WEST COAST, EXTRA SHIPS

 

ILWU-PMA contract agreement could be bad news for some containership owners

By Mike Wackett

02.24.2015 · Posted in Loadstar posts, Sea Add to favorites

While many on the US west coast will be celebrating the recent agreement between dockworker unions and the employers association, the spectre of vessel overcapacity once more rears its head on the transpacific.
According to Alphaliner, ocean carriers are currently deploying an additional 61 ships from Asia with a total capacity of 364,000 teu to compensate for the delays at US west coast ports.
This figure also includes 14 ships for ad hoc voyages operated between Asia and the US east coast launched as a result of the congestion indigestion on the west coast.
The analyst reported that 20 ships had been chartered-in specifically for round-trip voyages between Asia and the US, including 12 panamax vessels of 4,000-5,100 teu, with the balance provided by carrier tonnage – either owned or on long-term charter – that would otherwise have been laid-up during the winter period.
Although the “tentative” new five-year labour agreement is expected to be ratified later this week, many of these extra ships will be kept busy in the short term: the major Californian hubs of Los Angeles, Long Beach and Oakland estimate that it could take up to two months to clear the backlog of ships and cargo.
The 61 vessels represent 2% of the total global container ship fleet capacity, and their ad hoc employment was needed to supplement the increasing number of ships stuck at anchor off the US west coast as the contract talks disintegrated into working slowdowns by the labour force and weekend and holiday lockouts by employers.
Indeed, Alphaliner’s containership idled tonnage analysis of 13 February showed a decline to just 93 ships of over 500 teu, representing a total of 146,000 teu in hot or cold lay-up – the first time laid-up tonnage had fallen below 150,000 teu since 2011.
The demand for supplementary ships provided a welcome boost for containership charter rates, with the decision to hire-in more vessels on the transpacific greatly assisted by fuel costs that were on average 50% lower than six months earlier.
For ad hoc Asia-US east coast sailings, the inducement for carriers was that they were able to secure a premium from desperate shippers seeking alternative gateways for US imports that saw spot freight rates surge to over $5,000 per 40ft via the Panama Canal – around twice the level for west coast shipments.
However, the extra ships will ultimately become surplus to requirement once carriers return to their normal sailing patterns after the backlog has cleared.
Neither container shipbrokers nor panamax container vessel owners are likely to have welcomed news of the union-employer rapprochement, given that carriers are likely in due course to decline options on charter extensions.

G6 CONTAINER LINES CANCEL TRANSPACIFIC SAILINGS

West coast port congestion leads G6 to cancel 18 transpacific sailings

By Gavin van Marle

02.20.2015 · Posted in Loadstar posts, Sea Add to favorites

In a further blow to embattled US importer and exporters, the members of the G6 alliance are set to cancel multiple transpacific sailings as a result of the port congestion crisis gripping the US west coast.
From next week, around 18 sailings out of Asia bound for the US west coast are set to be blanked, according to a customer advisory issued today by Hapag-Lloyd.
The disruption to G6 services is due to run until the end of April, with the westbound backhaul legs also cancelled, and hitting US exports.
The cancelled sailings will take place beginning on week nine and continuing through to week 17.
The south-east Asia services 1 and 2 will see sailings departing Singapore and Laem Chabang cancelled on weeks 12 and 10 respectively; whilst the south China 1 service that runs between Kaohsiung and Los Angeles will effectively be suspended for almost two months, with four cancellations on weeks 10, 12, 14 and 17.
The south China 2 service which runs between Da Chan Bay and Long Beach will see two cancellations on weeks 10 and 12, while three of the four central China services that run between Shanghai and Qingdao and Los Angeles will see several sailings cancelled weeks nine and 10.
The north Pacific services 1 and 2 that run between Singapore and Vancouver, and between Hong Kong and Tacoma will see five services cancelled.
The announcement came shortly after operations at the port Oakland were completely suspended for a day while dock workers attended a union meeting between 8am and 5pm.
Oakland port director John Driscoll said: “The decision not to work is damaging to shippers who rely on the Port of Oakland to move their cargo, and to the thousands of people who depend on the Port for their livelihood.
“Disruptions such as this one cripple our ability to support global trade and the economy of the Bay Area.”

HTSUS AMENDMENTS

HTSUS Amendments Proposed to Reflect Jan. 1, 2017, HS Changes

Friday, February 20, 2015

Sandler, Travis & Rosenberg Trade Report

The International Trade Commission has issued its proposed recommendations regarding modifications to the Harmonized Tariff Schedule of the U.S. that will be necessary to implement 234 amendments to the Harmonized System that are expected to go into force for World Customs Organization members as of Jan. 1, 2017. The ITC is also recommending modifications concerning taro and corned beef. The ITC asserts that the proposed modifications would ensure substantial duty rate neutrality and have little or no significant economic effect on U.S. industry or labor.
Written comments on these recommendations from interested federal agencies, the business community and the public are due no later than April 20. The ITC expects to issue its final recommendations to the president by July 31. Following a 60-day congressional layover period the president may proclaim the HTSUS modifications, which cannot become effective before the 30th day after the proclamation is published in the Federal Register.
WCO Amendments. Pursuant to the WCO amendments, the ITC proposes to recommend HTSUS changes for a wide range of products and product groups, including the following.
- fish and fishery products
- forestry products, including tropical wood and certain bamboo and rattan products
- antimalarial products
- substances controlled under the Chemical Weapons Convention
- hazardous chemicals controlled under the Rotterdam Convention
- persistent organic pollutants controlled under the Stockholm Convention
- ceramic tiles
- newsprint
- light-emitting diode lamps
- multi-component integrated circuits
- hybrid, plug-in hybrid and all-electric vehicles
Taro and Corned Beef. The ITC proposes to recommend the deletion of HTSUS subheading 0714.90.10, which covers fresh or chilled taro and the amendment of HTSUS subheading 0714.40.10 to incorporate the rates of duty from subheading 0714.90.10. The ITC explains that there are different subheadings in the HTSUS for taro and dasheen but that these two terms are used interchangeably to describe the same product.
The ITC also proposes to recommend the deletion of HTSUS subheading 1602.50.10, which covers corned beef in airtight containers, and the insertion of a new HTSUS subheading for corned beef in airtight containers that is subordinate to a superior subheading for cured or pickled meat of bovine animals. The same rates of duty would continue to apply.

View Document(s):

• proposed recommendations

L.A. SEMINAR--BLUE OCEAN STRATEGY USING SUPPLY CHAIN MANAGEMENT

I will be doing two one-day seminars in Los Angeles on May 11 and 12. 

May 12 will be a discussion of Blue Ocean Strategy Using Supply Chain Management. 
Learn how to not be where everyone else is. Stop being in the red ocean where everyone else is.

Manufacturers, wholesalers, and retailers should attend. Learn about competitive differentiation, the new e-commerce, multichannel, and global--- all driven by blue ocean strategy using supply chain management.

3PLs and other logistics service providers should attend, to learn what their customers will be doing and to take ideas on what they can do to position themselves outside the commodity-service market they are in.

The May 11 seminar will be on Global Food Supply Chain Risk.

HERE IS A LINK FOR MORE INFORMATION--
http://www.complianceonline.com/global-food-supply-chain-risk-and-blue-ocean-strategy-seminar-training-80269SEM-prdsm?Channel_Alwin

EU, SUPPLY CHAIN INITIATIVE, FOOD

LTD Management's global food supply chain risk model and methodology complement this effort.

More than 160 food firms sign up to supply chain fairness initiative

BY

Andrew Allen

13.02.2015

web_fruitpick_istock_000027348465_large.jpg

Some 160 companies signed up to an initiative promoting fairness in the food supply chain in its first 14 months of operation. © iStock

Some 84 large companies and 80 SMEs have signed up to an initiative to increase fairness in the food supply chain in its first 14 months of operation.
Signatories to the Supply Chain Initiative (SCI), which was set up by seven European food industry institutions, commit themselves to fair trading practices and measures aimed at integrating the principles of good practice into their company's day-to-day operations.
According to an SCI survey 32 per cent of respondents said they had already perceived an improvement in trading practices since signing up.
Signatories pledge to undertake training to ensure compliance with SCI principles and agree to participate in the dispute resolution options available under the framework rather than engage in commercial retaliation.
The SCI signatories have nearly 900 subsidiaries operating across the EU.
Some 39 per cent of respondents said that they had used the SCI’s e-learning module. Meanwhile 74 per cent of survey respondents said they communicated their registration to their business partners. Almost three quarters said they were satisfied with the system. Of these, 35 per cent said they were very satisfied.
The SCI warned in a report that the 22 companies that did not take part in the survey were in breach of their commitment and said if they did not formally explain why they had not responded they could be expelled from the initiative.

- See more at: http://www.supplymanagement.com/news/2015/more-than-160-food-firms-sign-up-to-supply-chain-fairness-initiative#sthash.6SI7zf9X.dpuf

3PL, JAPAN POST BUYS TOLL HOLDINGS

This, coupled with Kintetsu's buying APL Logistics, should shake up the 3PL industry.  I can think of a few US and other 3PLs/forwarders who should be holding some internal crisis meetings.  The time for doing nothing is over.

Japan Post to buy Toll Holdings for $5.1 billion

Acquisition would make Japan Post one of the largest global 3PLs.

By Eric Kulisch |Wednesday, February 18, 2015

Government-owned Japan Post Holdings moved Wednesday to become a significant, global third-party logistics provider, offering A$6.5 billion (U.S. $5.1 billion) offer to acquire Toll Holdings, Australia’s largest freight transportation company.
The cash payment of A$9.04 (US$7.05) per share represents a 49 percent premium on Toll’s last closing price.
Japan Post said Toll would be run as a division of Japan Post and will retain the Toll name. Toll’s CEO Brian Kruger and the rest of the management team will remain with the company.
This is the second time this week a Japanese logistics company has made a major acquisition. Kintetsu World Express on Tuesday bought Singapore-based APL Logistics for $1.2 billion.
Japan Post, which also offers banking and insurance services, plans an initial public offering within the next year. A previous privatization plan was scuttled in 2010. The postal service cut the deal to increase its value ahead of the offering by diversifying beyond its domestic market, especially into the fast-growing Asia market where Toll has a strong foothold. Japan’s postal market has been shrinking in recent years due to population decline and increased Internet communication.
The acquisition follows the launch of an international parcel delivery service in October by Japan Post through a partnership with France’s GeoPost and Hong Kong’s Lenton Group.
Toll is the largest independent logistics provider in the region, engaging in freight forwarding, contract logistics, express delivery, intermodal rail and trucking. It even operates its own fleet of tugs, barges and other shallow-draft vessels in Asia. The company had revenue of US$6.9 billion and turned a profit of US$228.5 million in 2014.
The deal would make Japan Post the fifth largest logistics company in terms of revenue, pitting it in competition with the likes of CEVA Logistics, DHL, UPS, and FedEx. The company said it would use Toll’s expertise to make further acquisitions in Asia, Europe and North America.
“Toll has become an iconic Australian transport and logistics business with significant operations in Asia. We will be complementary to Japan Post, and closely aligned in our target markets. Combined we will have an expansive geographical footprint with Toll providing expertise in the global logistics and transport markets. Japan Post will bring extra capability, financial strength and significant scale to accelerate growth. Together we will offer an enhanced value proposition while delivering innovative, efficient and cost effective solutions to our customers,” Kruger said in a statement.
Toll’s interim results for the first half of fiscal year 2015, released Thursday, showed a 22 percent decline in net profit due to what the company said were sluggish economic conditions in Australia, as well as divestments and portfolio changes. Toll is in the midst of an internal restructure designed to trim costs, as well as an overhaul of information technology systems designed to improve efficiency and cost.
The Japan Post transaction is expected to close in June, contingent on approval by both regulatory parties and Toll shareholders at a meeting in May.

STRATEGIC COMPETITIVE DIFFERENTIATION

Why do so many manufacturers, retailers, and wholesalers refuse to develop supply chain management for competitive differentiation?

 

3PLs, COMPETITIVE DIFFERENTIATION

Why do so many 3PLs fail at strategic competitive differentiation?  Obsessing on the competition is one big reason.

KINTETSU BUYS APL LOGISTICS FROM NOL

I think the sale is a mistake by NOL. Can Kintetsu World Express, KWE, assimilate APL Logistics--and under what branding?

Japan’s Kintetsu World Express pays premium to bag APL Logistics purchase

By Gavin van Marle

02.17.2015 · Posted in Loadstar posts, Supply chain Add to favorites

Singapore’s NOL today sealed the sale of its APL Logistics division to Japanese logistics provider Kintetsu World Express (KWE), in one of the largest logistics acquisitions in recent history.
The sale will earn $1.2bn for the state-owned Singaporean shipping line, which is in urgent need of recapitalising its balance sheet, while KWE will be transformed into a mid-to-large sized contract logistics provider with a far greater geographic spread.
NOL said the sale price is 15 times APL Logistics’ EBITDA [earnings before interest, tax, depreciation and amortisation] of $80m last year, with KWE winning a competitive auction for the unit with the highest bid price – and reportedly beating competition from the likes of XPO Logistics and Korean company CJ Express – and one that is considerably above the current market average for acquisitions.
According to the NOL statement, the average EBITDA multiple in “precedent logistics acquisitions” has been 9.8 times, which would have valued APL Logistics at $800m, which means it has effectively earned itself a 50% market premium on the sale.
NOL added that the sale meant its net gearing ratio “pro-forma as at the end of 2014 reduces from 2.25 to 1.08”, while it effectively books a $900m net gain from the divestment, “pro-forma as at the end of 2014”. According to Alphaliner, prior to the sale NOL’s net gearing had grown to its highest level since 2002, and reducing it had clearly become a priority for management.
“In an increasingly competitive liner shipping sector, NOL believes that it is imperative to strive to have the most cost competitive position and the strongest financial position in order to have a better chance to thrive. Accordingly, after carefully considering its strategic options, NOL has decided to dispose of its logistics business and focus on improving its core liner shipping business.
“The net proceeds of the sale of APL Logistics will be applied to strengthen the financial position of the NOL Group, including repaying its borrowings,” it said in announcement to the Singapore stock exchange.
It also emphasised that it stood to lose relatively little possible revenues from the previous alignment of APL Logistics as a customer of the APL shipping line, revealing that last year the box shipping arm earned $70m in revenues from APL Logistics – representing just 1% of the carrier’s $7bn revenue in 2014.
The implications for the contract logistics sector are far greater however.
The deal was described as “transformative” for KWE by Transport Intelligence (Ti) senior analyst Thomas Cullen. He told The Loadstar: “It is a very generous deal for NOL, while for KWE it will change the nature of the company – it pushes them into different regions, particularly the US, and gives them a different customer base.”
It is a general truism that Japanese logistics providers have built their businesses serving the export requirements of Japanese OEMs, a model that has been very successful while their customers have been successful, but which also leaves 3PLs short of strategic options.
According to Ti data, almost two-thirds of APL Logistics contract logistics business is in the US, a large portion of it serving automotive manufacturers such as GM and Chrysler, as well as retailers such as Walmart, which represent a very different customer profile from KWE’s existing customer base, and it came as little surprise that one of KWE’s first comments on the deal was the assurance that it would keep APL Logistics’ existing management team and staff.
“We are very pleased to successfully enter into this transaction. Since 2013, we have laid out a strategy to strengthen our international presence especially in the US and Asia. This transaction fits right into our strategy,” said Satoshi Ishizaki, group president and chief executive of KWE.
“We intend to retain the headquarters of APL Logistics in Singapore and to run it as a separate unit. We will also ensure that members of the group work together for the benefit of our stakeholders. We warmly welcome customers and employees of APL Logistics into our group. To them, I would like to give my assurance that when this transaction is completed, KWE will continue to invest in and expand APL Logistics’ services so as to serve our customers better, and to create exciting career growth opportunities for all employees of the KWE family.”
It would also appear that KWE managed to secure the acquisition at a time when larger freight service providers – notably DSV and Norbert Dentressangle – are on the prowl for possible buys, particularly those with strong US businesses.
“Perhaps the price was too high for the other bidders,” Mr Cullen said, “After all, while KWE is alikely to incur quite a lot of debt to fund the acquisition, debt is cheap at the moment, and in Japan it is very, very cheap.”

SUPPLY CHAIN SEGMENTATION

To break the monolithic, one-size-fits-all supply chain; to better service multichannel sales; to improve inventories; to identify and reduce supply chain risk; and more, the supply chain should be segmented.  Segmentation is the best practice.

Read A Guide to Supply Chain Segmentation at http://www.ltdmgmt.com/segmentation-guide.php

 

U.S. STATE DEPARTMENT, ELIGIBLE GOODS & SERVICES FROM CUBA

State Dept. Lists Goods and Services Eligible for Importation from Cuba

Tuesday, February 17, 2015

Sandler, Travis & Rosenberg Trade Report

The State Department’s Bureau of Economic and Business Affairs posted to its website Feb. 13 information on the goods and services that may now be imported from Cuba in accordance with the policy changes announced by President Obama on Dec. 17, 2014.
Goods. Section 515.582 of the Cuban Assets Control Regulations authorizes imports of goods that are produced by independent Cuban entrepreneurs and imported directly into the United States from Cuba EXCEPT those specified in the following sections/chapters of the Harmonized Tariff Schedule of the United States.
- all chapters of Section I (live animals; animal products)
- all chapters of Section II (vegetable products)
- all chapters of Section III (animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes)
- all chapters of Section IV (prepared foodstuffs; beverages, spirits and vinegar; tobacco and manufactured tobacco substitutes)
- all chapters of Section V (mineral products)
- chapters 28-32, 35, 36 and 38 of Section VI (products of the chemical or allied industries)
- chapters 51 and 52 of Section XI (textiles and textile articles)
- chapters 72-81 of Section XV (base metals and articles of base metal)
- all chapters of Section XVI (machinery and mechanical appliances; electrical equipment; parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles)
- all chapters of Section XVII (vehicles, aircraft, vessels and associated transportation equipment)
- all chapters of Section XIX (arms and ammunition; parts and accessories thereof)
State notes that persons subject to U.S. jurisdiction engaging in eligible goods import transactions must obtain documentary evidence that demonstrates the entrepreneur’s independent status, such as a copy of a license to be self-employed issued by the Cuban government or, in the case of an entity, evidence that demonstrates that the entrepreneur is a private entity that is not owned or controlled by the Cuban government.
For travelers importing authorized goods into the United States pursuant to section 515.582 as accompanied baggage, the $400 monetary limit set forth in section 515.560(c)(3) does not apply to such goods, but goods may be subject to applicable duties, fees and taxes.
Services. Section 515.582 authorizes the importation of any services supplied by an independent Cuban entrepreneur in Cuba.
Persons subject to U.S. jurisdiction engaging in eligible services import transactions are required to obtain documentary evidence that demonstrates the entrepreneur’s independent status, such as a copy of a license to be self-employed issued by the Cuban government or, in the case of an entity, evidence that demonstrates that the entrepreneur is a private entity that is not owned or controlled by the Cuban government. Supply of services must comply with other applicable state and federal laws.

WEST COAST PORTS

Name-calling, finger-pointing is heating up for the West Coast ports. Sign of pre-positioning to resolve issues or sides getting meaner?

LUNAR / CHINESE NEW YEAR

CONTAINER LINES, SKIPPED SAILINGS, CUSTOMERS, SUPPLY CHAINS

Below is a letter I sent to the editor of American Shipper for their article on skipped sailings--

 

Skipped sailings hurt supply chains down the line

   In Ben Meyer’s Container Analytics column, “Skipped sailings still on the rise,” in the February issue, he has hit on an important topic. He discussed it with regards to overcapacity and carrier attempts to adjust it. 

   However, there is another take on blank sailings—slow steaming, schedule revisions, alliance changes, alliance operations, and other actions.  It goes beyond the transpacific and occurs throughout all the trade lanes. Also, skipped sailings as a global problem may continue—and grow—with more ultra-large/mega ships and the corollary moving of large ships into other trades. All this adds overcapacity.

   Steamship lines are not operating in a vacuum. There are impacts to what carriers are doing to adjust capacity that go beyond their own needs.

Carriers are selling a transport service. But what about the reliability of that service caused by dropped sailings and other actions?  The movements of containers represent many supply chains.

   Supply chains are based on the flow of products. There are build and logistics plans, often in weekly buckets, to manage the production and movement of materials and finished goods.  Implicit in these plans is the schedule and performance integrity of container lines.

   Steamship lines’ skipped sailings impact buyers, sellers, and related parties. The effect may be greatest on multinational corporations.  They have suppliers, factories, and customers in many trade lanes. The geographic scope and complexity of these supply chains demand reliability by all stakeholders and participants.

   Carrier actions that make their services undependable have negative consequences on these supply chains. Multinational corporations and others in global trade must invest in additional inventories to buffer these service vagaries. These buffer inventories are unnecessary working capital spent because of carrier performance erosion. These monies could have been used to grow sales, open new markets, improve operations, or add needed technologies.

   Looked at another way, these are not just supply chains, they are customers and their businesses. The industry has a suspect record with its on-time performance. Yet, they are selling a service. What does this say about the container lines and the service they are selling? What are their customers actually buying?

   And, American Shipper, keep paying attention to that man behind the green curtain—the container lines.

NOL, APL, SLOW STEAMING

Does NOL/APL understand what actions, such as slow steaming, do to their customers' supply chains?  Do they care?


NOL says no plans to drop slow steaming despite lower bunker price

Kenneth Glenn, president APL

By Marcus Hand from Singapore

Neptune Orient Lines (NOL) says it has no plans to stop slow steaming even given the lower bunker price and believes it will continue for “quite some time”.

With the bunker price at $350 per tonne compared to double that a year ago the question as to whether container lines will reduce or drop slow steaming altogether is high on the agenda
Asked if NOL liner arm APL plans to drop slow steaming, president Kenneth Glenn said at its full year results briefing: “In terms of increasing the speed of vessels across the board purely based on the lower cost of bunker we have no intention to do that. As for at what cost it would make sense I don’t have a number as I don’t think the number could go low enough.
“We do not see circumstances where we would speed up vessels based on the cost of fuel.”
Glenn did see a case for speeding up individual vessels that were behind schedule but not across the fleet as whole.
NOL president and ceo Ng Yat Chung flagged the impact that dropping slow steaming would have on boxship fleet capacity.
“The primary impact on speeding up is not just on the cost, the primary impact is even more is bringing in more capacity that is locked up by slow steaming and it would exacerbate the overall oversupply. That would not be helpful,” Ng explained.
“For us we foresee slow steaming to be with us for quite some time even with a reduced bunker rate.”
NOL reported a full year net loss of $260m for 2014 compared to a $76m loss in 2013, however, the previous year's result included a one time gain of $200m from the sale of its headquarters building in Singapore. Revenues were 2% down in 2014 at $8.62bn.
Commenting on the state of the market Ng said: “While we are seeing some benefits from the current trend of lower bunker prices, the longer term impact of the drop in fuel price on container freight rates is uncertain. More port congestion, resulting from further deterioration in the labour situation on the US West Coast, is a potential risk factor.”

INDIA E-COMMERCE, LOGISTICS

I do not think these firms understand the new e-commerce driven by the new supply chain. They are negative and think of themselves instead of how to seize opportunities and separate from the competition.

E-commerce 'sale days' create havoc for logistics players

Courier & logistic companies faced with 'unstable and inconsistent' business as e-commerce demand fluctuates between dedicated discount events

Itika Sharma Punit & Anita Babu | Bengaluru

February 11, 2015 Last Updated at 18:04 IST

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Running deep discounts on dedicated 'sale days' may have turned out to be a big success for Indian e-commerce players, but logistic and courier companies that support online retailers are left in a limbo with an 'unstable and inconsistent' business inflow because of these events. According to senior officials at several logistics companies that cater to online retailers like Flipkart, Amazon, Snapdeal and Myntra, there are sudden spikes in demand from e-commerce companies during the two weeks after a sale day, when they want thousands of packages to be delivered within the time frame that they have promised to the consumers. On other days, the demand is much lower compared to the sale days.
"The entire e-commerce game is being played on sale days that lead to sudden spikes in orders. During these days, they (e-commerce companies) want us to deliver thousands of packages to the most remote destinations within a couple of days, because that's what they have promised to their buyers," the head of a leading e-commerce logistics company said requesting anonymity.

"We cannot hire delivery boys for one week when the demand is high due to sales and then pay them salaries throughout the month, when there's no work."
While several e-commerce players have in-house logistics capacities, most of them partially depend on third-party vendors. Among others, Snapdeal does not have a captive delivery unit and relies on private courier companies completely.

While Flipkart delivers 65-70% of its orders through its captive logistics unit, e-kart, it works with logistics players for the rest. Amazon, which is also working to strengthen its delivery capacities, currently has a significant dependence on third-party vendors.
Holding discounts on dedicated days have been the mantra for boosting sales for most of the leading e-commerce players in the country over the last few months. The trend started when Flipkart saw an unprecedented response to its Big Billion Day in October 2014. The company had said that it clocked a revenue of $100 million in only 10 hours on the day of the sale.
Post the Big Billion Day success, Snapdeal hosted a 'Savings Day' in November, while Amazon India had also hosted 'Diwali Dhamaka' sale during the same period.
"We believe that at the time of signing the contract, most organised players make their capacities and limitations clear to the client. After that, if there is a sudden spike in demand, you cannot suddenly pick up delivery boys from the street," Vijay Kumar, chief operating officer of Express Industry Council Of India, a body representing privately run courier companies in the country.

"The e-commerce industry is at a nascent stage so obviously there are certain lags."

SUPPLY CHAIN MANAGEMENT

Too much talk about supply chain management is about its functions.  Unbundling supply chain management is wrong.

WEST COAST PORTS, MORE DAYS PORT NOT WORKING

West Coast port terminals to suspend vessel operations four of next five days

PMA said ships will not load or unload cargo Thursday, Saturday, Sunday or Monday due to continuing ILWU slowdowns.

By Chris Dupin |Wednesday, February 11, 2015

The Pacific Maritime Association said it will suspend vessel operations at West Coast port terminals on four of the next five days, rather than pay premium salaries to members of the International Longshore and Warehouse Union. The four dates affected by the suspension of vessel operations are Thursday, 2/12 (Lincoln’s Birthday); Saturday, 2/14; Sunday, 2/15; and Monday, 2/16 (Washington’s Birthday).
PMA spokesman Wade Gates said the longshoremen are continuing slowdowns “that will soon bring West Coast ports to gridlock. What they’re doing amounts to a strike with pay, and we will reduce the extent to which we pay premium rates for such a strike.”
“In light of ongoing and costly ILWU slowdowns, PMA members will temporarily suspend premium-pay weekend and holiday vessel operations on four upcoming dates, while yard, gate and rail operations will continue at terminal operators’ discretion,” the PMA said in an announcement Wednesday afternoon.
The union fired back at the PMA with a statement of its own, saying, "The cessation of vessel operations was initiated by employers, and is NOT a strike by workers."
ILWU President Robert McEllrath said the action was "an effort by the employers to put economic pressure on our members and to gain leverage in contract talks."
He said the PMA cancelled a negotiating session scheduled for 1 p.m. Wednesday afternoon and representatives have not made themselves available to negotiate since last Friday.
"The Union is standing by ready to negotiate, as we have been for the past several days,” McEllrath added.
“Weekend and holiday pay rates command a premium of at least 50 percent of the basic longshore wage rate," the PMA said. "As a result, working hours on those days would be paid at between $54 and $75 per hour for longshore workers and clerks, and between $77 and $92 per hour for foremen. PMA members have concluded that they will not conduct vessel operations on those dates, paying full shifts of ILWU workers such high rates for severely diminished productivity while the backlog of cargo at West Coast ports grows.”
“Last week, PMA made a comprehensive contract offer designed to bring these talks to conclusion,” said PMA spokesman Wade Gates. “The ILWU responded with demands they knew we could not meet.”
The PMA said the union is continuing “to push demands that would cripple the West Coast waterfront. In particular, the Union is demanding the right to fire any arbitrator who rules against them at the end of each contract period, even though those arbitrators are the referees who keep West Coast ports operating smoothly. During the 2008 – 2014 contract period, the four area arbitrators found the ILWU guilty of more than 200 slowdowns or work stoppages.”
“The ILWU’s current slowdowns, now in their fourth month, show the very reason that we need a healthy arbitration system in place,” Gates added. “It is essential to be able to prevent the crippling slowdowns that are impacting workers and businesses across the nation.”
After nine months of contract talks, PMA said last week that it had made a comprehensive contract offer that would raise ILWU wages by 14 percent over five years, on top of current average full-time wages of $147,000 per year. It said would maintain fully employer-paid health care, worth $35,000 per year, and increase the ILWU pension to as much as $88,800 per year. PMA said the pay guarantee program would ensure that longshore workers are paid for 40 hours per week, even if no work is available, and the ILWU would have jurisdiction over the maintenance and repair of truck chassis.
The ILWU said in its statement, "Longshore workers earn excellent benefits and good hourly wages ranging from $26-$41 per hour."
But it continued, "Most are unable to work a full 2000 hours in a normal work year. The typical pay for an experienced longshore worker is $83,000. Longshore work is extremely hazardous, with fatality rates exceeding those of police and firefighters."
The National Retail Federation issued a statement calling on the White House to intervene in the West Coast port labor dispute
Jonathan Gold, the NRF vice president for supply chain said, “The continued intransigence by labor and management to reach a new contract is unacceptable. Retailers and the rest of the supply chain are frustrated beyond belief.
“The slowdowns need to end," said Gold. "The brinkmanship needs to stop. The ILWU and PMA are delaying cargo and merchandise in the short-term while harming the competitiveness of the West Coast ports in the long-term. This stalemate is hurting American businesses, their employees and consumers.
“If the ILWU and PMA are serious about reaching a new labor contract, they need to remain at the table," he continued. “It’s time for the White House to immediately engage in this critically-important economic priority and force the two sides to remain at the negotiating table until a deal is done. The time for monitoring has passed. The time for action has come.”
While reducing weekend and holiday ship operations, the PMA said that on Friday and ongoing for weekdays beginning next Tuesday, terminal operators in Los Angeles and Long Beach can choose to allocate additional crane operators to vessels, depending on the conditions of their yards.

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