DHL and Makro to build US$4.6 million state-of-the-art automated warehouse in Thailand

DHL Supply Chain, a business unit of the world’s leading logistics services provider, has announced the extension of the successful partnership with leading wholesaler and retailer, Makro, with its plan to build a new US$4.6 million (167 million baht) automated warehouse.

Located in Wang Noi, Ayuddhaya Province, the newly purpose-built warehouse spans 14,500 square metres and boasts a handling capacity of more than 80 million cases per annum, offering an improved lead time of as little as six hours from the moment the supplier goods arrive at the warehouse to the time they reaches the retail stores in Bangkok. This marks an improved efficiency of up to 50% in lead time.

Advanced automation & technology for a highly efficient Makro automated warehouse. The increased throughput of the automated warehouse is made possible because of an advanced Autosort system which can handle more than 9,000 cases per hour.

Makro currently operates 41 stores across 38 provinces in Thailand and DHL Supply Chain has provided Makro with warehousing and logistics services in Thailand since 2004. Currently it handles two distribution warehouses for Makro’s ambient and fresh products at Klong Luang, and Wang Noi respectively. In July 2009, the dry food warehouse at Klong Luang will be replaced by the new automated warehouse.

Reliable sources inform whichforwarder.com that DHL have lost huge amounts of money over this relationship in Thailand for years. Why would they want to continue unless they are to recoup their losses on this deal? In which case is this a good deal for Makro?

IATA forecasts huge loss for Air Transport Industry

The International Air Transport Association (IATA) has stated that it expects the global air transport industry to record losses of $4.7bn in 2009. That is significantly worse than its December forecast which foresaw a $2.5bn loss, reflecting the rapid deterioration of global economic conditions. Overall revenues (cargo and passenger) are expected to fall by 12% ($62bn) to $467bn.

According to IATA, cargo demand is expected to decline by 13% this year compared with 2008. That latest forecast has also been revised since December when the organisation expected a 5% fall in cargo demand during 2009.

Losses would be even worse if fuel prices had not stabilised, indicated IATA. With an expected fuel price of $50 per barrel (Brent oil), the industry's fuel bill is expected to drop to 25% of operating costs (compared to 32% in 2008 when oil averaged $99 per barrel).

IATA believes that carriers in the Asia Pacific region continue to be hardest hit by the current economic turmoil and says they are expected to post losses of $1.7bn. The Middle East will be the only region with demand growth in 2009 (+1.2%).

IATA's warning is compounded by figures released by the Air Transport Association of America (ATA), the industry trade organisation representing leading US carriers. In a recent statement, that body reported that its members' cargo traffic declined by 21% year on year in January 2009, after back-to-back 17% declines in November and December 2008. Notably, transpacific cargo traffic fell 32%.

The only glimmer of hope in the short term, according to IATA, is that there may be a modest bounce in air freight as manufacturers end their destocking. That should see component shipping rise a little. But weak consumer and business confidence is expected to keep spending and demand for air transport low.

"The prospects for airlines are dependent on economic recovery. There is little to indicate an early end to the downturn. It will be a grim 2009. And while prospects may improve towards the end of the year, expecting a significant recovery in 2010 would require more optimism than realism," said Giovanni Bisignani, IATA's Director General and CEO.

What are your thoughts on the Aircargo situation for 2009, is your business surviving.

Fedex Freighter Crashes in Tokyo

A FedEx Express MD-11 freighter en route from Guangzhou, China, crashed at Japan's Tokyo Narita International Airport this morning (local time), Monday, March 23, killing the two crew members on board.

In a brief statement confirming the incident, FedEx said it had occurred as the aircraft landed and that there had been no survivors among the crew. "Our deepest sympathies go out to the family and friends of these crew members. This loss pains all of us at FedEx. Right now our focus is on doing everything we can to assist those involved at this difficult time.

"We are thankful for the quick response of emergency teams on the ground and will continue to work closely with the applicable authorities as we seek to determine the cause for this tragic incident."

Early international news reports said Narita airport had been experiencing strong winds at the time the aircraft, which had burst into flames after the crash, was coming into land. They also reported that following the incident, the airport had closed one of its runways, causing many flights to be cancelled.

More uncertainty over Ceva

Uncertainty continues to hang over private equity-owned worldwide logistics service and supply chain provider CEVA Group plc following the announcement of its annual results last week.

The Netherlands-based company's 2008 numbers revealed a strong underlying business which expanded throughout the first three quarters of the year. Over the full year, organic growth in revenue for its contract logistics and freight forwarding business was up 0.5% to €6,329m while EBITDA (earnings before interest, tax, depreciation and amortization) fell by 15.3% to €320m. The performance in the fourth quarter, however, was hit by the recession, with revenue falling 6.7% year-on-year and EBITDA down 43% at €57m.

Like other big freight forwarders, CEVA appears to have gained market share in an environment of rapidly falling volumes in its core air freight market. The group also appears to have maintained its margins, with EBITDA, at constant exchange rates, down just 4% for the year.

The contract logistics business held up less well, with EBITDA falling 20%. A key aspect of CEVA's market strategy has been a reduction in its reliance on the automotive sector. Until recently, that sector generated almost 40% of the group's business, led by its 'Lead Logistics Provider' contract with FIAT. Although around half CEVA's automotive business involves the more stable aftermarket contracts, it has still been hit hard by the fall in automotive production and that sector now accounts for just 32% of revenue.

Despite that, CEVA appears to have reacted aggressively, expanding with key customers such as Rolls-Royce Aero Engines. Consequently, its overall contract logistics business seems stable and of high quality.

The real issue with CEVA is the state of its finances. The group's huge debts, bequeathed by its private equity owners, remain and the company is focused on cash management in order to manage those. CEVA has already drawn down its revolving credit facility to maintain its financial headroom but that only highlights the criticality of the situation. It would not require too much pessimism to entertain the thought of a substantial restructuring of debt and possibly even ownership in the not too distant future. The underlying quality of the business, however, gives options in that area.

CEVA Logistics Ranked Number One Airfreight Forwarder by IATA in Thailand

CEVA Logistics, one of the world's leading supply chain companies, today announced that it had maintained its number one position in the International Transport Air Association (IATA) ranking in Thailand. This is the second consecutive year that CEVA tops the IATA ranking list after it announced a 27% airfreight growth and achieved over 3.8 billion Baht of airfreight sales volume in Thailand for 2008. This was published only on 26th March 2009, so how is it that their business seems to be falling off a cliff. WhichForwarder have been informed by several reliable sources that 5,000 employees are to go in Asia if the receivers don't get there first.