Friday, April 28, 2017


Supply chain analytics requires SCM domain expertise. Analytics as a standalone is not enough.  Otherwise it may be a lesson in misguided results.


Biggest logistics changer--digitization, omnichannel, Amazon Effect, or ?

Thursday, April 27, 2017


Supply Chains were never linear. They are non-linear--even more so in the omnichannel reality moving across industries. Supply chains within supply chains.

Wednesday, April 26, 2017


Read LTD article on #SupplyChain Time Compession in Global Supply Chain ME at


Omnichannel is for more than retail. For manufacturers, logistics providers, and much more. Has more power for change than even digitization.


Augmented Realtiy for retail must be supported by the New Supply Chain for velocity, larger orders, more SKUs. You ain't seen nothing yet.

Tuesday, April 25, 2017


In the new reality of order velocity, is ERP a help or a hindrance?


Amazon’s logistics add supply chain velocity, set new customer expectations, and address issues with 3rd party providers. And they widen the competition gap.


Supply Chain analytics has untapped potential--for macro and granularity gains with velocity demands.


Company conflict and reality. Vertical organization vs business as a horizontal process. Supply chain management is the perfect example of this.


On course for recovery or more ocean freight rate chaos? Opinions divided

© Sheila Fitzgerald hanjin 89611549
© Sheila Fitzgerald
A leading shipping analyst has predicted the return of rate volatility to the world’s major trades as the spectre of overcapacity comes back to haunt the industry.
This is despite growing confidence in a container market recovery over the past six months and other expert opinions.
Tan Hua Joo, executive consultant at Alphaliner, told delegates at the TOC Asia Container Supply Chain event in Singapore this morning, that despite 2016 being the “most balanced year in terms of supply and demand since 2009”, with a global fleet growth of just 1.6%, “hopes on the part of carriers for greater stability are still some time away”.
This is largely because the growth rate last year was constrained due to a high number of new vessel delivery deferrals, in combination with an unprecedented number of vessels sent to scrapyards and an unnaturally large idle fleet propelled by the collapse of Hanjin.
“As we move into this year, the rate of growth in the global fleet is going to increase as there is very little room for the industry to keep the growth of the fleet down,” Mr Tan said.
However, this view was contradicted by Robbert van Trooijen, head of Maersk Line for Asia-Pacific, who claimed that 2017 would be the year “in which all of us would find that balance”.
Alphaliner is forecasting total fleet delivery of 1.32m teu, mostly ultra-large container vessels (ULCVs), and although it also forecasting another year of record scrapping levels – up to 700,000 teu – there will still be a net increase in the global fleet of 620,000 teu, a 3.1% rise.
Around 1.6m teu of the world’s fleet was idled last year, although some 500,000 teu of this was Hanjin tonnage, but much has been brought back into operation.
Mr Tan said: “A lot of the Hanjin vessels have been brought back into operation and panamax vessels have seen something of a spike in demand due to the new alliances’ demand for capacity, pushing charter rates back up to around $10,000 per day.
“Idle Hanjin tonnage is now down to about 200,000 teu, and we expect this to be reintroduced by May,” he added.
“So as long as the shipping lines take back this idle capacity there is no sign of a recovery in the market, as carriers continue to bid for market share and significant freight rate instability will continue.
“In fact, we do not see a genuine recovery in the freight markets for another 18 months – it is not until 2019 that the supply-demand situation comes back into balance,” he suggested.
However, Mr van Trooijen argued that on the transpacific, Asia-US east coast and Asia-North Europe trades, capacity was likely to be far more in line with demand than Mr Tan suggests.
“It depends when the comparison is made. On Asia-US east coast, there was 148,000 teu deployed at the height of capacity last year, and although it has been growing since Hanjin’s bankruptcy, it is now at 144,000 teu per week.
“The transpacific trade is showing a similar pattern, and if you compare the capacity on Asia-North Europe in January 2016 with the anticipated deployment in December this year – even with the newbuilds coming in – it is 240,000 teu per week compared with 237,700 teu.”
Mr van Trooijen concluded: “In view of all this, I think we should be confident that the capacity injected in the east-west trades is more balanced than it was.”

Monday, April 24, 2017


Customer Expectations are now Customer Requirements. Does your supply chain deliver those results? Do your metrics measure performance?


E-commerce is not about technology. It is about the ability to provide the customer experience and deliver orders complete, accurate and quickly.


Analysis: COSCO may be unsinkable, but it's sailing in very choppy waters

China’s state-owned COSCO Shipping Holdings is unsinkable – yet its latest annual results, on 31 March, confirmed that 2017 could be, at best, a year of transition.
Continuing to sail through choppy waters, this container shipping powerhouse finds itself in the middle of a corporate restructuring that began at the end of 2015 and has yet to bear fruit.
In its annual results, it reminded us how the merger between the two biggest shipping groups in China was undertaken. On 4 May last year, it received “notification from China COSCO Holdings Corporation Limited (COSCO Group) that State-owned Assets Supervision and Administration Commission of the State Council (SASAC) has transferred its entire equity interest in COSCO Group at nil consideration to China COSCO Shipping Corporation Limited (COSCO Shipping), a state-owned enterprise established in the PRC and wholly-owned and controlled by SASAC”.
Essentially, the government had decided to flip a bunch of assets onto its balance sheet, while stripping, at higher corporate holding level, certain operations that might be more problematic than container shipping activities, particularly if the business cycle turns south.
Our take when the deal emerged can be found here, but it still remains unclear what the ultimate corporate structure will look like.

Unfavourable exogenous shocks played a part in a merger orchestrated by the government, but the writing was on the wall.
In 2013, China Cosco Holdings was forced to sell assets to avoid a possible de-listing spurred by two consecutive years of losses. It managed to find a way to stay afloat, but more structural intervention was already clearly necessary.
Now, in a difficult market where even Maersk has acknowledged the benefits of a leaner corporate tree, its container shipping fleet is the fourth-largest by capacity and adheres to the commonplace philosophy in container shipping that only through economies of scales are operators economically viable.
Then again, I wonder: do global growth prospects actually support this view?
The International Monetary Fund said in January that global growth for 2016 was estimated “at 3.1%… economic activity in both advanced economies and EMDEs is forecast to accelerate in 2017–18, with global growth projected to be 3.4% and 3.6%, respectively”.
It turned even more bullish this week, tweaking up slightly its growth forecasts for this year, but is that a game-changer for global trades?
The trend in recent years leaves little to the imagination – see the table below – while recession and geopolitical risks loom large in major countries whose economies hinge on fiscal and monetary policies that struggle to find a solid footing.
Source: The Economist
These macroeconomic risks will ultimately affect the box trades. Although The New York Times points to unusually expansive data showings by emerging markets since the turn of the year, “the emerging market story is harder to sell, and so grows the risk of investing in bigger ships”, one container shipping executive told me this week; while the chart below also testifies to a mixed picture for global economies.
Source: The Economist
Latest developments at Maersk are unsurprising, but it is the market leader and rivals are struggling to keep their debt levels down while investing to preserve competitiveness.
Size matters?
Size might – or might not – be the answer, but for the time being it’s interesting to note that Cosco Shipping Holdings highlighted a massive rise to the tune of Rmb14.6bn ($2.1bn) in reported revenues, which climbed to Rmb69.8bn ($10bn) in 2016 as a result of its merger deal.
Source: Cosco
One problem here is that its corporate structure has changed significantly in the past 18 months, so comparable figures cannot be a gauge of performance – although that also means its mounting losses of Rmb9.9bn ($1.4bn) should be taken with a pinch of salt.
After all, the merger was so complex that Seatrade defined it as “one of the most complicated deals in the history of China’s capital market”.
Lots to do
The picture that emerges from its financials points to certain critical areas where drastic intervention is needed. For example, the cost of goods and services (COGS) last year was higher than revenues – these costs usually exclude most or all operating expenses.
As it keeps track of the integration and divestment of certain other assets, financial discipline is of paramount importance – COGS will continue to be a key performance line to watch, because the group was loss-making even before selling, general and administrative costs (Rmb4bn) and net finance costs (Rmb1.8bn) were taken in into account – combined, these two items made up over 50% of annual losses.
Unsurprisingly, its balance sheet shows that property, plant and equipment fell, while long-term and short-term borrowing stood at Rmb57.3bn ($7.3bn), down almost Rmb30bn against one year earlier, which is a good sign.
It said: “Under the situation of the appreciation of the US dollar, in order to reduce exchange rate risk, since the second half of 2015, the company has been adopting measures for adjusting the debt structure, reducing the balance of US dollar loans and adjusting the structure of bank deposit by increasing the balance of US dollar deposits.”
Excluding proceeds from disposals, core free cash flow was negative to the tune of about Rmb4bn – about half a billion dollars annually – and that means it burned over $1m a day last year. However, its gross cash balances were virtually unchanged at Rmb33.8bn ($4.6bn), which gives it plenty of time to fix its accounts.


What good is good is closing stores if retailers do not have strong, viable e-commerce driven by transformed Supply Chains?


For manufacturers and retailers, e-commerce has accelerated the divide between what logistics providers offer vs the new supply chain requirements.

Thursday, April 20, 2017



AI Is Turning Supply Chain Logisitics Into Automated Trading

Ever wonder how your Amazon Prime packages show up at your door mere hours after you place an order?
A complex series of operations connects suppliers to manufacturers to wholesalers to retailers to you, the end consumer. Oversight of this process is called supply chain management (SCM). Within SCM, logistics is the portion that handles the movement of goods. E-Commerce giants like Amazon specialize in logistics while consumer packaged goods leaders like Unilever provide full-spectrum supply chain management services.
Like every other data-driven industry, logistics and supply chain companies are investing in transformational A.I. solutions to tackle their most pressing pain points. Both small and large enterprises are dabbling in innovations ranging from machine learning to robotics.
A breakdown in logistics breaks the supply chain, so companies constantly seek out improved ways to manage inventory, predict pricing, and streamline operations. Chad Lindbloom, CIO of C.H. Robinson, a Fortune 500 multi-modal transportation company, shares with us the top business use cases he’s using AI to tackle.
The largest portion of C.H. Robinson’s business is North American truck freight. A portion of their customers pre-commit to regular business and outsource portions or all of their logistics needs. The remainder are one-off transactions, for which the company is a surge provider for unplanned freight.
Surprisingly for a transportation company, C.H. Robinson owns no vehicles. They are instead what’s called a “freight broker”, an operational and financial middleman between buyers who want to move freight and suppliers of vehicles who can do the job. The supplier base is incredibly fragmented, ranging from one man with a truck to massive fleets of co-owned vehicles. Despite these capacity challenges, CHR must commit to move freight for a customer at a specific price in advance. Sometimes they’re asked to quote a price a last-minute same-day load. Other times they commit up to 2 years in advance.

Price prediction is thus their biggest business challenge. “The pricing in our industry varies seasonally, by day of the week, by lane, by time of the day,” explains Lindbloom. A “lane” is an origin destination pair, such as Toledo, OH to New York, NY. Note that reversing the lane, from NYC to Toledo, requires a different price since urban centers don’t generate high volumes of goods that must be moved back to manufacturing zones.
Many vendors such as Watson Supply Chain, ToolsGroup, and TransVoyant offer logistics and supply chain software with AI baked in, but the complexities and nuances of C.H. Robinson’s massive business require them to build in-house technology tailored to their specific needs. Pricing was previously done by human experts with deep domain experience and historical market knowledge.
Prior to becoming CIO, Lindbloom spent 25 years in finance and 15 years as CFO. Combining financial with technical expertise, he and his team have built machine learning models for price prediction that resemble those built by automated traders on Wall Street. These models examine historical freight pricing data along with concurrent parameters such as the weather, traffic, and socio-economic challenges to estimate the fair transactional price on a spot basis.
AI doesn’t always outperform market experts, which Lindbloom believes will not be fully replaced. “In some cases, humans come up with better price. In most cases, the technology helps them hone in on the fair market price,” he points out. He also adds that a key benefit of effective algorithms is democratization and accessibility of information. Instead of relying on a few industry experts to produce estimates, more employees can use machine intelligence to ensure they’re quoting within market so they don’t lose the sale, and within capacity so they don’t botch the execution.

The second important use case is securing and managing the supplier inventory, the vast and fragmented array of trucks available to transport loads.
CHR commits to a transport price for freight buyers before they know the exact pricing and availability of requisite vehicles. The company relies on strategic human relationships, specifically a vast trading network across employees to find the right truck with the right capacity for the load.
For every lane, CHR runs background analytics to examine which carriers have moved freight at what price and service level. Fragile, expensive, or time-sensitive freight requires a much higher service level. Pooling together these various factors allows CHR to optimize matching freight to the best mover.

Managing disruptions is the third important business task that can be improved with AI. Hurricanes, carrier bankruptcies, and employee strikes all have the potential to cause massive damages to the logistics business.
Predicting such disruptions and training AI to learn from contingency plans developed by humans enables automated corrective action in the future. To do so, CHR pulls together sources of information to analyze the impact of past disruptions, such as a carrier strike in France or a hurricane in the NE United States. If a distribution center is threatened with adverse weather, freight can be re-routed to a safer one.
Part of the data collection entails detailed surveys that track how human employees handled disruptions and the outcomes of their management. Lindbloom hopes that eventually systems can be trained to automatically take optimal actions after learning from humans.

“We are constantly looking at what’s on the marketplace, and we believe we build better technology,” says Lindbloom. Due to a critical need for reliability, CHR builds and manages their own data centers, only going to the cloud if extra computing power is needed. Owning data center resources allows CHR to spin up environments very quickly as needed, but also to commit idle systems to research and development.
In addition to flexibility, owning data centers enables privacy and control. “We are a cloud provider of transportation management system to our customers,” emphasizes Lindbloom. “We have all the same technology as the core cloud providers, but we know where all the data is, we can control it, and we make confidentiality promises to customers. Many of them are more comfortable using us.”
“Technology is such a differentiating factor in our industry,” Lindbloom concludes. Other giants in logistics and supply chain agree and also committed substantial dollars to AI initiatives. DHL aims to reduce costs with autonomous cars, Active Ants builds wearable technology to optimize warehouse tasks, Locus Robotics develops warehouse robots, and Honda leverages smartphone applications for real-time shipment tracking.

DHL’s 2016 Logistics Trend Radar predicts that artificial intelligence investments will continue to surge for both domestic and international logistics. Increasingly more companies plan to invest in in-house development for AI applications in predictive analytics, operations and management, augmented reality, robotics, and industrial IoT.
Lindbloom has words of wisdom for those who want to replicate CHR’s success with AI: “Many of the things you’re going to try probably won’t produce value. Be willing to experiment and fail fast. Try to solve the same questions with multiple different models. Multivariate-type testing is key.”
Additionally, he cautions against overfocusing on AI and encourages executives to define clear business use cases first. “Have the business challenges drive your development, instead of data scientists and engineers pushing AI into the business.”


Venture capitalists have found another multi-trillion dollar market to upend: shipping


Getting There


Getting There

Software may be eating the world, but some industries have been off the menu. Now, international shipping’s time has come. The UN estimates at least 90% of the world’s physical goods end up in a shipping container before arriving at their destinations. Until recently, shippers have conducted much of their business as they have for decades: using spreadsheets, emails, and phone calls.
Those days are drawing to a close. Last year, venture investors backed more than 245 startups in shipping and supply-chain management, a record number worth at least $4 billion, reports business intelligence firm CB Insights. AngelList tracks 420 shipping startups (not all international), as well as hundreds more in logistics and supply-chain management.
While domestic logistics is being rapidly transformed by robotic warehouses, autonomous trucks, and on-demand services such as Uber, DoorDash, and Amazon Prime, the unglamorous world of international freight has remained largely a rolodex affair. A single shipping transaction may involve 28 different entities including customs, terminals, forwarders and carriers, reports Lloyd’s List, a marine intelligence firm. Many of these interactions still happen by email, phone and manual data entry, generating reams of paperwork. Startups spy an opportunity.
“Our competition is [Microsoft] Excel and email,” says Renee DiResta, co-founder and director of marketing at logistics startup Haven which builds software to replace today’s workflow. Haven, which raised $13.8 million in venture capital, is automating a quoting, booking, and shipping process in which setting a price for customers can take days. By accessing data about trillions of dollars in goods shipped around the world, Haven plans to help create an open, transparent shipping market that can be automated and optimized with machine learning.
The efficiencies couldn’t come soon enough for an industry that just weathered its worst year in a decade amid a wave of consolidation. The losses prompted shippers like the Danish line Maersk to announce last year that “everything that can be digitalized will be digitized,” Jane Porter, an editor at Lloyd’s List, said in an interview. “Everyone else is playing catchup.” Last year, Maersk embarked on an internal reorganization to prioritize digital solutions, and plans to experiment with selling container slots on Alibaba, building new software and possibly acquiring technology startups.
The industry, long fixated on building bigger ships, is now turning its attention to the back office and customer experience. But designing new technology has proved challenging. In 2011, DHL spent $1 billion modernizing its own freight forwarding software, a failed effort that had to be written off four years later. Such efforts are nothing new. Lloyd’s describes half a dozen attempts to digitize the industry that have foundered since 1998 because carriers never bought into the idea that they had to change their business processes, not just technology. That’s different today, says Porter. Maersk’s announcement last December has made finding new digital solutions a matter of competitive survival. “That has been the wakeup call for whole rest of the industry,” Porter says.
Silicon Valley investors are betting startups will solve this problem. Companies like Haven and Flexport argue their cloud-based solutions will displace shipping and logistics companies’ SAP and Oracle software the same way Salesforce has grown to dominate sales and marketing solutions.
If they’re right, they could fundamentally accelerate global trade. The shipping container is a case study. The standardized metal box helped send costs down and global trade soaring by 700% over 20 years, researchers estimate (pdf), more than any international trade agreement. Within a few decades, the number of new products in countries like the US had quadrupled. Just as importantly, manufacturers whose only advantage was proximity to ports or customers were no longer protected: Malaysia could suddenly compete effectively with New York, reports The Economist reporter Marc Levinson (pdf). By the end of the 20th century, purely local markets for goods had become rare.
Software may remove massive delays and inefficiencies in an industry moving 180 million containers around the globe every year. If so, trillions of dollars in cheaper goods arrive faster at ports around the world.


Omnichannel success depends on the inbound supply chain and extending it upstream--a de facto vertical integration. Creates inventory velocity.

Tuesday, April 18, 2017


Velocity is the demand for business—from decision-making to customer expectations. Supply Chain Management drives velocity with inventory and time compression.

Monday, April 17, 2017


Li & Fung should transform to being a supply chain service provider to meet velocity and time requirements of businesses--to hold present customers and gain new ones.

       Hong Kong’s Li & Fung faces dilemma of ‘innovate or die’
       Fall from grace of world’s top sourcing group underlines China’s manufacturing evolution

       © FT montage
       April 11, 2017
       by: Ben Bland in Hong Kong

       Its market capitalisation has shrunk by more than 80 per cent since its 2011 peak, it failed to meet the targets in its last turnround plan, and its core customers have been hit hard by a recession and the rise of nimble retailers from Amazon to Zara.
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       No wonder Spencer Fung, chief executive of Hong Kong-listed sourcing group Li & Fung, has called in Ram Charan, a management guru who has advised top executives including Jeffrey Immelt of GE and Alan Mulally, formerly at Boeing and Ford.“If I have to give ourselves a report card on execution, we haven’t been the best,” admits Mr Fung, the great-grandson of the co-founder of the company, which helps retailers from Walmart to Kohl’s source their products in factories from China to Bangladesh. “We thought we were pretty good. [But] when we compare ourselves to the GEs of this world, we realise we’re only in high school and these guys are the PhDs.”Chelsey Tam, an analyst at Morningstar, an investment research house, puts it more bluntly: the world’s biggest sourcing company by revenue must “innovate or die”, she says.The fall from grace of the 111-year-old Hong Kong group underlines the transformation of China’s manufacturing sector, the changes roiling the global retail industry and the challenge of keeping a family business on track through the generations.Founded in the neighbouring Chinese city of Guangzhou in 1906, Li & Fung started out as a trading house selling handicrafts, porcelain and fireworks to the west.As the Chinese manufacturing industry grew rapidly from the 1980s, the company developed into a powerful middleman connecting US and other western retailers with the factories that could produce their goods at low cost.But after more than a decade of rapid growth, it ran into what Mr Fung calls a “perfect storm” starting in 2010. The global financial crisis drove the US retail sector into a long cyclical downturn, while the rise of fast-fashion brands such as Zara and Hennes & Mauritz, as well as internet retailers including Amazon, was undermining the very foundations of the industry.Meanwhile, with Chinese manufacturers having drastically improved their production and quality-control processes, more of Li & Fung’s customers were working with factories directly.At the same time, Li & Fung, which is still 33 per cent-owned by the family, has struggled to digest dozens of acquisitions, which analysts say papered over the company’s fundamental problems and proved difficult to integrate.“Like many family-run businesses in Asia, they did well and got big but the older generation hung on for too long, making it hard for the next generation to come in and turn it round,” says one person who knows the family.Spencer Fung, chief executive of Li & Fung © BloombergSince 2011, the company’s turnover has fallen 16 per cent, to $16.8bn last year, while pre-tax profits slumped 60 per cent to $306.8m over the same period.After hitting a peak market capitalisation of HK$205bn ($26bn) in 2011, the company’s equity valuation has slumped 86 per cent to HK$28bn.Investor confidence evaporated after Li & Fung failed to meet the targets in its last turnround plan and the company, once seen as a stalwart of Hong Kong’s industrial sector, was removed from the benchmark Hang Seng index in February because of its tumbling share price.“The company’s weak operational results over the past few years suggest a deterioration in its competitiveness and capability to adjust to disruptions in the global retail industry,” says Lillian Chiou, an analyst at Standard & Poor’s.Mr Fung, who took over as chief executive in 2014 when the company spun off its branded goods division into a separate listed company, has promised to address these problems, using technology to make the group faster, more efficient and more responsive to fast-changing consumer trends.Demonstrating new software that can help retailers make computerised three-dimensional designs of handbags, shoes and dresses — cutting out the lengthy sampling process and allowing them to sell products online before they have ever been produced — he says: “In the last 40 years, the whole supply chain was optimised for cost. Today, most customers are optimising the supply chain for speed.”But Spencer Leung, an analyst at UBS in Hong Kong, warns that factories and retailers are just as well equipped to adopt the latest design technology.He argues that the need for sourcing companies will continue to fade as the retail market bifurcates, leaving cut-price groups that will work directly with factories to reduce costs and those with unique brand or style offerings that will want more control over the production process.“The trend of more brands teaming up with factories will continue,” he says.Mr Fung retorts that many retailers do not want to do everything in-house. He insists that by investing $150m in new technology over the next three years and working with new partners from software start-ups to a Hollywood animation studio, he can make Li & Fung an indispensable partner.Anson Chan, an analyst at Daiwa Capital Markets, says Li & Fung’s decades of experience are still valuable in this regard.“Anyone can buy this new technology but Li & Fung’s strength is that they know their customers well so they can customise it,” he says.At Li & Fung’s headquarters in an industrial district in Kowloon, Mr Fung is taking some of Mr Charan’s ideas about breaking down corporate silos literally, having removed cubicles from the main office and put wheels on the desks.That is merely a baby step in his efforts to, as he puts it, “drag an analogue and backward industry into the digital world”.

Friday, April 14, 2017


From supply chain view, how much of container line on-time is carrier caused vs port caused? Result is excess inventory and capital tied up.

Thursday, April 13, 2017


For retailers who want to be leaders, your store supply chain cannot also do e-commerce--no supply chain is that agile. Transform.

Tuesday, April 11, 2017


How much excess inventory and working capital is in supply chains because of slow and inconsistent container line service?


Many logistics providers are locked in commodity service battles. Future is being a supply chain service provider. Big difference.

Monday, April 10, 2017


Good idea. Can they develop and implement the supply chain to make it work?

Valentino Teams With Yoox to Offer More Choice of Luxury Online

Online customers will be able to order any Valentino product, whether it sits on the shelves of a Valentino store or in a Yoox Net-a-Porter distribution center

Models present creations by Italian designer Pierpaolo Piccioli as part of his Haute Couture Spring/Summer 2017 collection for fashion house Valentino in Paris, Jan. 25.
Models present creations by Italian designer Pierpaolo Piccioli as part of his Haute Couture Spring/Summer 2017 collection for fashion house Valentino in Paris, Jan. 25. Photo: gonzalo fuentes/Reuters
PARIS— Yoox YXOXF 1.00% Net-a-Porter Group SpA, the online luxury retailer, has entered a partnership with Valentino SpA aimed at overhauling the way luxury companies do business over the internet, YNAP executives said.
Under the partnership, YNAP and Valentino have integrated their inventory management, logistics and distribution systems, to augment the website that YNAP already operates for Valentino’s luxury clothing. That will give customers who shop online the ability to order any Valentino product, whether it sits on the shelves of a Valentino store or in a YNAP distribution center, YNAP executives said.
The arrangement is supposed to eliminate logistical problems that have slowed the luxury industry’s efforts to sell online. Shopping for luxury brands on the internet can be frustrating for customers, since online retailers such as YNAP often have a relatively limited amount of product in inventory ready for delivery.
“With this model, we are going to expand the online sales of the brand,” said YNAP Chief Executive Federico Marchetti. “Customers are going to have access to more products, and they are going to get them faster.”
That intention in some ways runs counter to tradition in the luxury world, where inventory management has long been used to cultivate an image of scarcity. Hermès International SCA, for example, has long daily lines in front of its main Paris store because certain bags are hard to find elsewhere. But sluggish global growth, especially a downturn in China and Hong Kong, has luxury companies looking harder at ways to boost sales.
The chance to attract new, younger customers also has big-name luxury companies abandoning their resistance to selling online, which many had feared would damage their brands’ prestige.
Mr. Marchetti said the company is working on similar arrangements with other luxury brands whose online stores YNAP already runs. The company, which specializes in selling luxury brands online, manages the websites of most of Kering SA’s brands—including Saint Laurent and Bottega Veneta—among many others.
The partnership represents the culmination of a major capital investment to establish a single order-management system, designed by International Business Machines Corp. , that will oversee the movement of Valentino products across the Italian company’s own networks and those of YNAP. Once an order is made online, the system will automatically pick which store or distribution center is best placed to supply the delivery.
“When it’s very simple for the customer,” Mr. Marchetti said, “it’s very complicated behind the scenes.”
YNAP has benefited from a luxury clientele that has grown increasingly comfortable buying high-end products online. Sales last year rose 12.4% to €1.9 billion ($2 billion).
Write to Matthew Dalton at


April 8, 2017 7:11 am JST

Japan eyes cooperation with ASEAN in customs, e-commerce

Move is aimed at supporting talks on broad Asian FTA
TOKYO -- Japan will propose a plan for improving customs procedures and e-commerce in the Association of Southeast Asian Nations, an effort to spur progress in negotiations for a free trade agreement in the wider Asian region.
Economic ministers from the 10-nation regional bloc and the Japanese government will meet on Saturday in Osaka, where Japan will present the plan.
Behind Japan's move to launch this initiative is the Regional Comprehensive Economic Partnership, a proposed free trade agreement spanning the 10-nation bloc and six other countries, including Japan, China and India. China is pushing for a quick deal with a low level of liberalization, while Japan seeks an agreement with a high level of liberalization. Some members of ASEAN such as Laos and Cambodia with less-developed economies are drifting toward the Chinese position.
Japan's proposal will primarily focus on supporting the bloc's small and midsize businesses, which are seen as holding the key to ASEAN's economic growth. It will cover three topics: e-commerce, customs procedures and intellectual property protections.
To help cut costs in the e-commerce sector, Japan will introduce delivery methods pioneered by Japanese companies and have personnel share their know-how on improving efficiency. Many small and midsize businesses in Southeast Asia sell products online without having their own logistics networks. A more efficient delivery system would allow them to cut costs.
On customs, Japan will offer expertise on automation and inspections, with the aim of shortening the duration of such procedures, which currently take from several weeks to as long as a month.
On intellectual property, Japan plans to help countries clamp down on counterfeits and pirated goods. It will also propose supporting small and midsize businesses that have top-notch intellectual properties.


Chinese Shipping Giants Seek Control of ‘Maritime Silk Road’

Companies investing billions in ports to give priority to Chinese vessels

Chinese President Xi Jinping (L, front) and his Sri Lankan counterpart Mahinda Rajapaksa at a 2014 ribbon-cutting ceremony marking the inauguration of the Colombo Port City Project.
Chinese President Xi Jinping (L, front) and his Sri Lankan counterpart Mahinda Rajapaksa at a 2014 ribbon-cutting ceremony marking the inauguration of the Colombo Port City Project. Photo: Li Tao/Zuma Press
Chinese state-run shipping companies are investing billions of dollars in ports world-wide to ease the movement of Chinese goods, as the ocean-freight industry emerges from a slump and as Beijing becomes a vocal promoter of globalization.
The moves are paying off financially for the likes of Cosco Group and China Merchant Holdings International Co., but the overriding objective, Chinese officials say, is to control one of the world’s busiest trade loops. Ports on the route, running from Asia through the Suez Canal to Europe, would give priority to Chinese vessels.
The so-called Maritime Silk Road, the brainchild of Chinese President Xi Jinping , is part of One Belt, One Road, a $4 trillion undertaking to connect China and Europe by land and sea. With the Trump administration looking askance at global trade deals, Mr. Xi has become a champion of globalization.
The Chinese leader met this week with President Donald Trump at his Florida resort Mar-a-Lago, a bilateral summit that Mr. Trump had warned would entail a difficult discussion of the trade imbalance between the world’s two biggest economies.
China’s strategy “is taking shape with loads of money behind it,” said George Xiradakis, of Athens-based XRTC shipping consultancy, who serves as an adviser to China Development Bank. “As the West retrenches, the Chinese are out to dominate sea trade.”
In January, state-owned China Development Bank gave Cosco a $26 billion credit facility to develop its shipping interests. Cosco, whose container line lost $1.4 billion last year, is the world’s sixth-largest port operator and fourth-largest liner company.
Beijing will host a summit in mid-May on the Silk Road initiative with 20 leaders from Asia, Europe and Africa. Invitees include Russian President Vladimir Putin and British Prime Minister Theresa May.
“Private operators make investment plans for a maximum 12 months down the road,” said an executive at a Western port operator. “The Chinese can plan longer term and seal deals in places like Africa and Asia run by authoritarian regimes where we can’t go because of our shareholders and public opinion.”
Shipping lines have been adding more ports to position themselves ahead of an expected recovery in container freight rates, which for years have been below break-even levels.
A recent wave of consolidation cut the number of container operators from 20 to a dozen, and they have grouped into alliances for sharing vessels and port calls starting in April. The trend has port operators racing to attract dockings as bigger, but fewer, ships will serve the main routes.
“We had to learn to dance with giants,” said Zhang Wei, managing director of Cosco Shipping Ports. “The giants will create more pressure on our survival, but also bring better efficiency and more stable income if you can make them stay.”
One of Cosco’s competitors, APM Terminals, a unit of Danish conglomerate A.P. Moller Maersk A/S, has spent $7.9 billion since 2010 buying up terminals. Mediterranean Shipping Co., the world’s second-largest container carrier, in January bought 54% of the biggest container terminal in Long Beach, Calif., from bankrupt Hanjin Shipping Co.
Cosco, China Merchant and China Overseas Port Holding Co. have spent more than $4 billion since 2010 for stakes in 21 of the top 50 container ports, according to research by Theo Notteboom, a professor of port economics at universities in China and Belgium. That is on top of an estimated $40 billion China has pumped into ports along its coastline, he said.
Cosco has invested in terminals in Seattle, the Italian port of Vado and Greece’s Piraeus. Last year it paid $300 million for a 51% stake in Piraeus’s port operator and has agreed to shell out $300 million for an additional 15% stake. Cosco said in March that Piraeus was one of its best performing units, with container volumes rising 14% last year.
China Overseas, which has run operations at the Pakistani port of Gwadar since 2013, is investing some $1 billion in projects, including transhipment terminals and floating gas facilities.
“Ports like Gwadar and Piraeus are important because they move Chinese cargo first, and if you control the ports, you also control how much other shipping lines can do business,” Mr. Notteboom said.
China Merchant paid $185 million in 2012 for a 23.5% share in the Red Sea port of Djibouti, south of the Suez Canal. The port will also serve as China’s first overseas naval base, giving it access to maritime traffic between Asia and Europe. The state-owned conglomerate is also active in Sri Lanka, opening a $500 million container terminal in Colombo in 2013.
China Merchant recently reported that volume at its overseas ports rose 5.7% last year to 17 million containers. Colombo was its star performer with a 29% volume increase.
Write to Costas Paris at
Appeared in the Apr. 08, 2017, print edition as 'China Takes Ahold of Trade Route.'