 | Asean must reduce red tape to boost trade |
June 8, 2010 - (VIETNAM) South-east Asian nations must coordinate efforts to cut cross-border red tape and promote regional road transport as they move towards a common market, industry players said yesterday.
Better links among the 10-member Asean could reduce transport costs while boosting intra-regional trade and economic welfare, they said.
Asean is working towards establishing, by 2015, a single market and manufacturing base of about 600 million people.
But business leaders and other experts at an international forum said there are still too many bureaucratic hurdles to a free flow of regional goods.
'There is no holistic approach to the supply chain from the governments' perspective, from any government's perspective,' said Steven Okun, vice-president for public affairs with Singapore-based shipping firm UPS.
He said 'there isn't the political will yet for Asean to look at these as a group of 10 countries.
If we can do it collectively, trade within Asean is really going to grow'.
He was speaking at the World Economic Forum on East Asia (WEF), a gathering of global business leaders and regional politicians.
AFP
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| Fuel cost could put damper on air freight optimism | |
New US regulations could result in oil shortage
June 9, 2010 - The air cargo industry has been warned it faces serious challenges because of the rising costs of oil, despite increasing industry optimism.
Frost and Sullivan's Commercial Aviation Analyst, Max Sukkhasantikul, said that new US regulations could spark an increase in the cost of oil, which would have implications for the air industry.
He said: "There are many challenges still facing the industry, mainly the future of offshore drilling.
"Should the Obama administration tighten drilling regulations, there may be an oil shortage between 2016 and 2018, driving fuel costs above US$100 a barrel.
"With fuel costs representing roughly 40% of an airline's cost base, we can expect the same detrimental impacts as seen in 2007 and 2008."
Efforts to cut costs in response to the rising cost of fuel could have further impacts, he added.
"As airlines attempt to control non-fuel related costs and increase their revenue potential, they face resistance from labour unions, especially of legacy airlines like British Airways, Lufthansa and American Airlines.
He predicted that the fight to cut costs could also lead to more airlines joining alliances, which would create marketing and revenue synergies, to save cash.
"The future of the airline industry will definitely include more consolidation," predicted Sukkhasantikul. "It is the only way airlines can minimise cost and enhance revenue, given the conditions in which the industry operates.
"Acquisition strategies, such as Lufthansa's, whose present portfolio includes Austrian, BMI, jetBlue and Swiss, together with more partnerships and joint-ventures in certain markets, such as the Delta-AirFrance-KLM transatlantic jv, will be key to cost reduction and revenue enhancement."
He said a loosening of regulation and the introduction of bilateral agreements and open skies policies could also help the industry reduce costs. But Sukkhasantikul felt progress would be slow and mainly constrained to North America and Europe.
And he warned airlines not to assume that alternative fuels could provide the answer to rising fuel costs and environmental concerns.
He said: "Alternative fuels may not be commercially viable for the airline industry for another 10 years, due to extensive regulatory approval requirements."
Sukkhasantikul made his remarks after the International Air Transport Association (Iata) announced it expected airlines to make profits of US$2.5 billion this year, more than $5 billion more than originally estimated.
IFW
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| BA cabin crew to begin 20th day of strike action |
June 7, 2010 - British Airways cabin crew will take their 20th day of strike action tomorrow, with no sign of a breakthrough in their bitter dispute with the airline, reported The Press Association.
Members of Unite will remain on strike until Wednesday, but the union is threatening to hold a fresh ballot if the deadlocked row is not resolved soon, which could disrupt flights in the busy summer months.
BA said more crew than expected had turned up for work since the start of the latest five-day walkout yesterday at Heathrow airport, meaning it could operate additional flights.
The cost of the industrial action to BA will be well over US$228.92 million by the time the current strikes end on Wednesday.
Talks between Unite's joint leader Tony Woodley and BA's chief executive Willie Walsh under the auspices of the conciliation service Acas ended without agreement last week, with little sign of any progress.
Cargonews Asia
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| 100% screening of cargo an uphill task |
June 7, 2010 - The US Congressional mandate calling for 100 percent screening of cargo on passenger aircraft will come into effect on August 1, but there are still many questions in the industry, including the all-important problem of whether the responsibility for screening should fall on the freight forwarders, the shippers or the carriers themselves. "We feel that it does make the most amount of sense to spread the screening task into the supply chain as opposed to actually waiting to get to the airport and facing potential congestive bottlenecks that could slow down the shipping process," said Brandon Fried, executive director, Airforwarders Association, during a recent roundtable. "The good news is that many of the very largest freight forwarders have jumped into this in a very big way," said Dave Brooks, president of the cargo division of American Airlines. He added that some freight forwarders have been supplying American Airlines with screened shipments for two or three years already, and a number of direct shippers that had commodities sensitive to handling, such as fruit and vegetables, have been proactive in working the screening into their supply chains. Brooks said although the industry has already reached 75 percent screening, the remaining 25 percent was going to be among the most challenging - the largest consignments and the consignments with the largest piece counts. "Those who haven't really looked into this and made a determination may well be faced with delays at certain airports, particularly the large gateway airports, the Chicagos and the JKFs of the world," said Doug Brittin, general manager of air cargo for the Transportation Security Administration (TSA). Fried said the 100 percent screening mandate was not likely to be an issue at small airports, giving the examples of Lubeck, Tallahassee and El Paso, which were mostly limited to single-aisle narrow-body aircraft. Brooks said screening cargo at the docks was an expensive and time-consuming process and American Airlines would be increasing its fees dramatically come August 1. He added that leaving cargo screening until it reached airport docks was going to slow down the supply chain and the carrier would have to lengthen the lead time for cargo before it could be loaded on a flight. "If you're a supply chain professional, that's like the kryptonite of news. No one wants to hear that they have to be ready sooner than their supply chain is programmed for, but that's the reality and that's one of the unfortunate parts of this legislation," said Brooks. "Unfortunately, this is an unfunded mandate," said Fried, "so our members have had to spend their own funds to purchase the technology required to perform the task." Brooks said although unfunded from a government standpoint, ultimately most of the goods being shipped were for the consumer, and the extra costs will fall on their shoulders. But costs aside, Brittin said the industry would not be able to reach 100 percent screening on all air cargo imports by August. He noted that the US worked with the EU and many countries, some of which had their own cargo screening programmes. "Because these governments are being shy about collaborating on their screening programmes, the carriers have to live with two different programmes, which might require us to do the same thing twice," Brooks said.
By Saul Symonds
Cargonews Asia
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Shippers facing rate hikes as box supplies dwindle | |
June 9, 2010 - Container freight rates are expected to rise sharply in the next two months as a severe shortage of boxes leave shippers and the lines battling to cope with robust market demand for China exports.
The equipment shortage is spread across all major trades and is beginning to bite even as lines deploy extra capacity to accommodate fast rising volumes in the build-up to the peak season.
The unexpected headache may be frustrating carriers, but it is shippers who will end up paying the price.
"Shipping line rates are set to rocket during the peak season as shippers grapple with the equipment issue - interesting times lie ahead for certain," a liner executive told Cargonews Asia.
The huge increase in market demand on trades such as Asia-North Europe, Asia-Mediterranean and Asia-US West Coast has led to the launching and resumption of new and suspended services that have already pushed up weekly capacity by a staggering 85,000-plus TEUs this year.
According to some senior shipping line executives, China's export volumes were up well over 20 percent during the first half of this year. An industry that was flat during the last quarter of 2009 has shown a surprising rebound to meet market demand in Europe and the US.
"We are experiencing a hugely unexpected upturn in China export demand, but we don't have the container equipment now to cope with that demand," said the liner executive.
The shortage of containers stems from the worst downturn in shipping history. During the recession, China's container production plummeted from 3.2 million TEUs in 2008 to a mere 200,000 TEUs last year. Although some analysts believe 2010 production will climb back to a million boxes and to two million next year, the production increases will be too late to cater for the 2010 peak season market demand out of Asia.
One Asia-Europe line manager commented: "It is estimated that there is around a five percent shortage of the necessary level of containers needed right now to cope with global demand, and although there are still a couple of months to go before the peak season starts, we all need the equipment now, not later."
Shippers' problems are quickly becoming a crisis, and are being exacerbated by the liner practice of slow steaming. According to PR News Service ComPort data, around 75 percent of all Asia-Europe, Asia-Mediterranean and Asia-USWC and USEC services employ slow steaming.
Before the 2008/09 fuel price increases, most Asia-Europe services operated on a 56-day round trip, extended to 63 days to cover North China.
Today, most of the services operate on 77-day or even as much as an 84-day round voyage. Consequently, equipment is tied up for at least another 20 days sea passage, and repatriating empty containers to China has become even more complicated.
Interestingly, fuel prices at the major bunkering ports such as Singapore, have fallen around 10 percent in the last month.
A lack of orders from container leasing companies and the shipping lines during the recession led to the production shutdowns at box manufacturing plants.
Ironically, with the unexpected surge in China exports, it is now those leasing companies and shipping lines that stand to benefit from rates hikes.
Cargonews Asia
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| Reach: EU Inspectors Find 24% of Firms in Non-compliance | |
June 7, 2010 - Regulatory authorities from European Union (EU) member states say from an inspection program that 24% of companies with Reach obligations failed to comply with the regulation. The inspections were undertaken between May and December 2009. From a total of almost 1,600 inspections, 2.6% of companies were found to have infringed Article 5 of Reach leading to the requirement that the product be removed from the market, while in 5.6% of cases the content of pre-registration was incorrect. In 11% of cases safety data sheets (SDS) were not available and in 20% of cases SDS were not in compliance with the language and formal requirements.
The inspections were part of Reach-en-force 1, an EU project designed to evaluate whether companies had successfully met their obligations for Reach pre-registration, including requirements relating to SDS. The EU inspected a total of 878 manufacturers, 666 importers, 83 'only representatives', and 858 downstream users. Details abut the inspections were released this week by the Forum for Exchange of Information on Enforcement, a group made up of representatives from the European Union member states.
Forum members say they plan to undertake further inspections of companies through spring 2011 to assess compliance with Reach following the first registration deadline of November 30 of this year.
Additionally, the forum says it is making progress on plans to inspect formulators for their Reach compliance. The forum also has agreed to prepare enforcement procedures in accordance with an EU ban on the use of extender oils containing polycyclic aromatic hydrocarbons (PAH) used in automotive tires..
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| Gulf of Mexico ports see little impact from oil spill |
June 8, 2010 - The oil spill in the Gulf of Mexico so far has not affected ports that serve as a key hub for Midwest commerce, though that could change if the slick grows significantly. The area is a major hub for overseas imports headed to the Midwest, such as petroleum, steel and manufactured goods, including toys, apparel and consumer electronics, says economist Paul Bingham of IHS Global Insight. It's also a big gateway for U.S. agricultural exports. So far, shipping lanes have remained open to ports in New Orleans and south Louisiana, as well as Mobile, Ala., and Gulfport and Pascagoula, Miss. "As of right now, there have been no delays, nor have we noticed any ships being diverted from the Mississippi River system," says Michael Lorino, chief of Associated Branch Pilots, which guides ships through the area. Lorino says many ships headed toward New Orleans from other countries are traveling an extra 20 miles or so to skirt the oil spill as they approach the river, taking them about two hours out of the way. But
considering vessels carrying imports from Europe and Asia are on the seas for several weeks, the diversions are having no effect on deliveries, he says.
Detours could get longer if the slick expands, Lorino says. But if ships are contaminated with oil, officials are prepared. The U.S. Coast Guard and area pilots have set up three cleaning stations in and near the Southwest Pass, a channel at the mouth of the river. High-powered pumps and spraying machines installed on boats are poised to clean
ship hulls, preventing them from contaminating the river.
An additional 27 cleaning stations have been set up elsewhere in the Gulf, says Larry Chambers, a spokesman for the Coast Guard.
Only one ship has been doused so far - and that's because it sat in one place for three days outside the river while waiting for cargo, Lorino says. The wash, about a week ago, took 30 minutes to an hour, say Lorino and Chambers.
If a large number of ships were tainted, bottlenecks could develop, forcing ships to unload at other ports, such as Houston, Bingham says. Delivery costs, he says, could rise by as little as a few hundred dollars to as much as $10,000 or so, as goods might have to travel farther on both sea and and land. Initially, shipments to retailers and manufacturers could arrive a day or so late, but customers would quickly account for potential delays in their orders, minimizing or eliminating any lags.
Lorino says such bottlenecks are unlikely because dispersants used by BP to break up the slick have thinned the oil, allowing much of it to wash off without the need for cleaning.
Exports should not be affected, as oil that sullies outbound ships would wash off during a weeks-long trip, officials say.
John Hyatt, vice president of The Irwin Brown Co., a broker for importers and exporters, says no firms are canceling shipments. "Nobody's avoiding it," he says.
USA Today
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| Brazil sees economy surge by 9% | |
June 9, 2010 - Brazil's economy grew at its fastest rate in at least 14 years in the first three months of 2010, official figures have shown. Its gross domestic product (GDP) surged by 9% compared with the same period a year earlier. However, higher interest rates and the withdrawal of some tax breaks are expected to cool growth eventually.
Brazil's economy is the largest in Latin America and the eighth-biggest in the world.
Agriculture and industry were among the growth sectors, the government said.
Much of Brazil's economy is driven by domestic consumer demand rather than exports - which analysts say means it is relatively insulated from Europe's debt crisis and the projected slow recovery of the US.
"These figures are confirmation of what the market was talking about, a strong first quarter with very strong domestic demand despite the weak external sector," said Pedro Tuesta, senior Latin America economist at research firm 4Cast Inc.
The government said the annual growth was the swiftest pace seen since at least 1996.
Brazil's economy grew by 2.7% on the previous three months - again beating analysts' expectations.
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| Cathay around-the-world freighter service in July |
June 8, 2010 - Cathay Pacific Airways will launch its first around-the-world freighter service on July 9, offering its cargo customers a wider choice and at the same time helping to further develop Hong Kong's position as a leading international air cargo hub.
The airline has spent months developing the new route, which will initially be operated twice weekly, every Friday and Sunday, using a Boeing 747-400 freighter, reported the New Zealand Press Association.
The flight will leave Hong Kong and fly via Anchorage to Chicago. From there it will fly onward to Amsterdam and Dubai before returning to Hong Kong.
Cathay Pacific director, cargo, Rupert Hogg said: "We are very excited about the launch of this new freighter service which will further strengthen our cargo network and also help in the continued development of Hong Kong's air freight hub role - something to which our airline is deeply committed."
The around-the-world flight is an extension of Cathay Pacific's existing service to Chicago - the airline currently serves the city with eight flights per week. The flight from the United States to Amsterdam marks the first time for Cathay Pacific to ever operate a transatlantic service.
In total, the around-the-world flight will take 44.5 hours to operate, including ground time to uplift freight.
Cathay Pacific has been working hard to strengthen its services to and from Hong Kong in response to the recent global upswing in air freight markets, and has just announced it will strengthen its freighter route to Houston and Miami.
From July 2, the airline will fly four times weekly to Houston and five times each week to Miami.
The airline is also reinforcing its commitment to the continued development of Hong Kong as a leading international air cargo hub through the construction of its own new cargo terminal and the continued expansion of its freighter fleet.
Cathay said it was seeing cargo demand pick up as consumers in North America and Europe buy high-tech products, Tyler told Reuters Insider TV.
Cargonews Asia
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| APEC gateway to simplify customs rules for FTAs | |
June 7, 2010 - The Asia-Pacific Economic Cooperation said Monday it has opened a new online gateway to tariff and rules of origin information to help alleviate what it called the "noodle bowl" effect of free trade agreements.
"APEC's 21 members account for around 44 percent of world trade, and have concluded over 40 intra-APEC free trade agreements," the agreement said. "However, businesses often don't take full advantage of these special trading arrangements because information on preferential tariffs and rules of origin can be difficult to find."
"Business has told us that a lack of customs transparency is a major impediment to trade," said Akihiko Tamura, convenor of APEC's market access group. "APEC's new Web-based gateway helps lift this barrier by providing businesses with the information they need to better leverage the trade opportunities that exist in the region."
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| European haulage rates still below pre-crisis levels | |
Shippers can benefit as capacity remains stable
June 7, 2010 - European road haulage rates remain below pre-crisis levels, despite no drop in available capacity.
The third edition of the Transport Market Monitor (TMM) by analysts Transporeon and Capgemini Consulting reveals that the price index for European haulage rates fell 5.9 index points in Q1 to 88.9 index points, compared with the final quarter of last year.
And compared with Q1 2008, the index for Q1 2010 is 8 points lower, even though available capacity is at the same level.
The analysts said the decline was surprising, given that transport rates rebounded in 2009, growing steadily from Q1 2009 to the end of the year.
Erwin den Exter, Managing Consultant at Capgemini Consulting, said: "Although a slight drop in prices at the start of the year is a returning pattern, we didn't expect to see quite such a distinct fall.
"Shippers have the challenge of benefiting from these dynamics in transport prices, by finding the right buying strategy."
Peter Förster, MD of Transporeon, added: "It is also interesting to see that available transport capacity is at the pre-crisis levels, but prices are significantly lower. The interesting question, therefore, is to what extent the transport market has been structurally changed?"
Despite the overall drop in prices, the index did start to improve as the quarter moved into March. And based on that upward trend, it is expected that prices will increase in Q2 which would reflect the pre-crisis period of H1 2008.
IFW
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EU Chemical Industry to Grow by 9.5% in 2010 | |
June 7, 2010 - Cefic forecasts a year-on-year production growth of 9.5% for 2010 and 2% for 2011. The basic chemicals sectors are now registering the fastest rebounds, but in all cases chemicals output, excluding pharmaceuticals, remains well below previous levels. Growth in chemicals production has continued more strongly and for longer than was expected at the time of Cefic's November 2009 forecast.
Cefic anticipates a period of consolidation in the second half of 2010 and early 2011, which will result in reduction in growth rate forecast for 2011. Despite the high growth figures for 2010, output at the end of 2011will still be below previous levels, and it is likely to be another two years before those are seen again, Cefic says.
The overall economic recovery in Europe remains fragile and Cefic still expects a pause in the rate of growth of most commodity chemicals sectors. Capacity utilization rates remain well below "normal" levels, Cefic says. The development of the EU chemicals industry will also depend on the effectiveness of consolidation measures taken within EU countries. "The European chemical industry continues to face relentless global competition [and] acess to raw materials and energy at globally competitive prices remains a prerequisite for a successful recovery," says Hubert Mandery, director general of Cefic.
The chemical industry experienced a sudden fall in output in the second half of 2008 and into early 2009. Despite an almost equally sharp rebound in the second half of 2009, as much of the inventory liquidation in supply chains was reversed, the final 2009 figure showed a fall of 11.3%, compared to 2008. Recovery in output levels has conutinued in the first quarter of 2010, and this is likely to continue in the second quarter of the current year, Cefic says.
Chemical Week
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