Survey: Supply chain leaders face more uncertainty
Nearly two thirds of supply chain leaders say they’re facing more uncertainty now than at this time last year, according to a recent industry survey.
Conducted by Tompkins Supply Chain Consortium, 83 percent of the survey’s respondents said they are experiencing at least moderate cost increases as a result of uncertainty; 69 percent showed a higher-than-average increase in lead time; and 62 percent see their speed to market either moderately reduced or greatly reduced.
“Gone are the days when only history was used to understand the future; today, businesses have to plan for uncertainty,” says Bruce Tompkins, Executive Director of the Consortium and author of the report. “The events of the past two years and the precariousness of the near future are challenging forecasting, budgeting, business planning and other processes that are dependent on historical information. Anyone who claims they can predict the future is wrong.”
Tompkins said he sees companies employing a variety of specific solutions to deal with uncertainty.
“A majority of companies consider uncertainty in their strategic planning process, and the magnitude of their concern for uncertainty’s impact on important measures of success is a red flag for everyone in the supply chain field,” he said.
Tompkins Supply Chain Consortium said it has more than 500 participating retail, manufacturing and wholesale/distribution companies, and includes an advisory board that includes executives from Campbell Soup Company, Ingram Micro, Kraft Foods, Limited Brands, Miller-Coors, The Coca-Cola Company and Target.
Cargotec enters $190 mil cash agreement for Navis
The Finnish port equipment provider Cargotec has entered into an all-cash agreement to acquire the market leading terminal operations systems company Navis from Oakland-based Zebra Technologies for $190 million it was announced today on a conference call with Cargotec's president and CEO Mikael Mäkinen.
"We're going to invest in areas where we feel we can be the market leader," Mäkinen said referring to Navis' reported top market position for software systems for marine terminals, as well as other sectors it is in such as rail facilities and distribution centers.
Mäkinen confirmed the all-cash pricetag for Navis represented possibly the biggest investment yet for Cargotec.
"Yes, this is more than we're used to paying for acquisitions but we believe this business will definitely pay back...we see excellent opportunities for growth and innovation."
Founded in 1988, marine container terminals have been Navis' core market, used in over 50 countries at 200 facilities with projected 2011 sales of $70 million, of which approximately 40 percent is recurring business, according to information released by Cargotec.
As for the high price multiple being paid for Navis, Mäkinen said the tech firm's "margin and growth targets are quite high."
Mäkinen placed Cargotec's own average market share between 20 and 40 percent "depending upon product. Twenty-five percent is a good average guess."
Cargotec is saying that Navis will continue its business with its customers as an independent part of Cargotec no matter who the equipment supplier might be. Mäkinen said: "By adding Navis to our portfolio, we will be able to offer total solutions for terminals. We see excellent opportunities for growth and innovation."
Navis currently has more than 300 employees, mostly based in the U.S. and India, and Mäkinen said Cargotec "will employ all of them."
"Cargotec provides us insight into world-class equipment that is used in all of our customer segments. Joining forces creates exciting possibilities to improve terminal operations," said Bill Walsh, senior vice president and general manager of Navis.
Cargotec's acquisition of Navis is expected to close during this year's first quarter subject to regulatory approvals.
UPS forecasts record-high profits for 2011
United Parcel Service, the world's largest package delivery company, is forecasting record-high profits on the heels of releasing fourth quarter profits that surpassed estimates.
The Atlanta-based parcel and freight company’s revenue surged to $13.42 billion, up from $12.38 billion. UPS’ net income rose to $1.12 billion, up from $757 million for the same period a year ago.
The shipping company said it delivered 1.1 billion packages during the quarter, at an increase of 3.9 percent.
In a conference call, UPS forecasted “moderate global growth in 2011,” while keeping costs under control combined with rate increases that the company said have been “reasonably well received.”
Canadian firm acquires 1.1 mil square feet of industrial space in Memphis
Canadian real estate investment group Olymbec has acquired the 1.1 million square foot Space Center industrial park in Memphis for $7.3 million from Trammell Crow, according to the Memphis Daily News.
The Space Center has eight buildings with a single current tenant - International Paper Co.
The latest acquisition brings Olymbec’s property holdings in Memphis to close to 1.6 million square feet, the story reported.
Disruptions at Egyptian ports impact shipping companies
Due to significant disruptions at Egypt’s ports of Alexandria and Damietta ports from lack of staff and Customs officials during the large-scale protests and political unrest there, shipping lines that include Hanjin and Maersk, have reported various degrees of operational impacts.
"Our operation is affected as Port Said and Alexandria are either partially open or entirely not operating due to a lack of labor and IT systems," Hanjin's president Young Min Kim told the Reuters news agency in an e-mail.
Hanjin Shipping is reportedly re-directing some containerships away from Port Said and Alexandria due to the ports’ staffing shortages.
DP World and Maersk have both reportedly suspended their Egyptian port terminal operations due to the embattled nation’s current situation.
The Suez Canal has stated that it remains open with traffic moving through without incident.
Maersk has said that despite the operational interruptions that it is not pulling out of Egypt.
"We have not moved staff out of Egypt and Maersk Line has not imposed any restrictions on cargo to/from Egypt," the company said in a statement.
Wednesday, February 02, 2011
Top Story
Report: China’s apparel and textile industry to hit $227 bil by 2013
Thanks in part to strong government support, China’s apparel and textile industry is forecast to reach $227 billion by 2013 – a compound annual growth rate of around 22 percent, according to a new research report.
The Chinese government’s strong emphasis on manufacturing promotion combined the mature presence of skilled, affordable labor, a strong production line, and favorable policy framework should maintain, and grow, the country’s competitive edge, according to the new research report “China Apparel Industry Analysis,” put out by RNCO, an industry research firm.
Despite unfavorable global economic conditions, the Chinese apparel industry has experienced “tremendous growth” the past few years, primarily due to strong government support, the report said.
The Chinese government’s support in the form of tariffs and tax incentives and low-cost labor has allowed the Chinese textile and apparel industry to continue growth at a “remarkable pace compared to other Asian countries,” the report said.
“The rising presence of international brands is driving the Chinese apparel industry. A significant rise in the personal disposable income and Western culture influence are the factors responsible for the expansion of international brands in the country,” the report said.
Other pertinent trends outlined in the report include franchising operations and online apparel retail “fueling the demand for branded apparels in the country.” .
“As per our research, the Chinese apparel market will be dominated by segments such as, ladies wear, sportswear, and children wear. Among the segments, ladies wear and sportswear are expected to witness a rapid growth in the coming years,” RNCO’s report said.
Rising economic status is providing Chinese females stronger discretionary spending power, the report said.
The share of ladies wear segment was estimated at 31.2 percent in 2010 in the overall apparel market, and is expected to rise, the report said.
Old Dominion Q4 profit more than doubled
Less-than-truckload carrier Old Dominion Freight Lines posted a fourth quarter profit that more than doubled, beating market forecasts amid a recovering shipping economy.
However, the U.S. freight-hauling company's shares dropped approximately 13 percent, upon the news that it would sell up to $100 million worth of its common shares via an "at-the-market" offering in order to finance long-term capital expenditures.
Old Dominion says it forecasts 2011 capital expenditures of $265-$300 million, compared to about $106.3 million in 2010.
In addition to the economic pickup in industrial production and manufacturing, the trucking firm said its freight rate increases are also bolstering its business.
Old Dominion reported it had instigated a 4.9 percent increase in rates during fourth quarter, helping to push revenue up 5.9 percent. Shipments were up 19.9 percent, with tonnage surging 20.5 percent.
First-ever competition for inter-island ship service in state of Hawaii launches Feb. 15
The Hawaiian Islands will see a new inter-island shipping service test launch this month for the first time since becoming a state, breaking a monopoly held by tug an barge operator Young Brothers.
Corte Madera, Calif.-based Pasha Hawaii Transport Lines LLC is scheduled to begin a one-way, bi-weekly service on February 15 that transits from Honolulu to Kahului and on to Hilo.
"Our company is proud to deliver on a promise made to our customers to offer interisland services," George Pasha IV, chief executive officer of Pasha Hawaii, said in a statement.
According to a story in the Honolulu Star Advertiser Young Brothers applied for an average rate increase of 24 percent with the state’s Public Utilities Commission in December, three months after the PUC had approved a test service for Pasha.
Young Brothers maintained the rate increase was to offset projected loss of revenue due to Pasha’s competitive entry into the trade lane.
The news story points out Pasha's rates are higher than Young Brothers current rates for roll-on, roll-off cargo per 40 cubic feet with Pasha charging $26.75 to Hilo and $24.25 to Kahului, compared to $23.38 and $21.28 for Young Bros. For medium-weight automobiles, Pasha charges $226 to Hilo and $202 to Kahului, compared with $197 and $176 for Young Brothers, the news report said.
Pasha’s service will deploy the 579-foot ro-ro vessel Jean Anne that is already engaged in San Diego-Hawaii service.
Crowley re-locates Southern California logistics office to San Pedro
Crowley Maritime announced it has relocated its Inglewood, Calif. logistics office to a larger facility in San Pedro, Calif.
The transportation and logistics company said in a statement that its new office “is strategically located near the ports of Los Angeles and Long Beach, and will continue to provide ocean, air freight and Customs brokerage services.”
The company said the office’s relocation is part of a larger company expansion along the U.S. West Coast to supply customers in the Far East and in Central and South America with Crowley's logistics services.
"The relocation of this office was an ideal move for the company," said Kip Douglass, Crowley’s director of North America transportation. "In addition to having a strong team, we now have a larger and more strategic presence on the West Coast to better serve our clients," he said.
"The move also will enable us to grow our trucking, intermodal and logistics services," said David O'Connor, co-director of Crowley’s North America transportation group. "
L.A. City Council votes down $50 mil shipyard
The Port of Los Angeles has, at least for now, ruled out Gambol Industries’ proposed $50 million shipyard facility at the former Southwest Marine site after a vote on Tuesday by the City Council, according to the L.A. Times.
According to Long Beach’s Gambol Industries, the proposed shipbuilding and repair complex would create more than 1,000 jobs and restore the aged property that had once built Navy destroyers in the Second World War.
The proposal had the support of some politicians, labor unions and environmentalists.
The Port of Los Angeles was concerned the shipyard development would hinder deepening of the port’s main shipping channel in order to attract larger mega-ships as competition with East and Gulf Coast ports after the Panama Canal widens in the coming years is expected to be fierce.
1.7 mil barrels of crude pass through Suez each day
Egyptian troops have reinforced the guards protecting the Suez Canal and the Suez-Mediterranean oil pipeline running alongside it, according to an official with knowledge of the buildup.
Energy consultancy IHS CERA figures that more than 1.7 millions barrels of crude pass through the canal and the "SuMed" each day. The SuMed takes oil from large tankers that cannot navigate the canal when fully loaded and delivers it to empty tankers waiting off Egypt.
An act of sabotage or a decision by a new regime to close the canal and the pipeline to punish supporters of Egyptian President Hosni Mubarak could send oil prices sharply upward.
From 1967 until 1975, Egypt kept the canal closed in response to Israel's seizure of Arab territory, forcing tankers to travel around the Cape of Good Hope.
Today disruption of the SuMed would have a bigger impact on the oil and shipping markets than a shutdown of the canal itself, Eri Nikolai Stavseth, an analyst at Arctic Securities in Oslo said in a report on Jan. 31.
Minneapolis-based C.H. Robinson Worldwide Inc., the largest U.S. logistics firm, announced that its fourth quarter profit per share missed analysts' forecasts by a penny due to what the company sad was a 14 percent hike in expenses.
The logistics company's fourth quarter net income was reported at $103.2 million compared to $87.7 million a year ago.
Total revenue rose 16 percent to $2.33 billion, while analysts had forecast $2.34 billion.
C.H. Robinson said in a statement that personnel expenses related to its restricted stock program, other incentive plans, and increased average headcount accounted for the higher operating expenses.
MSC adds Seattle to California Express service
The Port of Seattle announced Mediterranean Shipping Company (MSC) has added Seattle to its California Express service.
The service calls Gioia Tauro, Naples, Civitavecchia, La Spezia, Italy; Valencia, Spain; Cristobal, Balboa, Panama; Long Beach, Oakland, California; and Vancouver B.C.
MSC will be deploying containerships in the 3000- TEU range, according to a press release. The new ship call will be at the port's Terminal 18, which is operated by Seattle-based SSA Terminals.
Two biggest U.S. industrial real estate firms finish Q4 signaling occupancy recovery
ProLogis and AMB Property Corp. the largest U.S. owners of industrial real estate, and recent signatories of a merger pact, reported higher occupancy rates in the sector, signaling early signs of a recovery.
"The underlying results continue to highlight an ongoing recovery in the global industrial real estate market," RBC Capital Markets analyst Dave Rodgers told Reuters.
Denver-based ProLogis reported fourth-quarter FFO (a measurement of real estate investment trust, or REIT), before one-time charges, of $140 millionThat compared with $109 million a year earlier.
Prologis reported fourth quarter-ending occupancy at 91 percent, up from 89.9 percent at the end of the third quarter. Rental rates on new leases were 10.5 percent lower than rates on expiring leases.
AMB reported FFO, before charges for early extinguishment of debt, of $56.0 million, compared with $48.2 million, a year earlier.
AMB's average occupancy rate rose to 92.6 percent in the fourth quarter from 91.7 in the third quarter and 90.7 percent in the year-earlier fourth quarter.
AMB ended the fourth quarter with occupancy at 93.7 percent. Rental rates on new leases were 11.6 percent lower than rates on expiring leases.
IMO releases "action plan" for anti-piracy that is short on details
The International Maritime Organization (IMO), the United Nation's maritime arm, released an "action plan" at its headquarters in London that includes calls for better international military, and civilian, coordination in anti-piracy efforts in waters primarily off Somalia, but is not long on details.
Somali pirates have commanded ransom payments that have soared into hundreds of millions of dollars, spurring increases in insurance premiums, not to mention safety of ships' crews.
The IMO's plan includes scaling up efforts to help states in pirate-infested regions bring pirates to justice, although details on how this would be accomplished were not provided
"The situation has worsened during the past years with fiercer and increasing attacks on ships. The increased use of so-called 'mother' ships has enabled the pirates to operate at a vastly greater range," said Robert Lorenz-Meyer, president of BIMCO, the world's largest private shipowners' association in a Reuters report.
"Today there are more than 700 seafarers held hostage for ransom on 32 ships ... This does not speak well for the effectiveness of the measures taken by the international community," he was quoted as saying in the Reuters report.
"Without robust and effective counter-measures, piracy will ... make the use of this important sea lane an unacceptable risk to ship owners," said Lorenz-Meyer.
"If the risks cannot be eliminated, then seafarers will demand not to sail into the area at all and responsible ship owners will support them," said David Cockroft, general secretary of the International Transport Workers' Federation.
