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Fuel a more sustainable future

LONDON: Royal Mail parcel delivery subsidiary GLS has partnered with DB Schenker Logistics for the Europe-wide distribution of freight and parcel traffic.

GLS, with one of the largest ground-based, deferred parcel delivery operations in Europe, provides services to 37 countries tBD GLShrough a combination of wholly-owned and partner companies.

Germany, France and Italy, GLS' main markets, accounted for around 70 percent of its £1.65 billion revenue in 2014 with 94 percent from deferred parcels business.

Beginning January 01, 2016 DB Schenker will handle pallet-based traffic for GLS in Germany while the parcel company will begin deliveries for the DB subsidiary.

"Freight customers are increasingly requesting parcel services", said Rico Back, (left of picture) CEO of the GLS Group. "GLS already works together with many freight companies and networks, including DB Schenker Logistics on a national level. By signing the cooperation agreement, we have extended our cooperation to include the European economic area."

DB Schenker said the deal with GLS was prompted by plans to offer parcel services for corporate customers in Europe under its own brand to complete its land transport product portfolio.

Ewald Kaiser (right of picture), board member of Schenker AG for Land Transport, explained: "Driven by e-commerce, the European parcel market offers excellent growth opportunities. In addition, the expansion of the product range meets the constantly growing customer demand for an all-in-one solution."

Rico Back added that while GLS has its own freight network in Belgium and the Netherlands, "we also have customers in other countries who would like to send freight or pallets through us. Therefore, the non-exclusive cooperation under which DB Schenker Logistics will handle part-load consignments is an ideal solution for our customers."

Sustainable Brands SolutionsPORTLAND, OR: OIA Global, a 3PL, packaging and materials sourcing company, is bidding to expand its Garments on Hanger (GOH) business with the launch of 'Garments on Ditto' - a marketing program that allows retailers to replace plastic hangers with 100 percent recyclable ones.

The company has joined with Ditto Sustainable Brands Solutions, producers of hangers made from 100 percent recycled paper fibreboard. As a result, retailers now can not only stop billions of one-use, virgin plastic hangers going into landfills every year, but will also have a competitive sourcing alternative to Tyco, which dominates the U.S. garment hanger industry.

Steve Akre, OIA's EVP of business development claimed "retailers can reduce shipping and warehousing costs [by] up to 20 percent and achieve significant sustainability advances using the Garments on Ditto program".

The two companies said their program redefines GOH shipping as the 'Ditto' hanger fits up to 50 percent more clothing on retail displays; provides a new branding and marketing tool that customers can touch and take home; is fully customizable for brand awareness and direct customer messaging – and is completely recyclable by stores or via consumer curbside collection programs.

Gary Barker, Ditto's founder and CEO explained: "People think plastic store hangers are used repeatedly but once the garment is sold, there's no reuse. Studies show that 85 percent of retail plastic hangers are thrown out resulting in a staggering 34 billion hangers going into landfills annually.

"We were able to show that this cheap, single-use plastic hanger isn't as cheap as we thought, actually costing almost 10 cents more per garment to ship, including the remarkable 3-cent cost to dispose of each plastic hanger – retailers are paying a premium to send tons of plastic to our landfills." he added.

Portland, OR-based OIA began in 1988 by shipping perishables to Asia. Over the next 10-12 years, the company expanded its portfolio to include customs brokerage, ocean freight forwarding, warehousing and distribution. In 2005, it began offering customers packaging redesign, sourcing and management, and supply chain optimization.

JAKARTA: PwC expects continued M&A activity in the global logistics market after a strong second quarter that produced nine deals valued at US$23.6 billion, almost 69 percent of deal value for the period.

Azul AirlinesDriven by substantial 'Megadeal' growth (over 36 percent compared to the first three months of 2015), average merger value rose to US$564 million. PwC said the deals were primarily driven by the need to fill a specific need or gap, gain scale, and drive profitability.

PwC cited a recent United Airlines agreement to buy a five percent stake in Brazil-based Azul Airlines SA and IAG's acquisition of Aer Lingus, in order to rapidly expand into a "new geography".

Analysts Jonathan Kletzel and Julian Smith said overall second quarter activity was driven by the trucking and logistics industries that accounted for more than 50 percent of the quarter's overall deal volume. A significant increase in trucking deals drove 28 percent of the total, compared to only 22 percent in the first quarter.

Companies in Asia continued to show the largest M&A activity with more than one-third of all deals. China saw 10 of the region's total of 21 during the second quarter – prompted by continued growth in middle class consumerism and the export-led economy. However "despite a recent drop in value in the Chinese equity markets, the costs of doing business remains high and some foreign investors have refrained from making deals", added the two analysts.

They noted that key drivers for continued M&A activity for the rest of the year include a strong U.S. dollar that makes cross-border acquisitions cheaper against other major currencies; continued middle class growth in emerging economies; and domestic U.S. fuel prices that will average US$2.33 a gallon, a decline of more than 30 percent compared to 2014.

BASEL: In a further move to expand into the circular economy, Panalpina has formed an alliance with Hong Kong-based Spread Logistics to collect faulty consumer electronics from origin, do failure analyses and, when required, arrange for product returns to the manufacturer for repair in Mainland China.

Despite international regulations requiring any smart device produced in China to be returned to the manufacturer if under warranty, the process is difficult according to Mike Wilson, Panalpina global head of Logistics. "The faulty products need to be sorted by fault code and correctly repackaged in their original form to meet Chinese customs demands before they can be sent back to their original manufacturer."

The process is called Return Materials Authorization (RMA) and Hong Kong's Spread Logistics is one of the few companies specializing in the return of electronic consumer goods to Mainland China. As a result, a large percentage of devices re-imported to China via RMA for repair is shipped by the company says Panalpina.

"By partnering with Spread Logistics, we have enabled the circular supply chain for our technology customers. We collect and pass on the data that is needed to decide if a product can be repaired close to the consumer market or if it needs to be shipped back to China for bigger repair work or even disposal," Wilson explained.

Panalpina DubaiTo manage the RMA, Panalpina has set up in Dubai (right) the first of four consolidations points to act as return centers for consumer electronic goods that will conduct first-level failure analysis (screening) to determine their condition.

If Panalpina can, it will repair or refurbish the broken equipment and return the product to the supply chain for reuse. "Screening in the region means products can potentially be returned to available stock faster," said Spencer Edmonds, global head of Logistics operations at Panalpina. "This improves the cash flow of our customers."

Products that cannot be repaired regionally are forwarded to Spread Logistics in Hong Kong for second-level analysis (checking at component level) and repackaging.

Customs regulations require manufacturers' returns to be in the original box, complete with documentation and accessories. "Since many customers don't return products this way, Chinese Customs can be tricky to maneuver," added Edmonds. "Our partner is adept in dealing with reverse flows, receiving returned products and making sure they are repackaged properly to re-enter the country."

For products that cannot be repaired, Spread Logistics can also recover the high-value parts: "The production of consumer electronics – such as mobile phones or laptops – involves more suppliers than ever," said CEO Jennifer Wang. "With excellent IT systems and easy-to-use platforms, we provide a scalable solution to manage the flow of components back to their various suppliers. We can connect anything to anyone."

Panalpina says the deal with Spread Logistics gives the 3PL opportunities to expand into an increasingly circular economy: "Supply chain is about the whole life span of a product," added Wilson. "Ultimately, the real meaning behind a supply chain is a product's life cycle – from sourcing to recycling and disposal. The future therefore lies in managing the product life cycle, not the supply chain. That's where we are heading with our approach to logistics."

MUNICH: Panalpina head of logistics Mike Wilson says the rise of circular supply chains is an opportunity for 3PLs to lead the way as the logistics industry adapts to meet the requirement of a new market estimated at US$1 trillion.

Speaking at a Sustainability conference organized by Swiss WorldCargo and Freightweek as part of Messe Munchen's 'transport logistic 2015', Wilson said companies are finding hard to keep up with the speed of change in supply chains as a result of new products and services enabled by predictive analysis, RFID, biomimicry, 3D printing and "The Internet of Everything".

He told the audience the need for manufacturers to change from a linear to circular economic model "is not optional" as many vital resources will be exhausted in the next 5-50 years.

Panalpina warehousePrompted by new technologies, together with shorter product life cycles and customer demands for personalized configuration, he predicted manufacturing processes will become more fragmented and distributed, with increasing focus on circular supply chains to redistribute, repair and recycle products before end-of-life management.

Wilson noted that most logistics companies have been reluctant to invest in R&D and take the lead in bringing innovation to supply chain management compared to the degree of innovation in other sectors.

However with a move to a circular business model, he said 3PLs are uniquely placed to take a leadership position in the supply chains of the future due to their global footprint, multiple product touch-points and access to vast amounts of data.

This, he claimed, would result in new market opportunities for 3PLs by enabling companies to distribute manufacturing processes closer to customer demand points; provide faster component value recovery; position new manufacturing technologies for last-minute personalization; combine transport flows and reduce over-packaging.

Messe Munchen said the number of visitors to its biennial event rose from 52,300 in 2013 to 55,000 this year from 124 countries. The top countries outside Germany were Austria, Netherlands, Italy, Poland, Czech Republic, Switzerland, France, Belgium, U.K. and Romania.

Aside from Germany the top 10 exhibitor countries were the Netherlands, Italy, Belgium, France, U.K., Austria, Spain, the Czech Republic, Switzerland and China.

BASEL: Panalpina reported a consolidated profit of CHF45.3 million on revenue of CHF2.9 billion for the first six months of 2015. EBIT was CHF60.4 million.

Panalpina Huntsville"We succeeded in keeping profitability stable in the first six months of the year despite a soft air and ocean freight market. We are doing an increasingly better job of getting our costs under control. Currency adjusted, profitability was higher than last year," said Panalpina CEO Peter Ulber.

"In the first six months of the year, we grew volumes in line with the market in ocean freight but fell behind market growth in airfreight, where we clearly felt the headwind in the energy sector. Overall, global transport demand softened considerably in the second quarter."

The company's airfreight volumes decreased 2.0 in the period, while the market grew by 1.0-2.0 percent. Ocean freight volumes grew 3.0 - in line with market growth - while gross profit per TEU decreased 7.0 percent.

In an investor presentation for the remainder of the year, the 3PL said it was revising downards a market outlook for air and ocean services; putting a strong focus on SAP TM implementation in pilot sites; closing the volume gap in airfreight; maintaining continuous productivity and efficiency improvements in ocean freight; and further developing innovative value-added logistics services.

"Our main focus remains on cost control and improving productivity. We have come a long way in cutting losses and transforming our operations, but we still see a lot of upside potential," added Ulber. "Despite the headwind in the energy sector, we are confident that we can recover lost ground in airfreight during the second half of the year. Our pipeline looks promising."


GREENWICH, CT: XPO Logistics, which reported revenue of US$2.4 billion and a net loss of US$63.6 million in 2014, is to acquire French logistics company Norbert Dentressangle (ND) for €3.24 billion, including €1.08 billion of net debt, following agreement with the family-owned business to sell its 67 percent stake for €217.50 per share.

With US$2.6 billion of the deal underwritten by Morgan Stanley, the all-cash offer is expected to close in the second quarter this year subject to regulatory approvals. If successful, ND will de-list from Paris and London stock exchanges. The combined company will have annual revenues of US$8.5 billion.

Norbert-Dentressangle-invests-in-mobileXPO said it plans to become a leading e-commerce 3PL provider with a five percent share of an estimated €5 billion European market. Last year ND produced revenue of €242 million from e-fulfillment and reverse logistics business in the U.K., France and Spain.

ND customers include Danone, Carrefour, Zara, Marks & Spencer, Tata Steel, Renault, Mars, Tesco, Akzo Nobel, Pepsico and L'Oreal.

Bradley Jacobs, XPO CEO commented: "In Norbert Dentressangle, we are acquiring a company that has been meticulously built over the last four decades. I am extremely pleased that Norbert Dentressangle's executive leader, Hervé Montjotin, will serve as chief executive officer of our European business and president of the parent company. I look forward to working closely with Hervé as we execute XPO's global strategy."

XPO announced it will deploy its 'Freight Optimizer' IT platform in Europe to grow its brokerage business and the "expected combined annual technology spend of approximately US$225 million will be among the highest in the industry".

When complete, Jacobs said the merger will put XPO among the "top ten worldwide" logistics companies; make it the second largest global freight brokerage firm by net revenue; the third largest provider of intermodal services in North America; and the largest provider of last mile logistics for heavy goods in the U.S. and Canada.

Last year the XPO net loss to shareholders was US$107.4 million that excluded an after-tax cost of US$16.3 million related to the acquisitions of New Breed, Pacer and last-mile provider Atlantic Central Logistics.

The company said that as a result of the ND acquisition it "will evaluate equity capital raise to maintain a prudent capital structure".

LONDON: Amazon.co.uk has introduced a 'Prime Now' app for one-hour delivery to customers in selected parts of London. The launch precedes a global shipping event to mark 'Prime Day' - Amazon's 20th anniversary on July 15, 2015.

'Prime Now' is provided by Amazon Logistics, the company's technology and logistics platform – similar in concept to Alibaba - for independent UK delivery companies. Last year 40 percent of Amazon's worldwide sales and deliveries were for third party retailers rather than itself.

amazon prime buckhouseAmazon began to trial its own logistics operations in the UK in 2012 and by the end of last year had established 13 delivery hubs and two sorting centres in Hemel Hempstead and Manchester.

Between 2009 and 2013, Amazon UK sales rose from £1.87 billion to £4.5 billion. Last year it shipped 140 million items.

The company says Prime customers can now choose delivery within one hour of ordering for £6.99 or free delivery within a choice of two-hour, same-day delivery slots between 8am and midnight, seven days a week.

Christopher North, Amazon UK managing director commented: "This is just the beginning. London is our first Prime Now city in the UK and we are already working on making Prime Now available in more postcodes in London and beyond."

In addition to the UK, the Prime Day sale will be available in the US, Spain, Japan, Italy, Germany, France, Canada and Austria. North said Prime started as a one-day delivery offer on a few million items in 2007. Since then the company has enlarged the offer to cover 10 million items.

The annual membership cost of Amazon Prime is £79 a year in the UK and offers customers unlimited one-day order delivery, unlimited video streaming and photo storage, and 800,000 books from the Kindle Owners' lending library.

Same-day deliveries, free two-day service and Sunday pick-up and delivery options helped increase Amazon Prime membership by 50 percent in 2014.

HONG KONG: Kerry Logistics has reported a 10 percent increase in net profit for 2014 of HK$976 million on revenue of HK$21.1 billion. Operating profit rose 14 percent year-on-year to HK$1.6 billion.

kerry logistics chinaThe company said its integrated logistics business produced a 12 percent profit rise to HK$1.4 billion as income from its freight forwarding activity rose 11 percent to HK$378 million.

George Yeo, chairman of Kerry Logistics commented: "The integration of China's economy with its neighbors is a major trend seen by the increasing intra-Asian trade and growing cross-border logistics. The combined economy in the region is becoming the central growth pole in the world. With our unique position as 'Asia Specialist, China Focus, Global Network', we aspire to be a major logistics provider for the new Silk Road."

In Mainland China last year Kerry completed the development of two new logistics centres in Zhengzhou and Kunshan, and began construction of two more in Chengdu and Xi'an - adding 1.6 million sq. ft. to its portfolio. The company also acquired land in Shanghai to build a 1.1 million sq.ft. logistics facility which, when complete, will be its largest in the country.

In a bid to build an ASEAN-wide express network, 2014 saw the company grow its Thailand-based Kerry Express operation with the purchase of a company in Cambodia and subsequently expand its business into Singapore, Malaysia, Indonesia and the Philippines.

In Hong Kong, Kerry set up a GMP-compliant secondary packaging facility and obtained the World Health Organization's Good Distribution Practice certificate for the provision of warehousing, distribution and secondary packaging services for pharmaceutical products.

During the year, Kerry also restructured its European forwarding business and set up joint ventures in the Middle East, Canada, New Zealand and Senegal. In Indonesia Kerry formed Kerry-Puninar Logistics, a joint venture with the shareholders of PT Puninar Saranaraya (Puninar Logistics), one of Indonesia's largest logistics companies.

CHENNAI: The Tata Group has agreed to sell its 3PL Drive India Enterprise Solutions (DIESL), to 3PL TVS Logistics Services for an undisclosed sum.

Founded in 2003, as a 50:50 joint venture between Tata International and Tata Industries, DIESL has since built a pan-India 3PL network with more than 180 warehouses and 6.5 million square feet of storage space in North and East India catering primarily to the consumer products industry. The company had revenues of over Rs950 crore (US$150 million) in FY2014-15.

Diesl logistics TVS LSL, spun out of auto distributor TVS & Sons in 2004, operates across India, the UK - where it owns Rico Logistics and Multipart - the USA, Europe and South East Asia. The company had revenues of approximately US$500 million in FY 2014-15 and manages over 3 million square feet of warehouse space in South and West India focused primarily on the automotive industry.

The sale, which is subject to regulatory approval, is being funded by a reported US $54.5 million minority investment in TVS LSL by the Tata Opportunities Fund.

TVS LSL managing director, R Dinesh said: "We are thrilled to be able to bring together two uniquely capable and complementary entities in the 3PL space in India. This move is highly strategic and enables us to add to our already expanding base of non-auto customers. Besides, we have widened our service capabilities including last mile delivery and other capabilities like demand forecasting and technology logistics through our overseas acquisitions."

Padmanabh Sinha, managing partner of the Tata Opportunities Fund in India added: "The fund and its limited partners are delighted to be able to support TVS LSL in this strategic endeavor and partner them in building a truly capable 3PL powerhouse in India. The fund believes that the new government's thrust on developing infrastructure and reforming taxation, especially the goods and services tax, will provide a conducive environment for the growth of professionally managed 3PL companies offering world class solutions."

Group Panalpina 747-8BASEL, Switzerland: Panalpina has reported a consolidated profit of CHF86.5 million on net revenue of CHF6.70 billion for 2014 – compared to CHF11.7 million and CHF6.75 billion respectively in the previous 12 months.

EBIT rose from CHF48 million to CHF116.7 million for the year – prompting Panalpina CEO Peter Ulber to comment: "In 2014, we executed on our clearly laid out strategy. This shows in the results we achieved. All in all, it was a successful year. With plenty yet to do, all eyes are now on 2015."

Panalpina expects the global airfreight market to grow 3-4 percent and the ocean market by 4-5 percent in 2015.

"Given the record low oil price, we expect some headwinds in oil and gas exploration and production activities, but this could also create opportunities in re-engineering supply chains end-to-end and outsourcing. Currency translation will impact our financial results because of the strong Swiss franc. Altogether, 2015 is a very important year for Panalpina," added Ulber.

Company airfreight volumes grew 4.0 percent in 2014 to 857,800 tons carried to produce a gross profit of CHF636 million and an EBIT of CHF112 million – up from CHF72.8 million year-on-year.

Ocean Freight volumes grew 7.0 percent year-on-year and the company transported 1,606,500 TEUs in 2014. However due to high-volume, lower-margin business, gross profit per TEU dropped 7.0 percent to CHF306 million with a resultant gross profit of CHF491.5 million and an EBIT of CHF12.9 million - down from CHF25.0 million in 2013.

Gross profit of the group's logistics services grew 5.0 percent to CHF 458.2 million in 2014. The company said expansion of its Logistics Manufacturing Services (LMS) and a disposal of loss-making road activities resulted in a "drastically reduced EBIT loss" of CHF8.2 million – down from CHF49.9 million in the previous year.

CSAFE Global




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