Friday, July 31, 2015


UPS buys Coyote Logistics. Why? Enlarge their logistics service footprint? Expand into non-parcel business? Lessen dependency on parcel business? Or?


Too many e-commerce / omnichannel firms obsess on the Last Mile.  The real issue and need is the New Supply Chain, especially to respond to the Immediacy and the Customer Experience.  Traditional/old supply chain management creates last mile issues.


Inventory allocation is not an answer for multichannel / omnichannel.  Upstream supply chain integration as part of New Supply Chain is. 

Thursday, July 30, 2015


EU Advances Modernization of Customs Procedures

Friday, July 31, 2015
Sandler, Travis & Rosenberg Trade Report
The European Commission has adopted a legal act to create a simpler, more modern and integrated EU customs system to support cross-border trade and provide for more EU-wide cooperation in customs matters. According to a Commission press release, this delegated act covers a wide area of customs activity, including the following.
- simplification of the customs procedure for inward processing, which allows the processing of non-EU goods without payment of import duty and other charges
- clearer rules to ensure equal treatment of economic operators in the EU
- wide-ranging provisions that will allow customs decisions and authorizations to be valid across the EU in the future
- establishing common data requirements as the basis for new IT systems
- linking member states' customs administrations to ensure a seamless exchange of information
- improvements in risk management to reinforce the fight against trade in illicit and prohibited goods, terrorism and other criminal activities
The Commission states that this act builds on the Union Customs Code, a major overhaul of EU customs rules that came into force in 2013, by setting out the details of the rules that will apply from May 1, 2016. The act will now be considered by the European Parliament and the European Council, which can both raise any objections within two months. It will be supplemented by an additional implementing act, which will be voted on by the Customs Code Committee composed of representatives from EU member states.


More dynamics for New Supply Chain that drives E-commerce Immediacy across the world

July 29, 2015, 4:17 PM

Global e-commerce set to grow 25% in 2015

Market research firm eMarketer projects e-commerce sales will eclipse $3.5 trillion within the next five years. The web will account for 7.3% of global retail sales this year, growing to 12.4% by 2019, eMarketer says.
Lead Photo
The fast-growing Asia-Pacific market is expected to fuel a 25% year-over-year increase in global e-commerce in 2015.
That’s according to market research firm eMarketer, which projects consumers worldwide will spend $1.672 trillion online this year. That figure represents 7.3% of overall global retail sales, which are expected to be $22.822 trillion this year. By 2019, eMarketer Inc. projects online purchases will more than double to $3.551 trillion, or 12.4% of total retail sales of $28.550 trillion, as more people come online around the world.
The Asia-Pacific region is growing faster than any other at a rate of 35.2% year over year, with eMarketer projecting $875 billion in online sales there in 2015.
Researchers say much of that growth will come from consumers in rural areas making online purchases from mobile phones. The region will gain about 80 million new online shoppers this year, eMarketer predicts.
“Especially in rural regions where you might have less availability of local markets, opportunities to get goods that may be easier to get online, that’s really starting to grow the market,” says Monica Peart, forecasting director for eMarketer. “Rural populations are picking up in terms of using mobile devices. That is what seems to be spurring a lot of the retail e-commerce growth.”
EMarketer projects North American e-commerce sales of $375.89 billion this year, up 14.3% from $328.6 billion last year. E-commerce sales in the U.S. are expected to account for 92.9% of that total, or $349.06 billion. That would represent growth of just over 14% from last year’s U.S. e-retail sales of about $305 billion, reported by the U.S. Commerce Department. The eMarketer report says U.S. e-retail sales will nearly double to just over half a trillion dollars ($548.22 billion) by 2019.
Peart says the biggest trend she’s noticed in analyzing the U.S. market is consumers’ willingness to spend big online. “Frequency of purchases and higher-value transactions are really growing online,” she says. “As a more mature market, we’re seeing sales continue to grow because of that. People are more willing to buy big-ticket items online.”
Also helping fuel growth here at home: the recent race to the bottom when it comes to prices between Inc. (No. 1 in the  Internet Retailer 2015 Top 500 Guide) and Wal-Mart Stores Inc. (No. 3), a trend likely to accelerate with the recent launch of new online marketplace, which promises to offer the lowest prices online.
“It’s definitely a win for consumers,” Peart says. “Each year during the holiday season, we see consumers pushing more and more of their shopping towards online from traditional retail. It’s forcing traditional retailers and online retailers to offer discounts early and throughout the year. It’s something that we really see moving the needle in terms of e-commerce.”
Here are the top 10 e-commerce countries based on projected web sales along with their year-over-year growth:
  • China: $672.01 billion (42.1%)
  • U.S.: $349.06 billion (14.2%)
  • U.K.: $99.39 billion (14.5%)
  • Japan: $89.55 billion (14.0%)
  • Germany: $61.84 billion (12.0%)
  • France: $42.60 billion (11.1%)
  • South Korea: $38.86 billion (11.0%)
  • Canada: $26.83 billion (16.8%)
  • Brazil: $19.79 billion (17.3%)
  • Australia: $19.02 billion (9.3%)

Wednesday, July 29, 2015


China Debt Woes Present a Growing Threat to Supply Chains, Report Says

The Chartered Institute of Procurement and Supply warns that actions by China’s central bank may raise the potential for defaults and disruptions

CIPS recommends companies communicate more with suppliers in China and set up alternatives at each tier of their supply chains. Above, a textile factory in Suzhou, China. ENLARGE
CIPS recommends companies communicate more with suppliers in China and set up alternatives at each tier of their supply chains. Above, a textile factory in Suzhou, China. Photo: Reuters
China’s troubled debt market is a growing threat to global supply chains, according to a new report from the Chartered Institute of Procurement and Supply.
Companies doing in business in China could see suppliers fall into disarray overnight if the People’s Bank of China moves to rein in the debt market, either through monetary policy or by allowing more borrowers to default, said John Glen, a CIPS economist.
Even suppliers with good credit could be forced to cut costs or delay shipments if they are able to borrow less, he said. “There’s probably going to be … a significant amount of defaults, and what you have to make sure of is that default doesn’t cause dislocations in your supply chain,” Mr. Glen said.
The Chinese economy is grappling with slower growth and a stock market plunge that has seen the Shanghai Composite Index fall nearly 30% in just a few weeks. That’s complicating efforts by China’s central bank to channel lending toward boosting growth while reining in bad loans and the amount of cash heading into the country’s stock markets.
China was the top factor behind a jump in the CIPS risk index to its highest level since late 2013, when Europe’s economic and credit problems drove uncertainties for supply chain managers to a 20-year high. The index, scheduled to be released later this week, rose to 80.1 in the second quarter, from 78.7 in the first three months of 2015.
CIPS put China’s contribution to global supply chain risks on par with India, which is typically viewed as a more dangerous place to do business.

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The biggest risk to Western firms is that small manufacturers deep in their supply chains buckle as credit tightens, Mr. Glen said. Such companies typically are less transparent about their finances and may only deal with other Chinese suppliers, making it harder for Western companies to monitor them. But if they fail, it can interrupt supplies to companies higher up the chain.
In its report, CIPS recommends companies doing business in China communicate more with suppliers there and line up alternatives at each tier of their supply chains. That way, if one company fails another can quickly step in. Commodities producers, which often deal directly with debt-laden Chinese buyers, also need to make sure they are properly insured against default, Mr. Glen said.


Container lines are laying up small ships while adding large ones-- all of which does little for excess capacity.  How bad will 2nd quarter numbers be? Then what?


The Suez Canal will challenge the Panama Canal for US East Coast containers.

 Embedded image permalink


What will ports do after Maritime Financial Tsunami strikes?  What is container lines with mega ships survive?  What are they planning?



More signs of the pending Maritime Financial Tsunami.

Deepsea alliances: is the strain beginning to show as the peak season disappoints?

By Mike Wackett
07.27.2015 · Posted in Loadstar posts, Sea FavoriteLoadingAdd to favorites
OOCL Qingdao
With the peak season appearing to offer no immediate lift to freight rates, reports suggest all is not well within the deepsea east-west alliances as their shipping line members come under increased shareholder pressure to stem losses.
There seems little doubt that the rate war that has raged on Asia-Europe container trades since the second quarter has severely impacted the bottom line of carriers that have heavily discounted rates in order to fill ships.
Ahead of the first half-results season – set to begin with NOL on Thursday – G6 partner OOCL has released its second-quarter operational update, which reveals a massive 28% year-on-year decline in its Asia-Europe average revenue per teu.
The numbers show extreme pricing volatility. The carrier’s average rate in Q1 was just 1.9% below that of the same period of 2014 – and once the significant fuel savings were factored in, the first quarter resulted in a satisfactory performance.
OOCL is a bellwether company for second-tier carriers. It posted a $270m profit in 2014 – although only 18% of its total container business is exposed to the extreme volatility of the Asia–Europe trade.
Meanwhile, the Shanghai Containerized Freight Index (SCFI) gave up another big chunk of the July general rate increase (GRI) last week, tumbling a further $118 per teu on Asia to North Europe and $127 per teu to the Mediterranean, to sit at a depressingly low $400 and $402 per teu respectively.
And, worryingly for the container lines, there is little indication from forward-booking forecasts that the peak season will show significantly higher demand, making the implementation of 1 August GRIs of around $1,000 per teu optimistic.
Indeed, today’s “response to changes in market demand” statement from the G6 carriers announced the cancellation of one sailing a week from Asia to North Europe in September, following the blanking of the same loops in August, removing around 13,000 teu of weekly capacity, approximately 20% of the alliance’s offering.
Culling capacity in what is normally the Asia-Europe peak season is almost unprecedented, and follows the blanking of over 50 voyages on the route in the first half of the year, an all-time record.
At the same time, there are another 50 ultra-large container vessels of 13,800-19,000 teu due for delivery to carriers before the end of the year.
Shipping analyst Alphaliner estimates that nothing less than the removal of four entire Asia-North Europe strings is required to readdress the current supply-demand imbalance.
The complex operational workings of the alliances require complete co-operation between all members, but sources indicate that the different financial pressures carriers find themselves under is putting considerable strain on day-to-day working relationships.

Tuesday, July 28, 2015


Global Supply Chains, New Directions, & Trade Finance

Standard Chartered recently produced a very good report titled Global supply chains: New directions. There is some good stuff in here and if you have the time definitely worth the read.
In it, they talked about some of the manufacturing changes that will impact supply chains, such as:
  • Robotics could challenge the low-wage model while 3D printing could bring a shift to customized products, made locally.
  • The centre of gravity of low-cost manufacturing looks set to trend west from coastal China, inland and to ASEAN, India and eventually Africa.
  • Services trade is likely to grow fast as digital technology advances.
But I found the trade finance section the most interesting and relevant.   This section focused on three areas:

Market Share of financing arrangements

From the USD 15.9 trillion in global merchandise trade (2008 IMF estimate), Standard Chartered estimated around 80-90% of all merchandise trade flows are supported by some form of trade finance (see chart below).
Open account finance
Think about that for a minute. What StanChart is saying is that in some indirect form, when buyers push terms out to 45 or 60 days or longer to buy merchandise, that suppliers are funding that on some type of bank credit and not equity or cash flows. I assume StanChart means cross border merchandise and not domestic. Does that pass the smell test? Maybe, but I don't think so for SMEs. Perhaps if they are throwing factoring solutions in there, but cross border factoring is still rather small compared to its domestic cousin.

‘Gaps’ in trade finance

StanChart believes most of the drop in trade and trade finance during the Great Recession of 2008 was probably due to the massive manufacturing inventory correction and not an inability to access credit. I believe that as well. One only has to look at the massive inventory write-downs of some of the technology companies back then.
They did point out that a recent ICC Survey suggests that while trade finance availability has risen, there is still a shortage for SMEs.
But many of us know new paradigms are changing the way SMEs access term loans and transactional finance, and this is moving fast. In fact, some banks are either white labeling these platforms or participating as funders, ie, using these platforms as user interfaces to get the data to run their own underwriting.
I do believe there are deep concerns about a possible trade credit squeeze in the Emerging Markets. The OECD banks have shrunk their Correspondent bank network due to compliance costs. This has the consequence of limiting credit in those markets.
Three new trends
Here, Standard Chartered talks about platform-based e-invoicing, mobile payment technology and the Bank Payment Obligation as three new trends.  From the little they touched on these subjects, particularly platform based e-invoicing, I can tell this is an area banks need to get much smarter about. There is much happening here, and it does not pay to have a superficial understanding.
As to the BPO, I would not call this a new trend, but something that has been in development for a long time  and got a recent lift off with the ratification by the International Chamber of Commerce (ICC), of the Uniformed Rules for Bank Payment Obligation (URBPO) on July 1, 2013.  The verdict is still out, and there is a divide between those that think this is the future of trade finance and those that see it as a waste of time.  I have written extensively about about this new instrument here, here and here.
Download Standard Chartered's report here.

Friday, July 24, 2015


Ocean carriers / container lines hurt liquidity / increase inventory of customers' supply chains.

--Impact from Actions of Container Lines--

Supply chains are complex with an evolving landscape of stakeholders and practices. Container lines are important participants that affect supply chains with their operational changes. Today:
  • fewer carriers are in business because of mergers and bankruptcies
  • alliances, slot exchanges, and vessel sharing among carriers have been created and changed
  • shipping routes are often revised
  • sailing schedules are made and reworked; and
  • “slow steaming” is an ongoing practice.
In addition, carriers have gotten bigger and bigger ships to meet trade growth and to reduce costs. Mega-ships are 18,000+ TEU (twenty-foot equivalent) and rival the size of an aircraft carrier. Port authorities are deciding whether to invest significant monies to handle these vessels. They must be ble to quickly berth, unload, load, and get the big ships sailing again to minimize congestion and delays.


Some shippers care only about the rates they pay; companies with leading-edge supply chains know differently. Carrier operations have repercussions. The effects are about more than transport; they are about supply chains.
Performance reliability is important for supply chain effectiveness. Firms create weekly buckets of production/build plans and logistics plans. These are dynamic and critical because they often involve high volume items, seasonal goods, or new products. The plans reflect underlying lead times, which include transit times, from suppliers to factories and from factories to customers and distribution centers.
When container lines change operations, there are corresponding changes to underlying transit times in logistics and build plans. Services that are slower, unreliable, and inconsistent, require companies to go into fire-fighting mode to compensate for problematic service. Significant expediting is used-- a sign of process breakdown--and creates de facto chaos. Products may be flown to keep production lines going or to meet sales needs.
Then there are uncertainties with mega-ships. How will they be filled if supply exceeds demand? What will carriers do to ameliorate under-utilized capacity—and will it affect transit times?
Also, what will be the time factors getting mega-ships into and out of ports? If fewer ports opt-in to handle the ships, what does that do costs and to the time from the port to distribution centers or to end-use customers? All these create scenarios of questionable time consistency. How do supply chain organizations deal with such vagaries for build and delivery plans and to effectively manage supply chains?
Uncertainty creates commercial and operations risks for supply chains. It is a driver for carrying extra inventory to buffer the unknown. Multinationals, with their global scope, are particularly concerned with these events.
To deal with varying transit times, more inventories—more safety stock--are added throughout the production supply chains. Additional working capital is tied up in raw materials, work-in-process, and finished goods. This is investment that could be used elsewhere. Such added inventories are an anathema to both supply chain management and lean logistics. The net result is a third group of inventories in the supply chain.
Many items have short shelf lives. Firms in dynamic, volatile businesses, such as fashion, and ones dealing with strong seasonality, such as retailers with Christmas, know the impact of product life cycles. Not having sufficient products timely for peak times creates problems. This, in turn, factors into managing product portfolio complexity and assortment optimization. These are important for both brand and private label items. Supply chain cost and performance have underlying roles to product assortment, sales, and profit results, all of which extend to the individual item level. Bottom line--service consistency/reliability is vital to supply chain results, both financial and operating.


Container lines play a vital role in global trade. Yet, carriers have made and are making operational changes that negatively affect the supply chains of their customers. In some ways, ocean carriers and shippers are diverging in what they are doing when the focus is placed on supply chain performance. Shippers need to take tactical actions to counteract carrier actions. More importantly, companies need to develop and implement strategic moves to improve their supply chains.

Thursday, July 23, 2015


There is a problem with such programs--in the US and globally.  Regulators do not know and understand supply chain management, trade, logistics, and logistics infrastructure.  As a result, they overlook risks.  And overlooking risks creates more risks with the global food supply chain.

FDA Proposes User Fee Program to Fund Accreditation of Third-Party Auditors

Friday, July 24, 2015
Sandler, Travis & Rosenberg Trade Report
The Food and Drug Administration has published a proposed rule and a draft guidance document to support a new program under the FDA Food Safety Modernization Act that will help eligible foreign entities demonstrate that imported food meets U.S. food safety requirements. Audits and certifications for eligible foreign entities under this program will be used by importers applying for expedited review through the Voluntary Qualified Importer Program and may also be required by the FDA as a condition of granting admission into the U.S. when certain food safety risks have been identified.
Specifically, the FDA is proposing to (1) amend a July 2013 proposed rule on the accreditation of third-party auditors and certification bodies to conduct food safety audits of eligible foreign entities (including registered foreign food facilities) and issue food and facility certifications, and (2) establish a reimbursement (user fee) program to assess fees and require reimbursement for the work performed to establish and administer the system for the accreditation of third-party auditors. Comments on this proposal may be submitted by Oct. 7.
Under the July 2013 proposed rule, the FDA would recognize accreditation bodies to accredit certification bodies, except for limited circumstances in which the agency may directly accredit CBs. Among other things, the proposal includes eligibility requirements for ABs to qualify for recognition and requirements that ABs participating in the FDA program must meet as well as eligibility requirements for CBs to qualify for accreditation and requirements that CBs choosing to participate in the FDA program must meet.
The comment period on the July 2013 proposed rule closed on Jan. 27, 2014, and the FDA is currently working on the final rule. The agency indicates that because that rule has not yet been finalized, the new user fee proposed rule is based on the accreditation of third-party auditors proposed rule. When the user fee proposal is finalized, it will be aligned with the accreditation of third-party auditors final rule. The user fee proposal includes provisions on parties subject to a user fee, computation of the user fee, FDA notification to the public of annual fee rates, collection of the user fee, and consequences derived from the failure to pay a user fee.
The FDA has also issued a draft guidance document for industry and FDA staff on third-party auditor/certification body qualifications for accreditation to conduct food safety audits and issue food and/or facility certifications. In developing the draft guidance, the FDA considered several voluntary consensus standards for their relevance to the qualifications of third-party auditors/certification bodies that would certify foreign food facilities and/or their foods for conformance with the requirements of the FD&C Act. The agency also sought to identify the standards most commonly used by stakeholders (e.g., other governments, public and private accreditation bodies, the food industry and the international standards community) in qualifying third-party auditors/certification bodies for conducting food safety audits. Comments on this draft guidance document may also be submitted by Oct. 7.


It is clear that many critics of Amazon & of Macy's same-day delivery do not understand supply chain management, especially the New Supply Chain for Immediacy.


It is interesting how few retailers have tried to adopt Amazon's e-commerce approach. It may reflect how few CEOs understand supply chain management and how the New Supply Chain drives Immediacy.

Amazon Waves Goodbye To Walmart On Its Way To The Top

There you have it.  Amazon Inc. is now the highest valued company in retail on the face of the earth.
The company reported June quarter revenues of $0.19 over share in profits versus expectations of $19.34 in revenues and a loss per share of $0.14/share.  (please note I am long AMZN shares and options)
At $570 per share which is where Amazon shares are trading as I write this quick post out, AMZM is now valued at approximately $270 billion plus versus Walmart which closed with a market capitalization of $233 billion.


I question whether Deliv, EasyPost, and Wharton prof understand supply chain management, especially the New Supply Chain for Immediacy.  They seem to have narrow views.

Macy's to expand same-day delivery to new U.S. markets, challenging Amazon

CHICAGO/SAN FRANCISCO Macy's Inc (M.N) is expanding same-day delivery to several new U.S. markets this summer, one of the most aggressive pushes by a brick-and-mortar retailer in an area dominated by e-commerce giant Amazon (AMZN.O), according to a Macy's official.    Macy's, the nation's largest department store chain, already offers same-day delivery services in eight markets. By partnering with Deliv, an Uber-like startup that uses a fleet of contract drivers to pick up online orders from stores and malls, the retailer has found a cost-effective way to expand, said the Macy's official, who spoke on condition of anonymity. 
    The official said that the initial plan is to offer the service in several more markets but there nay be additions later this year, and that could take it ahead of Amazon – which currently offers same-day delivery in 14 markets. Currently, Macy's is offering the service in Houston, San Francisco, San Jose, Seattle, Washington D.C., Chicago, Los Angeles and New Jersey. It couldn't be immediately ascertained which ones were being added.
    The department store company's efforts come as the "last mile" - the final portion of a package's journey that takes it from a retailer's warehouse or store to the customer's front door - becomes the next battleground for retailers trying to increase online sales. Macy's has one possible advantage over Amazon in that it has 886 stores as of May 2 in the U.S. from which to source products for delivery – meaning the packages often have less distance to travel - against 50 fulfilment centers and smaller distribution facilities run by Amazon.
    But fast shipping is costly and most retailers who offer it currently lose money on the service, warn logistics experts. For example, analysts estimate that Amazon loses $1 billion to $2 billion a year on its U.S. Prime service, which promises delivery within anything from one hour to two days. Amazon's net shipping cost rose to $4.2 billion in 2014, up from $3.5 billion a year earlier.
Macy's spokesman Jim Sluzewski confirmed the retailer's plans to expand the service this year but declined to give further details.
Faster delivery also becomes a differentiating factor when new online retail sites like, which launched on Tuesday, promise to offer cheaper prices than Amazon. The startup, which will charge $49 a year for membership, claims its consumers can get the lowest price on anything they buy online, with the trade-off of being relatively slow delivery service.
    Even as Macy's rushes to extend fast delivery, many other traditional retailers are far more cautious. The costs of same-day delivery and ambivalence from many customers remain concerns, analysts say.
    Nordstrom Inc (JWN.N) has offered same-day delivery for $15 since 2011, but the service is still only available in three markets: Seattle and Bellevue in Washington state, and La Jolla in California.
    A January survey of 5,118 online shoppers by UPS and Comscore found that 85 percent of people surveyed were willing to wait five days or more for their delivery.   
    "The thing that's so perplexing about this last mile and same day is that the consumers overwhelmingly prefer free shipping over speed," said Satish Jindel, a logistics consultant and president of SJ Consulting Group.
    That could change, said David Bell, a professor of marketing at the University of Pennsylvania's Wharton School, and if consumers became accustomed to same-day service, the result would be an expensive "race to the bottom for retailers" who would not be able to compete with Amazon on the delivery cost.
    Macy's does not disclose how many items it has available for same-day delivery, and Deliv will not say how many items it carries for Macy's.
    Amazon has more than a million products available for same-day delivery.
Macy's charges its customers $5 for same-day delivery, but it is unclear how much of its costs that covers. Deliv says its rates for retailers are in line with the average $8 ground delivery cost of carriers such as UPS and FedEx, but it was unclear whether that's what it charges Macy's or whether it takes a loss to offer the service to Macy's.
"It's very hard to compete with Amazon, but traditional retailers have an advantage in that they already have all of their inventory in place five miles from 90 percent of their purchasing population at their stores," said Deliv CEO Daphne Carmeli.
"This is one of those opportunities to out-Amazon Amazon," she said.
    Although Macy's does not break out details of its online sales or shipping costs, analysts assume the company is losing money on the service once additional costs are taken into account, including finding the product, getting the package ready for delivery, and restocking expenses.
    "Only the biggest of retailers that are capable will be able to afford these operations," said Jarrett Streebin, the CEO of EasyPost, a shipping startup. He estimated costs per package could reach $20 or more with additional logistics processes and staffing to handle the orders. "Who's willing to pay the bill?" he asked.

Wednesday, July 22, 2015


Will Temasek put NOL/APL sale on hold?  Will Hapag-Lloyd delay its IPO?  Both when conditions are better.


Someone else questioning who will buy APL--

Rumours growing of APL sale, but with more losses on the cards, who will buy?

By Mike Wackett
07.22.2015 · Posted in Loadstar posts, Sea FavoriteLoadingAdd to favorites
APL Temasek
A statement by parent firm Neptune Orient Lines this week, that no decision had been to sell its container arm APL, has done little to quell the rumours surrounding the ailing ocean carrier’s future.
It came in response to speculation that NOL’s majority stakeholder, Singapore government investment arm Temasek Holdings, was lining up potential buyers for APL.
NOL’s second-quarter results are due to be published on 30 July, and investors will be demanding a clear strategy from management if those results show it sliding deeper into the red.
Even in the favourable trading conditions of the first quarter of the year, NOL posted an $11m net loss and, with freight rates now substantially lower, next Thursday’s numbers could also prove disappointing.
Alphaliner this week looked at a potential APL sale and asked: “is it worth buying?” It described the carrier as “a chronically unprofitable company with few attractive assets” – noting that most of APL’s ships were bought at prices “well above the current market level”.
Furthermore, the consultant said, there were “no signs that its current management is able to turn around the company’s performance” – NOL having accumulated net losses of $1.5bn since 2009 and carrying, as of April, a debt mountain of almost $4bn.
This however will have been reduced in May by the $1.2bn proceeds from the sale of NOL’s logistics division to Japanese forwarder Kintetsu World Express.
Meanwhile, sources have indicated to The Loadstar that Temasek may be sounding out potential buyers for its terminal interests, in the hope of getting a premium price for this part of the business rather than it become part of a discounted fire sale within APL.
Meanwhile, Alphaliner has also analysed the prospects of Hapag-Lloyd raising €500m through an initial public offering (IPO) later in the year – needed to boost the carrier’s coffers, which are expected to have deteriorated during the adverse trading conditions of the second quarter.
Like NOL, Hapag-Lloyd is burdened with high debt – standing at €4.1bn as at the end of March – and the consultant argued that reports of an IPO valuation of $5.5bn for the German carrier were “unrealistic”.
“The prospects of securing such a high valuation are low,” said Alphaliner, given that 34% shareholder CSAV has market capitalisation of only $977m, based on its current share price, thus implying a market valuation of less than $3bn for Hapag-Lloyd.
The low value of CSAV shares may “cap Hapag-Lloyd’s potential IPO valuation”, it added, giving investors a cheaper, albeit indirect method, of obtaining a stake in the Hamburg-based carrier.
Hapag-Lloyd is scheduled to release its first-half results on 26 August, which will provide analysts with a greater insight into the IPO prospects.

Tuesday, July 21, 2015


Global Logistic Properties Launches $7 Billion China Warehouse Fund

The Singapore-listed company will develop warehouses amid continued growth in consumer spending in China

The corporate logo of Global Logistic Properties at its listing ceremony in 2010. GLP is setting up a $7 billion China-based logistics infrastructure fund. ENLARGE
The corporate logo of Global Logistic Properties at its listing ceremony in 2010. GLP is setting up a $7 billion China-based logistics infrastructure fund. Photo: Bloomberg News
BEIJING— Global Logistic Properties Ltd. GBTZY 1.28 % is setting up a $7 billion China-based logistics infrastructure fund, more than double the size of its previous China fund, to cater to rising demand for warehouse space amid continued growth in domestic consumer spending.
The Singapore-listed company said it would hold a 56% stake in the fund, which also has commitments from pension funds and sovereign-wealth funds that Global Logistic declined to identify. The parties are committing a total of $3.7 billion to the fund, known as CLF II, which will have an investment capacity of $7 billion including loans.
Global Logistic, which is the largest firm in China specializing in real estate for the logistics business, said the fund plans to start acquiring land later this year and begin construction of new projects in April 2016. It will develop 13 million square meters (140 million square feet) of space over four years. Currently, Global Logistic has 11.8 million square meters of completed facilities in the country, which was financed by the previous $3 billion fund, CLF I.

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There is growing demand for warehouse space from fast-moving consumer goods companies such as clothing retailers, pharmaceutical firms and food chains, said Global Logistic Chief Executive Ming Z. Mei.
“We’re seeing big demand for cold storage facilities,” said Mr. Mei, noting that recurring food-contamination incidents are a key driver. “Even ice-cream. When it’s manufactured it’s frozen, and when you buy it, it’s frozen. But when you eat it, you can tell that in between, it had melted before, and it does not taste good.”
Amid waning investor interest in the residential and commercial real-estate markets in China due to oversupply concerns, the logistics real estate segment has been a stand out in attracting investment in the past few years. Some investors are starting to become cautious about expanding in the logistics real-estate market, saying there are emerging signs of oversupply in some cities.
Mr. Mei disagreed, saying that strong demand remains in certain areas, especially for quality facilities in prime locations.
“The easy days are over and we’re well placed for the new market dynamic,” said Mr. Mei in a telephone interview.
Global Logistic, which operates warehouses in China, Japan, Brazil, and the U.S., also manages infrastructure funds in those countries.


G6 needs more lines to step up and to acquire megas.  Alliance does not have enough yet for a string.  Have to keep up with the Jones, aka, M2.


Organization "Noise", external and especially internal, is a very serious disruptor to great supply chain operations.


Amazon is set to make a BIG impact in India.  That includes Prime, Immediacy, and the New Supply Chain--


Amazon readies $5 billion chest for bigger play in India, to launch subscription-based ecommerce services


Can  develop supply chain capabilities to compete with Amazon's Immediacy?  If not, what then?


Supply Chain Immediacy and Agility require upstream supplier integration, based on supply chain segmentation.

Monday, July 20, 2015


Too many retailers and e-tailers do not understand E-commerce Immediacy and the New Supply Chain.  Because of it, they struggle to compete with Amazon.  It is the NEW supply chain, not rehashing the same old supply chain.


Supply Chain Metrics that do not support the company strategy or goals have little value. Beware of metrics for the sake of metrics. 


Why did Temasek sell APL Logistics? It made money. Made NOL more attractive than as standalone firm. Why did they do with the proceeds?


Why did Temasek not put the proceeds from the sale of APL Logistics back into NOL?


Do you manage your supply chain. Or does your supply chain manage you?


NOL / APL--small market share, losing money, has debt, has no mega ships, industry in self-destruct. But could it be turned around? Could be!

Sunday, July 19, 2015


Amazon (with E-Commerce Immediacy and the New Supply Chain) have a very, very successful Prime Day.  They make naysayers and retail competition look out of touch.


Is Hapag-Lloyd planning to use IPO proceeds to buy mega ships?  That is the only viable option for longer term survival, I feel.

Saturday, July 18, 2015


Despite what Temasek says about value/sales price, why would anyone pay more than book value for APL/NOL--if that?


I do not understand why anyone would buy APL.  All the excess capacity and their fleet with no megas.  Unless it is another step by someone in the self-destruct mode the industry is in.  How realistic is making them profitable in 2-3 years? 

And I do not see Hapag having a great IPO for similar reasons. 

Darwinism and survival of the fittest is at play.


E-commerce is a step from catalogs and TV home shopping.  Immediacy and its supply chain set it apart.  Virtual retailing is next.