Challenges of the Last Mile Delivery in Serving E-Commerce Business 35

The Official Journal of The Logistics & Supply Chain Management Society

MAY 2016 this issue

LEADING FOR THE FUTURE WITH EI 29

CHART OF THE MONTH: 2015 A MIXED YEAR FOR CONTRACT LOGISTICS 33

CHALLENGES OF THE LAST MILE DELIVERY IN SERVING E-COMMERCE BUSINESS 35

HOW CAN WE MANAGE DEMAND FOR FRESH FOOD IN ASIA SUSTAINABLY? 37

main feature Challenges of the Last Mile Delivery in Serving e-Commerce Business

Contents Page 29

33 Feature Articles 35 29 Leading for the Future with EI 33 Chart of the Month: 2015 a Mixed Year for Contract Logistics 35 Challenges of the Last Mile Delivery in Serving e-Commerce Business 37 How Can We Manage Demand for Fresh Food in Asia Sustainably?

Contents 37

From the Editor 04 A Word From the President 06 Contributors 08 Air News 10 Maritime News 13 Logistics News 16 Supply Chain News 19 E-Commerce/Technology 24 Events 39 4 LOGISYM MAGAZINE MAY 2016 | FROM THE EDITOR

from the editor

……And now for a Q2 Outlook The Australian Logistics Academy was formed in the 1990s for the purpose Dear Readers, Supply Chains are becoming more of providing training and education to advance Logistics and Supply Chain sophisticated across all industries. The Management practices in Australia and the region. It continues to grow as a The global markets are giving new signals emergence and benefits of embracing professional organisation for Logisticians and plays a major role for Members and point to new trends. So, I can start my Adaptive Supply Chains in industries that and the business community by providing access to quality management editorial on a positive note. For the supply would never have considered this to be information, resources, practical education and business networking. chain industry there continues to be many relevant to their sector, has created new opportunities and good reason for cautious paradigms and opportunities. optimism. With the traditional industries and markets TOPICS: The economic outlook is improving for in the EU, US and Japan transitioning emerging markets – a more dovish US re-adjustments, we ask where will the 1. Strategic Analysis & 6. Purchasing & Inventory Decision Making Management Federal Reserve and progress in Brazil’s growth for the supply chain industry Held once every two months political saga have improved sentiment come from? With innovation of IT systems, 2. Business Research Project 7. Operations Management in Kuala Lumpur, Malaysia and led to more positive leading indicator tools and transportation networks which 3. Channels of Distribution 8. Supply Chain Management readings in emerging markets. The rise in oil are continually improving, the industry prices has also signaled some stability and has undoubtedly become more agile and 4. International Transportation 9. Transportation Management First Class Starting establishes a direction, provided prices can ready for new challenges. 11 October 2016 reach a stable platform. 5. Logistics Technology 10. Warehouse Management The e-Commerce phenomena is not a It is also worth noting that global flows new one. But the speed at which it is EARLY BIRD PROMO are at their highest levels. They include – now accelerating is of great importance. data, information, goods and connectivity. The B2B engagement and development WHAT YOU WILL GET: TILL JUNE 15, 2016 Which confirms that interdependencies is very interesting. Those who are of economies and the trade lanes are on able to leverage the business model, Complete 6 electives to attain ALA Diploma USD 300 (full price USD 380) the rise – thanks in part to various free deploying e-commerce platforms and trade agreements being put in place and take advantage of free trade agreements, Complete all 10 electives for ALA Adv Diploma All participants will enjoy 50% discount on Delegate Pass expectations of new ones being rolled out strategic bonded hubs to reach their for GLCS LogiSYM Malaysia 2016 (12 - 13 October) like TPP. markets, will break new ground and Sign up now and get 1st year LSCMS For more details, access www.logisym.com create new paradigms. The savvy supply However with increasing interdependencies chain enablers who can support these membership free and direct approval for CLP! we must not forget the lessons of the past. new initiatives with a sustainable and cost Managing weaknesses will present the effective model, will greatly benefit biggest threats. Often the speed of change and the emergence of imbalances needs As usual, I look forward to receiving your HRDF LHDN Double to be a key focus point. We do not want feedback at [email protected] and even The Logistics & Supply Chain Management Logistics Executive Group’s Logistics CLAIMABLE Deduction to see trade controls, more unnecessary publishing an article of yours. Society is the regional professional body for Academy is a comprehensive suite of under SBL Scheme for approved compliance and indeed unilateral actions Logistics practitioners.LSCMS emphasises Educational and Training Programs that cater transaction by some trading blocks. a commitment to ongoing education and for all levels of professionals and logicians Joe Lombardo encourages performance consistent with looking to further enhance their supply chain FOR MORE INFORMATION International Editor a generally agreed body of knowledge or and logistics skills and theirs careers. standards. Please contact Keng Pang at [email protected] www.logisym.com/events/masterclasses or Jevan Chandran at [email protected] The Australian Logistics Academy was formed in the 1990s for the purpose of providing training and education to advance Logistics and Supply Chain Management practices in Australia and the region. It continues to grow as a professional organisation for Logisticians and plays a major role for Members and the business community by providing access to quality management information, resources, practical education and business networking.

TOPICS: 1. Strategic Analysis & 6. Purchasing & Inventory Decision Making Management Held once every two months 2. Business Research Project 7. Operations Management in Kuala Lumpur, Malaysia 3. Channels of Distribution 8. Supply Chain Management 4. International Transportation 9. Transportation Management First Class Starting 5. Logistics Technology 10. Warehouse Management 11 October 2016 EARLY BIRD PROMO WHAT YOU WILL GET: TILL JUNE 15, 2016 Complete 6 electives to attain ALA Diploma USD 300 (full price USD 380)

Complete all 10 electives for ALA Adv Diploma All participants will enjoy 50% discount on Delegate Pass for GLCS LogiSYM Malaysia 2016 (12 - 13 October) Sign up now and get 1st year LSCMS For more details, access www.logisym.com membership free and direct approval for CLP!

HRDF LHDN Double The Logistics & Supply Chain Management Logistics Executive Group’s Logistics CLAIMABLE Deduction Society is the regional professional body for Academy is a comprehensive suite of under SBL Scheme for approved Logistics practitioners.LSCMS emphasises Educational and Training Programs that cater transaction a commitment to ongoing education and for all levels of professionals and logicians encourages performance consistent with looking to further enhance their supply chain a generally agreed body of knowledge or and logistics skills and theirs careers. FOR MORE INFORMATION standards. Please contact Keng Pang at [email protected] www.logisym.com/events/masterclasses or Jevan Chandran at [email protected] 6 LOGISYM MAGAZINE MAY 2016 | A WORD FROM THE PRESIDENT

a word from the president

Let’s not be Silly.

Back in 2008 and into 2009, Oceanfreight rates I have spent the last month traversing much hit similar lows to what we are starting to see of the globe from Europe to Dubai and this today. I was working as a Logistics Manager in last week the US. Everyone is aware that a Major US Chemical company at the time and the rest of this year does not look very rosy the CEO of our company read in the financial but it is heartening to see that aside from a times one day that you could ship a container few ‘nervous’ individuals, most Logisticians from X – Y for as little US$100. are taking a cautious but fair approach in dealing with vendors and customers instead He immediately sent an email out to the of this short term thinking I experienced global Supply Chain organisation querying back in the day. why we were paying US$1000 a TEU when the papers were saying that rates were only Let’s face it, revenue and volume numbers US$100. Everyone went into a state of panic this year are not going to be as good as last and our VP of Supply Chain wanted us to “do year's. Every port is reporting lower volumes something about it”. I am sure this is a scenario - except for the blip in Frankfurt this month some of you are familiar with. which was a result of other issues and not buoyant trade. We do need to be cautious in I called the key carriers we were working with the coming months but taking a retrograde at the time and asked them what they could approach to growth and expansion plans do to help. Despite some of our carrier MQC’s and having a knee jerk reaction and (minimum quantity commitments) being less panicking is simply short term thinking and than 3 months old, all carriers we spoke to will expedite the turning of this less than understood the situation I was in and reduced rosy outlook into a self-fulfilling prophecy of their rates wherever they could. This was in doom and gloom. the days when most contracts had a minimum one year validity. Let’s not be silly and take a short term view – as many US corporations are prone to Of course our CEO was not satisfied with the do. We have seen this happen and indeed efforts we made but within half a year, rates happen with increasing frequency since started to creep upwards and we were actually the 1998 Asian Economic Crisis. By keeping paying below market rates over the next 6 – 9 our noses to the grindstone and paying months and in some cases into the second very close attention to the tactics we have year of those contracts. As you can imagine adopted and by being as prudent and and expect, we never heard a peep about fiscally responsible as possible, we will come what a great job we did by taking a moderate out on the other end but let’s not fret and as opposed to extreme approach and forcing react like frightened children. carriers to give us rates we knew were not sustainable in the short to medium term. As always, LogiSYM hopes to be there with you as we make our way through the choppy Why didn’t I listen to him? waters ahead!

Vendor, carrier and 3PL relationships, like all business relationships should be long Raymon Krishnan term ones. Crises come and go but it is only President by working together that we can we work The Logistics & Supply Chain through adversities. Management Society SAFETY FIRST FOR PEACE OF MIND.

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dexion.biz 8 LOGISYM MAGAZINE MAY 2016 | CONTRIBUTORS

contributors

Mareike Dave Buckby Mark Millar Gwyneth Fries Walter-Paschkowski Economist www.markmillar.com Senior Sustainability Advisor Regional Manager Middle East & Africa Ti Forum For the Future Logistics Executive Group www.ti-insight.com [email protected] [email protected]

Mareike is a dynamic and Having obtained a Masters Author of ‘Global Supply Chain Gwyneth Fries, a Senior engaging Supply Chain in Economics, David is now Ecosystems’, Mark Millar has Sustainability Advisor, is based project management Ti’s resident Economist. David been engaged as Speaker, MC in Forum for the Future’s professional with more manages one of Ti’s core or Moderator at more than 400 APAC office in Singapore. She than 12 years professional strengths, that of quantitative corporate events, customer spearheads Forum’s work in experience in managing analysis of a range of logistics functions and industry the region to bring about real complex logistics and supply markets, including sizing and conferences across 23 countries. change in the food system. chain projects. forecasting.

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LogiSYM Magazine COPYRIGHT Level 15, Langham Place All material appearing in LogiSYM Magazine is copyright unless otherwise stated or 8 Argyle Street, it may rest with the provider of the supplied material. LogiSYM Magazine takes all Mong Kok, Hong Kong care to ensure information is correct at time of printing, but the publisher accepts no Tel: +852 3958 2313 responsibility or liability for the accuracy of any information contained in the text or Fax: +852 3958 2300 advertisements. Views expressed are not necessarily endorsed by the publisher or editor. Email: [email protected] LOGISYM MAGAZINE JANUARY 2016 | AIR NEWS 9

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transported via a trucking network Cambodia increased 14 percent in Emirates to reach other cities and regions in 2015 to 38,065 tonnes. Cambodia. The Cambodia-EU trade lane for SkyCargo "Cambodia's air cargo market air cargo is also one of the fastest- is growing at a robust rate with growing trade lanes linking emerging Now Flying Europe and the United States being and developed markets with a key export markets. Establishing a compounded annual growth rate of to Cambodia presence in this market will position 16.5 percent in the last three years Emirates SkyCargo to benefit from the (2012 to 2015). healthy growth potential," said Hiran Emirates SkyCargo, the freight division Perera, senior vice president, Emirates The main imports to Cambodia are of Emirates Airline, has further SkyCargo. "Our strong route network expected to include fabric and leather strengthened its extensive route and Dubai's location as a global cargo while the main exports are textiles and network with the launch of a weekly hub mean that we can connect our garments. freighter service to Phnom Penh, customers in Asia to 150 destinations, Cambodia, starting 6 April 2016. including 42 gateways in Europe, 14 Emirates SkyCargo will be starting its gateways in North America and 27 service with an MD 11 freighter aircraft, The new freighter service to gateways in Africa." providing dedicated outsourced Cambodia's capital is the carrier's 53rd capacity for 80 tonnes of cargo. The destination in its worldwide freighter According to Cambodia Airports, aircraft's wide body will also enable network and the 13th in the Far East. which manages the country's three it to uplift outsized cargo and carry international airports, the volume larger consignments. From Phnom Penh, cargo will be of air freight shipments to and from

GLCS LOGISYM MALAYSIA 2016: Asia’s Future Supply Chains – Imagining Tomorrow’s Supply Chains, Today! 12 - 13 October 2016

Conference Partners GLCS Logisym Malaysia 2016 promises to be a highly unique event. Building on the success of the past 4 years, the 2016 Fifth Annual Global Logistics and Supply Chain Symposium will focus this year on providing a platform for mid to senior level shippers to discuss and explore innovation, excellence and what changes we can expect to see in the Asian supply chains of tomorrow.

For more information regarding partnerships or general enquiries, please contact Mike King at [email protected] LOGISYM MAGAZINE MAY 2016 | AIR NEWS 11

IATA Chief Addresses the Industry in Brussels

Tony Tyler, Director General and CEO of the International Air Transport Association (IATA), recently addressed doing so, aviation supports Europe's he noted. the European Aviation Club competitiveness, 12 million European in Brussels, the Belgian jobs and 4.1% of European GDP." "Without airports and air traffic control capital that is still finding we are going nowhere. And both its feet, in the wake of the Tyler continued: "The EC's publication must be cost-efficient and capable of of the European Aviation Strategy last accommodating demand." terrorist attack on the city's December affirmed aviation's vital role. airport in March. On many issues, however, I must say that He added, in relation to ATC: "After the strategy seems satisfied with the decades of discussion, there is nothing According to Tyler, "Crises bring out the status quo. that hasn't already been said about the best in people. The citizens of Brussels, importance of a Single European Sky," for example, have demonstrated their "The risk is that the plan becomes Tyler observed. fortitude by quickly returning the city to perceived as irrelevant or lacking a state of normality". in ambition. So it is important to "Progress is frustratingly slow. I struggle demonstrate that the strategy is to identify any since I last spoke to this "I want to make special mention of our inspiring concrete actions that will pay audience (about four years previously)." colleagues at Brussels Airlines, Brussels big dividends". Airport and all the carriers who worked On the subject of airport infrastructure, tirelessly to reconnect Europe's capital "Backed by the right strategic vision, he noted that Europe is falling behind to the world." the continent's airlines are capable in capacity. "It is hard to build or expand of delivering much more value to the airport infrastructure in Europe. Of the "Your impressive team effort has done European economy," he said. 168 slot-constrained airports in the our industry proud in demonstrating world, 101 are in Europe… the only that terrorism will not defeat the values This strategic vision would have many durable solution is to build." of a free and open society. Furthermore, components. "Ask a European airline that is the best tribute that we can pay CEO what's needed and you are likely The second issue Tyler looked at in to the memories of the victims of that to hear: reduce high taxes; simplify some depth is ‘smarter regulation'. "Air terrible day." Tyler went on to make and harmonise complex and onerous transport is highly regulated. Regulation a number of other points relating to regulation; and improve infrastructure on safety has been a great success story. the role and current condition of the that is too often inefficient, costly and in aviation industry across the European short supply," Tyler insisted. "But we are far from being able to apply continent. "Air transport plays a critical that statement universally across all role in Europe," he said. "In other words, they need Europe to forms of regulation. And the complexity become an easier place to do business." of the European system makes it even "It connects the continent from within, Two of the key areas for potential more difficult." giving substance to the vision of improvement which Tyler went on to European integration. It also connects consider are perhaps as important for However, he explained that IATA the continent to the rest of the world". cargo as passenger operations. The is working hard on ways in which "In both instances, vital economic first was infrastructure. "Airlines cannot simplification of the regulatory and cultural links are created and in function without infrastructure support," environment might be achieved. 12 LOGISYM MAGAZINE MAY 2016 | AIR NEWS

Etihad Cargo Strengthens Presence in the Middle East

Etihad Cargo has launched a 11 flights weekly," Etihad Cargo new service from Abu Dhabi, the Vice President David Kerr said. "The United Arab Emirates to Muscat, Middle East market continues to Oman, along with a new service perform strongly for us and is at the from Abu Dhabi to Kuwait, the core of our operation. We will also cargo airline said. Both services be looking to expand elsewhere utilize A330 freighter aircraft and around the globe during the year operate on a twice a week basis. ahead." "By strengthening our existing connectivity to Kuwait and Etihad Cargo was established in introducing a new freighter service 2004 and operates from its hub to Muscat, our frequency in the at the Abu Dhabi International Middle East has now increased to Airport.

The latest Airline Business Confidence the impact of last year's US West Coast IATA's Latest Index produced by the International port strike, which drove freight into Air Transport Association (IATA) was the air, the weighted average score publicised this month (April). The for confidence in the freight market Survey associated survey revealing that airline over the next 12 months has fallen Heads of Cargo and Chief Financial consistently over the last five quarters Suggests Lack Officers appear likely to report year on and is now at its lowest level since year gains in profitability over the first April 2011. quarter of this year. of Confidence Also of concern is the yield situation, However, expectations relating to returns being placed under pressure in Cargo cargo business growth are said to from over-capacity in the airfreight be, like the airfreight market itself, market. somewhat ‘mixed.' Future Half of those that replied to this latest Indeed, survey respondents' IATA quarterly survey said that they expectations of air cargo industry had experienced year on year falls in performance have moderated since cargo yields in the first quarter of 2016. the start of 2015 in the light of what IATA says has been "ongoing weakness Indeed, with one exception, the in global, trade growth." weighted average index concerning cargo yields has been in the red since However, despite short-term concerns, the start of 2012, while this latest long-term expectations for cargo survey shows that Heads of Cargo are growth are also said to have remained expecting further declines over the "positive." More than a quarter of next 12 months. respondents to the survey reported handling lower freight volumes in the A total of 93% of respondents said that first quarter of this year compared to they believed that yields would either the opening three months of 2015. remain constant or fall over the next While comparisons were skewed by year. LOGISYM MAGAZINE MAY 2016 | MARITIME NEWS 13

Asia-Europe Year 2015 4% Trade Set 1Q 2016 6% to Rebound in 2016: Maersk Line CONTAINER VOLUMES TRANSITING FROM ASIA TO EUROPE

In his recent speech at the TOC Asia lead to an increase in current freight the sustained increases in shipping Container Supply Chain Conference rate levels, which he described as capacity. in Singapore, Maersk Line's Asia "unsustainable," meaning carriers Chief Executive, Robert van Trooijen, were unable to protect the supply "Excess deployed capacity levels have indicated that growing evidence chain's integrity, in the second and led to lower utilisation such that a suggests that recent declines in Asia- third quarters of the year. vessel which is 95% full is unable Europe trade levels are set to reverse. to make money, and in some cases, Jim Lim, Senior Manager of Transport vessels which are 99% full, are losing Last year container volumes transiting Excellence, Procurement and Global money. from Asia to Europe fell by 4% while Logistics at Applied Materials, the first quarter of this year saw them agreed. "The heyday of lower rates for "In addition, there is a 20% downfall decrease by a further 6% year-on- customers is over. Those rock-bottom – bookings which made where the year. This decline represented one of rates will be a thing of the past." container does not show for the sailing the worst starts to a year concerning – which means that carriers effectively both volumes and freight rates since have to overbook a vessel by 20%; and the financial crisis. Maersk believes “ if a ship isn't full, then the sailing has that one of the reasons why container The heyday of lower rates to be blanked. volumes have been so weak over for customers is over. Those the last 15 months was due to the rock-bottom rates will be a "And that is very different to a couple strategy of European retailers’ to run of years ago," Van Trooijen added. Lim down stocks. However, the company thing of the past. also added that structural changes in expects this trend to reverse as the global supply chains could offer new Jim Lim year progresses. Senior Manager of Transport Execllence, opportunities for carriers seeking Procurement and Global Logistics - Applied Materials cargo and possibly more balanced "The retail industry in Europe spent trades. much of last year destocking but our economists expect that there will be "There are many possibilities to take some restocking later this year and we "As Europe gradually exits its recession advantage of nearshoring, where a lot think that the trade may well rebound I think that the worst is probably over of manufacturing is mobbing to East further than we have seen this year so for carriers." Europe, in places such as Poland and far." Hungary. I think shipping lines should Van Trooijen admitted that part of be looking to capture more eastbound "We do see some positive trends the reason why rates had fallen to cargo. Carriers have invested so much in 2016 and we believe that it may such desperate weakness was due in the westbound route and there are surprise us regarding volumes over to the vicious circle created by lines growing opportunities for them to the remainder of the year," he said. ordering such large quantities of ultra- develop their eastbound services," he He predicted that this would likely large container vessels (ULCVs) and said. 14 LOGISYM MAGAZINE MAY 2016 | MARITIME NEWS

G6 Alliance To Send 10,000 TEU Ships Through Panama Canal

The G6 Alliance has confirmed that its new "The new service via Panama will deploy service linking central and northern Asia neo-Panamax ships of around 10,000 teu," to the U.S. East Coast will employ Post- a spokesperson from alliance member APL Panamax vessels to take advantage of the told Lloyd's List. canal's new locks, according to Lloyd's Loading List. The new service will call at Qingdao, Ningbo, Shanghai, Busan, Manzanillo, New The G6, which comprises APL, Hapag- York, Norfolk, Savannah, Manzanillo, Busan Lloyd, HMM, MOL, NYK, and OOCL, will and Qingdao. relaunch its new NYX service later this year, although it did not give a date for the As Lloyd's List reported, the service is launch. part of a shake-up of the G6's transpacific services. It will have to be after June 26, however, when the Panama Canal's expanded locks The announcement comes in the week are officially opened. The Panama Canal that the alliance discovered it is to lose Authority announced this week that it was another member next year when OOCL taking reservations for transits from July joins the proposed Ocean Alliance with 27, with the first granted to Nippon Yusen CMA CGM, Evergreen and Cosco Container Kaisha's 78,874 cu m liquefied petroleum Line. APL will also leave the alliance when gas carrier called Linden Pride. its sale to CMA CGM is complete.

UASC and Hapag-Lloyd confirm merger talks Delivering with impact

United Arab Shipping Company and trade route, Hapag-Lloyd has shied for your auDience Hapag-Lloyd have confirmed they are in away from launching its own ultra-large talks over a cooperation agreement that container ships, due to the price crisis could include a merger of operations. currently affecting the container trade. Clients have engaged Mark Millar as Speaker, Moderator, MC or Mark Millar Conference Chairman at more than 400 Events in 23 Countries. [email protected] The German shipping line Hapag-Lloyd ULCSs, when operating at capacity, offer a Hong Kong said in a statement the companies are huge cost saving of around 50% per teu, Knowledgeable | Professional | Memorable +852 9468 5295 basing negotiations on relative business over Panamax vessels, but hemorrhage www.markmillar.com valuations of 72 percent for Hapag-Lloyd, money when only half full, which is the “thought- and 28 percent for UASC. average load most vessels on the Asia- provoking, “every event Europe route are currently carrying. inspiring and organiser’s MARK MILLAR The merging of UASC and Hapag-Lloyd humorous” dream” would create the world's fifth-largest The news comes just one day after an GLOBAL container shipping group, according announcement by CMA CGM that it has SUPPLY CHAIN ECOSYSTEMS to Alphaliner data, controlling 7.2% of formed a new shipping alliance with STRATEGIES FOR COMPETITIVE ADVANTAGE global ocean container freight capacity. COSCO Container Lines, Evergreen Line, IN A COMPLEX, CONNECTED WORLD and Orient Overseas Container Line The move would give Hapag-Lloyd access (OOCL). to UASC's fleet of six 18,000-teu container ships without the massive investment The new alliance forces lines such as needed to order its own tonnage. UASC and Hapag-Lloyd to find new partners to fill in the gaps of their now Despite operating on the Asia-Europe altered alliances. Mark’s book, Global Supply Chain Ecosystems, is available at Mark Millar is Managing Partner of M Power Associates Limited in Hong Kong www.gsce-mm.com LOGISYM MAGAZINE MAY 2016 | MARITIME NEWS 15

MOL suffered a net loss of 170 billion yen 50 billion yen stemming from structural Japan's (US$1.57 billion) in fiscal 2015, compared reforms in the dry bulk business. “K” Line’s with a net profit of 42.3 billion yen in structural reforms are to accelerate the fiscal 2014, as it booked an extraordinary rationalization of its fleet size, mainly 'Big Three' charge of 179 billion yen resulting from small- and medium-sized vessels. “K” Line’s the disposal of vessels in the container revenue declined 8 percent year-over-year Container shipping and dry bulk divisions. to 1.24 trillion yen in fiscal 2015. It is MOL’s first full-year net loss in three As for fiscal 2016, “K” Line, which is heavily Lines Suffer years. MOL’s revenue shrank 5.8 percent dependent on container shipping, year-over-year to 1.71 trillion yen in fiscal predicted that its revenue will plunge 11.6 2015. As for fiscal 2016, MOL predicted percent year-over-year to 1.1 trillion yen by Hisane Masaki that its revenue will tumble 11.5 percent and its net loss will total 35 billion yen. year-over-year to 1.51 trillion yen, but the Japan’s three largest container lines all company expects to swing back into the “K” Line said it would take time for supply reported dismal financial results for fiscal black with a net profit of 20 billion yen. and demand to rebalance and its financial 2015 on Thursday, with Mitsui O.S.K. Lines performance to improve. and "K" Line slipping into the red, although Container volumes on Asia-North America the country’s top carrier, NYK Line, routes will remain firm on the back NYK Line’s revenue slid 5.4 percent in fiscal remained profitable. The three Japanese of relatively strong growth in the U.S. 2015 from a year earlier to 2.27 trillion yen carriers all saw their revenues sink in fiscal economy, while those on Asia-Europe as net profit plummeted 61.7 percent year- 2015 amid stubbornly sluggish market routes might remain stagnant until the over-year to 18.2 billion yen. conditions. Lower fuel costs and a weaker summer demand season, MOL said. yen against the U.S. dollar were offset by NYK Line predicted that its revenue will be slumping freight rates and cargo volumes “K” Line also incurred a net loss of 51.4 2.2 trillion yen in fiscal 2016, down 4.1 amid oversupply and stagnant demand. billion yen in fiscal 2015, compared with a percent from a year earlier, while its net The lines all expect another tough year net profit of 26.8 billion yen in fiscal 2014, as profit will be 15 billion yen, down 17.8 ahead. it booked an extraordinary charge of about percent.

Delivering with impact for your auDience

Clients have engaged Mark Millar as Speaker, Moderator, MC or Mark Millar Conference Chairman at more than 400 Events in 23 Countries. [email protected] Hong Kong Knowledgeable | Professional | Memorable +852 9468 5295 www.markmillar.com “thought- provoking, “every event inspiring and organiser’s MARK MILLAR humorous” dream” GLOBAL SUPPLY CHAIN ECOSYSTEMS

STRATEGIES FOR COMPETITIVE ADVANTAGE IN A COMPLEX, CONNECTED WORLD

Mark’s book, Global Supply Chain Ecosystems, is available at Mark Millar is Managing Partner of M Power Associates Limited in Hong Kong www.gsce-mm.com 16 LOGISYM MAGAZINE MAY 2016 | LOGISTICS NEWS

China Approves FedEx Acquisition of TNT

The Chinese Ministry of Commerce has unconditionally of the US$4.8 billion deal in January. U.S. regulators approved approved FedEx's US$4.8 billion acquisition play for the FedEx-TNT Express tie-up at the end of November 2015. Netherlands-based global package delivery firm TNT Express. The European Union nixed a similar deal between UPS and TNT two years ago when it sought divestitures that UPS was "With this final regulatory approval, we are one step closer to unwilling to make. Memphis-based FedEx made its initial offer making the vision of combining the complementary networks to buy TNT in April 2015. of FedEx and TNT Express a reality," said Tex Gunning, chief executive officer of TNT Express, in a statement. FedEx is a smaller player in Europe than UPS, and many analysts believe the union with TNT is positive for consumers because it The announcement follows Brazil's Conselho Administrativo allows for three major competitors, as well as smaller regional de Defesa Econômica's unconditional approval of the couriers, and provides TNT with long-term stability at a time acquisition in late March, and the European Union's approval when it has been shrinking to remain profitable.

Yusen Logistics (Hong Kong) Limited opened a Yusen Logistics temperature-controlled facility at the Tsuen Wan Logistics Center in Hong Kong. The facility is the company's first Enhances Air refrigerated storage operation in Hong Kong. It will support the rising demand for food imports in Japan and Import Capability Europe, which are primarily driven by e-commerce. The facility enhances Yusen Logistics' air import capability with New in the Region and strengthens its presence in the food Temperature- industry, one of its primary growth segments. The 17,000-square-meter Tsuen Wan Logistics Center is Controlled Facility strategically located 25 kilometers from the Hong Kong Airport and 5 kilometers from the container terminal. in Hong Kong The facility previously provided various types of logistics services for electrical and electronic goods.

The chilled facility offers storage at a temperature range between 2˚C and 5˚C and the frozen service provides storage between -18˚C and -15˚C. As a result, this enables Yusen Logistics to handle a broad range of products, including processed foods, perishable commodities and alcoholic beverages.

In addition to handling refrigerated and frozen goods, the facility also provides storage, entering and dispatching, processing for distribution (sorting and labeling), packaging and inventory for non-residents. Yusen Logistics takes advantage of its CFS (Container Freight Station) capabilities as a base for its reefer ocean consolidation service. Photo: Yusen Logistics LOGISYM MAGAZINE MAY 2016 | LOGISTICS NEWS 17

Panalpina's Board of Directors Nominates Peter Ulber to Become Chairman; Stefan Karlen to Succeed as CEO

Panalpina's Board of Directors has appointed Peter Ulber (56) as the America. He was appointed to the International Management Board in company's new Chairperson for the upcoming Annual General Meeting 2008, and was responsible for both sea freight and air freight, as well (AGM) to be held on May 10, 2016. He would succeed Dr Rudolf W. as the global sales organization. "Panalpina is now a fundamentally a Hug (72) who has served as Chairperson since 2007. Stefan Karlen stronger company, making this the ideal time for me to concentrate (42), currently Regional CEO for Asia Pacific, has been designated to on the strategic development and future direction of the group by succeed Ulber as the next Chief Executive Officer. handing over the day-to-day responsibilities to Stefan Karlen," says Ulber. Commenting on the Board's appointment, Vice Chairman Beat Walti remarked, on behalf of controlling shareholder Ernst Göhner A Swiss citizen, Karlen joined Panalpina in 1997 and has held various Foundation, "During his tenure, Dr Hug was instrumental in setting the positions spanning across Europe, Africa, Central Asia and Asia Pacific. strategy for Panalpina and turning it into the highly professional and Karlen has played a key role in Panalpina's international expansion. bottom-line focused company it is today. Peter Ulber's nomination will In 2012, he became the managing director for South East Asia before ensure continuity and a seamless transition, and we are satisfied that assuming the position of Regional CEO for Asia Pacific in 2013. he will be a most capable Chairperson." After the AGM, Ulber would continue as CEO until Karlen, his designated successor, takes over "Stefan Karlen's proven track record of delivering results and in-depth during the latter part of the year. knowledge of the freight forwarding and logistics industry, coupled with his success in leading the Asia Pacific Region, Panalpina's most Ulber, a German citizen, joined Panalpina in June 2013 as President dynamic zone, for the last three years. This makes him a formidable and CEO. Previously he held various management positions from candidate," concluded Ulber. 1985 to 2011 at Kuehne + Nagel in Europe, as well as North and South

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knowledge and innovations that we can bring our customers DHL Redefines to meet the challenges of Industry 4.0, the fourth industrial revolution. We see the Asian region as a swift adopter of technologies for enhanced productivity and efficiency. By Logistics in 2020, Asia will constitute 30% of our total revenue. Facilities like the Advanced Regional Center offer a ready model of Singapore with innovations that reduce complexity, improve accuracy and maximize opportunities for productivity gains," said Dr.Frank Opening of the Appel, Chief Executive Officer, Deutsche Post DHL Group. S$160 Million

Advanced Regional As an organization,“ our spirit thrives on a hunger for new knowledge and innovations Center that we can bring our customers to meet the challenges of Industry 4.0, the fourth

• New facility boasts S$18.8 million industrial revolution. We see the Asian automation system featuring advanced region as a swift adopter of technologies robotics for enhanced productivity and efficiency. • 90,000 sqm facility translates into Dr Frank Appel 40% growth in DHL Supply Chain's CEO, Deutsche Post DHL Group warehousing footprint in Singapore • Award-winning customer service center completes advanced technology Co-located within the ARC is the DHL Asia Pacific Innovation Center (APIC), DHL's first innovation center outside of DHL Supply Chain, the global market leader for contract Germany is a joint development with the Singapore logistics solutions, today, launched its Advanced Regional Economic Development Board (EDB). Launched in 2015, Center (ARC) in Singapore. At an investment of more than APIC is the first dedicated center for innovative logistics S$160 million¹, the new 90,000 sqm facility features a services in the Asia Pacific Region and showcases futuristic S$18.8 million multi-customer automation system featuring technologies. advanced robotics. "We are witnessing a pivotal chapter in the transformation The pioneering system allows customers to enjoy the of the Singapore logistics industry, as these best-in-class benefits of automation solution without the need supply chain practices, exemplified by DHL's Advanced for significant capital investment. The technological Regional Center, start to take off in Singapore. DHL's enhancement uses 130 robotic shuttles to pick and store decision to locate their first innovation center outside of products from 72,000 locations spread across 26 levels, Germany, in Singapore, is another testimony to Singapore's improving picking efficiency by 20% and utilizing 40% less commitment to promoting supply chain innovation. It is space than conventional warehousing operations. also a vote of confidence that Singapore is well-placed to support companies in their efforts to explore and create It is the first of its kind deployed by DHL globally and creates new businesses here to serve Asia. These developments are a model for the future of warehousing in challenged, high- significant milestones in DHL's partnership with Singapore," density cities and countries where land availability is limited said Kelvin Wong, Assistant Managing Director of the and expensive. Singapore Economic Development Board.

"As an organization, our spirit thrives on a hunger for new LOGISYM MAGAZINE MAY 2016 | SUPPLY CHAIN NEWS 19

LF Logistics Opens Community and the pending Trans-Pacific Partnership. "Our new logistics facility is well positioned to serve Singapore, as well as the broader Asia region and beyond. Giant Singapore We see this facility as a gateway to the world," he said.

E-Commerce Facility Although China dominates the e-commerce headlines, Southeast Asia is one of the markets of the future, said by Greg Knowler Steven Li, director of strategic partnerships for Cainiao, the logistics platform of Chinese online giant Alibaba Group. LF Logistics has opened a 1-million-square-foot logistics facility in Singapore, the largest automated and customs "Alibaba merged with Lazada recently, the largest online bonded distribution warehouse in the city-state that will marketplace in Southeast Asia, and we believe the target surging e-commerce growth in Asia. e-commerce market in the Philippines, Indonesia and Thailand will explode in two or three years," he said at the The nine-story center is located in West Jurong and is the Cargo Facts Asia conference in Hong Kong. company's largest distribution facility in Southeast Asia, able to store up to 130,000 pallets with a throughput of 550 Singapore Post has been quick to jump on the e-commerce pallets per hour, aimed at meeting the fast-changing needs train. Over the past two years, the group has been ramping of brands and retailers in the region. up its regional logistics capabilities with new or expanded facilities, including the development of a US$145 million "Our logistics business has been a bright spot with double- fully integrated regional e-commerce logistics hub in digit growth," said Spencer Fung, the CEO of Li & Fung group. Singapore that is expected to start operating in mid-2016. He did not provide an investment amount. SingPost currently has more than 20 warehousing and fulfilment centers in the region. According to the recent Asia Pacific Online Retail Forecast, 2015 To 2020, total online retail revenue will nearly double Alibaba Group has invested more than US$200 million in in Asia Pacific from US$733 billion in 2015 to US$1.4 trillion partnership with SingPost through a series of initiatives in 2020, a compound annual growth rate of 14.3 percent aimed at expanding its e-commerce logistics platform over the next five years. across Asia-Pacific. Alibaba increased its equity stake in the group to 14.51 percent. The total online retail revenues in just five markets of Asia Pacific — China, India, Japan, South Korea and Australia — In a second initiative, Alibaba last year acquired a 34 surpass the combined figure for online retail in the U.S. and percent stake in SingPost subsidiary Quantium Solutions Western Europe combined. International for US$68 million, with SingPost holding the majority 66 percent share. QSI is a provider of end-to-end Joseph Phi, president of LF Logistics, said that cross-border e-commerce logistics, warehouse and fulfilment services in trade was expected to rise even faster with the establishment Asia Pacific with a network spanning ten countries. of the Association of Southeast Asian Nations Economic 20 LOGISYM MAGAZINE MAY 2016 | LOGISTICS NEWS

showed a 25% efficiency increase as well as strong positive Artificial Intelligence feedback from the users. Transforming Robotics and automation is another area that DHL believes will see further adoption within the next five years, particularly "collaborative robots" that work side- Logistics Says DHL by-side with human employees, supporting repetitive and physically demanding tasks in logistics. DHL also said it has made inroads in logistics, with autonomous forklifts and other self-piloted equipment now "reaching a level of maturity" in warehouse operations. The next step for self- driving vehicles in logistics will be to overcome regulatory and security challenges to deploy autonomous vehicles on public roads, according to the report.

While unmanned aerial drones will require more than five years for widespread adoption, DHL believes that some products may no longer be manufactured in large mass- production facilities and shipped around the globe. Instead, product designs will be digitized and transmitted to small factories closer to customers, allowing for what DHL dubs "hyper-customization" of products and "batch size one" Photo: Nikolai Wolff; Fotoetage manufacturing, all requiring new logistics service concepts. In their new report, DHL has concluded that worldwide supply chains are beginning to undergo a fundamental While the "Internet of Things" or "IoT" will also play a transformation as more "artificial intelligence" is deployed significant role in more "intelligent supply chains"– a trend to handle both the domestic and international movement DHL noted in its trend report last year – security concerns of goods. regarding hacking, among other issues, is slowing down its adoption. The global logistics provider's 2016 Logistics Trend Radar highlights the impact of data-driven and autonomous DHL emphasized that IoT offers the potential to connect supply chains which it says will provide an opportunity virtually anything to the Internet and accelerate data-driven for "previously unimaginable levels of optimisation" in logistics; estimating that by 2020, more than 50 billion manufacturing, logistics, warehousing and last mile delivery. objects will be connected to the Internet, which it estimates will represent an "immense" $1.9 trillion opportunity in The report further states such developments could become logistics. a reality in less than half a decade, despite high set-up costs deterring early adoption within the logistics industry. "Only a few logistics [IoT] applications with substantial business impact have materialized so far," DHL noted in Matthias Heutger, Senior Vice President of Strategy, its report. "This is largely due to a shortage of standards in Marketing & Innovation at DHL, said in a statement that 15 the industry, security concerns, and the fact that recent IoT of the 26 "key trends" identified in the company's annual innovations have mainly been developed for the consumer trend radar report "are likely to make an impact in under market. Therefore, logistics will have to wait until similar five years". ruggedized versions that meet business requirements come to market." According to the report, these trends include machine- human interaction and collaboration, which primarily The company added that high-profile data breaches and covers the use of augmented reality (AR) accessed via "smart hacking of data systems as well as even physical objects – glasses" for order picking in logistics (also known as "vision such as cameras and self-driving cars – are a reminder of picking"). A pilot program using vision picking by DHL growing security vulnerabilities in the "digitalised" world. LOGISYM MAGAZINE MAY 2016 | SUPPLY CHAIN NEWS 21

Amazon to Help European Vendors Sell Goods Across Borders

Amazon.com Inc. will offer to deliver vendors' goods director of European seller services, said in a phone to customers in other European Union countries, interview. Amazon's expansion of its shipping and as the e-commerce giant seeks to dominate online logistics operation may increase competition with deliveries across the region. European sellers on European courier services such as Royal Mail and TNT Amazon Marketplace can now ship inventory to one Express. The web retailer is reported to be seeking to of Amazon's 29 distribution centers on the continent, establish a global delivery network that controls the where the company will store the goods for them. flow of goods from factories in China and India to When the sellers receive an order from a customer in customer doorsteps in New York and London. another EU country, Amazon will ship the goods to the buyer's home. Sellers using the service will pay the local fulfillment fee of the market where their products are bought. "Our mission is to help every seller in Europe sell to In the first quarter, more than 50 percent of Amazon every customer in Europe," Francois Saugier, Amazon's vendors in the EU sold goods in multiple EU countries. 22 LOGISYM MAGAZINE MAY 2016 | SUPPLY CHAIN NEWS

AKM Foodstuff Launches Major Dubai South 3PL Facility

AKM Foodstuff Trading has launched AKM Logistics DWC, a for food importers into GCC. The new facility in Dubai South 24/7 food products distribution, repacking and storage facility provides secured logistical services as well as customs bonded in the Logistics District at Dubai South. The 7,500 square meter freight forwarding services for faster transit time to target facility caters to the retail, wholesale, and foodservice sectors markets. within the Middle East, and has a total capacity of 10,000 pallets and 35 workstations that SMEs can utilize until they Clients can also leverage AKM Foodstuff Trading's local know- achieve their economies of scale. how, strong market reputation and expertise in services such as marketing, storage, and delivery of goods for all sizes and "The facility will enable easier access to the perishables market volumes, AKM said in a release. for small and medium-sized enterprises (SMEs) in the UAE and the wider Region," said Ajit Kumar Mishra, Managing Director "We pride ourselves in supporting new and exciting ventures of AKM Foodstuff Trading, during a tour of the facility. and help them off the ground by providing customised storage and logistical solutions," added Ajit Kumar Mishra, Managing The AED 28-million investment follows the set-up of AKM Director of AKM Foodstuff Trading. "Sound infrastructure and Shipping and Logistics LLC in 2014 and reflects the company's a stable commercial environment are vital to the success of commercial ambitions to expand its third party logistics (3PL) our business. Dubai South has certainly provided the perfect activities. AKM Logistics plans to add 50,000 pallet spaces with platform for our company to better serve our customers, an investment outlay of AED 100-million by 2020, and will increase market share and optimise efficiencies" he expand into food related value-added processing facilities concluded. LOGISYM MAGAZINE MAY 2016 | SUPPLY CHAIN NEWS 23

Crown Equipment Expands to Support Increasing Material Handling Equipment Requirements in Johor, Malaysia

Company positioned to Crown has had a strong presence enhance customer service in Johor since 1992, servicing the in high-growth logistics needs of local and global companies hub trading in the region. However, as both government and commercial Crown Equipment, one of the investment increased in the area, world’s largest material handling Crown saw the opportunity to take companies, announced its relocation the lead in supporting the material to larger and more strategically handling requirements of new placed premises in Malaysia’s and existing customers, according busiest and most advantageously to David Sultana, Southeast Asia located seaport area. The relocation marketing manager at Crown positions Crown to enhance and Equipment. expand its services to its growing customer base in terms of capacity “Our new facility reflects our and service response times. The commitment to Johor,” Sultana said. new facility comprises new internal “ The larger facility allows us to offer combustion and electric forklift sales, increased stock availability of high- a large fleet of trucks for short and demand vehicles, a larger sales long-term rentals, and fully-serviced and service team, as well as a fully refurbished vehicles. Crown’s equipped spare parts division, all InfoLink® fleet management system, housed under the one roof. This is which enables fleet managers to another milestone in our continuing wirelessly stay connected to their role of supporting manufacturing, fleet and operators, will also be industrial, warehousing and logistics available. companies in Malaysia and our continued rapid growth in the Located in the region’s commercial Southeast Asia market.” Indonesia–Malaysia–Singapore Growth Triangle, Johor is home to the The new facility also enables Port of Tanjung Pelepas, Malaysia’s Crown to enhance its already largest container port, as well as Port strong environmental credentials, Johor, which supports the majority something that will be in harmony of the country’s resource refineries. with the Malaysian government’s The area is also home to Senai plans, as Johor is a key part of the International Airport, serving both government’s Iskandar Malaysia Low domestic and freight airlines. Carbon Society initiative. 24 LOGISYM MAGAZINE MAY 2016 | E-COMMERCE/TECHNOLOGY NEWS

Accenture has announced the release of The software is designed to help ocean Accenture a new version of the Accenture Ocean carriers prevent revenue leakages and Cargo Software designed to improve improve business results by providing billing accuracy and consistency through greater visibility into the utilization of Releases a more streamlined and automated a vessel's capacity and its yield carrier's pricing process for ocean cargo carriers. contribution. As a result, ocean carriers Enhanced can improve pricing strategies, make The release includes a new detention and more efficient use of assets and seek to Ocean Cargo demurrage (DnD) module to help ocean improve customer satisfaction. cargo carriers maintain and manage DnD Pricing tariffs, negotiations, and calculations. "For ocean cargo carriers, enhanced Carriers charge customer’s detention visibility into pricing means the ability and demurrage fees for delays, including to make better decisions," said Ganesh Software the late pickup or return of shipping Vaideeswaran, managing director in containers. Accenture's Freight and Logistics practice. to Provide "Our latest release is designed to provide The enhanced Accenture Ocean Cargo a much deeper and transparent view for Greater Suite can support ocean carriers by carriers, which will help them streamline helping improve operational efficiencies their pricing process and ultimately Pricing in rate and surcharge management, improve customer satisfaction. We're also quotes, tenders and contracts very pleased that we can now offer ocean administration, route generation and carriers our DnD module, an advanced Visibility for schedule supervision. It also supports capability that can be utilized in this booking, vessel capacity management critical business process where high levels Carriers and documentation. of revenue leakages occur."

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operating more advanced 3DPs to The full potential impact of 3DP is still 3D Printing build everything from custom-made a flyspeck on the radar screens of the replacement auto parts to space global logistics community – most & Cargo: station components to new human executives and managers know a little organs whenever they're needed, about the technology but are not wherever they're needed. What today aware that it represents a disruptive Threat or takes aircraft to fly half-way around game changer to their business the world in less than a day, this models. Opportunity? technology might be able to do with the click of a mouse in seconds. "I think it's difficult to say how it will by Michael Moore play out in the long run," said Thomas Because of its potential for on-demand, Bek, global manager of oil, gas and Many people still think of 3D printing custom-made manufacturing industrial projects at Blue Water (3DP) as a toy for the "maker" geeks capabilities, 3DP technology, to some Shipping, a global heavy-lift logistics crowd. Today, that toy status of 3DP is in the airfreight business, represents a and transport services provider. "We official. Mattel recently introduced a 3D dark cloud on the horizon, threatening use a lot of 3D visualization to plan printer for kids called the ThingMaker, disruptive changes for the logistics our equipment moves, and are about which runs on cutting-edge 3D status quo. There is no question that to use 3D-printed ship and equipment design and printing technology from changes will occur – what is difficult to models for a large, complex move, Autodesk, the same company that predict is the scale of the disruption, but the long-term implications of 3D brought the world AutoCAD. the forms it will take, and the timeline printing technology are something we for the full impact to be felt. have not really focused on." The Autodesk/Mattel collaboration will provide kids of all ages with Some say it's already here. Digital Blue Water is not the only logistics a new, immersive experience by disruption is "everywhere but services provider that is late to the combining beloved physical toys operating at different speeds," said gate regarding 3DP. "I know a little with digital adventures. ThingMaker Angus Dawson, who leads McKinsey about the technology," said logistics .... is fun, but it is also serious – it's a & Co.'s Strategy and Corporate Finance consultant Skip Grindall, who recently training tool to prepare today's kids Practice across Asia. "The fact that retired from his position as vice Latest A orl o Inoration at for tomorrow's essential tech skills. disruption is happening at different president of mining logistics at C.H. For over the next few decades, the speeds for different industries Robinson. "But the implications of Your Fingertis technology is expected to transform shouldn't lead those industries where 3D printing for the logistics industry the manufacturing sector as we know it's happening slower to assume it's is not something I can recall ever 2016 GlobalReort Contractis available Logistics ow it today. By the time these ThingMaker not happening." being discussed as a potential game- kids are adults, some of them may be changer."

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Kintetsu World to Help Chinese E-tailer Speed Up Delivery

Major Japanese air freight company clearance process once the order is page on Yhopu.com. Lawson will Kintetsu World Express will start placed. Purchases will be delivered receive commissions. handling shipment and customs to customers by China Post Group clearance of Japanese and other through its nationwide network. Japan's Ministry of Economy, Trade imported products for a Chinese and Industry estimates that Chinese online store, slashing delivery times Imported goods are highly popular consumers bought roughly 800 billion and giving the seller an edge over and easily available in China, but they yen (U$7.48 billion) worth of Japanese rivals. carry high import duties. The Chinese products through e-commerce sites in government offers preferential tax 2015. The ministry expects the amount The virtual store, Yhopu.com, was treatment for online stores that sell to jump 75% to 1.4 trillion yen in 2018, opened in March by a trading company foreign products using local bonded creating abundant opportunities for in the Chinese city of Chongqing. It warehouses, enabling consumers to both Japanese manufacturers and sells roughly 6,000 items, centering purchase imported goods at lower businesses that provide logistics and on food and other daily products from prices. other related services. Japan and Australia. Products shipped from Japan currently take about Yhopu.com has also teamed up with Yamato Holdings announced last two weeks to reach the customer. By Lawson, the Japanese convenience month that it would launch a new teaming up with Kintetsu World, the store operator. Some of the goods sold service for Chinese consumers in online store will be able to cut that at the online store will be on display at partnership with JD.com, China's down to as soon as the next day. 110 or so Lawson convenience stores second-largest virtual mall. The service in Chongqing. Lawson customers can allows shoppers at the mall to receive The freighter will keep popular purchase those products easily by products shipped from Japan in as products in its bonded warehouse in scanning the product's barcode with little as four days. Advancing Supply Chain & Logistics knowledge, Chongqing and initiate the customs a smartphone, leading to the relevant networks and collaboration across the global, LCSMS brings professionals and organisations together. Gain access to the latest industry knowledge, research, white papers and explore building opportunities with first-class training, Alibaba Group Holding Limited merchants, to access the Southeast conferences, events and educational programs. Alibaba and Lazada Group S.A. announced Asian consumer market. today that Alibaba entered into an agreement to acquire a controlling Lazada currently operates eCommerce Acquires stake in Lazada, a leading eCommerce platforms in Indonesia, Malaysia, the EXCLUSIVE MEMEBERS-ONLY BENEFITS: platform in Southeast Asia. Philippines, Singapore, Thailand and Controlling Vietnam. These six countries combined Monthly LogiSYM Magazine and Newsletter Certified Logistics Engineer The transaction consists of an have a population of approximately Stake in investment of approximately US$500 560 million and an estimated Internet LogiSYM Conferences (Singapore, Malaysia, Dubai) Australia Logistics Academy Masterclass Programs million in the newly issued equity user base of 200 million, according to capital of Lazada and acquisition Internet Live Stats. With only 3% of the CEO Knowledge Series (Singapore, Hong Kong, Dubai) Corporate Training, Degrees and Diplomas eCommerce region's total retail sales conducted of shares from certain shareholders Industry Networking Events SCM Directory and knowledge Portals of Lazada, for a total investment by online, Southeast Asia is expected to Platform Alibaba of approximately US$1 billion. offer tremendous growth potential Certified Logistics Professional Certification The transaction is expected to help to both companies as Internet Lazada brands and distributors around the penetration continues to rise. world that already do business on Alibaba's platform, as well as local "Globalization is a critical strategy for KNOWLEDGE FOR ALL. ENROLL NOW FOR INSTANT MEMBERSHIP Building a stronger, collaborate (Enjoy exclusive members-only benefits) industry of professionals. www.lscms.org LOGISYM MAGAZINE MAY 2016 | E-COMMERCE/TECHNOLOGY NEWS 27

the growth of Alibaba Group today Furthermore, leveraging Alibaba's and well into the future," said Michael unique know-how and technology Evans, President of Alibaba. "With the We are very“ excited about will allow us to rapidly improve our investment in Lazada, Alibaba gains joining forces with Alibaba and services and provide an, even more, access to a platform with a large and see significant synergies that effortless shopping and selling growing consumer base outside will drive great benefits to our experience." China, a proven management team and a solid foundation for future customers in Southeast Asia. Founded in 2012, Lazada is the

growth in one of the most promising Max Bittner one-stop eCommerce gateway for regions for eCommerce globally. CEO, Lazada Group local and international brands and This investment is consistent with distributors to consumers in six our strategy of connecting brands, Southeast Asia. Southeast Asia is an distinct Southeast Asian markets: distributors and consumers wherever attractive mobile-driven consumer Indonesia, Malaysia, the Philippines, they are and support our ecosystem market that is highly fragmented Singapore Thailand and Vietnam. By expansion in Southeast Asia to better and diverse with significant barriers combining its regional presence with serve our customers." to entry and a nascent modern locally tailored capabilities in areas retail sector that has considerable such as supply-chain, last-mile delivery Max Bittner, CEO of Lazada Group, headroom for growth. The transaction and payment, Lazada has developed added, "We are very excited about will help us to accelerate our goal to a unique solution for global brands joining forces with Alibaba and see provide the 560 million consumers and distributors wanting to enter this significant synergies that will drive in the region access to the broadest rapidly growing region. great benefits to our customers in and unique assortment of products.

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Kewill Buys in March 2008 for US$45 million in cash. The announcement is one of the biggest moves yet LeanLogistics in by focused TMS providers to amass share in an active and growing segment of the supply chain. Increasingly, technology is viewed as the differentiator in a commoditized Combination of Big business like physical distribution. Third-party logistics providers (3PLs) add value by leveraging TMS functionality TMS Players to support a broad and growing range of customer functions

Kewill Inc. said it will buy rival transportation management systems (TMS) provider LeanLogistics Inc. from its U.K. parent Brambles Ltd. for a reported US$118 million, a global Acquiring firms are“ gaining not just strong combination of two major players in the increasingly busy books of business, but relatively young hosted TMS segment. technology platforms designed to profitably The acquisition creates a combined TMS platform with support agile logistics services more than 14,000 carrier partners that make up the largest Monica Truelsch network of any North American provider, the companies Marketing Director, TMW Systems Inc. said. The combined firms manage more than $10 billion in annual freight spend, they said.

The combination brings Lean heavily into the TMS segment that fall into the supply chain business. Firms like Chicago- that supports parcel operations, which has long been a based Coyote Logistics LLC. and Command Transportation, Kewill strength. Chelmsford, Mass.-based Kewill gains access and Kansas City, Mo.-based Freightquote.com Inc., brought to Lean's "LeanDex" software, which compares truckload powerful systems to the table when larger firms looking to rates across North America by aggregating shipper-carrier add proven technology from the outside purchased them. transactions for dry van and refrigerated shipments. Kewill said in a statement that many of its 7,500 customers "Acquiring firms are gaining not just strong books of worldwide will find the application useful. business, but relatively young technology platforms designed to profitably support agile logistics services," said Under the deal, Lean will remain in Holland, Mich., and Monica Truelsch, marketing director for TMW Systems Inc., become Kewill's largest office, the firms said. In the a TMS provider in Mayfield Heights, Ohio, said in an e-mail statement, Kewill CEO Doug Braun said the company today. Independent TMS providers will need to build critical "intends to build around this office and leadership team mass to counter the encroachment of 3PLs that are bringing in the coming months." The companies did not state the proprietary software solutions to the broader market, transaction's value in their statement. Brambles, whose Truelsch said. Much of the 3PL-driven TMS technology is portfolio includes the CHEP pallet business, acquired Lean already in widespread use, she added. LOGISYM MAGAZINE MAY 2016 | LEADING FOR THE FUTURE WITH EI 29

Leading for the Future with EI

Various trends and developments force CHALLENGE NUMBER 1: companies and organizations to rethink Support current and future employees to and refocus on how to attract and develop gain the hard and soft skills needed to face talent for the future. Below I would like the changes coming with the Industry 4.0. to highlight two trends that will have an impact on most organizations and one CHALLENGE NUMBER 2: fascinating way to approach this. Create a comprehensive, forward-looking HR strategy that respects the values Industry 4.0 seems to be the current buzzword in the and strengths of individuals in their economic world. I mention this as it was a regular theme that organization. was discussed when the World Economic Forum interviewed the top managers of the 350 biggest companies around the A sustainable footprint is more than ever on the agenda globe, to analyze the impact of recent developments in for organizations, companies and individuals. Faced with industrial automation. developments such as climate change, shortage of natural resources and a shifted awareness of clients and employees The as yet, unpublished study predicts that, due to increasing to more sustainable products and services, making a use of automation and the proceeding digitization of transition to a sustainable business presents significant the working environment and processes, industrialized opportunities. Companies get ahead of the game and lead countries will lose five million jobs within the next five the way by embedding sustainability into the very core of years. This will mainly affect jobs in offices or administrative their strategy and operations. They are the ones most likely positions with highly standardized duties, indicated by the to succeed in the face of current and future challenges. fact that automation changes have already taken place in most factories and manufacturing plants. In 2005, the World Summit on Social Development identified three areas to focus on, including economic and social In contrast, the study predicts that only 2 million new development as well as environmental protection. What we jobs will be created and the majority of these will require actually see today is that most companies and organizations specialists in the areas of IT and technology. What we still focus more on the economic and environmental aspect also see is that many companies still underestimate the of sustainability. The social aspect is largely ignored and importance of certain skills (such as change management, the impact widely underestimated. To get the most out of project management, communication and conflict sustainability activities, companies will have to take all three management). It is essential to utilize this development in areas of sustainability into account, as they are interrelated the best possible way. Businesses that can meet individual and as such influence each other. employee expectations will win the battle for talent in the future. 30 LOGISYM MAGAZINE MAY 2016 | LEADING FOR THE FUTURE WITH EI

CHALLENGE NUMBER 3: factor for a successful career. But today What is Emotional Implement and integrate people and especially leaders need Intelligence? a comprehensive to develop many additional qualities sustainability strategy that which will enable them to effectively Following Travis Bradberry's book generates a shift from “nice deal with stress, ever changing work “Emotional Intelligence 2.0” (2009) to have” to “business as processes and a lack of job security. there are three factors that make a In this new viral world, personal usual”. person “tick”. These are Intelligence impressions make a difference. Quotient (IQ), Emotional Intelligence Emotions and personal values have (EI) and Personality. According to his CHALLENGE NUMBER 4: increasingly made their way into our findings, there is no known connection Focus on the people aspect professional and business lives. That between IQ and EI and it’s not possible of sustainability even if it is is why it is even more important to to predict emotional intelligence based more difficult to calculate understand the dynamics of how and on how smart someone is or what the business case reasoning why some people handle change kind of personality he has. Another behind these activities. and challenges more successfully finding is that IQ and personality (for adults) stay stable over a lifetime and do not change. Interestingly, for EI, there is a uniform understanding that the related skills build upon each other and independent of age, can be enhanced with training.

A famous theoretical model created by Daniel Goleman includes four key aspects of Emotional Intelligence: Self-Awareness, Social-Awareness, Self-Management and Relationship- Management.

Goleman defined EI as “the ability to recognize, understand and manage our own emotions and to recognize, understand and influence the emotions of others. In practical terms, this means being aware that emotions can drive our behavior and impact Taking all of the above into account, than others. Many concepts have people (positively and negatively), it can be safely assumed that the been evolved to explain what and learning how to manage those 21st century is an era of rapid enables certain people to be more emotions – both our own and others modernization and change and this successful than others, and today’s – especially when we are under pertains to politics, the economy and understanding is that Emotional pressure.” increasingly towards social systems. Intelligence (EI) is one factor in this. Stability and predictability are factors Certainly, this is not a new insight. The Is there a link between we can no longer rely on in today's impact and processes behind EI have leadership styles and EI? world. From a human resource been widely examined over the last 20 perspective, these developments years but facing Industry 4.0, as well as Furthermore, his consulting firm create the need for urgent and the trend into a sustainable business, Hay/McBer analyzed the relationship fundamental change in the way we it might be the perfect time to have between EI and leadership styles. They attract, manage and develop people. another look at what is really driving found six distinct leadership styles (see Historically, IQ was the most important successful people. Figure 1), each springing from different LOGISYM MAGAZINE MAY 2016 | LEADING FOR THE FUTURE WITH EI 31

Figure 1

components of emotional intelligence. be relied on exclusively and all have at EI skills and expertise. Finally, for all The research summarized the styles, least short term uses. employees coaching and mentoring their origin, when they work best programs can add an incredible value and their impact on an organization’s How to measure your EI? to understand and develop Emotional climate. Intelligence. There are various tools and platforms The main findings were available that support individuals What are the Pros and Cons? summarized as follows: and organizations to measure and understand Emotional Intelligence. When EI found its way into the • The six styles, taken individually, The EQ-I (Bar-On) is a self-report corporate world various studies appear to have a direct and unique instrument to assess those personal and reports analyzed its impact impact on the working atmosphere qualities that enable some people to and significance. Especially in the of a company (climate), division or possess better emotional wellbeing beginning, most research illustrated team, and in turn, on its financial than others. highly positive outcomes for performance. organizations if they focused on • The research indicates that leaders The Emotional Competence Inventory EI in their Talent Acquisition and with the best results do not rely on (Goleman) is a 360-degree instrument, Development programs. Recent one leadership style, they use most of where people evaluate the individuals examples, such as the Global them in a given week – seamlessly and within an organization (Individual Empathy Index (2015) from the Lady in different measure – depending on Feedback Reports), or the organization Geek Advocacy Agency shows that the business situation. as a whole (Work Force Audits). These businesses are more profitable and • According to report, the visionary audits can provide an organizational productive when they act ethically, leadership style has the most positive profile for any size group within the treat their staff well, and communicate effect on the working atmosphere of company. In addition, there are various better with their customers. The top a company. However, three others: training and certification programs ten companies in the Global Empathy Affiliate, Democratic and Coaching, available which enable leaders or Index 2015 increased in value more follow close behind. That said, the people in HR related functions to than twice as much as the bottom 10 research indicates that no style should broaden and professionalize their and generated 50% more earnings.1 32 LOGISYM MAGAZINE MAY 2016 | LEADING FOR THE FUTURE WITH EI

Another example is the EI Consortium that publishes various better the outcome will be. A leadership coaching style is points that build a case for how Emotional Intelligence the least utilized but its also maybe the most effective style contributes to the bottom line at work. In addition, they to add to your soft skills portfolio. publish latest research findings that support the positive outcome of EI in the business world. In one example 515 Higher emotional intelligence translates into Senior Executives were studied by the search firm Egon 3 better performance. Especially in jobs that require Zehnder International. Those who were primarily strong extensive attention to emotions (this counts for all jobs in Emotional Intelligence were more likely to succeed with social interaction such as sales, marketing, project than those who were strongest in either relevant previous management and all leadership or management roles). experience or Intelligence Quotient. In other words, Emotional Intelligence was a better predictor of success There is a fine line between motivation and than either relevant previous experience or high Intelligence 4 manipulation in relation to Emotional Intelligence. Quotient. More specifically, Executives registered as high in People could use Emotional Intelligence for nefarious ends, emotional intelligence in 74 percent of the successes and but more often, emotional skills will be simply instrumental only in 24 percent of the failures2. However, as it is with all tools for goal accomplishment. tools and methods: “Poison is in everything, and no thing is without poison. The dosage makes it either a poison or a remedy” (quote Paracelsus). 1 https://hbr.org/2015/11/2015-empathy-index 2 http://www.eiconsortium.org/reports/business_case_for_ei.html. New studies show the potential downside of Emotional Intelligence. In many studies, poor research methodology has exaggerated the significance of Emotional Intelligence. A group of Austrian psychologists for example, reported a correlation between Emotional Intelligence and narcissism, raising the possibility that narcissists with high Emotional Intelligence might use their “charming, interesting, and even seductive” qualities for “malicious purposes,” such as deceiving others. Another study with college students shows that people with high Emotional Intelligence might Mareike Walter-Paschkowski be more over credulous due to overconfidence in their Regional Manager Middle East & Africa ability to read others. Logistics Executive Group [email protected] What to take away?

Mareike is a dynamic and engaging Supply Creating awareness around Emotional intelligence Chain project management professional with 1 has never been easier. There is no lack of information more than 12 years professional experience in and no shortage of partners who can help you to develop, managing complex logistics and supply chain implement and audit a business model that will support projects. As Practice Leader of Logistics Executive you in getting it right. There are various tools and services Group in the Middle East, she delivers whole-of- (training programs, mentoring & coaching) available that lifecycle talent management including Corporate help individuals and organisations to measure Emotional Advisory Services, Executive Search and Executive Intelligence and to develop and increase required skills such Coaching across the supply chain, logistics, FMCG, retail, resources, industrial, disaster relief and as Self-Awareness, Social-Awareness, Self-Management and humanitarian sectors. A hands-on Consultant Relationship-Management. working in a team in Dubai together with their offices in Sydney, Melbourne, Singapore, Hong 2 To be effective, individuals and especially leaders Kong, Shanghai, Chennai, Mumbai, Delhi and will need more than ever to be able to influence London, Mareike holds a PRINCE2 (Projects others through gaining their respect and enlisting their IN Controlled Environments) foundation and passions. And The more Emotional Intelligence skills a practitioner certification of APMG International. leader has at his disposal, the more flexible and seamless he can switch styles depending on the situation and in turn the LOGISYM MAGAZINE MAY 2016 | CHART OF THE MONTH: 2015 A MIXEDLOGISYM YEAR MAGAZINE FOR RETAIL JANUARY CONTRACT 2016 | LOGISTICS AIR NEWS 33

Chart of the Month: 2015 a Mixed Year for Retail Contract Logistics

Ti is frequently asked to analyse markets on a vertical sector appears that in 2015, major European markets have done basis, with the question usually being either how large or relatively well, the US relatively poorly, Asia Pacific’s figures how fast a certain sector is growing with reference to a held up well while Brazil and especially Russia suffered specific logistics market. badly.

As part of our upcoming report, Global Contract Logistics An immediate question that arises is how useful are high- 2016, we are investigating the size of the global contract level retail sales figures in assessing the performance of a logistics market by vertical sector. Moreover, we are also country’s retail contract logistics market? Firstly, all else attempting to shine a light on the speed of growth in two equal, the larger a country's retail sales, the larger its retail of contract logistics’ most important verticals: retail and contract logistics market. Similarly, the higher its retail automotive. Taking a deeper look at the retail market, our sales growth, the higher its retail contract logistics growth. initial findings suggest that the consumer/ retail sector In reality however, there are other important variables to accounts for approximately half of global contract logistics consider: the extent of modern/ formal retail penetration revenues. And using real retail sales growth figures as an in a country, the value of logistics costs as a % of sales for indicator of the performance of retail contract logistics, it retailers and the extent of logistics outsourcing to name a

REAL RETAIL SALES GROWTH 2015 REAL RETAIL SALES GROWTH 2010-2015 OF SELECTED MARKETS CAGR OF SELECTED MARKET

China China

Vietnam Vietnam

Poland Turkey

India Indonesia India Mexico South Africa Indonesia Brazil UK Mexico Turkey USA Spain Poland South Africa Russia EU 28 UK Germany France France Germany

Italy EU 28 USA Japan

Japan Italy Brazil Spain

Russia

-10.0% - 8.0% - 6.0% - 4.0% - 2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% - 4.0% - 2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 34 LOGISYM MAGAZINE MAY 2016 | CHART OF THE MONTH: 2015 A MIXED YEAR FOR RETAIL CONTRACT LOGISTICS

few. It follows that the usefulness of near the bottom of the list, with only retail sales data alone is limited. That Japan (long term stagnation), Brazil said, imagine a scenario whereby retail (in recession) and Russia (in recession) sales growth equals retail contract worse. logistics growth because the formal retail penetration rate, logistics costs Looking at growth over a longer time David Buckby as a % of sales and the outsourcing rate horizon (2010-2015 CAGR), China and Economist, Ti do not change year-on-year. In certain Vietnam are still top of the pile, and www.ti-insight.com developed markets, this scenario may unsurprisingly emerging markets not be too far from reality. In emerging alone fill out the top eight spots. The Having obtained a Masters in Economics David is now Ti’s resident markets, this is far less likely. US is much higher up while austerity Economist. David manages one of Ti’s Europe languishes near the bottom. core strengths, that of quantitative With these caveats in mind, the graphs Overall, the figures are likely to be analysis of a range of logistics markets, below suggest that China and Vietnam highly instructive when assessing the including sizing and forecasting. David contributes to the GSCi portal, had the best growth rates in 2015, performance of retail contract logistics Ti Reports and consultancy projects. with Poland outperforming a number in developed markets, useful to an He also is author of many briefs for of far less mature emerging markets extent in markets with somewhat Ti’s Logistics Briefing service. His key like India and Indonesia. The UK also mature retail sectors like South Africa interests are the economics of the logistics sector, emerging markets performed strongly, comfortably and China, but virtually useless in the and statistical modelling. outpacing growth in Germany, France case of markets such as India, where and the EU as a whole. The US was informal retail really dominates. LOGISYM MAGAZINE MAY 2016 | CHALLENGES OF THE LAST MILE DELIVERY IN SERVING E-COMMERCE BUSINESS 35

Challenges of the Last Mile Delivery in Serving e-Commerce Business

The “Last-Mile” element of the home- one home so cannot accept delivery, touches the customer in a face-to-face delivery model represents more than buyer remorse – no longer wants scenario – typically on the door step 50 percent of the total logistics cost the delivery, lack of nearby parking, with the interaction between delivery and is fraught with challenges. Traffic elevators out of service and many person and the consumer. This can congestion in urban areas and the other hurdles, all add cost, time and often be that critical moment-of- tyranny of distance in remote areas inconvenience to an already marginal truth that represents your company, both add time and cost, negatively activity. your brand and your reputation – impacting the economics. Further and the lasting memory that stays compounded by practical issues However, this last mile delivery with the consumer reflecting their such as invalid or incorrect address is frequently the only link in the overall experience with the whole details, hard to locate locations, no- e-commerce supply chain that directly online purchase transaction, and on which they judge the company and inevitably discuss online through HOME DELIVERY LOGISTICS COSTS social media networks with their fellow digital consumers. Collection 4% 6% Sorting Alternatives to Home Delivery

The introduction of ‘Click and Collect’ Last-mile Line options overcomes many of the Delivery 53% 37% Haul challenges with home delivery and offers retailers, consumers and logistics service providers a Win-Win solution for all stakeholders.

By offering the buyer the option to 36 LOGISYM MAGAZINE MAY 2016 | CHALLENGES OF THE LAST MILE DELIVERY IN SERVING E-COMMERCE BUSINESS

collect merchandise from within a railway offices or subway stations of opportunity for new entrants who bricks and mortar retail store or from and - having had the deliveries placed can design and build business models other convenient locations such as securely inside the various boxes - and logistics operations from scratch, post offices, networks of convenience are accessed by the consumer using leveraging leading-edge cloud based stores such as Seven-Eleven, smaller a unique collection code, digitally technologies to rapidly implement shops or gas stations, retailers can ship transmitted to their mobile device made to measure e-commerce multiple individual orders in bulk to a and providing one-time access to solutions, whilst the traditional service single delivery point, thus reducing electronically ‘open the box’. providers struggle to adapt and keep much of the cost and avoiding many of The logistics service provider can up with the pace of change. the drawbacks of the last mile element thus make multiple deliveries, of home delivery. simultaneously to the same single The boundaries are becoming location, resulting in much more increasingly blurred – the previously Many consumers prefer this method effective and efficient last mile clearly segregated roles undertaken of collection because they can pick up solutions; for example imagine the by retailers, internet companies their merchandise at a time that suits efficiencies of delivering twenty and logistics service providers are them, perhaps on their way to or from individual packages to one smart converging - with many exciting work, without having to be at home locker location as opposed to opportunities ahead in serving Omni- for a prescribed period – typically delivering them individually to twenty Channel supply chains. two or four hours – to receive and different residential addresses. sign for their delivery – a process that typically takes less than five minutes. Implications for supply Thus, in addition to more efficient and chain management cost effective logistics, this provides greater consumer convenience. Whilst the retail sector has made massive progress in adapting and The collect-from-store options offered adjusting to the new world order of Mark Millar by large retailers, such as Walmart and e-commerce and online shopping, www.markmillar.com Tesco, have become popular and cost even the industry leaders recognise effective alternatives to home delivery that they have a long way to go. Mark Millar is the author of and - whilst having some implications Global Supply Chain Ecosystems - commissioned and published by on store layout and service personnel - A 2014 survey concluded that only Kogan Page - in which he presents can also provide incremental revenue 24 percent of companies believe they detailed and practical insights opportunities for the retailers, in that have an agile supply chain adequate that help companies capitalise on many customers, whilst collecting to serve the online world, and a huge market opportunities, overcome supply chain challenges and make their online orders, will also make 81 percent admitted their supply better informed business decisions. additional purchases within the store. chain is not fit for purpose for serving Acknowledged as an engaging As a variation on the Click and Collect the Omni-Channel. presenter who delivers a memorable theme, many companies are starting impact, Mark has completed over 400 speaking engagements at to adopt Smart Lockers – typically un- These shifts in the retail landscape corporate events, client functions manned installations of steel locker combined with digital consumers’ and industry conferences across 23 boxes that offer a self-pick-up solution shopping preferences will continue countries. A Visiting Lecturer at Hong in the form of intelligent high-tech to have profound supply chain Kong Polytechnic University, Mark is recognised in the 'China Supply parcel delivery lockers – creating implications, particularly for Chain Top 20', as one of ‘Asia’s Top market opportunities for new entrants. traditional distribution operations and 50 Influencers in Supply Chain and Rows of technology enabled smart established logistics networks. Logistics’ and in the USA listing of 'Top lockers are located at convenient Pros-to-Know in Supply Chain 2016'. public locations such as car parks, These challenges present a window LOGISYM MAGAZINE MAY 2016 | HOW CAN WE MANAGE DEMAND FOR FRESH FOOD IN ASIA SUSTAINABLY? 37

How Can We Manage Demand for Fresh Food in Asia Sustainably?

Asia is beginning to flex its Food system emissions are estimated massive consumer chops. to account for over 25% of all human By 2030, it will contain two- greenhouse gas emissions, and Asia thirds of the global middle is a hotspot, contributing 55% of the 1 class, accounting for 59 total amount . The majority of these percent of all middle-class emissions are due to the production of food that is never consumed. consumption. Environmentally unsustainable transport and storage practices also This creates a complex challenge. As form a significant factor, contributing populations grow and incomes rise, directly to emissions and also Asian households are moving away indirectly to food loss. In South and from packaged and frozen products, Southeast Asia pre-consumer food and demanding more fresh fruit, losses account for more than 90 vegetables, fresh meat and dairy. The percent of total food wastage2. question is: how can the demand for fresh food be met in a sustainable Over two billion people in Asia rely way? on agriculture for their livelihoods, making them vulnerable to climate Currently, the infrastructure to store change impacts resulting from and transport chilled products (also these greenhouse gas emissions. known as cold chain infrastructure), It’s thus important that we meet as well as other essential logistical growing demand for fresh food in services in the region, are not ready Asia by improving the cold chain for the growing demand for fresh infrastructure in a sustainable way, food. In Thailand for example, shrimp in order to cut down on overall food are transported for hours in containers system emissions. filled with ice, which quickly melts during the first half of the journey; Another reason why we need to shrimp arrive warm, bloated and reduce food loss is the looming mushy at their destination. threat of food insecurity. Currently, 490 million people in Asia go hungry Unappetising as they sound, these every night. Imagine what a difference methods are business-as-usual food cutting down food losses could transport practices in the region, make in bringing down hunger and and for most perishable products, malnutrition. Additionally, improved loss levels are consistently high. cold chain infrastructure brings If transportation logistics aren’t down the cost of healthy fresh fruits improved, increased demand for and vegetables, making them more delicate perishable goods is only set accessible for low-income consumers to strain supply chains and exacerbate – thus improving their nutritional this loss. health. 38 LOGISYM MAGAZINE MAY 2016 | HOW CAN WE MANAGE DEMAND FOR FRESH FOOD IN ASIA SUSTAINABLY?

Building a better, less wasteful food are well-poised to address it, but they One can’t underestimate the potential system also improves profit margins. need their buyers to prioritise it as well, impact of addressing supply chain Improved transport and storage and be willing to invest in solutions to losses in Asia, and via the Food conditions increase the quality, shelf- reduce losses. Addressing the issue Loss Consortium we are gathering life, safety, and ultimately the retail requires both sides to commit to momentum and expertise to tackle value of products. harnessing the value of lost food in the this complex problem throughout the supply chain, and to work together to Asia Pacific region. We want to achieve If the benefits are so clear, why aren’t tackle the problem. better food security, better profits for all companies already building more local businesses, better nutritional efficient food chains? The answer is that To try and bring the right stakeholders health for all, and ultimately reduce it’s hard to pin down responsibility. As together and foster mutual trust, emissions to ensure the future of opposed to food waste, supply chain Forum for the Future has created the the region. If you have the expertise, food losses often go unnoticed, are Food Loss Consortium. It is a platform resource and the drive to help make very complicated to measure, and vary – and more than that, an opportunity that happen, we’d like to hear from by product, region and supply chain. – for businesses to form partnerships you. Vegetables and fruit, for example, are with like-minded, committed produced by smallholder farmers in companies across the supply chain, complex supply chains involving a get to know the innovators that 1 FAO (2013) Food Wastage Footprint large number of actors, many of whom are disrupting food logistics, and 2 FAO (2013) Food Wastage Footprint lack trust in each other. It’s difficult to participate in pilot projects that test pinpoint any one cause of food loss industry-transforming investments. because the likelihood is that many Some companies are already different parties are responsible. starting to find innovative solutions. OpenTaste, a new online food retailer, The secret lies in a strong, long-term, sells fresh produce through an online trusting relationship between retailers platform. By shipping directly to Gwyneth Fries and logistics service providers. While customers in Singapore from farms in Senior Sustainability Advisor the onus lies with food retailers to California, it reduces losses, and could Forum For the Future demand and pay for more efficient be more cost-effective for consumers. [email protected] food supply chains, they often focus Another exciting firm is EcoHub, which Gwyneth Fries, a Senior Sustainability on reducing highly-visible retail provides tools that allow buyers to Advisor, is based in Forum for the Future’s APAC office in Singapore. and consumer food waste, and are quickly and easily estimate the future She spearheads Forum’s work in generally unaware of how much shelf-life of fish before purchase, so the region to bring about real food is lost before it reaches their that fishermen who maintain the change in the food system. For more establishments. On the other hand, freshness of their fish by using an information about the Food Loss Consortium, contact Gwyneth at food logistics service providers effective cold chain can command a [email protected]. confront this problem every day and higher price.

Fresh vegetables ending up as waste LOGISYM MAGAZINE MAY 2016 | EVENTS 39

EVENTS

THE 14TH ANNUAL NORTH AMERICAN May 3PL SUMMIT & CHIEF SUPPLY CHAIN October OFFICER FORUM June 20th - 22nd, 2016 Chicago, USA MULTIMODAL 2016 www.events.eft.com/3pl/ th th LOGISYM MALAYSIA 2016 May 10 - 12 , 2016 th th Birmingham, UK October 12 - 13 , 2016 www.multimodal.org.uk Kuala Lumpur, Malaysia www.logisym.com/events/logisym- AVIATION FESTIVAL AFRICA 2016 malaysia-2016/ June 28th - 29th, 2016 3RD MENA PHARMACEUTICAL COLD Johannesburg, South Africa CHAIN FORUM www.terrapinn.com/exhibition/ May 24th - 25th, 2016 aviation-festival-africa/index.stm CILF CHINA INTERNATIONAL Dubai, UAE LOGISTICS FAIR www.menacoldchain.com October 12th - 14th, 2016 Shenzhen, China

10TH ANNUAL HI-TECH & ELECTRONICS July SUPPLY CHAIN SUMMIT May 25th - 26th, 2016 CEO BREAKFAST SERIES Novotel Amsterdam Schiphol Airport October 20th, 2016 www.events.eft.com/hitech/ DYNAMIC DISTRIBUTION DISRUPTION 2016 th th Shanghai, China July 13 - 14 , 2016 www.logisym.com/events/ceo-breakfast-series/ New York, USA events.eft.com/d3/ TRANS4 QATAR TRANSPORTATION AND LOGISTICS EXHIBITION THE WORLD LOGISTICS SHOW 14TH ASEAN PORTS & SHIPPING May 24th - 26th, 2016 BAHRAIN - 2016 CONFERENCE Doha, Qatar October 18th - 20th, 2016 July 14th - 15th, 2016 www.trans4qatar.com Bahrain Bangkok, Thailand www.worldlogisticshow.com/ www.transportevents.com

PROCURECON ASIA 2016 May 31st - June 2nd, 2016 Singapore www.procureconasia.wbresearch.com September November

ME TRANSLOG 2016 th th LOGISYM DUBAI 2016 September 5 - 7 , 2016 November 22nd - 23rd, 2016 June Muscat, Sultanate of Oman Dubai, UAE www.metranslog.com/ www.logisym.com/events/logisym-dubai-2016/

TRANSPORT INTELLIGENCE LONDON CEO BREAKFAST SERIES nd THE FUTURE OF LOGISTICS AND September 22 , 2016 16TH INTERMODAL AFRICA EMERGING MARKETS Hong Kong November 17th - 18th, 2016 th th June 7 - 8 , 2016 www.logisym.com/events/ceo-breakfast-series/ Mombasa, Kenya London, UK www.transportevents.com www.ticonferences.com/london/2016/

AIR CARGO SUMMIT June 12th - 15th, 2016 Shanghai, China www.aircargosummit.com/ 40 LOGISYM MAGAZINE JANUARY 2016 | AIR NEWS