Logistics report

Japan Airlines will offer air cargo transport, Mitsui sea freight transport.The joint service solution is called, “Value-up Innovation Partners by Mitsui and JAL.” The alliance is said to be the first of a kind cooperation between an airline and a general trading company in Japan.

In announcing the combined program the carriers characterize it as a one-stop service solution created from their collaboration. Its objective is seen as offering customers an enhanced value chain with “wider options in transportation modes, logistics processing and other technique-based functions such as logistics financing.” Recognizing that global logistics is suffering and the foreseeable future remains challenging, Mitsui and JAL have joined with the aim of expanding service territories. They say they will be raising the level of convenience and service standards for customers by providing a comprehensive and seamless transportation process. The service begins for both companies on July 1.

Within Brazil CEVA will be opening its newest and largest distribution center (DC) in the São Paulo city of Louveira. The facility will have 82,000 square meters of space, some 63,000 square meters of which will be used for storage. With the ability to handle 250 trucks daily, the DC has 114 leveling docks and six ramps for express deliveries. Total capacity is 60,000 pallets.

The territorial reorganization is part of a strategic move by CEVA to combine its Contract Logistics and Freight Management divisions. The special emphasis on Brazilian operations is part of a plan implemented by the company’s Airton Gimenes, who notes, “Brazil offers the biggest growth potential for CEVA on the American Continent. We expect to achieve approximately 15% growth per year in the country within the next three years with this new structure.”

The new DC uses RF (radio frequency) technology, employing data collection via terminals installed on its fork lifts. This enable mobile control of pallet picks and movements, saving transport time and expenses. CEVA explains the technology it is deploying permits customers to obtain data online about all processes within the facility and to review operational performance indicators.

In response to economic conditions, the Canal seeks to help its customers by instituting short-term cost reductions.

The reductions fall into two categories: a temporary redefinition of ballast for full containerships; and temporary modifications to the reservation system. These changes will take effect June 1 and remain in force until September 30.

By modifying the definition of ballast for full container vessels, a ship carrying 30% or less of its capacity will be charged at the reduced rate of $57.60 per twenty-foot equivalent unit (TEU). That rate is $14.40 less per TEU than the $72 rate charged laden (ships with cargo) ships. The Canal will also reduce the base reservation price—depending on the size of a vessel—for those using its Reservation System. It provides this example: base price for a super vessel with a beam equal to or greater than 100 feet, and a length equal to or greater than 900 feet, will be reduced by $5,000 per transit. Additional measures within the Reservation System come in reductions of late arrival fees and in providing more flexibility for making slot substitutions. At present, if vessels don’t arrive on schedule they lost their slot but do have the option to pay an additional fee to keep the reservation and transit for that same day. Temporary measures will reduce those charges. Canal customers will now have 30 days prior to transit to request slot substitutions without penalty. To now they had to give notice 60 days in advance.

Nearly 100 industry and government representatives attended a hearing to discuss what measures might be needed to help the European motor carrier industry survive the economic crisis. The meeting provided a view of the severity of the economic impact on trucking, but has yet to offer solutions.

"The road transport sector is the most important pillar for the exchange of goods in the internal market,” said Commission Vice-President Antonio Tajani, in charge of transport policy. “This stakeholder meeting helps all actors better understand how serious the consequences of the economic downturn on road transport undertakings are. At the same time it is clear that short term measures should not be taken at the expense of market integration and the objective of a sustainable transport system. The crisis must be used as an opportunity to modernize the transport sector."

The first conclusion: Since it is closely linked to general economic conditions, transport activity is suffering from the crisis. Demand for transport services is decreasing rapidly and transport companies are facing economic difficulties and bankruptcies. The report of the meeting noted, the first component of transport to feel the crisis is that of freight, which is more directly linked to economic activity and trade than passenger transport. Moving through a list of consequences and indicators of the severity of the market situation, the group noted, limited access to credit is a major concern for capital intensive operators such as logistic operators investing in and employing costly equipment. In cases where transport equipment is leased, operators may be protected by long term contracts, and in these cases it is the equipment owners that are suffering the economic consequences. The road transport sector also depends on a large number of labor-intensive small and medium enterprises (SMEs), which are economically more fragile.

An increasing number of road haulage companies [motor carriers] are having difficulties keeping up with their payments. According to the International Road transport Union (IRU), the number of bankruptcies of road haulage companies may have increased by up to 110% since the end of 2007. Financial difficulties also seem to affect businesses whatever their size. French road transport organization FNTR reports that out of 210 insolvency cases recorded in the road goods transport sector in France in January 2009, 82% took place in small or very small enterprises. Larger companies of over 50 employees, usually subcontracting to self-employed, are however also at risk. Still according to FNTR, cases of insolvency had increased threefold in French businesses of more than 50 employees between 2007 and the end of 2008.

According to figures of IRU, a total of 140 000 jobs in EU road freight transport are currently at risk or have already been lost since the end of 2007. The number of jobs lost is only one indicator of the effects of the crisis on employment. Employment conditions in existing jobs are also affected by the crisis, with many businesses choosing to reduce or adapt working hours. The first forecasts for the rest of 2009 are pessimistic. In January 2009, the IRU published its yearly road transport indices, according to which growth in the transport sector in Western Europe is set to stagnate at a low level over the first half of 2009. Results communicated by ACEA (the European Association of Automobile Manufacturers) confirm this view: over the year 2008, new truck (> 3.5 tonnes.) registrations fell by 4.0% in the EU-27 and EFTA (without Cyprus and Malta), mainly because of the 21.1% decrease in the EU-12. The latest figures for HGV registrations in February show the same trend for the beginning of the year, with a drop of 43.7% compared to February 2008 for the over 3.5 tonnes category and 46.4% for the over 16 tonnes segment.

The economic downturn is already having a dramatic impact on HGV traffic. Traffic volumes on motorways have dropped by between 5% (France) and 34% (Spain) in December 2008 compared to the same month in 2007. First figures for 2009 show that this trend is expected to worsen in the near future. Traffic (measured in vehicle per kilometre) dropped 8.27% in December 2008 in Austria compared to the same month a year before, while the decrease recorded in January 2009 reached 20.27%. The fall in traffic is also visible when measured in terms of Average Daily Traffic (ADT). ADT in the Liefkenshoek tunnel in Belgium was reportedly 5% lower in December 2008 than it was the same month the year before, and 22% lower in January. International road traffic, which was set to grow rapidly before the crisis, also appears to be affected by the recession. The latest statistics from German motorways (Mautstatistik) show that the number of HGV crossing borders on toll roads in Germany in February 2009 had decreased 17.3% compared to the previous year.

The agreement previously agreed to in principle between TNT Post and its union workers included a decrease in pay, which the parties had agreed to in light of transitional measures and a job guarantee spanning six years (twice the term or the agreement). The fist three years of that measure were unconditional. However, rejection of the agreement means the proposed measures no longer apply, said TNT.

TNT cited increased use of e-mail and the opening of European postal markets to competition for the decline in work for TNT Post operations. It said declines had been at rates faster than ever before—5% to 6% per year. “What’s more,” said TNT, “ the company’s competitors offer their staff a much more sober employment package. This means that over the coming period TNT will have to continue making preparations for the restructuring plans required to achieve the necessary savings.” Among the changes, TNT anticipates reducing the number of days on which business mail is delivered, a move it says is in line with customer wishes. “In compliance with its obligations under the Postal Act, TNT Post will continue to deliver consumer mail six days a week.”

TNT is maintaining its target of annual savings of €395 million ($514.7 million) until the end of 2015. These are savings required to compensate for the mail volume decline, says TNT. Should the restructuring plans be carried out, job losses could amount to 11,000 employees over a period of one to three years. “Under these circumstances forced redundancies will be unavoidable.”

TNT said it remains receptive to further talks with the unions on serious alternatives that can make a substantial contribution to achieving the savings target.

Supply Chain Management (SCM), Canada's largest retail logistics services organization, has a 15-year relationship with Wal-Mart Canada providing dedicated transportation, logistics and value-added services to Wal-Mart’s 312 stores and supercenters nationwide. The two signed a five-year contract extension that takes them to 2013.

SCM, and Exel company, supports the Wal-Mart’s ambient supply chain by operating five distribution centers totaling five million square feet. The facilities handle products including general merchandise, dry grocery and imports. SCM also coordinates all outbound transportation activities and directs a regionally dedicated fleet of 150 tractors and 350 drivers delivering products from distribution centers to Wal-Mart stores.

SCM was acquired by Exel in 2004 and operates multiple distribution centers in Mississauga and Cornwall, Ontario, and Calgary, Alberta.

 In April 2009, 48% of fleet equipment buyers polled planned to place orders for power units in the next three months, says CK Commercial Vehicle Research CKCVR). In the same poll, 38% reported planned trailer buys for the same period.

CKCVR reported the Equipment Buying Index improved to 93.3 in the second quarter vs. 75.8 in the first quarter of 2009. The index is a simple measure of planned buying behavior of for-hire, private and government fleets projected ahead three months, explains CKCVR. A lower reading indicates fewer fleets are planning to purchase equipment, while a higher reading indicates more planned equipment purchases.

While there was an increase in the number of respondents who planned to place equipment orders, the size of those orders remain weak, said CKCVR. The index for the second quarter of 2008 was 94.4, rising to 99.1 in the third quarter and then dropping to 83.7 in the final quarter of 2008.

The traffic in Beijing, China is legendary, but it could be getting better. Aldis Corp. announced the first installation of its GridSmart Spectra 360 system for traffic management in Beijing. That installation is at the intersection outside the North China University of Technology and it is the first of a number of installations planned in coming months, says Aldis.

"We are very pleased with the results and look forward to adding additional GridSmart systems around the city. This is an exciting new technology that will improve the way we handle traffic now and into the future," said Li Zheng Xi, Ph.D./VP of North China University of Technology.

The primary purpose for the GridSmart system will be focused on intersection efficiency and the city of Beijing plans to utilize some of the advanced tracking features to monitor pedestrians, bicycles and scooters. In addition, GridSmart will provide the city with rich traffic data to better understand patterns and identify potential problem areas and find proactive solutions. The university's ITS department will maintain the systems and collect data to further their research. "Beijing is a great example of a city that is leading the way in deploying smart technologies to improve the safety and efficiency of their transportation system while reducing intersection wait times and emissions," said James "Vig" Sherrill, president and CEO of Aldis.

“Despite current economic conditions, Asia continues to be a global manufacturing hub, and market research indicates Asia's contract logistics market could overtake North America’s in the next five years,” said Brad Mitchell, president of UPS Logistics & Distribution. Mitchell was commenting as part of an announcement UPS will expand its field stocking locations (FSL) in India and establish an Asia Post-Sales Customer Support Center in Clark, Philippines.

UPS will expand its presence in India with plans for more than 130 FSL’s through an agency agreement with AFL, one of India’s leading logistics and domestic transportation service providers. The expanded network will benefit customers requiring close-to-customer field stocking facilities and a transportation network to support same-day, Next Flight Out and next-business-day delivery of critical service parts, said UPS. The sourcing time for customers is greatly reduced as they gain immediate access to strategically located central distribution centers and FSL’s across India, it continued.

“India is a priority market for UPS’s contract logistics business,” Mitchell added. “With this enhancement, UPS is well-positioned to support the after-market needs of local businesses as well as multi-national corporations. It gives our global customers improved access to one of the world’s largest economies.”

AFL will use UPS’s post-sales technology to manage customers’ forward stocking inventory at multiple locations, with the ability to view inventory located in FSLs worldwide. The UPS post sales solution also provides value-added services such as inventory planning and returns management services in India and globally, said UPS.

In addition to expanding its FSL network in India, UPS is enhancing its customer service through a new Asia Service Parts Logistics (SPL) Customer Support Center in Clark, Philippines. Operating 24x7, the center provides UPS’s SPL customers in Asia with prompt support and full visibility into their critical orders with real-time status throughout the entire cycle, said UPS.

The UPS SPL network has more than 700 field stocking locations in 120 countries.