Monday, September 15, 2014

CONTAINER LINE ALLIANCES & THE FUTURE

Will the new container line alliances actually accelerate the M&A or bankruptcies future for some carriers? Are shippers prepared for the impact on their supply chains? Are ports prepared for the volume impact?

ALIBABA, SUPPLY CHAINS

With Alibaba's IPO, interesting to read how many do not understand what is happening to supply chains.

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

TRADE FINANCE & TRADE CREDIT ASSETS

Options to Buy Trade Finance and Trade Credit Assets are… David Gustin - September 10, 2014 2:36 AMCategories: Risk Management, Specialized Purpose Vehicles | Tags: asset management, Trade Finance Bank’s have been looking to distribute trade finance assets off their books for a number of years because their equity has become increasingly expensive, especially for low risk weighted assets. This has also occurred during increasing compliance costs. Banks have experimented with a number of techniques to take trade finance assets off their balance sheet in what I call an originate to distribute model. None of these efforts are trivial, cheap, or transparent. As I mentioned in a previous post, the term “trade finance” is generally reserved for bank products that are specifically linked to underlying international trade transactions (exports or imports). As such, a working capital loan not specifically tied to trade is generally not included in this definition. Trade finance products typically carry short-term maturities, though trade in capital goods may be supported by longer-term credits. Banks support international trade through a wide range of products that help their customers manage their international payments and associated risks, and provide needed working capital. These include products like letters of credit, specific trade loans tied to letters of credit, supply chain finance, factoring, invoice discounting, etc. Some of the methods to take these assets off their books include: Securitize trade finance assets into notes that can be purchased and resold by investors. Citibank and Santander developed a trade finance special purpose entity based in Ireland called Trade MAPs in 2013. In September of that year, Commerzbank’s securitisation of pre-export and import financing transactions with financial institutions came to market called CoTrax Finance II-1. Investors can buy these rated products, but little exists, they’re not publically trade and to date product has been complex and investor unfriendly. Selling bespoke CDS on trade portfolios as the banks try to gain capital relief, but many investors don’t fully understand the underlying transactions of what they are buying. Private placement deals direct with investors (eg. Ex-Im Banks deals are the most popular. Those are limited to major Aircraft, etc.). The much larger opportunity exists with trade credit. Why? Quite simply banks only touch on a small part of receivable lending for a corporate, with most of the receivables staying on the corporate balance sheet. We will explore this in Part 2 of this post. - See more at: http://spendmatters.com/tfmatters/options-to-buy-trade-finance-and-trade-credit-assets-are-growing-part-i/#sthash.ntdF4OoA.dpuf

Saturday, September 13, 2014

U.S. PORT CONGESTION PROBLEMS

Maritime official says port congestion a problem

By BRUCE SMITH, Associated Press |September 12, 201

CHARLESTON, S.C. (AP) — A top federal maritime official said Friday that congestion in moving goods in and out of terminals is a growing problem facing America's ports.

"All of the ports in general have some kind of congestion at the gate. We refer to it in the business as the first mile or the last mile whether it's an import or an export," U.S. Department of Transportation Maritime Administrator Paul Jaenichen said while visiting the South Carolina Ports Authority.

Jaenichen came to formally announce an $11 million grant to upgrade a local terminal to handle a new generation of larger container ships.

"Many of the ports grew up around cities and local areas where the port was there first and the city sort of grew around it and now you have constrained it," he said. "Now you have challenges in being able to get the cargo out of the port — you have (railroad) grade crossings, you have truck activities and you have a lot of trucks being queued up."

The problem, he said, will likely get worse in the coming decades with the nation's population is expected to grow to 400 million people by 2050 requiring the movement of an additional 14 billion tons of cargo.

The Federal Maritime Commission begins a series of meetings in Los Angeles next week to discuss the problem with industry leaders.

Commission Chairman Mario Cordero told the South Carolina International Trade Conference earlier this week that a second meeting will be held in Baltimore next month with later sessions to be held in the Southeast, perhaps in Charleston, and in New Orleans.

He envisions the meetings will result in a study of ways to deal with congestion.

The $11 million for the Wando-Welch Terminal in Mount Pleasant is part of a new round of $600 million in TIGER grants for 72 transportation projects in 46 states.

TIGER stands for Transportation Investment Generating Economic Recovery and the first round of grants were awarded in 2009 as a way to create jobs and help the nation out of the Great Recession.

The new round of grants announced this week includes $74 million for ports and since the grant program began, almost $500 million has been awarded for port projects across the nation.

U.S. Rep. Jim Clyburn, D-S.C., had earlier this week announced the grants for South Carolina which include both the terminal work and money for a street project in Columbia.

John Hassell, the vice chairman of the ports authority board said work on the terminal project, estimated to be more than $80 million, will begin next year and should take between two and two-and-a-half years.

Friday, September 12, 2014

DIGITAL TRADE & USITC

Digital trade linked to 3-4% boost in U.S. GDP

USITC report finds foreign barriers stymie further opportunities in digitally sensitive industries.

By Eric Johnson |Friday, September 12, 2014

Digital trade is responsible for an estimated 3.4 percent to 4.8 percent boost in U.S. GDP, according to a new report released Thursday by the U.S. International Trade Commission.
The report, Digital Trade in the U.S. and Global Economies, Part 2, is the follow up to a report released by USITC in July 2013 — both were conducted at the request of the U.S. Senate Committee on Finance.
The most recent report concludes that domestic commerce and international trade conducted via the Internet has “far-reaching effects on the U.S. economy that have fundamentally transformed many aspects of the ways businesses operate and interact with one another,” the USITC said.
Part 2 provides information on the value of U.S. digital trade and the potential growth of this trade, as well as insight into the broader linkages and contributions of digital trade to the U.S. economy. The report includes a survey of U.S. firms in industries particularly involved in digital trade (so-called digitally intensive firms); examines the effects of notable barriers and impediments to digital trade; and presents case studies that examine the importance of digital trade to selected U.S. industries.
Among the findings in the report are that enhanced productivity and lower international trade costs in digitally intensive industries due to digital trade likely resulted in an estimated $517.1 billion to $710.7 billion increase in U.S. GDP in 2012.
U.S. real wages were likely higher by 4.5 percent to 5 percent, and the effect on U.S. total employment ranged from no change to an increase of 2.4 million full-time equivalents (FTEs), depending on how workers and employers responded to rising wages. If the effects of enhanced productivity and lower trade costs in non-digitally intensive sectors were also quantified, the economy-wide estimates would likely be larger.
The most recent report also found that U.S. digitally intensive firms sold $935.2 billion in products and services, and purchased $471.4 billion in products and services over the Internet. Most products and services firms sold or purchased online in 2012 were delivered physically or in person — not digitally.
The Commission's survey of U.S. digitally intensive firms found that internal communications and online ordering of products and services are the leading ways firms use the Internet.
Critically, the survey estimates that losing access to the Internet would reduce productivity by 15 percent or more for more than 40 percent of firms in digitally intensive industries. Business-to-business communications ranked as the largest contributor to the productivity benefits of the Internet; selling online products or services was tied with ordering online products or services as the second largest.
Meanwhile, online international trade is a relatively small component of U.S. exports and imports of both digitally and physically delivered products and services. Digitally intensive firms exported $222.9 billion and imported $106.2 billion in products and services ordered online in 2012. Most exports and imports ordered online are delivered physically or in person — not digitally.
The report also found that the removal of foreign barriers to digital trade in digitally intensive industries would likely result in an estimated $16.7 billion to $41.4 billion increase (a 0.1 percent to 0.3 percent increase) in U.S. GDP. U.S. real wages would likely be 0.7 percent to 1.4 percent higher, and the effect on U.S. total employment would range from no change to an increase of 0.4 million FTEs.

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Thursday, September 11, 2014

SINGAPORE & E-COMMERCE

Interesting. Does the size of Singapore impact what supply chain service can be provided and when? Discusses everything in terms of logistics, not supply chain management.

E-commerce changing the landscape of logistics industry

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By Nicole Tan
POSTED: 08 Sep 2014 21:02

New players cater to eager online shoppers who want to track the progress of their packages in real time, and also help e-commerce companies that do not want to hold large inventories.

File photo: A shopper browsing a website on a tablet.

SINGAPORE: E-commerce is changing the logistics landscape in Singapore, as new players enter the market to better cater to the changing profiles of both consumers and retailers.
Traditional business-to-business logistics involves the shipment of orders to a centralised distribution centre, before they are delivered to the storefront. But in recent years, the e-commerce 'business-to-consumer' model has emerged, and this requires a different set of systems and mindsets.
For instance, online shoppers want to track their purchases and know their likely delivery date. To cater to these eager consumers, logistics providers are adopting a high-speed and customer-centric approach. Logistics firm aCommerce, for example, sends customers SMS shipment notifications, provides real-time delivery status updates and gives its drivers smartphones for all their deliveries.
The company also has its own call centre team to handle rescheduling if a delivery fails to reach the customer the first time. Ms Sabina Chang, CEO of aCommerce (Singapore), said: "Consumers want visibility and transparency in their delivery, and that is what I think many logistics providers can't provide today."
From webhosting to warehousing, and picking and packing, new industry players said they can provide solutions from one end of the logistics supply chain to the other, and help smaller retailers that lack sufficient resources and volume to go online.
E-commerce companies like blogshops, for example, tend to have small inventories, but most logistics companies require a minimum volume commitment.
Said Mr Vaibhav Dabhade, co-founder and CEO of Anchanto: "We need more companies that allow e-commerce companies to store and fulfil maybe a few thousand products - that would really meet the needs of smaller retailers. For small or big businesses, we give great flexibility, in that we do not charge a minimum fee, but we charge based on what they consume."
As new firms enter the market, industry watchers said the main challenge is to keep costs down while still being able to scale up. "Opening up a website, hosting a website, digital marketing - these can be scaled up quite quickly," said Mr Sachin Mittal, vice-president of equity research at DBS Bank. "But how fast can you scale up people on the ground, how fast can you scale up right deliveries in right time? That is the perennial challenge for logistics."
The e-commerce market in Singapore was estimated to be worth more than S$2 billion in 2013. It is expected to grow in line with its Asian peers, at an average annual rate of about 30 per cent over the next four years.

SUPPLY CHAIN RISK

First you have to identify and assess supply chain risk before you can mitigate it.

SUPPLY CHAIN RISK

Is supply chain risk ubiquitous?

SUPPLY CHAIN FINANCE & GOODS IN TRANSIT

Goods in transit: how lessons from retail can transform the financial data supply chain

10 September, 2014 Written by Banking Tech

Stephen Engdahl, SVP product strategy, GoldenSource

Regulatory mandates call for the financial services industry to collaborate and rethink its data supply chain to tackle systemic risk and improve transparency. Looking at how the retail industry manages its supply chain could hold the key, writes Stephen Engdahl.

The financial services industry consumes, processes and distributes information on a massive scale. The stability and integrity of the financial markets relies heavily on how that information is handled, and, more specifically, on how it is shared and transmitted across multiple parties.
For many other industries, the design, manufacturing, storage and distribution of a physical product is the core focus and the generation of data is simply a by-product of doing business. However, in financial services, data is the core product. Data is what powers the sector and, unlike other industries, each part of the supply chain, from the manufacturing of “products” through to distribution, is electronic as opposed to physical. Even its warehouses are electronic.
Financial services is an industry of information and is being recognised as one of the most technologically advanced sectors in the world. However, despite this, critical processes often fall short of those in industries with a physical product, such as retail.
Regulations and cost-pressures are forcing firms to face up to this issue once and for all. In doing so, there are some clear lessons to learn from the likes of retail, which have had to build rigorous and efficient supply chains based on that physical product. Here, the supply chain has matured into a set of collaborative processes to benefit both individual firms and the industry as a whole. By putting in place similar building blocks around identification, standards and integration, financial services stands to gain from better risk management, reduced costs and greater business agility.

Building block 1 – identification

The first step for any supply chain is to understand what is being traded and with whom. In retail, barcoding provides a common standard. This allows firms to accurately identify and track products – and who has handled them – and then associate it with other information such as stock levels and location. The result is greater visibility and tighter control over supply and demand.
In financial services, it is essential to have this level of identification in order to achieve the overall goal of regulation; reducing systemic risk in the market. Security identifiers already exist in various forms but the identification of entities has, historically, been less of a priority. That has already started to change with the introduction of the legal entity identifier (LEI). Having this financial services ‘barcode’ is helping firms emulate the controls seen in the retail supply chain. However, it is just one of several pieces in the puzzle.

Building block 2 – communication standards

Retail firms achieve inter-company co-operation and efficiencies along the supply chain by having common standards. One example is the Electronic Data Interchange, which applies a standard format of communication between parties. The challenge in financial services is that there are sometimes different standards for different countries, parts of a transaction process or types of financial instruments.
This becomes a clear problem when looking at specifics such as transaction reporting under EMIR, where both counterparties are reporting the same trade. If both companies are using different formats, reconciliation becomes all the more difficult and prone to errors. In a report published in May 2014, European repositories warned that up to 60% of derivatives trade reports entering their systems could not be matched across both counterparties. The result is in an incomplete picture of activity across the derivatives markets.
Getting this piece right will be a major achievement and, importantly, will pave for the way for initiatives such as T+2. Having an open and uniform approach will significantly increase firms’ chances of complying.

Building block 3 – integration

Methods of identification and communication are critical. However, they mean nothing if firms cannot use them properly to achieve integration across the supply chain. A joined up approach in retail, based on common standards, means firms have full visibility of the entire manufacturing process. Retailers can provide feedback from the sales channel, down the supply chain, to ensure products are designed with ease of manufacturing in mind.
The same benefits are possible with data management in financial services. It is about creating efficiencies through automation across the supply chain rather than simply passing data on and out of sight.
This level of integration also extends to internal visibility. Processes within a retail organisation allow it to scan a product, update and calculate inventory and effectively manage supply and demand. In a similar fashion, financial institutions need sight of the data lineage so they can manage data internally – they need to know where their data comes from, who has handled it and where it is going to next.
The role of an industry utility
It is possible to automate many of the data processes within a firm – such as buying data from vendors, ensuring data quality and managing downstream systems. However, with everyone doing many of the same processes, this leads to a massive duplication of effort, and cost, for little or no competitive advantage.
For a truly efficient supply chain, there needs to be a collaborative approach that suits all parties while allowing for competitive differentiation and innovation. Industry utilities have proved successful elsewhere and could provide an obvious answer for data management in financial services – specifically, the separation of the commoditised parts of the process. These include the creation of raw data, manufacturing and capturing of events; the aggregation of data feeds and the management of quality and distribution; plus the acquisition phase, which includes data purchasing, standardisation and warehousing. Firms could then focus resources on areas that deliver real business value, such as enriching data, transforming it and delivering it to consumers.
Putting all of this in place could be a big undertaking and would require a major shift in thinking. The rewards would be huge but, for many, it might seem out of reach. However, by breaking it all down into smaller initiatives, it becomes far more achievable and realistic. And much of it is already underway – whether it is the introduction of the LEI, the review of messaging protocols and collaboration in preparation for T+2, or the FIBO initiative to define industry standard terms.
Whether in isolation or as a broader united effort, these types of initiatives are valuable and positive steps towards a more beneficial data supply chain – one that manages its product, the data, effectively and with greater visibility. By continuing with this work, the industry will inevitably become more transparent and capable of tackling systemic risk. For individual firms, they would streamline processes, save costs on commoditised data processes and be better equipped to achieve real competitive advantage where it counts.

TRANSHIPMENT VS CARGO IN TRANSIT

Difference between transhipment and cargo in transit..

Written By Hariesh Manaadiar on 10 September, 2014 In Category: Questions and Answers, Shipping and Freight, Shipping Knowledge, Vessel Operation Under Tags: Cargo in Transit, transhipment | 6 Comments on this article - Click here to add yours..??

What is the difference between Transhipment and Cargo in Transit..??

This article is based on a question from a user Krishna..
What is Transhipment..?? – Transhipment is the act of off-loading a container from one ship (generally at a hub port) and loading it onto another ship to be further carried to the final port of discharge..

How is this different from Cargo in Transit..??
A cargo that is moved from an origin point across international borders to another country over land is termed as “Cargo in Transit”..
Let me explain further..
There are several countries and commercial centers around the world that don’t have a seaport and these countries have to use the seaports of other countries in order to import or export their cargo..
Some examples of such countries would be

Ethiopia which uses the port of Djibouti in Djibouti as their gateway port
Uganda which uses the port of Mombasa in Kenya as their gateway port
Moldova which uses the port of Constanta in Romania as their gateway port

Cargo in Transit move could be as below :

Cargo from Country A is moved to destination Country D via Country B (which could be a sea port) and Country C (another inland country) or
Cargo from Country A is moved to destination Country D overland, via countries B and C where Countries A, B, C and D are all within a union of countries like the EU

Bills of Lading and Manifest for cargoes bound for such inland country destinations, must carry the clause Cargo in transit to “name of country” .. This clause tells the gateway/transit port/country that the cargo is not meant for consumption in their country and is meant for the manifested inland country and by virtue of this clause, the cargo maybe allowed to transit international borders under customs control..
If this clause is not included in the bill of lading and manifest, the movement across the international border will not be allowed and the recipient might need to customs clear the goods at the gateway port which might not be an ideal situation for the recipient..
In some cases, shipping lines or government regulations might dictate/insist that the clause reads as “Cargo in transit to “name of country or final destination” on client care, risk and cost“..
Cargoes in transit may be moved via any mode of transportation depending on the infrastructure available..
The documentation and customs clearance processes between the countries depend on their trade and other co-operation agreements.. Unions and Communities such as EU and SADC have agreements for cargoes moving in transit within/via their territories..
To summarize :
*** Transhipment is the act of off-loading a container from one ship (generally at a hub port) and loading it onto another ship to be further carried to the final port of discharge.. Cargoes that have been off-loaded at a port for transhipment are NOT allowed to exit the port by land or rail across international borders to a land locked country unless they are declared as Cargo in Transit..
*** Cargo in Transit is the movement of cargo that is

discharged at a gateway seaport or
originating from a country within a union

across international borders to another country where the final destination is (generally) a landlocked country..

Wednesday, September 10, 2014

INDIA, WEF, EFFICIENCY

The World Economic Forum ranks India #95 in Goods Market Efficiency for its Global Competitiveness Report. This score shows the need for strong supply chain management.

Tuesday, September 9, 2014

INDIA, PORTS, WEF

India ranks #76 in World Economic Forum Competitiveness for 2014-15 for Quality of Port Infrastructure. This is fundamental isssue for global market and being a global player.

JAMAICA, PORT, WEF, LOGISTICS HUB

Jamaica ranks #44 in World Economic Forum Competitiveness for 2014-15 for Quality of Port Infrastructure. That means they must have a big jump to be a logistics hub.

SUPPLY CHAIN RISK

Qualitative supply chain risk assessment is a weak, subjective approach.

MEGA PORTS FOR MEGA SHIPS

Little seems to be happening to create a mega-port/mega-hub to handle mega ships. There is talk about going to a hub and spoke for these big ships. But what about customers? Let's talk about what they need. They have been subjected to actions over the past few years that add time to shipments. I feel carriers have forgotten about customers and supply chains as they chase low costs. So as someone running a supply chain, why would I want to use a carrier and the hub and spoke? Time is critical--especially for my A inventory items, for serving customers, and for inventory velocity. I am not a fan of H&S for flying. Also in terms of lean, H&S is a waste. It adds time to the product and creates no additional value.

For the mega, I was thinking a Rotterdam or someone would make the needed investment to handle the big ships and get them unloaded and loaded and back out "quickly". As things are, there are delays at ports with the big ships. How is that problem fixed? Or is it? One other related topic, what do you think of off-shore platforms/terminals to load and unload ships--and then barge them or truck them over this to be built long bridge connecting the mainland?