Today’s Top Supply Chain and Logistics News From WSJ

Posted on by Chinh Nguyen Huu

Delivering up-to-the minute news, analysis, interviews and explanatory journalism on logistics, supply-chain management, e-commerce and more.

Amazon.com Inc. AMZN +2.14% is placing one of its biggest bets yet on the global e-commerce arena. The company is buying into the Middle East with its acquisition of Dubai-based Souq.com, the WSJ’s Nicolas Parasie reports, buying into the region’s small but expanding online shopping market . Amazon didn’t give a value but a banker familiar with the deal said it was worth around $700 million. Amazon has been spending heavily on expanding its global footprint but doesn’t often snap up companies as large as Souq.com. Amazon’s move sets up a potentially fierce battle with regional real-estate billionaire Mohamed Alabbar, who plans to launch a $1 billion e-commerce platform called Noon this spring. Online sales in the Persian Gulf region are still small compared with more mature markets, but Amazon is entering on the cusp of what analysts say will be a period of rapid e-commerce growth. Cash-buyers.net provides an additional option for individuals who are interested in the speedy and painless sale of their homes. They can assist you in completing a transaction that is prompt and easy in just two days’ time. Visit https://www.cash-buyers.net/tennessee/cash-buyers-for-houses-lebanon-tn/.

The drive for warehouse space is hitting record levels in Europe, and the demand can be traced back to Seattle. Amazon has become a major force in a European logistics real-estate sector that is being reshaped by online shopping, the WSJ’s Art Patnaude reports. In the U.K. alone, the Seattle-based online retail giant accounted for nearly a quarter of all warehouse property space leased last year. Experts say the rush by Amazon and others to find capacity is drawing in more real-estate investors. While Europe’s overall commercial real-estate investment fell last year, industrial and logistics volumes rose 7.3% to a record $27.24 billion, says CBRE. The key is the growing demand for rapid delivery as online sales grow in Europe’s dense population zones as well as smaller towns that typically are far from the sprawling distribution centers. Buy-my-house.org is glad you stopped by. We really value your help. Our experts can help you sell your house quickly and for a fair price. Marketing and networking have been noticed by buyers who want to close deals quickly and make money. Our business grew as it changed. Our experts will negotiate and give you paperwork to raise the value of your house. We will put your home’s most important features online so that they will be seen for a long time. Orders for products are being met. Visit https://www.buy-my-house.org/iowa/.

Investment cash seems to be flowing into the logistics sector. Shipping technology startup Freightos raised $25 million in a new funding round led by General Electric Co.’s GE Ventures, WSJ Logistics Report’s Erica E. Phillips writes, the second big infusion this week for a logistics tech operation. The funding for Israel-based Freightos follows a $25 million Series A funding round this week for Silicon Valley startup Turvo, which hopes to use software to make it easier for shippers to track and manage their goods across the supply chain. Freightos wants to use the new cash to expand its booking and pricing-information platform, and provide its software to freight forwarders for their back-office functions. In both cases, investors like the focus on technology in a global business. PitchBook Data Inc. says venture capital money flowing into the logistics sector has grown from $60 million in 2013 to nearly $200 million a year ago.

TRANSPORTATION

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Freight rail consolidation is underway in North America, but it’s not happening with the major railroads. Mexican mining and railroad company Grupo Mexico SAB is buying Florida East Coast Railway Holdings Corp., the WSJ’s Anthony Harrup reports, in a $2.1 billion deal that will give the Mexican company a 351-mile railway with operations in Florida that reach into the U.S. southeast. Jacksonville, Fla.-based FEC runs trains through the ports of Miami, Everglades and Palm Beach, and has agreements that connect with lines that carry cargo as far as Dallas, Atlanta and Charlotte. Grupo Mexico, which operates Mexico’s Ferromex and Ferrosur railways, says the business will complement its operations in Texas. The acquisition will need regulatory approval before closing, a step that may prove more than a speed bump if the Trump administration flags the deal while it considers negotiating a new North American Free Trade Agreement.

Freight railroads probably shouldn’t load up on new coal car orders just yet. The Trump administration is rolling back President Barack Obama’s signature climate-change policies. But the WSJ’s Cassandra Sweet writes that is unlikely to reverse the U.S. utility industry’s shift to natural gas, solar and wind as leading sources of electricity even if it may extend the life of some aging coal-fired power plants. Cheap U.S. natural gas has prompted many companies to scrap older coal plants in favor of gas-fired plants, which require fewer workers to operate, and many utilities say their investments are being driven by economic as well as regulatory forces. The changing energy picture has had a dramatic impact on freight rail networks, even with double-digit gains in coal traffic this year.
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“E-commerce is forcing investors to look at logistics and warehousing completely differently.”

—Andrew Jones, chief executive of London Metric Property PLC.

 

Vietnam loading up on logistics

Posted on by Chinh Nguyen Huu

Regional integration and bilateral trade growth are driving Vietnam’s ambitions to become a major transport and logistics hub, though existing port infrastructure will need to be better leveraged to achieve the country’s goals.

Rising foreign investment in Vietnam and growing manufacturing and agricultural output have placed greater pressure on the logistics sector in recent years, with this trend set continue into 2016 and beyond.

Throughput at Vietnam’s ports is set to rise by 10% this year to 470m tonnes, according to data issued by the Vietnam Maritime Administration, while container shipments are pegged to increase by 11% to reach 13.3m twenty-foot equivalent units (TEUs) this year.

Sector prospects

Logistics account for 20-25% of GDP, according to the Vietnam Logistics Business Association (VLBA), with the sector projected to grow by roughly 12% per year through to the end of the decade, driven by a projected $632bn worth of trade by 2020.

Economic integration in Asia and the newly signed free trade agreement (FTA) with the EU and the Trans-Pacific Partnership (TPP) deal are all slated to provide a boost to Vietnamese logistics.

The rollout of the ASEAN Economic Community (AEC) at the end of last year should also see a reduction in bureaucratic procedures and greater regional connectivity, with the ASEAN Single Shipping Market, a key pillar of the AEC, being developed with a view to harmonise shipping industry regulations.

Meanwhile, the EU FTA and the TPP should see trade volumes rise dramatically, with the TPP projected to boost exports by as much as 28% in the next 10 years, according to media reports.

Despite significant expansion in the sector, local firms have not been able to reap the full scope of benefits available. Although there are more than 1200 local logistics companies in operation, most are relatively small and contribute only about 20% of sector revenue and trade activity.

Large-scale foreign operators continue to dominate, with 40 firms handling a combined 80% of the country’s international cargo movements. According to estimates from the VLBA, foreign firms account for between 80% and 87% of sector earnings, which total around $37bn-40bn.

Wholly foreign-owned logistics businesses were legalised in 2012, following Vietnam’s accession to the World Trade Organisation in 2007. Prior to 2012, foreign investors were required to establish joint ventures with local players.

Hub potential

Increased investments by local operators and improvements in connectivity could shift this balance of power, in time allowing domestic freighters to capitalise on growing trade.

With more than 3200 km of coastline and an extensive river network providing access to inland cities and production hubs, as well as neighbouring markets, Vietnam is well poised to develop its logistics sector, according to Nguyen Dang Nghiem, president and vice-chairman of port operator and logistics firm Saigon Newport.

“The geographic location and topographical conditions are some of Vietnam’s main advantages in terms setting up a regional logistical hub,” he told OBG. “Coastal land with deep rivers makes it convenient to build sea and river ports.”

While Vietnam ultimately aims to rival Singapore, Hong Kong or Malaysia as a logistics hub, insufficient transport infrastructure – with port road access at times unable to handle freight volumes – and high levels of bureaucracy are impediments to sector growth.

“Navigation tariffs, import regulations and Customs formalities are hindering Vietnam from becoming a more competitive port in the region,” Nguyen added.

Indeed, as a result of infrastructure shortfalls in some supply chain segments, logistics costs stand as high as 25% of GDP, well above that of Malaysia (13%) and China (18%).

Leveraging capacity

According to industry officials, Vietnam could strengthen its shipping credentials by taking advantage of available capacity at Cai Mep-Thi Vai, a VND40trn ($1.8bn) port complex in the southern province of Ba Ria-Vung Tau that first opened in 2009.

Just 1.16m TEUs were handled at Cap Mep-Thi Vai in 2014, the provincial transport department reported, equivalent to about 17% of the facility’s capacity.

While goods bound for overseas markets are currently transported to Hong Kong or Singapore first, stakeholders argue that repurposing Cap Mep-Thi Vai as a local trans-shipment centre could offer significant savings.

The Vietnam Ship Agents and Brokers Association estimates that handling and shipping Vietnamese goods directly from a local port could boost GDP by more than $2.2bn per year.

Greater efficiencies could also be achieved by anticipated privatisation of nearly a dozen of the country’s ports. In February the Ministry of Transport announced plans to divest state-owned Vietnam National Shipping Lines from nine of the country’s major seaports and companies, while reducing its stake in two other ports to 20%.