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Fuel a more sustainable future

FRANKFURT: Seabury, the global advisory group that includes a cargo and logistics practice, is forecasting a 4.8 percent growth in air cargo traffic from Europe to China in 2014.

The historic northbound bias from China to Europe, expected to increase three percent this year, is now being overshadowed by a strong demand by China's middle class for high-value consumer products.

This is obviously good news for European manufacturers, which is why Lufthansa Cargo thinks the volume of German exports will be enough to provide a modest boost to its load factors – and bottom line – this year.

On February 07 the country's statistical office announced that German exports fell 0.2 percent over 2012 to 1.09 trillion while imports dropped 1.2 percent to 895 billion. The resulting 198.9 billion trade surplus was the highest ever recorded, up from last year's 189.8 billion.

Lufthansa A380 FRAThe Seabury forecast data, which suggests an overall 2.9 percent increase in air cargo traffic from Europe to the rest of the world, is echoed by IATA economists who say Eurozone manufacturing in December 2013 rose for the seventh successive month - "largely reflecting momentum in the German economy, where the sector is expanding at a three-year high growth rate."

However this relatively warm trade prospect – after several years of decline – may not last for long.

According to former Fitch analyst Charlene Chu, now working for the London-based research firm Autonomous, China's credit-fueled economic boom is a bubble that could burst at any time – creating fall-out that she says will dwarf the Global Recession that began in 2008.

Media reports suggest Ms. Chu has been warning since 2009 that China's credit expansion, now valued at close to US$15 trillion, is supporting an unprecedented property and infrastructure boom. As a result, she says a financial collapse remains a certainty following government tolerance of a growing "shadow" banking industry now responsible for as many loans in terms of volume as the country's entire mainstream financial system.

Tony Tyler, IATA's CEO and a former senior manager of Hong Kong-based Cathay Pacific, may be understating his view therefore when he says: "We can still expect that 2014 will be a challenging year. World trade continues to expand more rapidly than demand for air cargo. Trade itself is suffering from increasing protectionist measures by governments."

Chu claims many of China's policymakers realize what is happening but with the country and its politicians committed to a seven percent annual rate of growth, apparently there are few attractive options. However when the credit bubble bursts – as Chu thinks it surely will – it won't be just the Chinese economy that implodes.

So whether they arrive by train from Poland, 'plane from Frankfurt or ship from Hamburg, who will be buying those shiny European exports that are helping the Eurozone stagger back from an equally self-made abyss?

DAVOS, Switzerland: A drive by progressive companies and governments to adopt a "circular" approach to economic growth will mean a huge opportunity for the reverse logistics industry.

This new business model effectively decouples growth from rising resource constraints in a world that will add three billion middle-class consumers over the next 15 years according to the World Economic Forum (WEF).

Ellen MacArthurSpeaking at the annual WEF meeting in Davos last week, Ellen MacArthur, founder of the non-profit Ellen MacArthur Foundation, said a circular economy would save US$1 trillion in materials by 2025 "while reconciling the outlook for growth and economic participation with that of environmental prudence and equity."

According to Dominic Waughray, WEF senior director, a shift to reusing, re-manufacturing and recycling products could lead to significant job creation. "In short, the economic case for shifting to a circular economy is compelling. The economic impact of this change would be evident for business and consumers in both industrialized markets and fast-growing economies."

As an example, the WEF cites the growing circular practices of Netherlands-based Heineken: "We started out on this journey responding to pressures from environmental groups, but we soon learned that it makes sense to think holistically about everything we do, from treating the water we use and conserving energy to composting yeast and recycling bottles and aluminium cans," says CEO Jean-François van Boxmeer.

Another Dutch company, Royal Philips, has moved from dealing with hazardous materials and conserving energy to a circular approach that CEO Frans van Houten credits with a number of breakthroughs: "We are a major producer of LED lights, but when we introduced this energy-efficient technology, municipal customers railed against the additional cost for lighting their streets. Our response was to offer them lighting services rather than selling them bulbs, allowing them to take advantage of energy savings without having to pay higher upfront costs."

In her WEF presentation MacArthur said 20 percent of the annual €3.2 trillion European fast-moving consumer goods market could be saved through smart circular practices.

One company that has made a start is retailer H&M. Last year it launched a global in-store collection programme to encourage customers to bring in end-of-use clothes in exchange for a voucher – a move similar to Marks
 & Spencer and Oxfam. H&M's long-term aim is to find a solution for reusing and recycling all textile fibre for new uses and to use yarns made out of collected textiles 
in its products.

To manage downstream processing of the clothes
 H&M collects, the retailer works with Stuttgart-based I:CO, a reverse logistics provider specializing in the apparel sector. I:CO's biggest sorting facility in Germany employs 600 people and it also has plants in India and the U.S.

Of the total clothing it collects, I:CO estimates 40-60 percent is marketed as re-wear worldwide. In addition to H&M, the company's other customers include Puma, Foot Locker, Adidas, Esprit, Adler, C&A and The North Face.

I:CO says its goal is to have all collected textiles and shoes in a recycling process by 2020. On January 15, 2014 the San Francisco Department of the Environment announced it would collaborate with I:CO as part of its goal to be the first major city in the world to achieve zero waste. Currently the city sends almost 20,000 tons of textiles to landfill.

WASHINGTON, D.C.: The World Bank says the global economy will strengthen this year, with growth picking up in both developing countries and high-income economies – some five years after the financial crisis.

However, in its report the bank warns that "prospects remain vulnerable to headwinds from rising global interest rates and potential volatility in capital flows, as the United States Federal Reserve Bank begins withdrawing its massive monetary stimulus."

World BankGlobal GDP is projected to rise from 2.4 percent in 2013 to 3.2 percent this year, stabilizing at 3.4 percent and 3.5 percent in 2015 and 2016 respectively, with much of the initial acceleration reflecting stronger growth in high-income economies.

Growth in developing countries will pick up from 4.8 percent in 2013 to a slower than previously expected 5.3 percent this year, 5.5 percent in 2015 and 5.7 percent in 2016.

For high-income countries, the drag on growth from fiscal consolidation and policy uncertainty will ease, helping to boost economic growth from 1.3 percent in 2013 to an expected 2.2 percent this year, stabilizing at 2.4 percent for each of 2015 and 2016. Among this group, the bank notes the recovery is most advanced in the US, with GDP expanding for 10 consecutive quarters. The US economy is projected to grow by 2.8 percent this year from 1.8 percent in 2013, firming to 2.9 and 3.0 percent in 2015 and 2016 respectively. Growth in the Euro Area, after two years of contraction, is projected to be 1.1 percent this year, and 1.4 and 1.5 percent in 2015 and 2016, respectively.

Kaushik Basu (below),  senior vice president and chief economist at the World Bank comments: "One does not have to be especially astute to see there are dangers that lurk beneath the surface. The Euro Area is out of recession but per capita incomes are still declining in several countries. We expect developing country growth to rise above 5.0 percent in 2014, with some countries doing considerably better, with Angola at 8.0 percent, China 7.7 percent, and India at 6.2 percent. But it is important to avoid policy stasis so that the green shoots don't turn into brown stubble."

The bank report projects global trade to grow from an estimated 3.1 percent in 2013 to 4.6 percent this year and 5.1 percent in both 2015 and 2016. However, weaker commodity prices will continue to put pressure on trade revenues. Between their early-2011 peaks and recent lows in November 2013, the real prices of energy and food have declined by 9.0 and 13 percent respectively, while those of metals and minerals have fallen by 30 percent.

Kaushik Basu 2--621x414Highlighting economic regions, the bank says growth in East Asia & the Pacific eased for a third year in 2013 to an estimated 7.2 percent, reflecting slower growth in Indonesia, Malaysia and Thailand,. GDP in China is projected to stay flat in 2014 at 7.7 percent, slowing to 7.5 percent for the next two years.

Growth in developing Europe & Central Asia strengthened in 2013 to an estimated 3.4 percent, bolstered by improved exports to high-income Europe and continued strength in energy-exporting Central Asian countries. This is expected to keep growth stable at 3.5 percent in 2014, gradually lifting to 3.7 and 3.8 percent in 2015 and 2016, respectively.

In Latin America & Caribbean, economies will pick up from 2.9 percent in 2014 to 3.2 percent in 2015, before accelerating to 3.7 percent by 2016. Strong export levels, along with continued consumption, is expected to nudge Brazil's growth to 3.7 percent in 2016. Depending on U.S. behaviour, Mexico's GDP is expected to grow by 3.4 percent in 2014, accelerating to 4.2 percent in 2016.

Middle East & North Africa growth, which contracted by 0.1 percent in 2013, will remain weak with the outlook "shrouded in uncertainty" says the bank. Aggregate growth for the region is projected at 2.8 percent in 2014, firming to 3.3 in 2015 and 3.6 percent in 2016 - well below the region's potential.

Growth in South Asia expanded 4.6 percent in 2013 and is expected to rise to 5.7 percent in 2014 and 6.7 percent by 2016, led mainly by recovering import demand by high-income economies and regional investment.

Finally, real GDP growth in Sub-Saharan Africa strengthened to an estimated 4.7 percent in 2013. The bank forecasts growth of about 5.3 percent in 2014, 5.4 percent in 2015, firming to 5.5 percent in 2016.

BRUSSELS, Belgium: Abbas Gullet, secretary general of the Kenyan Red Cross, has won the Aidex 2012 Humanitarian Hero of the Year Award.

He won ahead of Arthur Etheridge from Hope Carriers Trust, Andrew Koval from MedPharm and Evans Wadongo from Kenya-based Sustainable Development For All.

The Aidex Humanitarian Hero of the Year Award recognises outstanding individuals from the humanitarian community. This year the shortlist was derived from nearly 40 nominations.

LONDON: Following retailer Marks & Spencer’s (M&S) mid-year report of a £135 million saving in 2012 as a result of its Plan A sustainability programme, the company has announced a partnership with UK charity Cool Earth to protect one million Amazon rainforest trees.

Mike Barry, M&S director of Plan A at M&S, commented: “It’s been another six months of good progress including some great achievements, addressing tough challenges and breakthrough projects. We’re tackling some of the biggest issues in sustainable business such as youth unemployment, clothes going to landfill and engaging consumers in more sustainable living and are very proud of what we’ve delivered. It’s making M&S a better business."

The Cool Earth project will protect 5,000 acres of rainforest in Peru by empowering indigenous communities to adopt financially and environmentally sustainable land-use policies.

The three-year partnership with M&S will support Cool Earth’s Ashaninka project, 300 miles east of Lima, Peru. The area is west of the Mato Grosso where much of the forest has already been lost to soya and cattle agriculture.
The M&S investment will tip the balance away from clearing forest for soya, ranching and plantations by giving indigenous communities control over their forest and boosting the incomes they make from sustainable harvesting of forest products such as coffee, cocoa, Brazil nuts and ashiotti seeds (used in beauty products).  The company says keeping 5,000 acres of forest intact will prevent 1.3 million tonnes of CO2 emissions.

Based in Cornwall, Cool Earth is supported and endorsed by a range of environmental experts including Sir David Attenborough and Sir Nicholas Stern (author of The Stern Report). Cool Earth’s aim is to protect 10 million acres of rainforest by 2016.
Barry added: “We are also very conscious that we’re only part way through our journey of making M&S a sustainable, international multi-channel retail business. That’s why we’re currently working closely with our external Sustainable Retail Advisory Board to develop a series of new social and environmental goals to further strengthen Plan A and, in turn, our business.”cambodia

One example he cites is a new health campaign (right) in Cambodia with US NGO Project HOPE to educate 14,000 garment workers better deal with common health issues.  The goal is to create a model that can be rolled out to M&S clothing suppliers across the world to deal with the specific health needs in different countries.

Laura Hawkesford, ethical trading manager at Marks & Spencer explained: “The project is helping us develop policies, procedures and materials that will enable us to roll out a health education campaign across all our sourcing territories. We’re already making a difference in Cambodia and it makes good sense to be a fair partner by ensuring good working conditions for everyone in our supply chains. This includes making sure our suppliers can offer the best possible advice and facilities on health which in turn boosts attendance, worker retention, happiness and productivity.”

Plan A is Marks & Spencer’s eco and ethical programme that aims to make it the world’s most sustainable major retailer by 2015. Launched in 2007 and extended in March 2010, it takes a holistic approach to sustainability focusing on involving customers, involving all areas of the business and tackling issues such as climate change, waste, raw materials, health and being a fair partner."

SAO PAOLO, Brazil: Brazil is Latin America's dynamo. While other global economies flicker, Brazil shines brightly. Already the world's sixth largest economy, it is also touted as one the BRIC nations, alongside Russia, India and China, for being one of the four fastest-growing emerging economies.

There appears to be only one thing that can impede Brazil's relentless progress, and that is Brazil itself. The country's woefully inadequate infrastructure is beginning to have a telling effect on business and investment. Growth has slowed to less than two percent this year and GDP projections have been revised downwards on an almost monthly basis, and the real, has been devalued, yet again.

Some 2,000 aid experts descended on Brussels last week to exchange ideas and business cards at Aidex 2012.

The humanitarian development event provided an opportunity for logisticians, donors and 200 exhibitors to forge closer partnerships on behalf of beneficiaries worldwide.

Uganda's auditor general has accused the office of Amama Mbabazi, the country's prime minister, of fraud.

According to the Norwegian ministry of Foreign Affairs, Euro 10 million in aid intended for reconstruction efforts in northern Uganda has been misappropriated.

"This amounts to no less than stealing from the impoverished people of northern Uganda who have been subjected to conflict and misrule for years. We have a policy of zero tolerance for corruption and other misuse of funds, and we intend to get to the bottom of this," said Norway's minister of International Development Heikki Holmås.

LONDON, UK: Qatar Airways CEO Akbar Al Baker says the British government must build a third runway at London Heathrow to avoid a "catastrophic" impact on the country's economy.

Speaking in London last week, Al Baker said the third runway is not an option, adding that the government should take action now rather than involve itself in "long winded debate and public enquiries".

LONDON, UK: The China Investment Corporation (CIC), the country's sovereign wealth fund, is to buy a 10 percent stake in London's Heathrow airport for £450 million.


The move follows an announcement in August that Qatar Holding is to acquire a 20 percent share for £900 million in FGP Topco, the holding company that owns Heathrow Airport holdings, formerly known as the BAA. European Commission approval is expected by the end of the year.

CSAFE Global




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