Title: Vietnam Shipper No. 52
Date: (01-02-2009)

Seafreight-

Impact of High Fuel Costs on the Shipping Industry and the World Trade

 

Adding more vessels, reducing speed of ship, re-routing service, and increasing surcharge and bunker adjustment factor (BAF) are such solutions that shipping companies are now using to cope with the triple-digit bunker fuel prices to save their costs (Roberts & Jameson, 2008). Even other companies, Stena Line for instance, has no choice but to stop some of their services to reach the same end of saving any costs originated from the booming bunker fuel price as well (Dixon, 2008). On the trade side, some economists, notably Rubin & Benjamin, argued that “the cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today” and they also emphasized that “in a world of triple-digit oil price, soaring transport costs, not tariff barriers, pose the greatest challenge to trade” (2008, p.4). Moreover, environmentally speaking, soaring bunker fuel costs may contribute to the reduction of emission from ships as, in order to save fuel costs, shipping company should think about lowering vessel speed and fuel consumption.…(Read more on Vietnam Shipper Issue No. 52)

 

 

Supply Chain Management

Low-Cost Country Sourcing Remains Cost-Effective

 

Despite recent interest in 'near-shoring' key sourcing categories, interest will continue in low cost country sourcing in 2009 as US and European businesses seek out strategies for driving costs out of their supply chains, according to supply chain software and service provider BravoSolution.

Low cost country sourcing (LCCS), a long-time staple of the supply management process has recently come under fire as a short-sighted and potentially risky sourcing strategy due to quality and volatility concerns. Many sourcing professionals have begun to shy away from LCCS, fearing that low quality production standards will negatively impact their brands.

But, according to Guillaume DeRoquefeuil, the Director of BravoSolution's Shanghai office, this perspective fails to account for recent developments in many low-cost countries. "We are seeing a rapid development of highly skilled labor and innovative techniques on the part of low-cost countries that want to remain competitive with the West," he says. …(Read more on Vietnam Shipper Issue No. 52)

 

 Logistics

Time factor in logistics management

Today, unique characteristics of a product, reasonable price or good promotion are no longer dominant factors, which determine a company’s competitive advantage. Logistics has become a new key component to create their competitive strength. Aims of any logistics system is try to minimize the total cost from points of origin to those of consumption whilst still ensure customer service level.

 

Product life cycles are shorter than ever due to globalization, quick development and transfer of new technology; industrial customers and distributors require just-in-time deliveries; end users are ever more willing to accept a substitute product if their first choice is not available. Therefore, in recent years, time has become a critical factor, which affects considerably on the efficiency of logistics pipeline.…(Read more on Vietnam Shipper Issue No. 52)

 

Asia-Europe train to challenge to sea-air services

 

The block train service, headed by DB Schenker in partnership with Chinese and Russian state-owned railways, cuts across five countries to provide and an alternative to ocean and air services between Asia and Europe. The service is expected to target cargo originating in China’s hinterland - in other words, points far from China’s many large seaport.

At Transport Intelligence’s Global Distribution Strategies - Asia Pacific conference in Hong Kong Wednesday, DB’s Jurgen Rogner said the service’s advantages over ocean and air freight are transit time and cost, respectively. Taking a shipment between Shanghai and Hungary as an example, he said the transit time for air would be three days, for ocean 33 days and for sea-air (routed by ocean to Dubai and by air from Dubai to Frankfurt) 18 days. The Eurasian rail link would take 21 days, but at a much lower cost to sea-air.

 

 

Shipper in focus

US Consumer Spending in the Time of Economic Crisis

 

The year 2008 has started with the possibility of the recession in US reflected recently by poor economic indicators (GDP declining, inflation, unemployment, decreasing personal consumption, reducing manufacturing capacity,…). Then the financial crisis has just happened with the bankruptcy of some big financial institutions, the stock market going down and the crisis spreading to Europe and Asia. 

 

In the context of the present US economic crisis, many people concern with questions raised regarding the impact of such situation on the daily life from various aspects such as agriculture, industry, tourism, banking, foreign trade, personal income, unemployment… US economy is one of the biggest economy in the world with the key role affecting the economy of other countries. When US sneeze, the global catches a cold. Therefore, US recession and financial crisis is a profound concern coming from not only the US but also other countries including Vietnam. One of the most concerns Vietnam government is worried about is the impact of the crisis to the export from Vietnam to US market. Export plays an important role in the Vietnam economy with dominant ratio as of approximately 60% of annual GDP.

 

Many people could foresee the negative impact of US economic crisis on Vietnam export. However, in order to evaluate the situation, we have to look into the core of the subject to see how it is. To find the answer, we should study how the situation of US consumer spending is. As US consumers’ expenditure is a decisive factor in export from all over the world.

 

Which variables are affecting US consumer spending?

 

Economically there are 5 key determinants of demand such as income, prices, taste, expectations and number of buyers. In the context of economic crisis, income and expectations are two main factors. …(Read more on Vietnam Shipper Issue No. 52)

 

 

Airfreight

Too little and too late for Taiwan’s carriers

Taiwan’s international airlines could be forgiven for feeling a trifle peevish about the China market. For yeas relegated to bystanders who could only tap into China’s airfreight boom through interline deals, the pair see the door to the grand prize finally ease open a fraction just when the market is running out of steam.

 

At the end of June, Beijing and Taipei finally agreed on regular weekend flights between the two territories. The deal is limited to passenger flights at the moment, but operators are viewing it as a prelude to full passenger and cargo access. No longer will China Airlines and EVEA have to content themselves with interline traffic over Hong Kong and Macau and sea-air cargo trickling into their home market from across the Taiwan Strait.

 

Elsewhere sea-air may have come into its own again after a long hiatus, as shippers look for cost-effective alternatives to sending their traffic by air, but the Taiwanese route is largely regarded as an option of limited appeal. Forwarders Agility has seen growing interest in the hybrid mode for shipments out of northern and eastern China, but most of this traffic moves via Korea..…(Read more on Vietnam Shipper Issue No. 52)