway. But as congestion increases around urban areas and transport costs continue to rise, rail freight has become a welcome option.

Recently, the CEOs of DB Schenker Rail (Germany), TX Logistik (Germany), SBB Cargo (Switzerland), and BLS Cargo (Switzerland) presented requirements for developing European rail freight transport corridors as defined by the European Commission. Their principal goals are to simplify rules, eliminate bureaucratic bottlenecks, and increase freight throughput.

EU Regulation No. 913, concerning a European rail network for competitive freight, was enacted in November 2010 and aims to increase the competitiveness and quality of international rail freight. The measure stipulates that a network should be organized to provide fast, reliable connections among the most important economic centers, allowing for greater freight volumes. As part of this blueprint, nine international rail freight corridors that give more priority to freight trains will be established by 2015.

The growth forecast for European rail freight mainly concerns cross-border corridors. For example, on the Rotterdam-Genoa Corridor, bottlenecks exist in Oberhausen, Germany, Basel and Chiasso, Switzerland, and Milan, Italy. With new infrastructure—notably the Lötschberg Tunnel and the Gotthard Base Tunnel—coming online in the next few years, these segments need to be linked together to create a more efficient end-to-end corridor.

"Improving the corridor’s efficiency involves numerous infrastructure investments," says Alexander Hedderich, CEO of DB Schenker Rail. "Construction and information about these projects must be coordinated internationally to maintain the best possible service quality."

Furthermore, the railroads argue that capacity can be increased if priority is given to freight trains, operational processes are harmonized, and routes are established based on market needs. And with the objective to improve economic efficiency, they are looking to ensure any new infrastructure is designed to accommodate mile-long trains. Interoperability is essential for rail companies to remain competitive with road transport.

Dutch Defy Euro Crisis

Despite a lingering financial crisis in the Eurozone, the Netherlands remains a stable, competitive, and attractive location for foreign companies to establish operations. The country posted record foreign direct investment (FDI) in 2011, attracting 193 projects, representing 4,358 jobs and planned investment of $1.95 billion, according to the Netherlands Foreign Investment Agency (NFIA).

In terms of projects, the NFIA brought in the highest number in its 30-plus years of existence, registering a 25-percent increase over 2010.

While a little more than half the projects originated in Asia, North America recorded 26 percent of the total. The United States remains the largest source country with 46 projects, of which 32 were initial investments of companies in the Netherlands. Adding in three projects from Canada and one from Puerto Rico, the North American totals are: 50 projects; 1,770 jobs; and $390.6 million investment.

"Companies favor the Netherlands for its position as a stepping stone into Europe, its language and educational skills, and its fiscal climate," says NFIA Commissioner Bas Pulles.

Big Blue Sees Red

Walmart is increasing its investment in the holding company of Yihaodian, an e-commerce Web site in China, to solidify its supply chain presence within the country. Launched in July 2008, the online retailer offers more than 180,000 SKUs, predominantly in grocery sales, consumer electronics, and apparel. With an existing logistics network based in Shanghai, Beijing, Guangzhou, Wuhan, and Chengdu, Yihaodian serves an expanding customer base with same- and next-day delivery—an ideal foil for the U.S. big box retailer.

With a 51-percent controlling stake in Yihaodian, Walmart now has an established presence in China—a reality foreign to most companies trying to enter the politically insulated market. But the retailer’s stake may be small compared to China’s ulterior motive and gain.

"More than an investment of funds, Walmart will share its knowledge, technology, and best-in-class retail practices with Yihaodian’s existing organization," says Junling Liu, co-founder and CEO of Yihaodian.

2011 Import Ups and Downs

2011 brought some noteworthy dips and spikes in U.S. imports from specific countries, measured in TEUs. Imports from the UAE showed an impressive increase in 2011 compared to 2010, while imports from Venezuela saw one of the largest decreases.

United Arab Emirates 42.93% +
Austria 24.05% +
Belgium 19.26% +
Czech Republic 19.17% +
Peru 16.51% +
Oman 15.27% +
Portugal 14.50% +
Spain 14.31% +
Ecuador 12.23% +
Germany 12.18% +
Finland -10.77%
Hong Kong -11.57%
Pakistan -12.13%
Russia -14.29%
Venezuela -62.33%
Source: Zepol Corporation

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