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Fuel a more sustainable future

SEATTLE, WA: Expeditors International of Washington reported a net profit of US$99.38 million for the fourth quarter of 2014 – an increase of 19 percent year-on-year. Net revenue for the period rose nine percent to US$518.87 million compared to 2013.

Net profit for 2014 was US$376.88 million, an increase of eight percent year-on-year as net revenues rose five percent to US$1.98 billion. Total revenue and operating income was US$6.56 billion and US$594.64 million respectively – a rise of eight percent over 2013.

"During the 2014 fourth quarter we saw strong year-over-year increases in both air and ocean freight volumes. Despite the 10 basis point reduction in overall net revenue margin, airfreight and ocean freight net revenues both managed double-digit increases, up 10 percent and 11 percent, respectively," said Bradley Powell, senior vice president and CFO.

Expeditors of Washington financials 2014Powell added that the double-digit growth in operating income as well as air and ocean freight net revenue provided the company with positive reinforcement at a very opportune time. Jeffrey Musser, president and CEO, added this was particularly true "in light of a global economy that still struggles to gain traction".

Referring to the protracted West Coast ports slowdown, he acknowledged "the long hours and extraordinary efforts by our ocean team to assist our customers in working through a most difficult and challenging ocean freight environment".

Musser said he felt good about the coming year based on the momentum of the last several quarters. He also paid tribute to the retirement this year of Expeditor co-founder and Asia-Pacific president James Wang who will remain a board member.

"We could not write a press release long enough to list all of James' contributions over the last 34 years. We do, however, want to publicly thank James and acknowledge the critical and formative roles he played in both the establishment and development of Expeditors. His foresight and vision in our company's early years led to the creation of a strong network of offices in the then-emerging manufacturing markets in Asia...We will miss James' day-to-day mentoring, three-word aphorisms, his way of simplifying complex issues, and, most of all, the respect and courtesy he showed as he helped build Expeditors and develop its future leaders," Musser added.

SCHINDELLEGI, Switzerland: Kuehne + Nagel (K+N) has reported a 6.1 percent increase in net profit for 2014 of CHF644 million on a gross profit of CHF6.288 billion. Net turnover was CHF17.5 billion, an increase of 1.9 percent over the previous year.

Commenting on the results K+N chairman Karl Gernandt noted: "We set ourselves ambitious targets and we have reached these with a new record result. In 2015 market conditions will again be challenging, therefore the continuous improvement of our performance remains our clear ambition."

Detlef Trefzger, the company's CEO, added: "In a volatile economic environment with fluctuating currencies, we were able to simultaneously expand our market share and increase results in 2014. The turnaround in the overland business unit made an essential contribution to the considerable improvement in profitability. For the first time profits were reported over four consecutive quarters."

KN logoAlthough K+N's overland business produced a slight drop in net turnover from CHF4.18 billion in 2013 to CHF4.11 billion last year, EBIT rose from CHF-8 million to CHF30 million during the period.

For its seafreight business, the company reported net revenue of CH8.44 billion, up from CHF8.33 billion a year earlier, and a segment EBIT of CHF398 million, a slight decrease from CHF405 million year-on-year. K+N says it handled over 3.8 million TEU, an increase of 242,000 containers or 7.0 percent compared to 2013, prompted by an improved U.S. economic climate and "considerable volume increases" in transpacific and transatlantic trade lanes.

Airfreight revenue rose from CHF5.78 billion to CHF5.87 billion during the period for an EBIT of CHF238 million compared to CHF222 million the previous year. In addition to improved profitability, the company outperformed general market growth of 3-4 percent with a 5.3 percent increase in traffic. K+N cites "significant business wins in the pharmaceutical, automotive and industrial goods sectors" as key success factors.

During 2014 the company's contract logistics operation increased net turnover by 4.4 percent from CHF4.42 billion to CHF4.58 billion for a 7.7 percent in EBIT of CHF153 million in part to the acquisition of "complex and innovative projects" with pharmaceutical, automotive and e-commerce customers.

BAAR, Switzerland: In the past five years Saudi Arabia has risen from ninth position to reach second place on Agility Logistics' latest index of 45 emerging markets, produced in conjunction with Transport Intelligence (TI).

The company says the jump is due to the speed at which Saudi Arabia is building a world-class infrastructure, implementing reforms and attempting to diversify beyond oil, which is still half of the economy.

saudi railWith a US$750 billion GDP and a population of 29 million, the country has an index raking behind only China that has a US$9.3 trillion economy and a population of 1.4 billion.

Agility says among all emerging markets, the UAE, Qatar and Oman have created the best business conditions followed by Uruguay, Saudi Arabia and Morocco. The UAE, Malaysia, China, Oman, Saudi Arabia and Chile have developed the best infrastructure and connectedness.

To investigate the logistics potential of emerging economies, TI surveyed nearly 1,000 logistics industry professionals between August and October last year with the following conclusions:

Russia's growing economic isolation has dramatically diminished its appeal with more than 75 percent of respondents saying they were pessimistic about its prospects. The Russian-backed rebellion in Ukraine has damaged both countries and now have significantly less potential as emerging logistics markets.

In Asia Pacific, the top risks identified were natural disasters and corruption. In Latin America, corruption and government instability were the leading risks. Terrorism and government instability are seen as the leading concerns in the Middle East & North Africa. In Sub-Saharan Africa, poor infrastructure and government instability continue to be seen as the greatest risks.

Despite Ethiopia's emergence as a leading East African exporter, air hub and investment destination, it has yet to gain notice among logistics and supply chain professionals who rate the country with the least potential – behind even Syria, Iraq, Iran and Libya.

Survey respondents showed increased optimism about trade growth within Asia, between Asia and South America, and routes linking Asia and Africa.

According to the survey, logistics professionals also think near-sourcing is reshaping supply chains with 68 percent saying they are seeing manufacturing shift locations closer to end markets.

"A year ago, there was talk of an emerging markets meltdown and of a new 'fragile five' based on concerns about weakness in South Africa, Brazil, India, Turkey and Indonesia," said Essa Al-Saleh, president and CEO of Agility Global Integrated Logistics. "Emerging markets as a group turned out to be far more resilient – even vibrant – than expected despite continued sluggishness in the global economy."

JAKARTA: Kerry Logistics has formed Kerry-Puninar Logistics, a joint venture with the shareholders of PT Puninar Saranaraya (Puninar Logistics), one of Indonesia's largest logistics companies.

Puninar LogisticsThe joint venture will give Indonesian customers access to a combnation of supply chain solutions and a globally integrated network.

Kerry Logistics chairman George Yeo said: "The joint venture ...marks a significant phase of our business development in Indonesia. As an archipelago, Indonesia has high demand for quality inter-island logistics services, which translates into immense growth opportunities...we believe we are well-positioned to capture opportunities in the rapidly growing Indonesian logistics market."

Eddy Korompis, president director of Puninar Logistics added: "We look forward to the immense business opportunities that will emerge."

Indonesia is poised to benefit from the free flow of goods and services with the launch of the ASEAN Economic Community (AEC) this year. According to Frost & Sullivan, Indonesia's logistics industry currently accounts for about 3.6 percent of its national economy. Indonesia's transportation and logistics market was estimated to be worth US$144 million in 2014.

Puninar Logistics and its subsidiaries manage a logistics portfolio of 9.67 million square feet throughout several Indonesia cities, including Jakarta, Bandung, Jambi, Semarang and Balikpapan, plus a 700-strong truck fleet and 27 vessels. Key customers are in the automotive, fuel, oil, electronics and retail sectors. The company is part of the Triputra Group, an Indonesian conglomorate with a business portfolio covering mining, agribusiness, finance, trading, rental services, logistics and manufacturing.

BONN: After a one-year development phase, Deutsche Post DHL has acquired StreetScooter, a developer and producer of electric vehicles.

Uwe Brinks Chief Production Officer MAIL and Prof. Dr. Achim Kampker General Manager at StreetScooter GmbHFounded in 2009, StreetScooter is a spin-off from the RWTH Aachen University and is made up of a consortium of around 80 companies from automotive related industries. The company's goal is to research, develop and manufacture sustainable vehicles of the future.

In 2012, Deutsche Post, Streetscooter and the university developed a prototype electric car specifically designed for mail and parcel delivery. Last year 50 pilot vehicles were deployed from several company depots. With plans to operate 100 Streetscooters next year, the company says it will convert its  mail and parcel delivery in Bonn to all electric vehicles by 2016.

Speaking in 2013 Jürgen Gerdes, corporate board member for Mail for Deutsche Post said: "We operate one of the largest vehicle fleets in Germany, which is why we have a particular interest in economical and low-emission vehicles. We're confident that this vehicle will pass the test in our day-to-day operations."

Designed specifically for the company, the lithium ion battery-powered Streetscooter has a top speed of 85 km/h and a range of 120 km. It can handle 200 stops and starts daily and operate 300 days a year.

"Streetscooter is a car that companies will be able to count on and achieve economically sustainable figures," said Achim Kampker (right, with red tie), chair of Production Management at RWTH Aachen University and general manager at StreetScooter. Around 200 vehicles are produced annually at the former Talbot/Bombardier plant in Aachen.

This latest acquisition is part of the Deutsche Post DHL "GoGreen" environment program that aims to increase the company's carbon efficiency by 30 percent from a 2007 base line.

Alternative Tasimacilik ISTANBUL: The European Bank for Reconstruction and Development (EBRD) is providing a €63 million loan to Turkish short-sea operator Alternative Tasimacilik (Alternative) to buy three ro-ro vessels currently under charter.

Alternative operates the three ships, each with a capacity of 240 trailers, between Istanbul and Trieste. The company was launched in 2012 by Ahmet Musul, the founder and majority shareholder of 3PL Ekol Lojistik.

Sue Barrett, EBRD director for Transport commented: "We see strong growth potential for Turkey's logistics sector which currently represents 12 percent of [the country's] GDP. With its geographical position and the second largest fleet in Europe, Turkey serves as a logistics hub connecting Europe to Asia and the Middle East." EBRD says 85 percent of Turkey's international trade is seaborne.

Michael Davey, the EBRD director for Turkey, added: "This project will boost a growing industry, vital for Turkish international trade, and will foster ties between Turkey and EU countries, supporting growth in the wider region."

Since 2009 the EBRD has invested almost €4.5 billion in 130 Turkish infrastructure, energy, agribusiness, industry and finance projects.

Ekol, one of Turkey's leading 3PLs, says it has launched a separate heathcare division with a turnover goal of €20 million this year. The company claims a 35 percent share of Turkey's pharma logistics market.

DElivering Happiness SchenkerCOLOGNE: DB Schenker AG, which earlier this week announced it was suing a group of airlines US$3 billion for price-fixing, has agreed to pay US$8.75 million to settle a similar complaint brought by a group of shippers.

The logistics subsidiary of Deutsche Bahn has been a defendant in a class action 'Precision Associates, Inc. v. Panalpina World Transport' filed in the Eastern District of New York – the same court where Schenker is now suing several airlines.

The shippers, who include Mail Boxes Etc., JCK Industries, RBX Industries, Mary Elle Fashions, Printing Technology, Inter-Global, Zeta Pharmaceuticals and Kraft Chemical Company, claim a large group of forwarders conspired, in violation of antitrust laws, to fix prices for logistics services on routes between the U.S. and China, Hong Kong, Japan, Taiwan, and the U.K between January 2001 and September 2012.

While the court has yet to adjudicate, as of September 15 this year Schenker, EGL, Expeditors, Nishi-Nippon, Vantec, United Aircargo, Kuhne + Nagel, Morrison Express, UTI Worldwide, Toll, Panalpina, Geodis, Jet Speed, DSV, SDV and ABX Logistics have agreed to pay US$178 million into a settlement fund for the benefit of shippers.

Court documents say these companies have agreed to reach an out-of-court settlement "to avoid the time, expense, and uncertainty associated with resolving this case by a jury trial". Other forwarder defendants have yet to settle.

Commenting on the move this week to recover what it claims are "hundreds of millions of dollars in the form of fuel and security surcharges" from the airlines, a spokesman for Schenker said: "As a company, we believe that discussion and engagement among partners are always the best ways to settle disputes. But sometimes these approaches simply don't work, and we have to find other ways to bring about just and reasonable solutions. We find ourselves in one of those situations today."

More information on the Schenker airline lawsuit here.

MEMPHIS: FedEx has acquired major 3PL Genco and e-trade facilitator Bongo International. Terms of the two purchases were not disclosed and are subject to regulatory approval in the U.S. and Canada.

With US$1.6 billion in annual revenue, Pittsburgh-based Genco is a self-described "forefather in reverse logistics – providing triage, test and repair, remarketing and product liquidation solutions" to technology, consumer, industrial, retail and healthcare customers.

Bongo"The acquisition of Genco will transform our global portfolio through the addition of new best in class supply chain management services," said Fred Smith, chairman and CEO of FedEx Corp. "As e-commerce continues to grow, customers of both companies will reap the benefits from the broadened capabilities and powerful new services."

The announcement coincides with FedEx reporting a 23 percent increase in net profit to US$616 million on revenue of US$11.9 billion in its second quarter ending November 30. Operating income was up 22 percent to US$1.01 billion compared to the same period last year.

Earlier this month, subsidiary Genco Marketplace said it had liquidated more than US$2.5 billion in secondary merchandise in 2014. The company partners with America's largest retailers to remarket returned and excess electronics, hardware and clothing to off-price retailers, online sellers, liquidators and flea marketers.

CEO Laurie Barkman commented: "Secondary merchandise has been increasingly embraced by consumers in recent years. We are seeing more and more sold during the holidays as gifts. "

FedEx said the purchase of St. Petersburg-based Bongo International will enhance its portfolio of global e-commerce solutions. Bongo enables global consumers and businesses to purchase on-line using a U.S. address for delivery to more than 200 countries worldwide.

The company, which will become a subsidiary of FedEx Trade Networks, has developed e-commerce technology that includes duty and tax calculations; export compliance management; HS classification; currency conversions; international payment options inclusive of language translation; shopping cart management and fraud protection. Bongo also takes pictures of each item ordered (right) to enable consumers to verify they're receiving what they ordered prior to being charged shipping fees, duties and taxes.

"Our knowledge and experience within the evolving cross border enablement environment, as well as our customer-centric culture, is a perfect fit with FedEx. We're excited about joining the FedEx family," declared Craig Turnbull, Bongo International co-founder and CEO.

ATLANTA: UPS has reported net income of US1.2 billion on revenue of US$14.3 billion for the third quarter of 2014 ending September 30. The results were a 5.7 percent and a 10.7 percent rise respectively compared to the same period last year.

U.S. domestic package freight rose 5.3 percent to US$8.7 billion; the international package segment increased 5.5 percent to US$3.2 billion; and the supply chain and freight business gained 7.4 percent to over US$2.4 billion.

Total operating profit rose 8.3 percent year-on-year to US$1.95 billion with the international package business showing the largest gain of 10.3 percent or US$460 million as the company delivered 1.1 billion packages worldwide, up 6.9 percent over the third quarter 2013. Some of them were delivered by Ginny Odom (below) who has become the first UPS driver in the company's history to drive 40 years and over four million miles without an accident.

Ginny Odom 6Apparently not a company to take advantage of inversion, UPS paid US$655 million in corporation tax for the quarter – a rise of 6.2 percent over the same period last year – as it generated US$2.8 billion in free cash flow.

The third quarter results follow a decision by the company to increase 2015 rates by an average of 4.9 percent from the end of December for its Ground, Air, International, UPS Freight, and UPS air freight services within and between the U.S., Canada, and Puerto Rico.

"The solid performance we delivered this quarter establishes our ability to stay ahead of market growth and generate positive operating leverage," said David Abney, UPS chief executive officer. "We continue making investments in technology and expanding our capabilities around the world to ensure we provide the long-term solutions customers demand."

UPS said demand for its export products increased 9.4 percent overall with shipments out of Asia rising 16 percent and Europe 14 percent. Forwarding revenue was higher primarily due to increased International Air Freight (IAF) tonnage that was aided by high-tech product launches and government sector gains. The company noted that operating profit improvements in North American airfreight and ocean forwarding were more than offset by continued pricing pressure in IAF.

"It's encouraging to see all three segments show positive momentum, as we head into our busiest time of year," added Kurt Kuehn, UPS chief financial officer.

SINGAPORE: Following a whistle-blowing move by DHL Global Forwarding, the Singapore Commerce Commission (SCC) has fined 10 Japanese logistics companies S$7.15 million for price fixing on routes between Japan and Singapore. While part of the scheme, DHL escaped the penalty.

The SCC says the 11 ccompanies fixed fees and surcharges while exchanging pricing and customer information between September 2002 and November 2007. According to the Commission the forwarders agreed to charge shippers the same rate for a Japanese Security Surcharge (JSS), a Japanese Explosives Examination Fee (JEEF) and a Japanese Fuel Surcharge (JFS). The SCC noted: "ThereDHL Singapore is evidence pointing to a significant mark-up in some instances."

In not fining DHL for its participation in the cartel, the Commission acknowledged it relied on the company to provide the necessary evidence to pursue its investigation.

The information included the revelation that after deciding to pass on surcharges to their customers, the group met regularly to discuss their success; exchanged information about their collection ratios; identified customers that wouldn't pay the JFS; and assigned a particular forwarder to negotiate with them.

In applying subsequent penalties, the CCS based its calculation on each company's turnover and willingness to cooperate. As a result Nippon Express and Yusen were fined over S$2 million each while Hankyu Hanshin, Kintetsu World Express, NNR and Vantec received a discount. Forwarders who didn't get a reduced fine also included "K" Line Logistics, MOL Logistics, Nissin and Yamato.

CCS chief executive Toh Han Li commented: "Price fixing among competitors (thus forming a cartel) is considered one of the most harmful types of anti-competitive conduct. It distorts the terms of trade between the cartelists and their customers, with the latter not being able to enjoy competitively determined rates. As an open economy, Singapore businesses are vulnerable to such international cartels."

PARIS: French logistics group Norbert Dentressangle has reported a 14.1 percent increase in revenue to €3.375 billion for the first nine months of 2014.

The company produces 65 percent of its annual revenue outside France with the UK accounting for nearly 30 percent and the U.S. its third largest market.

Transport revenue rose 6.8 percent year-on-year to €1.618 billion; logistics increased 18.5 percent to €1.67 billion due to gains in Europe and Russia; and revenue from air and sea forwarding rose nearly 60 percent year-on-year to €149 million.

Norbert-Dentressangle-is-on-the-road-in-the-USIn August the company completed its acquisition of the U.S. Jacobson Companies (right) to position Dentressangle as a significant supply chain operator in the country. In September it announced a 3PL contract with Pepperidge Farms to operate a distribution and packaging site from Morrow, Georgia and a strategic partnership with Nulogy, a leading provider of contract packaging software systems. Jacobson has now implemented Nulogy's packaging software at its one million sq.ft. warehouse in Lancaster, Pennsylvania.

Commenting on the latest financial figures Hervé Montjotin, executive chairman of Norbert Dentressangle, said the company had reaped the benefits of its increasingly international profile: "The French market is still weak, due to the unfavorable economic climate and the uncertainty surrounding the introduction of the HGV tax, until it was dropped in mid-October.

"The integration of Jacobson in the United States, consolidated since 1 September, is proceeding rapidly and smoothly, and the roll-out of the Norbert Dentressangle brand is already underway. Our sustained sales momentum in the United States should generate a high organic growth rate for the end of this year and next," he added.

The group's nine-month results coincide with an OECD report that suggests France's economy could grow by 0.4 percent per annum over the next decade if the country fully implements recently proposed structural reforms.

However OECD secretary general Angel Gurría noted: "The much hoped-for recovery can only gather pace if these reforms are pressed ahead, to continue to restore confidence, achieve increased productivity and improve competitiveness. The structural reforms started in 2012 will have to be intensified to put the French economy on the road to even stronger – and more inclusive – growth."

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