March 18, 2010  - As a complex global web of government trade and security programs spreads in the face of growing global concerns over environmental and safety issues, many companies are outsourcing all or part of their compliance efforts, according to a new study released by global logistics firm BDP International and its Centrx consulting unit.

In a recent survey, nearly half (45 percent) of supply chain professionals indicated they are supporting their internal regulatory compliance departments with external resources, especially those with under $1 billion in annual revenues and those doing business in emerging markets.

The rising tide of trade and security programs is having an impact on both importers and exporters, and both products and their movement. Compliance with new regulations such as the EU REACH and U.S. Importer's Security Filing 10+2 programs can be complex and costly. To better understand how companies are dealing with these issues, BDP and Centrx surveyed 184 logistics executives from a wide range of industries.

The need for compliance services, it was found, is most pronounced in emerging markets. Respondents conducting business in Asia-Pacific indicated they outsource the entire compliance function. Moreover, 60 percent of the respondents trading in Asia-Pacific cited a growing need for such services over the next 12 to 18 months, compared with 53 percent in North America and 50 percent in Europe. Compare these results with the 80 percent of respondents who staff and administer the compliance function internally for North America.

"It was not surprising to find that the larger companies with more resources were more inclined to handle compliance matters themselves, particularly on their home turf," explained Michael Ford, BDP vice president of regulatory compliance. "Nor was it surprising to see even these companies relying on local expertise in places like Africa and Asia. What is notable, however, is the degree to which they all recognize the need to proactively manage the function to minimize often highly punitive penalties and maintain desk-level productivity."

Division of Labor

The survey suggests that companies typically deal with product-related regulations such as registration, labeling and marked, themselves, while outsourcing compliance with those associated with its movement.

With regard to use of outside compliance services, respondents split fairly evenly between those who retain the function fully in-house (43 percent) and those who outsource at least a portion of it (45 percent). Only 12 percent indicated they outsource the entire function.

More than half (51 percent) of respondents from companies with annual revenues up to $1 billion indicated they outsource at least a portion of the compliance function, with a third (32 percent) retaining the function in-house and just 17 percent outsourcing it entirely. This compares with 38 percent of respondents from billion-dollar-plus companies who reported outsourcing part of the compliance function; 58 percent who retain it fully in house; and just 4 percent who outsource it entirely.

Over half of all respondents reported employing two to eight full-time staff in the compliance function. Only 5 percent of the respondents with in-house compliance departments reported staff reductions over the past two years, whereas 45 percent reported additions. During the same period, respondents outsourcing the entire function reported increased usage of these services, compared with 44 percent who use a combined in-house/outsource model.

Compliance responsibilities depend largely upon the products being moved and the expertise of the compliance team. Nearly half of the respondents from the petroleum, electronics and textile industries who partially outsource compliance rely on their service providers for assistance with government reporting and product registrations. Those in the agricultural sector, in contrast, tend to handle these responsibilities in-house.

Increasing Need

Nearly all of the respondents saw a continued increase in the need for compliance services, particularly in the Asia-Pacific region (60 percent). Nearly a third (30 percent) indicated an increased need for such services in the Middle East and South America as well.

Just 7 percent of respondents saw the need for more compliance services for European imports, compared with 27 percent for North America. However, half of those exporting to these markets anticipate near-term growth in these services. Asia-Pacific, on the other hand, anticipates greater growth in imports (50 percent) than exports (37 percent), reflecting perhaps the region's growing consumerism.

Interestingly, over half of the respondents from billion-dollar-plus companies see a growing need for compliance services in North America, and 75 percent of those in metals and minerals see greater demand in Asia-Pacific.

When queried about where they expect to secure compliance support in the future, nearly 80 percent (77 percent) indicted in-house resources, but fully 65 percent noted they will also work with freight forwarding/customs brokerage firms.

"Today more than ever it is critical for global traders to understand the vagaries of the regulatory landscape and the speed with which it is changing," said BDP's Ford. "Going forward, the challenge will be staying ahead of the regulatory curve with its growing trade, security and environmental rules."

The survey was conducted in the fourth quarter of 2009 with an online questionnaire distributed globally to more than 700 supply chain/logistics professionals, 184 of whom completed it for a statistically valid 25 percent response rate. Nearly half of the respondents, whose anonymity was assured, represented the chemical industry (49 percent). Also represented was a wide array of other industries, including electronics, heavy machinery, life sciences/pharmaceuticals and consumer goods.

Annual revenues of respondents' companies were nearly evenly split with 47 percent reporting less than $1 billion and 43 percent reporting over $1 billion. Of these companies, 81 percent engaged in both imports and exports, with 14 percent in imports only and 5 percent in exports only.

To read the full report, as well as, view previous studies conducted by BDP International visit: http://www.bdpinternational.com/news/Research.asp

 

 

March 24, 2010 -  Hapag-Lloyd is the latest carrier to announce a surcharge on Finnish cargo as a result of the two-week dockworkers' strike. 

Carriers and terminals are struggling to clear a backlog of containers at north European ports as a result of the strike that began on 4 March and ended on Friday 19 March. 

Hapag-Lloyd said that, as a result, containers destined for Finland were being delayed at Bremerhaven and Hamburg, and it would introduce a demurrage and feeder surcharge. 

Containers would be stored at no charge for 10 days, but then daily demurrage charges of €32 (US$43) per teu would be applied to dry containers and €116 per teu to reefer containers. 

The German carrier has also introduced a feeder surcharge for northbound shipments to Finland of €65 per teu. 

Hapag-Lloyd said: "The large container volume involved is causing congestion and, as a consequence, additional charges were announced by feeder operators." 

This week, feeder operator Unifeeder introduced a strike surcharge of €65 per teu until further notice, while Team Lines' charge of €72 per teu will apply for at least three weeks. 

Unifeeder said: "There is a considerable volume of import cargo to be shipped to Finland, but only limited export volumes. 

"The extra cost due to the imbalance, implementing a capacity upgrade, extra overtime and congestion is vast."

March 19, 2010 - The European Union is partnering with industry to try and prevent a large number of chemical companies missing an important deadline under the Registration, Evaluation, Authorisation and Restriction of Chemical Substances (Reach) regulations that could cause chemicals to be removed from the market.

 

March 23, 2010 -  Member carriers in the Transpacific Stabilization Agreement said Monday they will continue to pressure shippers for $800 per 40-foot container rate hikes to the U.S. West Coast during ongoing service contract negotiations.

 

The TSA held chief executive officer-level meetings in Taipei last week and "reiterated their support for the recommended TSA guideline rate increases," which also includes a hike of $1,000 per 40-foot container for cargo moving to U.S. East and Gulf coasts, as well as U.S. interior points, via all-water or intermodal services.

 

The lines have taken heat from shippers for their concerted effort to raise rates this year to what carriers consider sustainable levels. At a recent container shipping event in Southern California, shippers seemed most upset with the pace at which carriers were trying to increase rates (not to mention that shippers were being asked to accept slower transit times and insufficient active capacity as rates spiked).

 

But in its message Monday, the TSA said rates are still nowhere near where they need to be.

 

"Even if the scheduled increases are fully achieved, that will at best restore some but not all freight rates to late 2008 levels, which were viewed at the time as barely compensatory," TSA said. "Container lines in aggregate lost, by various estimates, $15 billion to $20 billion in 2009 worldwide as the direct result of falling demand and a corresponding decline in rates, and liner shipping industry return on capital invested fell to -6.5 percent."

 

Rates have improved in recent weeks, though that appears to be largely a result of increased inventory restocking prior to the Chinese New Year, and not a lasting economic recovery fueled by consistent growth in demand. Also, as container lines hammer out contracts with shippers, the prospect of new capacity hovers over the transpacific trade, threatening to undermine the way alliances have endeavored to match supply with demand.

 

TSA said it was forecasting 6 percent to 8 percent cargo growth for 2010 on the transpacific, but noted that "market conditions remain uncertain in the Asia/U.S. trade, and that revenues are still well below sustainable levels." Transpacific demand fell by more than 15 percent in 2009, while rates fell by one-third to more than half, depending on commodity and routing, TSA said.

"Transpacific container lines took dramatic, emergency steps to cut costs and preserve basic service levels during a period of unprecedented turmoil," said Y.M. Kim, TSA chairman and Hanjin Shipping CEO. "In the process, freight rates fell to unsustainable levels that were locked into 12-month contracts. The key to reinvestment and service expansion in the trade is a sustained increase in cargo demand, accompanied by return to a viable, compensatory rate structure."

 

Kim said lines are still losing money on the transpacific and may seek better returns in other trades.

 

Meanwhile, the TSA also addressed the issue of space and equipment shortage for shippers, a topic that's captured the attention of the Federal Maritime Commission and members of Congress.

 

"The chief executives stressed that they are well aware of, and are committed to addressing, the short-term difficulties that arose in Asia in the run-up to the Lunar New Year holidays and factory closures," TSA said. "The situation of tight space and rolled cargo on some sailings, they indicated, was due to sustained post-holiday consumer demand in the U.S., and an urgent need for retail restocking, and has already begun to ease.

 

"It is expected that specific service issues will be resolved by individual carrier actions as they redouble their efforts to improve their services working together as partners with their customers. Longer-term questions about restoration of assets and services in the Asia-U.S. trade will be a function of demand trends in coming months, and carriers' ability to restore transpacific revenues to stable, compensatory levels."

 

TSA Executive Administrator Brian Conrad said the organization would have a better picture of the industry once carriers lock in contracts with their customers.

 

"The market forecast that matters most will be found in the volume commitments, service features and rate levels negotiated in upcoming contracts," Conrad said. "That is what will ultimately drive internal carrier decision-making in the months ahead."

March 24, 2010 - The port of Antwerp is embarking on an effort to position itself as a maritime gateway for France by improving its road, rail and barge connections with that country.

In 2009 some 500,000 20-foot equivalent units were carried to and from the French hinterland, and the Antwerp port community is aiming to increase this volume. "This can be done by improving the hinterland connections and implementing our Total Plan," said Port Authority CEO Eddy Bruyninckx Wednesday at the Port Day in Paris organized by the Port Authority, the Antwerp private sector and the Customs service.

Around 16 percent of all container traffic to and from Antwerp's hinterland currently has its origin or destination in France, where the most important trading regions for the port are Lille-Roubaix-Valenciennes and Alsace-Lorraine.

More than half of the port's container volume - some 300,000 TEUs - is carried by road because it is located so far inland that most road trips are relatively short. As a result the transport costs to and from Antwerp are considerably lower than for ports such as Rotterdam and Hamburg.

The rest of the container volume is fairly evenly divided between barge and rail transport. The Rhine and Moselle in particular are important for barge freight. Transport via the Scheldt and the Leie is expected to get a significant boost once the Seine-Scheldt project has been completed.

Rail transport provides an increasingly wide range of services to and from intermodal terminals situated near the border in places such as Kortrijk, Mouscron, Athus and Charleroi. There are also important rail services to Spain, Italy and Switzerland with stops in France.

 

Recently IFB added a French destination to its Spanish rail service, with the intermodal terminal in Bonneuil-Sur-Marne.

Bruyninckx also presented the "Total Plan" for the port that was drawn up in collaboration with the private sector. The plan's goal is to attract more conventional freight to the port and to develop Antwerp into the main general cargo port of Europe.

 

 

Journal of Commerce 

March 24, 2010 -  Two more cargo ships were hijacked by pirates in the Indian Ocean yesterday. 

The EU Naval Force (EU Navfor), which patrols the Indian Ocean, said the 35,000dwt Malta-flagged Frigia, which had a crew of 19 Turkish and two Ukrainian sailors, was sailing from Port Said to Kaousichang, Thailand. 

The hijacking took place 1,850km east of the northern coast of Somalia, 720km outside EU Navfor's operational area. 

EU Navfor said the 11,000dwt Bermuda-flagged Talca, with a crew of 23 Sri Lankans, a Filipino and a Syrian, was captured 220km off the coast of Oman and was