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Fuel a more sustainable future

COLLEGE PARK, MD: According to a new whitepaper, the reuse supply chain is an overlooked opportunity for the logistics industry to increase value and revenue.

Author Lisa Harrington, associate director of the Supply Chain Management Center at the University of Maryland Robert H. Smith School of Business, says a new closed loop supply chain can reduce carbon and deliver significant cost savings.

Harrington argues that some businesses no longer perceive sustainability as a cost, but recognize it as an opportunity to create value – and cites P&G and its near-US$1billion in cost savings as an example.

re-use"The recipe for success is to get the four principles right. These are reduce, reuse, recycle and recapture. Reduction is all about eliminating waste by injecting efficiency, reusing involves product refurbishment, while recycling is ensuring that your waste becomes opportunity. Recapturing is the process of breaking down end-of-life products to harvest residual value such as precious metals."

Harrington says the principles require a "Lead Environmental Partner"(LEP) to fulfil a control tower role, a closed loop supply chain management approach, and provide the customer management visibility through detailed carbon reporting.

"A great shift in attitudes is currently underway across industries. Gone are the old and dated misconceptions that 'green' means higher costs." She claims companies are creating new value by modifying their supply chains to manage their key inputs and outputs such as energy, carbon, water, materials and waste in a way that can reduce the environmental footprint of a business and generate new sources of revenue from residual value.

Chris Jackson, vice president Envirosolutions for DHL Supply Chain and sponsor of the paper adds: "LEPs help make the cost savings even greater with their ability to act as a single vendor for a company's waste management, ensuring the best recyclable rates are achieved and the process is simplified as much as possible.

"For example, the integrated partner approach is now at the forefront of waste management with companies receiving their shipments and having their recyclable waste collected by the same vehicle. Having a partner that can fulfil this role saves companies hundreds of thousands in land fill tax savings and reduces carbon emissions significantly as well," he says.

SAN JUAN, PR: Panalpina has begun a weekly service from San Juan, Puerto Rico (PR) to Luxembourg in conjunction with Cargolux.

The new service is designed to meet the needs of major pharma manufacturers with production facilities in Puerto Rico.

cargolux and panalpinaPanalpina says freighters are a manufacturer's preferred choice for moving pharmaceuticals because it is easier to control the temperature and bigger lots can be moved as a single shipment.

Until July this year, Puerto Rico pharma exporters had the option of using passenger aircraft out of San Juan or freighters out of Aguadilla, 80 miles (130 km) away. "Now our healthcare customers can put their temperature-sensitive goods on a cargo-only aircraft right on their doorstep. Not only do we cut out an 80 mile road leg of the journey, we also ensure the best possible control on the ground and in the air from door-to-door," said Matthias Frey, global head of Panalpina's own controlled air freight network.

Panalpina says its pharma traffic out of PR helps underwrite a new Cargolux "Caribbean Star" 747 freighter service that originates in Quito, Ecuador and routes via Bogota, Colombia and San Juan to Luxembourg.

For its expanding pharma exports, the company operates "the coolest place in the Caribbean" - a 37,500 sq. ft. (3,500 m2) facility two miles from San Juan airport to handle high-value, hazardous and temperature-sensitive goods.

"The temperature-sensitive cargo out of San Juan is currently moved in special containers that provide active cooling. But our controlled environment from door-to-door also enables us to transport goods using passive cooling, which could reduce cost and present another option for our customers. So we're running tests and are in the process of auditing our passive cooling solution out of San Juan as well," said Ricardo Ortiz who runs Panalpina's operations in Puerto Rico.

BONN: Deutsche Post DHL says it is not providing an earnings forecast for 2015 due to the costs associated with restructuring its supply chain, global forwarding and freight businesses.

The company says the expected costs for establishing what it describes as a "New Forwarding Environment" will lead to a one-time negative impact on the company's operating earnings in 2015.

dhl-papenburg-baumaschinenHowever it is forecasting a higher group EBIT the following year of €3.4 billion to €3.7 billion made up of €2.45 billion from the DHL divisions and €1.3 billion from its Post/e-commerce/parcel business (PeP).

For the first six months (H1) of 2014, the group reported a drop of 2.1 percent in its forwarding and freight business to €7.3 billion due to what it describes as a "challenging market environment".

Earnings before interest and taxes for H1 dropped a dramatic 30.4 percent to €149 million due to continued lower gross profit margins.

H1 express revenue rose 2.4 percent to €5.96 billion to produce an EBIT of €607 million - a rise of 16.1 percent. The PeP business had revenue of €7.6 billion, a rise of 1.8 percent, and an EBIT of €585 million – a fall of 7.9 percent.

For the full year, the DHL branded divisions are forecast to produce an EBIT of €2.0 billion to €2.2 billion and the PeP business will contribute a further €1.3 billion.

The company says it expects average earnings to rise eight percent per annum to 2020. The DHL divisions will remain the main contributor to growth with an average EBIT of approximately 10 percent per year.

In a coincident move, DHL Global Forwarding has completed a large part of an ocean project (above) that began three months ago. To date, 15 bulldozers, 20 loaders, 10 excavators, 60 motor graders and 20 tippers plus various spare parts have been delivered from Nordhausen via Hamburg to Ghana on behalf of the family-owned construction company GP Günter Papenburg. Some 80 more machines are due to be shipped in Q4 this year.

SEATTLE, WA: Expeditors has reported net revenues of US$484.7 million for the second quarter (Q2) of 2014 – up three percent over the same period last year.

Revenue for the first six months (H1) of 2014 was US$949.3 million – also a rise of three percent over 2013. Net profit for Q2 fell one percent to US$91.3 million and for H1 increased one percent to US$175.1 million.

HacisTrucks"Our second quarter ocean and airfreight volume increases of 12 percent and 6.0 percent, respectively, provided encouraging revenue growth. We also saw strong revenue growth in our customs brokerage and other services product. While pricing volatility still presents challenges, we feel very good about expanding our ocean freight and airfreight market share in key markets," said Jeffrey Musser, president and CEO.

Musser noted the company had been successful in expanding its European business that had compensated for weaker Americas' growth and a decline in Asia Pacific results.

"Looking forward to the remainder of 2014, our priority will be to refine and implement the tactical plans supporting the outcome of our strategic assessment...The assessment process will necessitate a reallocation of resources. This will require us to focus very carefully on optimizing existing resources to internally fund our strategic objectives without requiring excessive additions to overall headcount," he added.

Expeditors employs just over 14,000 people worldwide with over a third based in the U.S. and 25 percent in Asia Pacific where the company has become the largest customer of Hong Kong Air Cargo Terminals' logistics subsidiary Hacis.

Hacis has been providing Expeditors with breakbulk, cargo handling and house air waybill services since 2000. This has now been extended to export cargo handling, storage and delivery to all terminals at Hong Kong International Airport.

In addition, the company now uses the Hacis bonded express road feeder service to re-export cargo primarily to Huangpu, Shenzhen and Guangzhou.

BASEL: Panalpina has released its first standalone Sustainability report – reflecting a goal to reduce costs and further strengthen customer relationships.

According to CEO Peter Ulber, the company’s ability to provide customers with key environmental transit data via its PanGreen programme not only builds trust but also identifies areas to reduce supply chain costs.

Panalpina peopleHe acknowledges that “many of our important customers are scrutinizing the sustainability performance of their suppliers, us included”. He adds that Panalpina will be doing the same to its suppliers “in the coming years”.

The company says it assesses potential subcontractors based on compliance, credibility, pricing, quality of service, consistency and performance. In addition, they must be willing to “engage in a cooperative partnership,” it adds. Although currently it doesn’t screen suppliers using labour practice criteria, impact on society or environmental performance, “this subject is of increasing interest and discussions are underway to implement such screening criteria in the future,” Panalpina warns.

Ulber says his company now has a business continuity plan in the event of supply chain disruption from global warming that proactively identifies vulnerable zones and circumstances: “We are confident in our ability to manage such risks and already incorporate weather-related risks into our corporate risk assessment methodology.”

Last year the company launched its first roundtrip paperless air cargo service and now operates such services to Europe, Hong Kong and the U.S. on its Atlas Air ACMI 747-8 freighters. Panalpina says it aims to replace 80 percent of general air cargo document pouches with cost-cutting e-freight by 2015.

And just in case anyone wonders why he has spent time and money on this report, Ulber explains: “We will be focused on enhancing our sustainability performance as outlined in this report, and in the policies and programmes we have put in place regarding energy, environmental, and social performance. We see these issues as supporting our goals to achieve sustainable profit and secure our position as one of the world’s top five companies in the freight forwarding and logistics industry.”

GREENWICH, CT: XPO Logistics has purchased last-mile provider Atlantic Central Logistics (ACL) for US$36.5 million and announced an agreement to acquire contract logistics provider New Breed Holding Company for US$615 million.

New Breed had revenue of US$597 million and adjusted EBITDA of approximately US$77 million for the 12 months ending June 30, 2014.

The company was founded in 1968 and according to XPO has become a "pre-eminent provider of complex, industry-defining contract logistics services" under the chairmanship of Louise DeJoy who will become CEO of XPO's contract logistics business based in High Point, N.C.

New-Breed-HQNew Breed specializes in services for omni-channel distribution, reverse logistics, transportation management, freight bill audit and payment, lean manufacturing support, aftermarket support and supply chain optimization. Processing an average 275,000 orders a day and employing 6,800 people, its revenue renewal rate for the past three years has been a claimed 99 percent.

Bradley Jacobs, chairman and chief executive officer of XPO commented: "We're making a transformational move in acquiring New Breed – one that gives us critical mass and elevates our service offering. We'll be able to deliver integrated, end-to-end logistics solutions for any company, of any size, with any combination of transportation needs...When the transaction is complete, we'll have an IT workforce of more than twice its current size, and about 10,000 employees at over 200 locations."

Founded in 1980, ACL provides last mile logistics for the growing demand for e-commerce fulfillment by facilitating the time-sensitive, local movement of goods between distribution centers and the end-user. ACL had revenue of US$63 million and adjusted EBITDA of US$6.2 million for the 12 months ending June 30, 2014.

Karl Meyer, CEO of XPO Last Mile said: "The acquisition of ACL expands our presence in the high-growth e-commerce sector, where we manage more last-mile deliveries of heavy goods than any other logistics provider. ACL's delivery patterns complement those of XPO Last Mile, allowing us to leverage capacity as we increase our volume."

MADRID: Following a review announced in February this year, Imperial Tobacco is to sell a minority share of its Madrid-based tobacco distribution and logistics company Logista.

Imperial acquired Logista in 2008 as part of a €16.2 billion acquisition of Altadis, itself the result of a 1999 merger between French and Spanish tobacco monopolies.

LogistaAltadis will sell an undisclosed percentage of its shares in Logista to institutional investors via an IPO on the Spanish Stock Exchange. Imperial says it intends to retain a majority stake in the company via its Altadis subsidiary.

For the six months ending in March and for the full year ending in September 2013, Logista reported revenue of €516 million and €1.01 billion respectively from the tobacco, FMCG, telecom, pharmaceutical and publishing sectors.

Commenting on the proposed IPO, Logista CEO Luis Egido said: "Since we left the stock exchanges in 2008, we have successfully expanded our business by providing a broad spectrum of additional products and value-added services to different channels, added an additional important and large market through the acquisition of Logista France, and strengthened our position in tobacco product distribution. "

Gálvez added that the combination of cost reductions and diversification had enabled the company to maintain a "solid" performance in the past three years despite a decline in tobacco volumes and a weak economic environment.

"Our strategy is premised on applying our know-how acquired through a long experience in the distribution of tobacco products," he said. The company says it is the trusted logistics partner in Spain, France, Italy and Portugal for all major tobacco manufacturers.

Other Logista services include a long distance road transport network and Nacex, an express/courier company. Earlier this year, Nacex announced a partnership with electrical retailer Euronics to leverage a point-of-sale and drop and pick-up network. The company says the tie-up will allow individuals to use Euronics to pick up deliveries as well as orders via Nacex. The express company has a fleet of 1,532 vehicles and a network of 310 agencies in Spain, Portugal and Andorra.

BRONDBY, DK: DSV has reported revenue of DKK23.76 billion for the first six months of 2014 (H1) – up 5.5 percent over the same period last year. The company says its second quarter (Q2) revenue rose 6.6 percent to DKK12.16 billion.

DSVProfit for H1 fell from DKK738 million in 2013 to DKK 583 million due to the cost of the company's cost-saving "Operational Excellence" 2.0 initiative that includes the  setting up its international Shared Service Centre in Poland.

DSV CEO Jens Bjørn Andersen commented: "The earnings growth owes to our global air and sea freight activities, which reported top line growth and increased productivity. The European road freight and contract logistics markets are characterised by fierce price competition, which had an impact on our earnings in these business areas."

The air and sea division reported a 9.0 percent increase in ocean freight volumes and 11 percent rise in airfreight for H1. Road freight saw a five percent increase in consignments and a 5.8 percent rise in net revenue but the gross margin declined slightly from 18.9 percent to 18.1 percent. DSV's logistics solutions business was affected by surplus capacity in several countries. As a result, gross profit fell 4.5 percent and the margin declined from 26.1 percent to 24.6 percent for the period.

The company is forecasting a 3-5 percent growth in its ocean freight business; a 2-4 percent increase in airfreight; 1-3 percent rise in road freight and a 1-3 percent growth in logistics solutions for the remainder of the year. As a result its full-year operating profit is expected to be in the range of DKK 2.55 billion to 2.7 billion.

Andersen added the company still sees good possibilities for growth "both organically and through acquisitions" and said he was "pleased to note" that DSV has exhibited stronger growth rates than the market in general.

WASHINGTON, DC: The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has fined the Dubai-based arm of Aramex US$125,000 for the unlicensed export and re-export to Syria of internet monitoring devices and software.

Between December 2010 and February 2011, the company is alleged to have received two shipments from another - unnamed - UAE freight agent and aramex dubaiagreed to forward them to Syria despite its employees being specifically advised of sanctions against the country and instructed not to move U.S. products to Syria. As a result of cooperating with the BIS investigation, Aramex received a reduced penalty.

"Today's settlement shows the importance of compliance with U.S. law by foreign freight forwarders handling items subject to U.S. export controls," said under secretary of Commerce Eric Hirschhorn. "The items in question could [have been] used by the Syrian government to monitor Internet activity and block pro-democracy websites as part of its brutal crackdown against the Syrian people."

According to BIS, the Aramex fine relates to a US$2.8 million penalty imposed last year on Dubai-based Computerlinks FZCO for similar activity. BIS said Computerlinks knew the order it placed with Blue Coat Systems was destined for end users in Syria but claimed it was for Iraq's Ministry of Telecom and the Afghan Internet service provider, Liwalnet.

BIS controls the export and re-export of U.S. commodities, technology and software relating to national security, missile technology, nuclear non-proliferation, chemical and biological weapons non-proliferation, crime control, regional stability, foreign policy and anti-terrorism.

Last year it fined Weatherford International's Houston, Texas office a record US$100 million for export control and nuclear non-proliferation violations between 2002 and 2007 to Iran, Syria, Cuba, Venezuela and Mexico.

Headquartered in Switzerland and providing oilfield service and equipment to 100 countries, the company's code of conduct is available via its web site in 16 languages.

ATLANTA: UPS reported revenue of US$14.27 billion for its second quarter ending June 30 – up 5.6 percent over the same period last year.

Earnings before tax excluded a US$1.066 billion pre-tax charge for transferring post-retirement health and welfare benefit obligations relating to its Teamsters union agreement.

The company allocated the amount between its U.S. domestic business (US$957 million); the international division (US$27 million) and its supply chain and freight segment (US$82 million).

UPS WorldportAs a result, net income fell 56 percent to US$454 million from US$1.07 billion year-on-year.

UPS said U.S. domestic revenue increased 5.2 percent to US$8.7 billion in Q2 led by respective gains of 8.1 percent and 5.4 percent in its ground and deferred businesses. Adjusted operating profit was US$1.2 billion, up 3.0 percent over the prior year second quarter.

A growth in export traffic saw international small package revenue rise 6.2 percent to US$3.3 billion to produce a 4.4 percent operating profit gain to $471 million.

The company's supply chain and freight revenue increased 6.5 percent in Q2 to $2.3 billion prompted by growth in its forwarding and distribution business units that led to an 11 percent overall rise in operating profit to US$176 million.

UPS said "strong improvements at North American airfreight, brokerage and ocean freight were offset somewhat by a drop in international airfreight. Market pricing on the key Asia to U.S. lane continues to put pressure on rates".

For the six months ended June 30, the company generated US$1.0 billion in free cash flow; paid dividends of US$1.2 billion and repurchased 13.7 million shares for approximately US$1.4 billion.

UPS said it planned to spend US$175 million this year for capacity and peak related projects including expanded operations on the day after Thanksgiving, accelerated deployment of route optimization software (ORION), IT development, additional hub sorts and temporary capacity.

Scott Davis, UPS chairman and CEO commented: "As we've said, 2014 is the year of investing for the customer. We are providing new capabilities and expanding capacity to ensure UPS meets the rapidly growing needs of the marketplace."

BASEL, Switzerland: Panalpina has reported a six percent increase in air and ocean volumes for Q1 2014 compared to the same period last year.

Net revenue was almost unchanged at CHF1.59 billion but net profit rose 24.5 percent to CHF17.8 million.

Panalpina CEO Peter Ulber 130515 aCEO Peter Ulber (left) said it was a "decent start" with both sectors growing ahead of the market while the company further reduced losses in its logistics business.

Group gross profit increased 5.0 percent to CHF384.3 million in the period - the highest first quarter level since the Great Recession of 2008. Total operating expenses were up three percent year-on-year but down five percent quarter-on-quarter while EBIT rose 32 percent to CHF24.5 million.

Gross profit from logistics services increased five percent to CHF107.9 million (Q1 2013: CHF102.1 million) and helped reduce the EBIT loss to CHF5.4 million (Q1 2013: CHF8.6 million).

Commenting on the outlook for the remainder of the year Ulber said: "In the context of difficult market conditions, the results for the first quarter are very encouraging. Our systematic restructuring activities to turn around the company's loss-making operations are ongoing and on track, but these activities will continue to influence the financial results in the short term."

Panalpina says it expects the airfreight market to grow 2-3 percent and ocean trades 4-5 percent this year.

140429_PA_2014_Q1_Investor_Presentation.pdf

 

 


 

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