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Amazon 3rd party fulfillment revenue up 34 percent

SEATTLE: April 28, 2017. Amazon has reported net income of US$724 million on sales of US$35.71 billion for the first quarter of 2017. Results for the same period last year were US$513 million and US$29.13 billion respectively.

AmazonJobs desktop. CB520457356 Revenue from fulfillment, commissions and shipping fees to third parties who use the Amazon.com platform rose 34 percent year-on year to reach US$6.44 billion. By comparison, Amazon retail and digital sales on its own behalf rose 15 percent to US$22.82 billion.

During the first quarter, worldwide shipping revenue increased 37 percent to US$2.5 billion as net shipping costs rose 34 percent to US$4.38 billion year-on-year.

Commenting on the results founder and CEO Jeff Bezos highlighted his company's growth in India saying fulfillment capacity for sellers had already risen 26 percent this year.

"We're grateful that customers are responding - Amazon.in is the most visited and the fastest growing marketplace in India," he said. "It's still Day 1 for e-commerce in India, and I assure you that we'll keep investing in technology and infrastructure while working hard to invent on behalf of our customers and small and medium businesses in India."

At the end of March, Amazon employed 351,000 full and part-time staff worldwide - a rise of 43 percent over Q1 2016. Earlier this month the company announced plans to build three more fulfillment centers in New Jersey and hire another 2,500 full-time employees. "Our ability to expand in New Jersey is the result of two things: incredible customers and an outstanding workforce,” said Akash Chauhan, Amazon’s vice president of North American Operations.

Amazon global net sales are expected to grow 16-24 percent to reach US$35.25 billion to US$37.75 billion in Q2 2017, and assumes foreign exchange losses of US$720 million. Operating income is forecast between US$425 million and US$1.075 billion, compared with US$1.3 billion in Q2 last year.

Blockchain used in pharma supply chain

BEIJING: April 11, 2017. IBM and China-based supply chain manager Sichuan Hejia have launched the 'Yijian Blockchain Technology Application System', a supply chain financial services platform to purchase and pay for pharmaceuticals.

A pharma retailer, Heija, a hospital and a bank are using the system in order to help improve the efficiency, transparency and operation of supply chain finance.

Hejia said it will expand the platform in July to include multiple pharmaceutical retailers, hospitals and banks to help Chinese SME pharma retailers raise finance due to an underdeveloped credit system and a lack of established credit evaluation and risk control.

IBM BlockchainCurrently it can take 60-90 days for retailers to get paid by hospitals.

Working with IBM, Hejia has now set up a blockchain-based business network for the three supply chain participants to help reduce the turnover time of funds and allow banks to provide funding for SMEs.

By tracking drugs through the supply chain and encrypting trading records, the transparency of the blockchain can help establish the authenticity of the transaction, lower the credit risk and allow payment within 48 hours, said Heija.

"The launch of the supply chain financial services platform marks a milestone for the cooperation between Hejia and IBM on the innovative application of blockchain technology," said Board chairman Leng Tianhui.

"In the future, the platform will expand to include more industries to provide participating companies and financial institutions with transparent and efficient financing services built on blockchain-based innovation in a business model that will contribute to China's economic development," he continued.

Gregor Pillen, IBM Greater China Group Global Business Services managing partner said his company had helped Hejia by providing insights from analyzing the supply chain finance industry, and the financing conditions facing pharma retailers.

IBM is an early member of the Linux Foundation's Hyperledger Project to support the development of openly governed blockchains and has since worked with companies in financial services, supply chains, IoT, risk management, digital rights management and healthcare.
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K+N and Alibaba to leverage BtB eCommerce

SHANGHAI: April 12, 2017. Kuehne + Nagel and Alibaba.com, the B2B business arm of the Alibaba Group, are combining their respective capabilities to offer China-based shippers eCommerce logistics solutions.

For the past year China customers have been able to get airfreight and LCL shipping quotes, book a pickup and arrange a delivery via K+N's digital solution KN FreightNet on Alibaba.com.

Now, the partners will extend their suite of services covering air, sea, rail, overland and contract logistics to markets outside China.

KN contract logisticsThe news follows last month's announcement by China's ministry of Commerce updating its guidance on rules for cross-border e-commerce. Overseas goods purchased online and distributed through bonded warehouses will continue to receive some preferential treatment, avoiding quarantine and quality checks that could have brought the import of many popular foreign products to a halt.

Last April, Beijing announced changes to a pilot program meant to bolster Chinese consumers' ability to buy online directly from overseas merchants via cross-border e-commerce.

The proposed changes would have increased the tariffs paid on that merchandise and removed the preferential regulatory treatment.

For Alibaba the government announcement means the online purchase of overseas goods will continue, with marketing research firm eMarketer predicting the sector will reach US$157.7 billion by 2020 from US$86 billion last year.

Cheng Ouyang, a director at Alibaba's Cross-Border E-Commerce Research Center, called the government's announcement a "positive signal" for the sector.

Part of the ministry's announcement also included the addition of five more pilot zones, or testing areas for bonded warehouses, in Dalian, Hefei, Chengdu, Qingdao and Suzhou, bringing the total number to 15.

Alibaba's logistics affiliate Cainiao Network said it welcomed the news. "We already have a strong network and will work closely with our partners in the newly announced pilot zones to continuously provide seamless cross-border logistics service and better serve both merchants and consumers," said James Zhao, director of import logistics at Cainiao.

It's a view obviously shared by North Asia Kuehne + Nagel president Wong Siew Loong: 
"For Kuehne + Nagel, the establishment of this relationship is in line with our global strategy to digitalize logistics services in order to meet the evolving needs of customers today. We look forward to further developing this cooperation by expanding the scope of our e- commerce logistics offering to Alibaba customers in the future."

Swiss approve commercial drone use

LUGANO, Switzerland: March 31, 2017. The Swiss Federal Office for Civil Aviation (FOCA) has approved the use of drones by Swiss Post to carry laboratory samples between two hospitals in Lugano.

SWISS drone LuganoThe green lights follows 70 test flights in March by Swiss Post, the Ticino EOC hospital group and drone manufacturer Matternet between two of EOC’s hospitals in Lugano, as an alternative to a 12-minute road trip.

Following a review of the drone’s safety components and defining the legal conditions for flying it, the FOCA has approved Swiss Post and Matternet to conduct further tests prior to beginning a daily drone service next year.

With a landing pad that transmits an infrared signal at takeoff and landing, hospital staff will be able to load the drone and launch it using a smartphone app for the two-minute flight between the hospitals in the Canton of Ticino.

The Matternet logistics ‘quadrocopter’ has a two-kilo payload, a maximum range of 20 kilometers and flies at an average speed of 36 kilometers per hour.

Claiming to be one of the first companies in the world to test drones in a commercial context, Swiss Post said it is particularly interested in their use for last mile delivery to remote areas, or places cut off by a storm. The company added it expects drones to “complement traditional parcel delivery sensibly, but they will not replace it”.

In addition to Swiss Post, Matternet has partnered with Mercedes-Benz Vans, Swiss WorldCargo, UNICEF, the World Health Organization and Médecins Sans Frontières.

Maersk and IBM to launch digital trade solution

ARMONK, NY: March 06, 2017. Following ratification of the WTO's Trade Facilitation Agreement, IBM and Maersk are developing the use of blockchain technology to help transform global supply chains.

The goal is to digitize the paper trail associated with a container-based global supply chain by using a blockchain solution built by IBM and Maersk based on the Linux Foundation's open source Hyperledger Fabric. When adopted at scale, the solution has the potential to save the logistics industry billions of dollars, according to the two companies.

IBM and Maersk intend to work with a network of shippers, freight forwarders, ocean carriers, ports and Customs authorities to build the new global trade digitization solution, which is expected to go into production later this year.

APM New JerseyThis follows a proof of concept study with various shippers and government agencies including Schneider Electric, the Customs Administration of the Netherlands, the U.S. Department of Homeland Security Science and Technology Directorate, U.S. Customs and Border Protection, Damco, Royal FloraHolland and the Port of Rotterdam.

"The projects we are doing with IBM aim at exploring a disruptive technology such as blockchain to solve real customer problems and create new innovative business models for the entire industry," said Maersk Chief Digital Officer Ibrahim Gokcen. "We expect the solutions we are working on will not only reduce the cost of goods for consumers, but also make global trade more accessible to a much larger number of players from both emerging and developed countries."

An industry standard application program interface (API) for the centralized sharing of data via the Cloud was originally conceived by Frank Heijmann, head of trade relations, Customs Administration of the Netherlands, and David Hesketh, head of Customs research and development at Britain's HM Revenue and Customs.

"The Customs Administration of the Netherlands see the data pipeline as a tool supporting the balance between trade facilitation and enforcement, where information sharing in supply chains is optimized from a commercial perspective, and government authorities can re-use that information flow for supervision purposes," said Heijmann.

Bridget van Kralingen, IBM senior vice president Industry Platforms added: "We believe that this new supply chain solution will be a transformative technology with the potential to completely disrupt and change the way global trade is done." 

GCC eCommerce market could reach US$20 billion

SEATTLE/DUBAI: March 28, 2017. Amazon is to acquire eCommerce company Souq.com, the largest online marketplace in the Arab world with 45 million visits a month with local operations in the UAE, Kuwait and Egypt.

According to a recent report by A.T. Kearney, the GCC region has the potential to become the world's fastest growing e-commerce market. In 2015, it contributed US$5.3 billion or 0.4 percent to GDP compared to an average 3.0 in parts of Europe, Asia and North America.

Soug customer center DubaiA.T. Kearney says the market could reach US$20 billion by 2020 if several obstacles to growth were removed including: consumer trust and awareness, gaps in payment systems, distribution and logistical infrastructure, government policies, data security and fraud.

"We expect the growth of e-commerce in the GCC to transform the future of businesses, economics and lives across the region – but only with the right set of enablers in place," commented Laurent Viviez, a partner at A.T. Kearney. " And it doesn't rule out traditional retailers, who can be on the winning side of e-commerce by adopting an omni-channel approach.

"We see the future for the sector as not digital-only but 'physical with digital' – traditional retailers can really tap into this," she added.

According to CEO and co-founder of Souq.com Ronaldo Mouchawar, when he stared the company 12 years ago the aim was to combine technology to give the Arab world a way to trade online: "This is a milestone for the online shopping space in the region. As we take this next step in the journey with Amazon, [it] will enable us to drive further growth, [and] benefit from their technological investment."

Last month Souq.com opened its first bricks and mortar center in Dubai (right) for customers to experience products before buying them online, collect them once purchased, and return or service merchandise previously purchased. The center also serves as an extension of Q-Express, the company's logistics arm.

"Amazon and Souq.com share the same DNA – we're both driven by customers, invention, and long-term thinking," commented Russ Grandinetti, Amazon senior vice president, International Consumer. "Souq.com pioneered e-commerce in the Middle East, creating a great shopping experience for their customers. We're looking forward to both learning from and supporting them with Amazon technology and global resources.

Terms of the acquisition were not disclosed and subject to closing conditions, it is expected to finalize this year.

IATA repeats Trump warning

WASHINGTON, DC: March 03, 2017. IATA has reiterated its warning to the Trump Administration about a future of restricted borders and protectionism.

"Our world has grown much wealthier through trade and travel. Air travel liberates people to live better lives and makes our world a better place," said IATA director general and CEO Alexandre de Juniac, "In the U.S., the aviation sector contributes US$680.1 billion dollars to GDP and supports 6.2 million jobs."

De Juniac said political change in the U.S. is being watched very closely because of its impact on global aviation. He called on the Trump Administration and Congress to replace the Federal Aviation Administration with an independent, "corporatized non-profit entity" to manage U.S. skies.

IAG Cargo Elephants"Airlines and their passengers suffer the impact of the unpredictable federal budget process on the [FAA] provision of air traffic services," he said, adding the U.S. is falling behind in the introduction of new and more efficient technology.

De Juniac also urged the Trump Administration to create jobs by reducing the tax burden on travel: "Airlines for America estimates that taxes account for more than a fifth of the cost of the average domestic ticket," he declared.

Noting the idea of private sector involvement in Trump's US$1 trillion infrastructure plan, De Juniac said he knew of only one airport in the world – San Juan Puerto Rico – that had fully delivered on expectations: "Airports are monopolies. When they are in private hands, the pressure to maximize shareholder returns too often outweighs the core objective of delivering user/consumer benefits."

He warned that private sector involvement in funding infrastructure improvements should be balanced by regulatory innovation to protect national and consumer interests.

Acknowledging the need to maintain international and domestic environment regulations, the IATA director general said it was "vital" the Trump Administration supports the successful implementation of the Carbon Offset and Reduction Scheme for International Aviation (CORSIA).

At the 39th Assembly of the International Civil Aviation Organization last October, 191 countries - including the U.S. - agreed to reduce and offset carbon emissions beginning in 2021: "Airlines cannot operate with multiple and conflicting environmental regimes. CORSIA is the global solution that is in everybody's best interest," he declared.

Pictured: IAG Cargo celebrated World Wildlife Day on March 03 as member of the IATA/CITES initiative to protect endangered species. The cargo business of the International Airlines Group donated 400 passenger blankets to an elephant orphanage run by the David Sheldrick Wildlife Trust in Kenya.

Qatar backs Britain as May signs Brexit

LONDON/BIRMINGHAM: March 28, 2017. A day before Britain confirmed its formal departure from the European Union, the country signed an MoU with Qatar to increase co-operation in education and healthcare, science, research and innovation, tourism and culture, transport, energy, financial services and the development of small businesses.

Qatar has already invested US$43-US$50 billion in the UK and according to the country's finance minister Ali Shareef al-Emadi, his government plans to invest a further US$6 billion in energy, infrastructure, real estate and services.

Liam Fox and Al BakerPublic and private Qatari investors already have stakes in the International Airlines Group, Heathrow airport, Harrods department store, Sainsbury's supermarket chain, the landmark Shard building in Central London and the former Olympic Village in East London.

Speaking at the joint UK-Qatar Business and Investment Forum on March 28, Britain's prime minister Theresa May acknowledged the strength and seniority of the delegations from both countries "are a testament to the importance we both place on our bilateral relationship and the scale of our shared ambition to develop it".

As a precursor to her later Brexit announcement she added: "My plan for Britain is not just a plan to leave the EU, but a plan to build a stronger economy...and a critical part of this plan is developing a modern industrial strategy that can help secure my vision of a high-skilled, high-paid Britain.

"As a global Britain, I am determined that we will be the most committed and most passionate advocate of free trade in the world," she declared.

Shareef al-Emadi added he was confident the UK would have a "good future" outside the EU.

The inaugural Qatar-UK Forum provided government ministers and business leaders from both countries with the opportunity to promote investment and trade opportunities in the UK and showcase best practice and areas of opportunity in support of Qatar's 2030 National Vision.

Forum delegates included Qatar Airways' Group CEO Akbar Al Baker who acknowledged his airline's investment in IAG and the 70-plus weekly flights linking Qatar with Heathrow, Birmingham, Edinburgh and Manchester as part of encouraging trade between the two countries.

Also participating in the Forum was the revolutionary Dearman Engine that uses the expansion of liquid nitrogen to produce zero emission cold and power. Last year Sainsbury's became the first company in the world to trial a refrigerated truck cooled by Dearman's liquid nitrogen-powered engine that eliminates all related emissions.

Noting there are few countries that appreciate the value of cooling more than Qatar, Dearman said it is developing a suite of applications for the transport, energy, retailing and data sectors for possible use in the Gulf state.

(Pictured left to right: Liam Fox, UK Secretary of State for International Trade, and Qatar Airways Group CEO Akbar Al Baker at the UK-Qatar Business and Investment Forum)

America first for trade

WASHINGTON, DC: March 02, 2017. With the confirmation of Trump's billionaire Florida neighbor Wilbur Ross as U.S. Commerce secretary, a recent Gallup poll says a record 72 percent of Americans see foreign trade as an opportunity for economic growth.

During his confirmation hearing in January, Ross told members of the Senate Committee on Commerce, Science and Transportation: "China is the most protectionist country of very large countries. They talk much more about free trade than they actually practice."

In setting out its trade policy for 2017 this week, the Trump Administration argued: "While the current global trading system has been great for China, since the turn of the century it has not generated the same results for the United States."

FedEx panda arrives in ChinaGallup said its latest poll is an increase from a previous level of 58 percent and is prompted by Trump's declaration to put "America First" in renegotiating NAFTA, or replacing multilateral trade deals such as the Trans Pacific Partnership (TPP) with bilateral ones.

Seventy-one percent of Americans now think promoting favorable trade for the U.S. is a "very important" foreign policy goal, up from 66 percent in 2013, the last time the question was asked.

According to Gallup all the political parties have increased their views that trade is an economic opportunity. Among Democrats, it has risen 17 points to 80 percent, while among Republicans it has increased 16 points to 66 percent. The rise is smaller among independents it noted, up eight points to 71 percent.

Despite the cancellation of the TPP, viewing foreign trade as an economic opportunity is now at a record high level among politicians. The previous high mark for Democrats was 66 percent in 2013, and for Republicans it was 57 percent in 2002. Since 2012, Democrats have been more positive about trade than Republicans have been, Gallup concluded.

The Trump Administration said its approach to trade is designed to increase economic growth, promote job creation in the U.S., promote reciprocity with the country's trading partners, strengthen America's manufacturing base and "our ability to defend ourselves", and to expand agricultural and services industry exports.

"As a general matter, we believe that these goals can be best accomplished by focusing on bilateral negotiations rather than multilateral negotiations – and by renegotiating and revising trade agreements when our goals are not being met," it added.

GCC airfreight market to face Hyperloop competition

ABU DHABI: March 28, 2017. Speaking at the Global Manufacturing and Industrialisation Summit this week, Hyperloop One senior vice president Nick Earle said his company aims to acquire US$12 billion of the GCC region's US$35 billion multimodal transport market.

When fully operational, Hyperloop One claims the disruptive effect of traveling between GCC cities in under an hour will create new opportunities in manufacturing, warehousing and supply chain distribution.

Earle said the sectors would benefit from increased capital due to a 25 percent reduction in finished goods inventories; access to larger talent pools with the same commute time; up to 80 percent savings on real estate costs; shorter lead times; reduced freight spend; and a big reduction in CO2 emissions.

Hyperloop One DubaiIn October last year DP World announced it had become a "significant investor" and Board member of Hyperloop One following a reported US$50 million deal for continued research and development. This followed an August signing of an MoU to analyze the value of using Hyperloop systems to move containers from Jebel Ali Port to a new inland container depot in Dubai (pictured: artist rendering).

"As the only company in the world building an operational Hyperloop system, Hyperloop One is focused on creating a new mode of transportation to move people and cargo," said Earle. "Hyperloop One changes everything. We're committed to enabling disruption to create new opportunities in manufacturing, warehousing and supply chain distribution.

"Hyperloop will drive significant value for a wide range of businesses and reinvent transportation as we know it," he added.

Based on McKinsey 2016 data, Earle thinks his company could acquire 100 percent of the GCC's annual airfreight traffic worth US$7 billion, 22 percent or US$3 billion of the region's road and rail market, and 13 percent of its maritime industry valued at US$2 billion.

During the summit Hyperloop announced the launch of its partner program designed to add expertise in Hyperloop solutions, increase revenue, build industry recognition and provide inside access to understand and influence Hyperloop One's strategy.

Harj Dhaliwal, a senior vice president at the Parsons engineering and construction company said his organization is already providing Hyperloop with expertise and knowledge of regional transportation requirements on a number of projects worldwide.

"Hyperloop One's progress is extraordinary and it will happen sooner than you think," he declared.

“C-suite” supports sustainable procurement says survey

PARIS/NEW YORK: February 10, 2017. A survey of supply chain purchasing executives has found that 97 percent place a "high level" of importance on sustainable procurement.

Supply chain rating organization EcoVadis said its data shows 50 percent of sustainable procurement leaders have increased revenue from such initiatives, a 33 percent increase over non-leaders.

"Sustainable procurement is no longer a nice-to-have – it's an integral business function responsible for protecting and improving brand reputation, driving revenue and mitigating business risk," said Pierre-François Thaler, EcoVadis co-CEO.

According to the survey, nearly half (45 percent) of organizations said their sustainable procurement program covers 75 percent or more of their spend volume, up from 27 percent that reported the same in 2013.

Unilever Lipton TeaHowever only 15 percent admitted they have complete supply chain visibility into the CSR and sustainability performance of both tier one and two suppliers, and only six percent reported full visibility into tier three suppliers and beyond.

EcoVadis said its study also found that organizations collecting sustainability data are now using it to guide sourcing decisions. "By making CSR data a key factor in the sourcing process, organizations are incentivizing suppliers to be more sustainable and act more responsibly across the board," explained Thaler.

In its last survey conducted in 2013, the rating company found the main obstacle to supply chain and procurement sustainability was a lack of executive and board support.

This year "the C-suite appears to be finally on board with sustainable procurement initiatives," Thaler declared. "However, when you dive deeper into the data, an interesting picture starts to appear. While executives are finally on board, procurement teams still report that a lack of internal resources holds them back," he added.

The EcoVadis data confirms a study published last month by Unilever that revealed 33 percent of consumers are now choosing to buy from brands they believe are doing social or environmental good.

The study asked 20,000 adults from five countries how their sustainability concerns determined their choices both in-store and at home, and then mapped their claims against real purchase decisions. Unilever concluded there is a €966 billion sales opportunity for brands "that make their sustainability credentials clear".

Pictured: Tea pickers work on a Unilever Lipton estate in Kenya.  As the world's No.1 tea producer, in 2007 Unilever became the first company to commit to sustainably sourcing tea on a large scale.

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