PORTS, CONTAINER LINES, MEGA-SHIPS

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Singapore’s transport minister warns on growing global bottlenecks

Copenhagen: With global trade growing at a rate of knots there is a risk that spending on ports will not keep up, Tuck Yew Lui, Singapore’s minister of transport warned at the inaugural Danish Maritime Forum this morning.
Lui predicted global trade will double by 2030, with shipping routes becoming more crowded than ever.
“Spending on port infrastructure is vital,” Lui said, but warned that this outlay will be competing against a rising need for housing, medical and other transport infrastructure, which could see bottlenecks rise around the world.
“Infrastructure growth will lag behind demand,” he warned.
Lui also predicted a growing use of LNG as a ship fuel in line with a global move for cleaner energies across most industries. He called for greater dialogue to get the regulations in place worldwide for LNG as a ship fuel.
“It is the responsinbility of global hub ports around the world to come together to harmonise rules and procedures for LNG as a ship fuel,” he urged.
Lui also discussed the “global challenge” of attracting the next generation of seafarers, something he thinks will be very difficult, leading to the possibibility of more automated vessels. “Will robots work alongside the crew to relieve some of the work and stress?” he mused, adding: “I think it is important we must discuss this.”
The issue of unmanned ships is one of the themes under the spotlight in our sister title, Maritime CEO's latest quarterly online poll where we ask readers six topical questions and gauge people's opinions. It takes two minutes to fill in and there is no registration. The link is below. [08/10/14]

SUPPLY CHAIN RISK

Check out LTD's supply chain risk model at--
http://www.ltdmgmt.com/identify-validate-assess.php

RUSSIA GSP TERMINATED

Russia’s GSP Eligibility Terminated; Program Still Lapsed

Wednesday, October 08, 2014

Sandler, Travis & Rosenberg Trade Report

President Obama has issued a proclamation terminating the designation of Russia as a beneficiary developing country under the Generalized System of Preferences. The move has no immediate effect but removes one hurdle to the potential renewal of GSP, which expired July 31, 2013.
Russia’s GSP eligibility was terminated as of Oct. 3, the date the proclamation was issued, in contrast to the usual 12-month delay. While the justification given is that Russia is sufficiently advanced in economic development and improved in trade competitiveness that it no longer warrants GSP treatment, the immediate effective date reflects increasing political tensions with Moscow over its involvement in neighboring Ukraine. The European Union and Canada acted earlier this year to remove Russia from their own trade preference programs, and the U.S. has imposed a series of successively tougher economic sanctions against Russia as well.
The revocation of Russia’s GSP benefits has no immediate economic effect; GSP as a whole remains suspended, so goods from Russia as well as all other beneficiaries are already subject to normal tariffs when imported into the U.S. However, it is generally expected that GSP will be reinstated eventually, at which point Russian goods will be at a disadvantage in the U.S. market. In addition, should Congress approve refunds of duties paid on GSP-eligible imports after the program expired, no such payments will be made to importers of Russian goods.
A more immediate effect of the proclamation may be on prospects for congressional renewal of GSP. The Obama administration has been under pressure to push a renewal forward from the U.S. business community, which says domestic manufacturers have lost sales and laid off workers because they have been paying an extra $2 million a day in tariffs on inputs sourced abroad that largely cannot be procured in the U.S. Russia’s status as a GSP beneficiary had been one of the factors cited by lawmakers as standing in the way of a reauthorization, and its termination could make it politically easier to renew the program. However, with only a short post-election legislative session remaining this year, such a step may have to wait until 2015.

RETURNS FOR E-COMMERCE / OMNICHANNEL & NEW SUPPLY CHAIN

The new supply chain paradigm for e-commerce / omnichannel will reduce returns by minimizing the delay between order and delivery--a key cause of returns.

http://www.ltdmgmt.com/the-new-supply-chain-paradigm.php

SUPPLY CHAINS, 3PLS, COMPETITIVE DIFFERENTIATION

Many companies and many 3PLs share 3 traits---struggle to move beyond price as issue, customer retention, and failure to create competitive differentiation.

3PLs, SUPPLY CHAIN MANAGEMENT, VALUE PROPOSITION

3PLs struggle with a value proposition.  They talk about cheap rates, some great technology, or something else that really is about them.  They lack a customer-centric value proposition.  3PLs should use supply chain management to develop a unique selling proposition--and differentiate from the commodity service competition.  The questions are--
1) why don't 3PLs have a realy value proposition? 
2) why don't 3PLs use supply chain management to create a winning value proposition?

LTD Management know supply chain management and how to use it to build competitive differentiation.

WORLD BANK & SUPPLY CHAIN RISK

The World Bank recognizes supply chain risk.  Why do so many companies not recognize it?  Read THE Guide on Supply Chain Risk Management-- http://www.ltdmgmt.com/identify-validate-assess.php

SUPPLY CHAIN ANALYTICS

Analytics has much potential with SCM. Two good examples are segmentation and risk management. That data analytics is not used more may involve--not understanding what it is; too much of big terms like business intelligence; the need for domain expertise to complement it; its limitations with providing granular information; that SCM's scope is both internal and external (far beyond what traditional analytics is used for); SCM's extensive list of stakeholders inside and outside of the company; and how all this means using multiple data sources in multiple formats. We discuss this in our new article on supply chain risk management.

http://www.ltdmgmt.com/supply-chain-risk-guide.php

SUPPLY CHAIN FINANCE, FACTORING

How to reduce supplier onboarding costs through PrimeRevenue’s Electronic Time… David Gustin - October 1, 2014 3:03 AMCategories: Supply Chain Finance | Tags: PrimeRevenue, supplier onboarding

Most of us by now are familiar with the term Supply Chain Finance. We may even know how banks “productize” it by calling it Reverse Factoring, Approved Payable Finance, or some other name – all to indicate leveraging an uncommitted credit facility of an investment grade or near investment grade buyer to provide cheap finance to their suppliers. We may even be familiar with that fact that when a supplier elects to finance receivables with P&G, Tesco, Sainsbury, etc. this way, they are selling their receivables to the bank or funding provider. This entails much work for the bank to: perfect interest in those receivables to protect themselves in case the supplier is using those receivables as collateral elsewhere. The bank needs to file UCC financing statements when purchasing account receivables. This can take time. get a release from another bank if a supplier has already pledged those receivables. This may be tough these days as second and third tier banks do not want to give up good credits when they are flushed with deposits. Different jurisdictions will have different requirements, adding to the complexity. PrimeRevenue’s Electronic Drafts are distinguished from the “sale of a receivable” in two ways: First, the funding provider purchases the draft at a discount – the legal structure in the U.S. is governed by Articles 3 and 4 in the UCC (whereas sale of receivables are governed by Article 9). Second, when a large bank rolls out a supply chain finance program for John Deere or Verizon, it typically involves multiple jurisdictions. With Electronic drafts, the financial transaction is contained in the U.S. with the creation of time drafts. PrimeRevenue has actually put together a good whitepaper on the subject which I recommend interested parties download here. Several banks and corporates are currently using this program, including Scotiabank, and Bank Montreal. Any corporate could use the program, but you must have the domestic U.S. creation and negotiation of electronic time drafts. - See more at: http://spendmatters.com/tfmatters/how-to-reduce-supplier-onboarding-costs-through-primerevenues-electronic-time-drafts/#sthash.YwfRUj6p.dpuf

SUPPLY CHAIN BARRIERS

Most barriers to companies having effective supply chains--that create competitive differentiation--are internal, not external.

MANUFACTURERS STRUGGLE WITH SUPPLY CHAIN MANAGEMENT?

Too many manufacturers struggle with supply chain management.  And with that, they struggle to meet the supply chain requirements of their customers.  Supply chain management and lean have much in common--the pull, not the push; smaller lot sizes; compressing time; avoiding inventory waste; and more.

Manufacturers still operate much as they did 40 years ago.  They see logistics costs, "cheap" prices, and functions.  They do not understand the negative impact of such short-sightedness with regards to profits--as driven with higher revenue from competititve differentiation--and with inventory velocity and turns.  As a result, they are "penny wise and pound foolish".

GCC, GULF COOPERATION COUNCIL

Should the GCC have such a bureau instead of each country investing monies into its own infrastructure and dividing up the pie into small pieces?

New report calls for HK to get dedicated logistics bureau

Hong Kong: A new report urges Hong Kong to up its game on the logistics front. The British Chamber of Commerce Logistics Committee called for greater land to be freed up for the city’s logistics sector whole also calling for the industry to be overseen by a new body rather than the current Transport and Housing Bureau (THB).
“The largely international outlook of the logistics, ports and aviation-related sectors cannot be properly channelled under the current structure (in the THB) with the largely Hong Kong livelihood-centric focus (in public housing and mass transportation),” the committee said in a position paper submitted recently to chief executive Leung Chun-ying and the bureau.
“(THB’s) logistics portfolio should be devolved to a separate administrative structure with a centralised and focused vision and mission to lead and coordinate future needs with other government bureaux and agencies,” said the paper.
The British Chamber’s report is the latest in a series of papers and studies looking at the future of Hong Kong’s transport sector. [03/10/14]

INDIA LOGISTICS, WORLD BANK, WORLD ECONOMIC FORUM

Should India do something similar to jump start its needs with logistics infrastructure and service providers?  World Bank says this for India's Logistics Performance Index--

World Bank LPI	2007 Score/Rank	2010  Score/Rank	2012 Score/Rank	2014 Score/Rank
India	3.07/39	3.12/47	3.08/46	3.08/54

And the World Economic Forum, India ranks #71 on its Global Competitiveness Report, #L76 for Quality of Port Infrastructure, and #95 in Goods Market Efficiency. 

New report calls for HK to get dedicated logistics bureau

Hong Kong: A new report urges Hong Kong to up its game on the logistics front. The British Chamber of Commerce Logistics Committee called for greater land to be freed up for the city’s logistics sector whole also calling for the industry to be overseen by a new body rather than the current Transport and Housing Bureau (THB).
“The largely international outlook of the logistics, ports and aviation-related sectors cannot be properly channelled under the current structure (in the THB) with the largely Hong Kong livelihood-centric focus (in public housing and mass transportation),” the committee said in a position paper submitted recently to chief executive Leung Chun-ying and the bureau.
“(THB’s) logistics portfolio should be devolved to a separate administrative structure with a centralised and focused vision and mission to lead and coordinate future needs with other government bureaux and agencies,” said the paper.
The British Chamber’s report is the latest in a series of papers and studies looking at the future of Hong Kong’s transport sector. [03/10/14]

TRANSPACIFIC CONTAINER FREIGHT RATES 2015-2016

Transpacific carriers to try a new approach in trying to improve rates

TSA announces contract rate objectives for 2015-16, differentials for 20-foot and high-cube boxes.

By Chris Dupin |Thursday, October 02, 2014

The Transpacific Stabilization Agreement, the discussion agreement for container carriers in the Asia-U.S. trade, said that it will take a new approach in 2015 to improve freight rates.
TSA said it was announcing “contract rate objectives for 2015-16 rather than scheduled general rate increases from varying baseline levels; rates for 20-foot and high-cube 40-foot containers that more fully reflect cost impacts in loading and handling; full recovery of rising intermodal costs due to inland transport capacity and congestion issues; a revised bunker surcharge formula more accurately reflecting current vessel size and fuel consumption; and recovery of low-sulfur fuel costs as tighter emissions standards take effect in January 2015 for vessels operating in North American coastal waters.”
TSA executive administrator Brian Conrad, said, “Carriers feel an urgent need in the current market environment to view pricing differently. Rate minimums are an effort to better reflect actual costs of service, rather than simply recommending a specific increase to whatever baseline rate is in the tariff based on short-term supply-demand conditions. Rates will continue to fluctuate with the market according to origin-destination pairs, service requirements, routing and so on, but a common base guideline is essential for lines to maintain basic service levels and, beyond that, expand their offerings based on customers’ needs.”
On rates, TSA is recommending that its members seek to conclude 2015-16 contract rates at levels at or above $2,000 per FEU to the West Coast and $3,500 per FEU to the East Coast from all North Asia ports. While some shippers negotiate rates on a calendar year basis, many contracts are negotiated for a "contract year" that begins on May 1 and ends April 30.
For Southeast Asia, TSA said the objective will be to achieve rates at or above $2,150 per FEU to the West Coast and $3,650 per FEU to the East Coast.
Last Friday, the spot rate for cargo moving from Shanghai to the West Coast, according to the Shanghai Shipping Exchange’s Shanghai Containerized Freight Index, was $1,930 per FEU, down $156 from the prior week; to the East Coast, it was $4,085 per FEU, down $213.
TSA noted “intermodal base rates will vary by destination, but as an example, TSA is proposing 2015 CY (container yard) rates to Chicago-area ramps to be at least $3,900 from North Asia and $4,050 for Southeast Asia.
TSA said its members have additionally modified TSA’s formula for other equipment sizes with respect to minimum rates. Base rates for TEUs will be assessed at 90 percent of FEU rates.
It said high-cube FEU base rates for containers that are a foot higher than standard 40-foot containers, which are popular with retailers and other shippers moving lightweight cargo, will be charged a premium of at least $50 over the 40-foot standard rate for West Coast and $100 more than the 40 foot rate for all other destinations.
TSA said, “The changes reflect the greater cost impacts from the handling of different container sizes as load and discharge patterns in port become increasingly complex and time-sensitive.”
The new recommended contract rates will also be subject to the addition of a low-sulfur fuel cost recovery component, which TSA is currently studying and expects to announce in the next several weeks.
Conrad noted the emissions mandate will require ships to use costlier marine gas oil when operating in those areas and “is of special concern because it will hit the trade all at once and no one can predict just yet where prices will settle. That, in turn, makes it difficult to adapt our existing formula, but we expect to have a clearer picture closer to Jan. 1, in time to announce a charge with the necessary advance notice.”
TSA members include APL, China Shipping, CMA CGM, COSCO, Evergreen, Hanjin, Hapag-Lloyd, Hyundai Merchant Marine, “K” Line, Maersk, MSC, NYK, OOCL, Yang Ming, and Zim.

RESHORING

Does reshoring also mean a step backward from global trade?

3PLs , LOGISTICS SERVICE PROVIDERS, & STRATEGY

3PLs--and all logistics service providers--should have a sound strategy and should execute it.  Execution is important.  Bouncing around looking for new customers is not a strategy.  Selling cheap rates is not a strategy.  Read about strategy and execution at http://www.ltdmgmt.com/strategy-for-logistics-service-providers.php

SUPPLY CHAIN TECHNOLOGY

Integrated supply chain technology is very important for supply chain management.

 

SUPPLY CHAIN PROCESS

Integrated supply chain process is very important for supply chain management.

SUPPLY CHAIN MANAGEMENT

It is interesting to read supply chain articles that are written by people who have actually worked in supply chain management. And not by career consultants. Practitioners are credible.

3PLs, VALUE PROPOSITION, INVENTORY YIELD, SUPPLIER MANAGEMENT

3PLs should create a value proposition to differentiate from the herd. Use inventory yield and supplier management to do it. http://www.ltdmgmt.com/scm-value.php