TNT, Europe’s second largest express delivery service, suffered a full year net loss of $351 million from an $86 million profit for the same period in 2010.

The parcel delivery giant logged an operating loss of $139 million in 2011 after making a profit of $465 million in Europe and losses of $468 million and $99 million in the Americas and the Asia-Pacific, respectively.

On the new strategy to refocus on Europe, Marie-Christine Lombard, CEO of TNT Express, said in a press release dated February 21: “Our franchise in Europe is unrivalled, with its unique service portfolio, dense networks and leading presence in all countries. This franchise gives us confidence in the future.”

She added that while their markets outside Europe remain critically important to them, they will be changing their business approach. “We will reduce our exposure to fixed intercontinental capacity through cooperation agreements with leading airlines and we will explore partnership opportunities for our domestic activities in Brazil and China. Our objective is to strengthen our proposition to customers and employees while reducing our financial exposure.”

TNT Express earlier received an unsolicited acquisition bid of $6.45 billion from U.S.-based United Parcel Service, the world’s largest package shipper, for its entire issued capital, which TNT Express subsequently rejected. Talks between the two sides are still ongoing, however.

Photo courtesy of TNT Express

According to the Vietnam Port Association (VPA), the total container-handling capacity of the ports in Ba Ria-Vung Tau is nearly 8 million TEUs, but actual demand is less than 5 million TEUs.

The provincial Department of Transport said the Ba Ria-Vung Tau seaport system is host to 53 ports (23 are operational and the rest are set for completion in 2012 and 2013), with a total registered investment of more than US$7 billion as of the end of 2011.

But the department said the ports in the Cai Mep-Thi Vai area suffer from underdeveloped traffic and infrastructure support that detracts from their attractiveness to customers.

National route No 51 connecting the Cai Mep-Thi Vai area to the main traffic system is dilapidated, while route No 956 connecting national route 51 to other major seaports remains unfinished. Road building plans leading to the ports are still in the blueprint stage.

Officials of the province said the poor infrastructure development was largely due to a capital shortage.

As a result of the inadequate infrastructure, carriers have had to use barges to transport their containers to the port, increasing the cost for container owners. The under-capacity has also forced the seaport operators to reduce fees to entice more vessels to come in.

Photo by felixtriller

Over the next five years, 12 countries—Hong Kong, Singapore, Australia, Japan, Taiwan, South Korea, India, Malaysia, Thailand, China, Vietnam, and Indonesia—will contribute to the Asia-Pacific transportation and logistics market’s annual growth of 7.6 percent to reach US$4 trillion in 2016, the international consulting firm said in a media statement on February 21.

Gopal R, vice president of transportation and logistics practice of Asia Pacific at Frost & Sullivan, said sea freight is the key transport mode for freight movement in Asia-Pacific, handling more than 60 percent of total freight traffic in the 12 countries researched.

He forecast total cargo volumes in Asia-Pacific to increase 5.1 percent year-on-year to 19.67 billion tons in 2012.

Gopal said that Hong Kong’s transportation and logistics market is projected to grow at a compound annual growth rate (CAGR) of 6.7 percent to reach $40.58 billion in 2016, supported by growth in external trade.

He added that Hong Kong, as one of the leading logistics hubs in Asia, saw its transport, storage and courier sector account for 6.7 per cent of total GDP in 2011.

Gopal noted that Hong Kong operates the world’s busiest cargo airport with 4.1 million tons of cargo throughput, and ranked third in the world’s busiest container seaports with 23.7 million TEUs in 2010.

“With the world-class logistics infrastructure and comprehensive transportation connectivity, freight volume by air and sea experienced a steady growth over the years,” he added.

But he also noted that Hong Kong port is facing increased challenges from neighboring ports within Pearl River Delta and mainland regions. He added that Shenzhen Port and Guangzhou Port have brought stiff competition to Hong Kong.

The emergence of other hubs for logistics and supply chain operations in the Asia-Pacific region, such as Singapore, is also a threat to Hong Kong’s dominance in the region, he said.

“In addition to its excellent connectivity, state-of-the-art infrastructure, and pro-business environment, Singapore has attracted many leading global logistics players to set up their regional distribution centers in the country, putting pressure to Hong Kong logistics market,” Gopal said.

According to the Civil Aeronautics Board (CAB), throughput reached 282.497 million kilograms (kg) compared to the previous year’s 234.635 million kg.

Inbound cargoes and mail reached 144.309 million kg and comprised the bulk of the total. Outbound air cargoes hit 138.188 million kg.

Philippine Airlines was the country’s top cargo carrier last year, handling 24.57% of the aggregate at 69.412 million kg. Of this, 65.723 million kg were booked at the airline’s Manila terminal and 3.689 million kg in Cebu. Cargoes shipped were classified as electronics (70%), tuna (20%), and garments, spare parts and live animals (10%).

Vis-à-vis PAL’s 2010 volume of 76.334 million kg, last year’s throughput slid 9%.

Hong Kong-based airline Cathay Pacific was the country’s second biggest cargo last year. It handled 36.678 million kg, with 29.548 million kg booked in Manila and 7.13 million kg in Cebu.

In third place was Singapore Airlines, accounting for 20.822 million kg, followed by Korean Air at 18.361 million kg, and Gulf Air at 11.932 million kg.

Rounding up the country’s top 10 cargo carriers were United Parcel Service, Eva Air, Thai Airways, The Emirates, and Qatar Airways.

Earlier, CAB reported domestic cargo volume carried by five Philippine airlines dropped slightly to 183.312 million kg in 2011 from the previous year’s 183.477 million kg.

But in the domestic passage sector, passenger volume grew 13.3% to 18.76 million from 16.55 million, thanks to promotional fare offers.

Under PEZA Memorandum Order 2012-002 signed by PEZA director general Lilia de Lima on February 14, the system covers all export shipments of ecozone export enterprises; ecozone logistics service enterprises, including ecozone facilities enterprises with warehousing/logistics and recycling operations.

Only shipments loaded at the Ninoy Aquino International Airport, Manila International Container Port, Port of Manila, Mactan-Cebu International Airport, Cebu International Port, Diosdado Macapagal International Airport, and the Port of Subic are part of the system.

Excluded are several cargoes under a single export declaration (ED) or cargoes to be released from economic zones on a staggered basis; export shipments of physical products of ecozone IT enterprises; and direct export shipments of enterprises to be loaded outside the listed ports whose shipments still require processing under the existing manual export processing system. (The latter still needs the issuance of an order covering the same under the E-AEDS.)

All export declarations have to be electronically filed and processed through any of the PEZA-accredited service providers: InterCommerce Network Services, E-Konek Pilipinas, and Apollo Technologies.

The order also provides for selective shipment inspection to be undertaken by PEZA-Bureau of Customs (BOC) personnel prior to release from the PEZA ecozone.

The E-AEDS export processing fee (EPF) has been set at P225 per ED for less than a container load, and P225 per ED consisting of one to two full container load plus P112.50 per FCL in excess of two.

But for the system’s first six months of implementation, the EPF will be P150 per ED regardless of the type or number of cargoes contained in the ED.

The order is silent on how exportables for ecozone logistics service enterprises and facilities enterprises with recycling operations will be approved. In the meantime, these will be tagged as regulated by zone officials.

Meanwhile, the BOC’s separate automated export system under the electronic-to-mobile system is still being worked on. PortCalls understands a meeting at the agency will soon be called to hammer out details of the initiative.

Business Man Standing On Key Board by renjith krishnan http://www.freedigitalphotos.net/images/view_photog.php?photogid=721

In a paper entitled “Investing in Local Roads for Economic Growth”, Llanto pointed out that while the Philippines has relatively improved its transport and logistics performance, it has lagged behind neighboring ASEAN countries such as Malaysia and Thailand.

He urged the country to intensify its focus on making transportation and logistics more efficient, noting that, “Exporting countries, which have been able to effectively address both border (e.g. tariffs) and behind border issues (e.g. transport and logistics), have been able to exploit new and bigger markets opened by globalization and trade liberalization.”

Citing a 2006 study, Llanto said improved road network quality has been associated with higher intra-regional trade flows. Simulations suggest an ambitious but feasible road upgrade could increase trade by as much as 50%.

He said more road network investments are imperative in boosting trade and local economic growth and are a key to poverty reduction.

“A severe underinvestment in good quality roads has certainly contributed to the high cost of doing business in the country,” he added. “A good network of roads at the local level is indispensable in the timely movement of people and transport of goods with low transaction costs.”

To meet infrastructure needs, Llanto underscored the need for local governments to launch a vigorous revenue mobilization campaign, which may involve plugging tax leakages.

“Real property taxation is an underutilized source of local revenue in the country in contrast to its being a mainstay of local finances in more developed countries,” he said. Moreover, Llanto said local revenues should be utilized to produce local public goods that serve the people and not a few vested groups.

”People will be convinced to support government efforts to raise revenues once they experience an improvement in public service,” he noted. “However, weak governance and corruption erode the credibility of local governments, which may face strong resistance to attempts to increase the level of local taxation.”

Apart from these measures, the PIDS paper said there is need to improve the procurement system involving local roads, ensure that local roads form part of an efficient road network, and conduct an audit of past utilization of road funds for more effective and efficient use.

“Raising additional money to fund local roads is only a part of the solution. Much more will depend on the quality and strength in governance and adherence to good planning, budgeting, and procurement practices in the national government and local government units,” it added.

Highway by winnond http://www.freedigitalphotos.net/images/view_photog.php?photogid=1970

Bobby Amores, head of PHILFOODEX, and board member of the Export Development Council and PHILEXPORT, wants the Export Development Council (EDC) to revive the issue, which he says keeps food, furniture and handicraft exports uncompetitive to similar goods in the ASEAN region.

All that time, most Asian countries have made it to the ranks of the newly industrializing economies with Korea and Japan already highly industrialized, and China growing to be the second biggest economy in the world. Back home, the Philippines has remained poor, with millions of its men and women of working age without jobs.

One research study showed it only costs US$5 to ship a ton of corn from Manila to Hong Kong, 633 nautical miles away. But when shipped from Cagayan de Oro to Manila, closer at 504 miles, the same corn costs up to more than twice as much at $9.1 to $13.9 per ton!

Studies and studies have been made, one by the World Bank, to find the problem’s root causes. Two have been pinpointed, the first being the Cabotage Law, which prohibits foreign vessels from moving cargoes and people between the islands. The law was enacted by Congress long before globalization was the name of the game. Only another law could reverse it. A bill is now pending before the legislature, which is to say that no immediate relief can be expected.

The other problem is the high cost of port handling services like arrastre, wharfage and other services. Port charges are regulated by the Philippine Ports Authority (PPA). The fees have gone through the roof over the years. The EDC transportation committee points to PPA as the culprit since it gets 20% of fees from international lines and 10% from domestic carriers, collected for it by service providers themselves.

Although the PPA goes through the motion of holding public hearings each time port service providers seek rate increases, the agency always ends up approving the rate hikes despite vehement objection by exporters, importers and local manufacturers serving the domestic market. PPA knows who butters its bread — the port handling outfits. As rates increase, its share of the fees also increases.

At last week’s EDC meeting, it was pointed out that while the PPA charter was enacted into law by Presidential Decree 857 issued by the late dictator Ferdinand Marcos and can only therefore be changed by Congress, the agency’s power to collect a percentage of the port services fees was only given through a letter of instruction or more specifically, LOI 1005-A.

An LOI was the martial law equivalent of a Presidential Executive Order which an elected President can issue today. As such, the Marcos LOI can be changed or reversed by an executive order issued by President P’noy. There is some hope of partial relief from that end.

Ambassador Dee informed the group that path was taken in the past but nothing happened. There’s no harm in trying again. Maybe this time around, Transportation Secretary Mar Roxas, known to have close links with the business community and familiar with issues the sector faces since he was trade chief, may bring the issue straight to his close friend, the President.

And maybe this time around, some changes toward faster and more frequent movement of goods between the islands actually happen so that farmers and other rural producers will have better access to their markets. Economic growth coming from that end will then be truly inclusive.

Kenichiro Koreeda of the Embassy of Japan expressed this during a review of the economic relationship between the two countries during a forum called by the Department of Trade and Industry on Doing Business in Free Trade Areas held in Pasay City.

Of the nine economic cooperation agreements Japan has hammered out with Asian countries, including India in the past few years, Koreeda said the Philippines has turned out to have the best utilization with 88.4%.

Last year, Japan imported an average US$1 billion a month from the Philippines. From January to November, Japan bought 18.44% or the bulk of Philippine exports, followed by the United States whose purchases accounted for 14.7%. China sustained its buying spree with a 12.62% share.

Senen Perlada, executive director of the Bureau of Export Trade Promotion, said Japan imports a wide range of products such as minerals, semiconductors, electronic and machinery parts, and consumer items like food and garments, making Japan a huge market for Philippine exports.

Members of the automotive industry were the biggest users of PJEPA, while usage of perks the pact provided was more diverse among Filipino exporters.

Signed in December 2008, PJEPA covers trade in goods, services, customs procedures, investments, intellectual property and mutual recognition, movement of natural persons, cooperation, competition, and improvement of the business environment.

In 2010, Japan had a 126 million consumer base; $5.46 trillion gross domestic product; and was the fourth largest importer of goods in the world, with $693 billion worth of imports.

Retail market

Meanwhile, exporters were urged to look at the expanding retail markets of the Philippines and other Asian countries that are bursting with opportunity, said Dennis Orlina, president of the Philippine Chamber of Handicraft Industries, Inc. (PCHI).

Orlina made this recommendation following release of the 2011 Global Retail Development Index (GRDI) indicating that six Asian markets, including the Philippines, were among the top 30 destinations for global retailers.

He said the data suggests that aside from the local market, exporters can set their sights on these countries as alternative markets, in addition to traditional buyers and emerging economies.

”Many developed markets have been slower to recover from the global economic downturn than emerging markets and are often over-stored and facing wary customers,” he said. “New markets offer new opportunities, as well as new challenges. Global expansion is more than knowing where to go; it is knowing when and how to do it.”

Citing GRDI results released by international management consulting firm A.T. Kearney, Orlina said the Philippines has improved its position as top emerging markets for retail development.

He said Filipinos’ purchasing power is supported by two contributing sectors giving rise to the “new” middle class: the business process outsourcing sector now employing about 350,000 Filipinos, and remittances by overseas Filipino workers.

The GRDI found that Philippine urban areas are fueling growth, with a rising number of dual-income, middle-class families and young professionals driving retail sales. Half of the country’s total retail sales is concentrated in the Manila metropolitan area.

”The Philippines, 24th last year, is expected to see retail sales grow from $39 billion in 2011 to $42 billion by 2015, thanks to an expanding urban population and rising consumer spending fueling growth in organized retail,” the report noted.

Other Asian emerging countries ideal for retail development are India, China, Indonesia, Malaysia and Vietnam. Others are the Middle East and North Africa and South American countries.

”The outlook for Southeast Asia remains bright, with increased domestic demand and exports, stabilizing retail sales and improving consumer confidence. Grocery remains the region’s most important sector, accounting for almost two-thirds of total organized retail sales,” the report added.

Hand Exchange Money by tungphoto http://www.freedigitalphotos.net/images/view_photog.php?photogid=1708

“With this adjustment we are able to reduce our Asia-Europe capacity and improve vessel utilisation without giving up any market share we have gained over the past two years. We will defend our market share position at any cost, while focusing on growing with the market and restoring profitability,” Søren Skou, Maersk Line CEO, said in a February 17 press release.

The 9 percent capacity reduction will be facilitated by a vessel-sharing agreement with the French container shipping line CMA-CGM.

“With this agreement, Maersk Line is able to remove 9% of its vessel capacity while still maintaining full and competitive coverage for its customers. In addition, the cooperation helps Maersk Line cut the cost of serving West Mediterranean markets, enabling Maersk Line to deploy its own vessels to areas where they are most needed as well as pursue further slow-steaming,” the company said.

A January report from shipping analyst Alphaliner predicted Europe-Far East container traffic growth would slow to 1.5 percent in 2012 from an estimated 2.8 percent in 2011 due to a weakening economic outlook in Europe. The industry container vessel fleet, by contrast, is set to grow by 8.3 percent in 2012.

“The Asia-Europe trade remains the world’s busiest trade lane, however, the supply of vessels currently operating on this trade simply outweighs the demand. We are therefore rationalising our service by taking out vessel capacity and thereby reducing costs,” says Vincent Clerc, chief product and yield officer for Maersk Line.

Maersk Line said it will also consider additional opportunities to reduce capacity, including redelivery of time charter tonnage, the use of lay-ups and slow-steaming. Additionally, it will not declare the option for the last 10 Triple-E vessels.

Under their vessel-sharing pact, Maersk Line and CMA CGM will merge their respective AE11 and MEX services into one new AE11/MEX (operating 12,500 TEUs per week) to cover the trade from the Far East to and from Spain, France, and Italy.

To cover the Mediterranean hubs, Maersk Line and CMA CGM will merge their announced AE20 and FAL9 services into a new AE20/MEX3 service, operating a weekly capacity of 9,500 TEUs. Maersk Line will further complement the coverage of its volume requirements in the Mediterranean hubs with the reinstatement of two port calls in Algeciras, Spain, on its North Europe Daily Maersk strings.

For its new AE11 service, Maersk Line’s AE11 service is merging with CMA-CGM’s MEX service and will continue to cover the Western Med, including Malta, Valencia, Barcelona, Fos Sur Mer and Genova.

The full rotation will be Qingdao, Busan, Shanghai, Ningbo, Yantian, Chiwan, Nansha, Tanjung Pelepas, Port Kelang, Malta,Valencia, Barcelona, Fos Sur Mer, Genoa, Malta, Khor Fakkan, Singapore.

The AE11 will start on the first week of April 2012 from Qingdao with a 12,500 TEU vessel.

The new AE20 service will have the following rotation: Xiamen, Shanghai, Ningbo, Yantian, Nansha, Tanjung Pelepas, Port Kelang, Beirut, Malta, Valencia, Malaga, Tangiers, Port Said, Port Kelang, Singapore.

The AE20 will have its first sailing on the last week of March 2012 from Xiamen with a 9,500-TEU ship.

Photo by Fischer, Silke for Maersk Line

Exports dropped by 20 percent year-on-year, while imports and transshipments decreased by 18 percent and 11 percent, respectively, compared to the same month last year, it added.

“Although cargo is expected to be slow following a general decline last year, there have been signs of a slowdown in the rate of decline since the last quarter of 2011. Therefore, we are confident that the aviation industry’s performance will continue to be vibrant in the long run,” said Stanley Hui Hon-chung, chief executive officer of Airport Authority Hong Kong.

On a rolling 12-month basis, the amount of cargo handled was 3.9 million tonnes, down 6.7 percent year-on-year.

Photo courtesy of HKIA