<![CDATA[ Digital evolution of air freight advances with e-Dangerous Goods Declaration ]]> The air freight industry has moved a step closer to digitalisation and data-sharing with the launch of the e-Dangerous Goods Declaration (eDGD).

The air freight industry has moved a step closer to digitalisation and data-sharing with the launch of the e-Dangerous Goods Declaration (eDGD).

The eDGD, which is IATA compliant, uses supply chain community platforms to enable collaboration between partners, traceability and reduce errors and delays.

Implementing the e-DGD requires cooperation between all stakeholders, including shippers, forwarders, carriers and ground handling agents.

The current “proof of concept” phase involves the three airlines behind the initiative, Lufthansa Cargo, Swiss World Cargo and AF-KLM.

“The house manifest, security declaration and dangerous goods declaration are the next three paper documents that need to be electronic after the air waybill,” said Alexis von Hoensbroech, chief commercial officer of Lufthansa Cargo.

“Then 70% of the shipments could be moved without paper, and the efficiencies really kick in. Then we and forwarders can change our processes.”

The news follows hot on the heels of several other digitalisation initiatives, revealing a groundswell of support for change in the industry.

Last week, Lufthansa Cargo announced it was offering two new platforms for forwarders: GetCapacity and GetRates. Customers can access data, which includes real-time capacity information, via their own systems and process it without having to manually upload it. The process speeds up the flow of information and reduces errors, said the airline.

“We are strongly moving towards digitalisation,” said Mr von Hoensbroech, on the sidelines of the WCS conference in Dallas last week.

“One very important aspect is to create the right interface and get away from EDI. The new service offers visibility on capacity and rates. You have to sign up, it’s not public.

“The service is for forwarders. We don’t do business directly with shippers, and that won’t change. It might make it more transparent for shippers, but it is facilitated by forwarders.”

The carrier said it was working on more services, such as being able to provide spot prices together with capacity information.

Swiss World Cargo (SWC) is also working on new electronic initiatives, along with community association, Interest Group Air Cargo Switzerland (IGAirCargo).

“We are working to digitalise,” said SWC chief Ashwin Bhat. “It’s all about connecting all the relevant parties. There was a lot of paper in dangerous goods declaration; it was very inefficient.”

Colleague Christian Wyss, head of quality & services, added: “It took the industry more than 20 years to make the AWB the default document, but things are really changing now for the good.”

However, in this new era, the key will be universally available data, warned Jim Butler, senior vice president international and cargo for American Airlines.

“For any of you who still believe your competitive advantage in the future will be the data you possess, I am willing to bet you will be proved wrong.

“The competitive advantage around data will likely be defined by how you use universally available data, not the data you keep to yourself.

“And if anyone questions that, just think back to the independent travel agent of 15 years ago who believed that holding passenger airline fares to himself was his competitive advantage.

“In fact, the ones who perfected how to use newly universally available data are the ones who are still around today.”

Source: The Loadstar

Author: Alex Lenanne

<![CDATA[ FedEx Express struggles for traction as the rest of the group grows ]]> FedEx crept forward over the third quarter, with the latest numbers showing the Group’s revenue for the quarter up 9% to US$16.5bn but operating income effectively flat at $1bn with a slight deterioration in margins, down from 6.7% to 6.1%.

FedEx crept forward over the third quarter, with the latest numbers showing the Group’s revenue for the quarter up 9% to US$16.5bn but operating income effectively flat at $1bn with a slight deterioration in margins, down from 6.7% to 6.1%. 

At the core Express business, underlying revenue benefitted from higher rates and higher fuel surcharges, although FedEx describes the cyberattack on TNT in June as having a lingering affect. More disappointing was the low level of growth in volumes. For the quarter on a year-on-year basis, volumes were down 1% in total, with international and domestic US traffic falling slightly. In weight terms however, freight pounds increased by 3%. In addition, wages were higher as were ‘peak-related’ sub-contractors. The result was a fall of 24% in operating income to $424m.

FedEx Ground is more exposed to internet shopping and it shows in the volume numbers. Demand measured in terms of the number of packages moved increased by 6% which, aided by higher rates, resulted in an increase in revenue of 11%. Operating income was up 23% at $634m. However, it is noticeable that despite heavy investment in new capacity, FedEx is still affected by increased outsourcing costs at peak periods.

FedEx Freight benefitted from growth in the wider US economy, delivering a 14% increase in revenue year-on-year and a 34% jump in operating income to $55m for the quarter. This latter number represents a stiffening of margins from 2.7% to 3.2%, something which FedEx ascribes to better asset deployment. The only rising cost was higher wages for drivers.

The numbers for FedEx Ground and Freight are satisfactory, showing the company’s ability to benefit from both e-retailing and wider domestic demand in the US. The concern should be around FedEx Express. In a period that has seen a substantial increase in global trade amplified by e-retailing, why has it grown so slowly?

Source: Transport Intelligence, March 22, 2018

Author: Thomas Cullen

<![CDATA[ SNCF Grows, Geodis Shines ]]> The 2017 annual results of SNCF Mobilités Group were significantly stronger than in the prior years, with the improvement showing in most of its P&L, cash flows, and returns metrics.

The 2017 annual results of SNCF Mobilités Group were significantly stronger than in the prior years, with the improvement showing in most of its P&L, cash flows, and returns metrics.

Group revenues rose 4.3% to €31.8bn, with gross profit up 27.9% to €2.7bn and operating income surging 55.9% to €1.3bn. There emerged some accounting and corporate adjustments, but regardless of some yearly changes, gross profit margin, operating income margin and return on capital employed stood at 8.7%, 4.2% and 7.9% against 7.1%, 2.9%, and 5.2%, respectively, in 2016.

The group consolidates SNCF Transilien, TER and Intercités, with sales of €8bn; Voyages SNCF, which turned over €7.3bn; Keolis, with over €5.2bn of revenues; and the smaller Gares & Connexions unit.

However, of great interest was the performance of its largest unit, SNCF Logistics, where Geodis, its main revenue driver, grew organically but has also been looking for sizeable acquisitions as it ranks just outside the top 10 by revenue in the freight forwarding field, according to our 2016 data.

In 2017, SNCF Logistics included four operating segments, which contributed to about one-third (€10.2bn) of group revenues: alongside Geodis, its reporting businesses were rail freight and multimodal transport (TFMM), Ermewa and STVA. As part of a portfolio rationalisation, STVA (€268m of sales, €1m of operating profit, €4m of investment in 2017) was sold in the second half of the year.

Geodis was responsible for about 80% of SNCF Logistics revenues, turning over almost €8.1bn, with gross profit of €271m and current operating profit of €201m (once the contribution of affiliates was included), which implied an operating margin of 2.8%.

Geodis invested €125m to grow sales by €243m, up 3.1% on a comparable, annual basis, while all business lines posted growth, except for the supply chain optimisation unit, “following a change to the IBM contract,” the group said. Meanwhile, freight forwarding activities “grew substantially” thanks to rising volumes, and contract logistics recorded a positive performance due to contract wins in France and internationally.

TFMM grew by €54m (3.6%) annually; “excluding the counter-effect of the 2016 strikes it is steady, with a decrease for Fret SNCF (mainly for cereals transport), stability for other rail transport operators, and growth for Multimodal Transport (combined),” it noted, adding that the revenues generated by Ermewa and STVA rose by €3m (+1.1%) and €12m (+4.7%), respectively.

Notably, Geodis recorded several significant wins.

It strengthened its partnership with Lego by signing two new contracts, “the first involving the maritime transport of virtually all the toy manufacturer’s flows and the second concerning the Danish company’s e-commerce logistics in North America.”

On top of that, Geodis and Ford signed a three-year contract for the transportation of spare parts between warehouses in Germany (Cologne and Dormagen) and Greece (Athens). Elsewhere in South Korea, Geodis said it would manage logistics for a BMW auto parts distribution hub, which the German manufacturer “hopes (…) will become the main Asia-Pacific platform for its spare parts.”

Moreover, it renewed a contract with Prénatal in the Netherlands for three and a half years, which now includes e-commerce logistics in Almere (Netherlands). It added that it “has been operating Kenzo’s global logistics from France since March.”

“Through this five-year partnership, Kenzo will be able take advantage of the specialist retail fashion expertise of Geodis, which is responsible for the reception, storage and preparation of the fashion brand’s products. Geodis is also supporting Kenzo in the development of its e-commerce sales channel in addition to the management of raw materials, quality control and product compliance.”

The 2018 outlook suggests improvement in the rate at which profitable growth is achieved, particularly in freight forwarding, as well as developments in key nations and countries (US, Germany, Benelux, Asia) and higher productivity.

The group maintains financial flexibility. In early 2017, it issued a 12-year €1bn fixed-rate bond swapped at floating rates for half of the amount, with both the bond and swap maturing on February 2, 2029. Furthermore, it said it had sold a “swaption to revert to a fixed rate in the amount of €250m with a maturity date of February 26, 2018. A second tranche of €300m backed by a floating-rate swap was issued on May 31, 2017.”

Source: Transport Intelligence, March 20, 2018

Author: Alessandro Pasetti

<![CDATA[ The EFT Logistics CIO Forum EU – Amsterdam ]]> Ti Advisory Board Member Ken Lyon gives his take on the recent EFT Logistics CIO Forum in Amsterdam, explaining how some of the attendees were utilizing disruptive technologies to their advantage.

I attended the EFT Logistics CIO Forum in Amsterdam earlier this month and I was struck by breadth of opinion expressed in the presentations and the attendees. The intention was to showcase innovation and explore how technology is being exploited by the logistics sector, as well as drawing opinion and comment from senior executives on the front line. It was broadly successful. 

Some presentations left the impression that the technology landscape has been unchanged from the 1990’s. This is where large enterprise IT environments lived inside walled gardens only accessed through magic doorways. Other presentations illustrated the opportunities for innovation by experimenting with mobile and cloud technologies at low cost.

In reality, some organisations are constrained by legislation as to how they use technology to capture, process and manage information. Others have political constraints over what they are able to do, especially if those initiatives challenge expensive capital investments made by members of senior management that are now shown to be irrelevant.

Despite these constraints, which are common to many industries, there were some excellent examples of innovative thinking from both major corporations and start-ups alike.

CMA CGM and Infosys combined to show that it is now possible to exploit low cost cloud services to augment existing applications, adding direct value to the customer. A short video demonstrated that for a few Euro’s and a couple of hours effort, it is possible to use the Amazon Alexa service to interact with customers, initiating bookings and respond to shipment queries. The speaker made the point that thousands of these cloud services are now available, on demand, from the online giants and they are an opportunity to be exploited.

The corollary to this is that to do so would require exchanging corporate information with the likes of Amazon, Google, Facebook etc. The grand bargain is that companies are able to benefit from the vast amounts of money and resources these organisations have invested in developing the services, versus allowing them to accumulate huge datasets and use cases that they will potentially exploit themselves in the future. That may be a price worth paying if the companies can use these services to gain competitive advantage now by introducing innovation to their customer base before their competition can.

Ahlers is another well-established organisation that has been operating for over 100 years in the forwarding and logistics arena. They have realised that as the sector was becoming more commoditised, supply chains are being reshaped into demand driven, just-in-time, networks of collaboration. They concluded that these new operating networks would probably be dominated by technically savvy and asset light companies. 

The senior management at Ahlers realised that lacking the resources to compete at scale with the industry giants, they needed to be intelligent by leveraging their inherent skillsets and knowhow, in concert with innovative technologies. But there is a difference between understanding the problem, visualising the solution and then being able to execute it successfully. 

The first challenge is often getting the parent organisation to agree with the appropriate solution. This is frequently down to internal culture. Radical, innovative solutions, will frequently challenge many of the habits and operating processes in the parent organisation. Usually the only way this can be avoided is via the creation of a completely separate operating entity. It is the only way new thinking and processes can be tried, without disrupting the existing business – which has to continue operating while the new entity finds its feet. It also allows the new business to make their own mistakes with hopefully ‘limited’ blowback to the parent.

Ahlers have understood this and via a separate independent unit, staffed by ‘Mavericks’, now provides data driven solutions to manage client supply chains. This approach is true 4PL management and very few companies have been able to successfully migrate into this model from the position of a traditional asset and administration heavy logistics operator. But this remains a viable option for many companies looking to break away from the commoditised spiral of decreasing revenues from price driven transport and warehousing contracts. A more detailed review of the Ahlers transformation is available in Ti’s GSCi portal.

There was an interesting presentation by a company called Enigio, who are using Blockchain (of which more later) to manage title of bearer instruments such as Bills of Lading, etc. at much lower cost. This is something that has been tried many times before and I am old enough to remember an initiative called SeaDocs trying the same approach some 35 years ago. A bank, Chase Manhattan, and the publisher McGraw Hill, invested some $30 million to digitise and hold Bills of Lading, Letters of Credit and a variety of other transferable instruments used in the movement of oil cargo. It failed.

Obviously this was before the Internet escaped from the US government research labs and when Blockchain as a concept didn’t exist. So being able to use these technologies today may give this project a better chance of success. It is yet another example of how new technologies are being used in innovative ways to reduce cost and challenge existing convention.

The French company Bollore, presented a compelling argument concerning talent acquisition and retention. It echoed many of the points made during the Clevertech presentation who demonstrated that cheap, generally available technology can be game changing in the hands of industry novices. The Bollore team explained that as technology is transforming business, it has transformed how young people entering the workplace expect to work and be treated. They can be used to ‘educate’ the organisation into becoming more technology literate, fostering innovation and exploiting new technologies.  

Finally… Blockchain. Of the many themes touched on during the conference, Blockchain came up time and time again. It is probably fair to say that while many attendees may have heard about Blockchain, only a small number are familiar with the technology and are working with it. It was therefore disappointing that the one session dedicated to discussing it was very poor, and ultimately descended into an argument between the presenters and some members of the audience. This was the only low point in the entire conference and one that was out of character with the generally informative and upbeat tone. 

Yes Blockchain is a significant technology, it has implications way beyond the headline grabbing cryptocurrency froth in the media. It will be transformative in the way it can verify truth and engender trust across supply chain and logistics networks. There will not be one company who will provide the compelling application or solution, despite the hype surrounding the IBM/Maersk initiative. This is important, but it is only a pathfinder, and IBM’s track record in trying to control marketing messages regarding technology over the past decade or so, illustrates this. What is required is a clear, coherent appreciation of the concepts that underpin Blockchain and how it might be relevant to industry challenges.

In summary, this was a well-attended event that had valuable contributions from across the logistics spectrum. It is clear that there is great interest in how the industry is being changed by technology and the opportunities this presents.

Source: Transport Intelligence, March 20, 2018

Author: Ken Lyon

<![CDATA[ DP World grows volume and orientates into other areas of logistics ]]> The container terminal giant DP World has announced strong numbers for the past year but has also pointed to a development of its strategy beyond the operation of terminals.

The container terminal giant DP World has announced strong numbers for the past year but has also pointed to a development of its strategy beyond the operation of terminals.

On the back of container volumes increasing by 10.1% on a consolidated basis, revenue was up 13.2%. Profits also increased, with EBITDA up 9.1% and ‘profit for the period’ up 8.2% to US$1,363m. EBITDA margin was 52.4%.

DP World claimed that this represented a considerable increase in market share, citing Drewry’s figure of 6% for the overall growth in container port volume increase. DP World said that it was experiencing growth broadly across the world, “from all three regions”.

The business made considerable acquisitions to its portfolio over 2017, including “new units” at Berbera in Somaliland, Limassol, Saint John, CXP in Peru, Yarimca in Turkey, Kigali, Posorja in Ecuador and increases in equity at PNC in South Korea and Santos in Brazil.

A notable development was the comments by DP World’s CEO Sultan Ahmed Bin Sulayem  that “in recent years, we have leveraged on our in-house expertise to extend our core business into port-related, maritime, transportation and logistics sectors with the objective of diversifying our revenue base and connecting directly with the owners of cargo and aggregators of demand to remove inefficiencies in trade, improve the quality of our earnings and drive returns”.

The immediate effect of this strategy is two recent acquisitions on Sunday 18; the purchase of the Peruvian port, warehousing and transport company Cosmos Agencia Maritima for US$315.7m and India’s Continental Warehousing Corporation for an undisclosed sum.

Effectively, DP World is evolving into more of a diversified logistics service provider, looking to build on its presence in emerging markets such as South America or India to develop inland logistics capabilities. It will be interesting to see how far this goes.

Source: Transport Intelligence, March 20, 2018

Author: Thomas Cullen

<![CDATA[ Strong year allows Port of Rotterdam to carry out ambitious investment programme ]]> Strong financial results allow the Port of Rotterdam to carry out investments intended to help maintain its leading position as Europe’s largest port.

Container traffic growth has been particularly strong at Rotterdam throughout 2017 and is likely to drive expansion at the port in the coming year.

The Port of Rotterdam Authority reported a turnover of €712.1m in 2017, an increase of 4.6% compared to 2016. Net profit amounted to €187m, a fall of 16.6%.

The results from Rotterdam port saw total cargo throughout up by 1.3%, with the port returning to the growth trend seen before 2016. Total tonnage increased from 461m to 467m. This increase in throughput mainly involved the container segment (12.3%). The fall in dry bulk of 2.6% and in wet bulk of 4.1% dragged down the numbers whereas break bulk (Roll on/Roll off and other break bulk) increased by 7%.

Container throughput rose by 10.9% to 13.7m TEUs (Twenty Foot Equivalent Units), as Rotterdam took its share of the European container market to 31% (2017 through to Q3), the highest it has been in almost two decades. For comparison, in neighbouring Belgium, growth at Antwerp was not as impressive, and although its volume increased by 4.1% to 10.45m TEU, Antwerp experienced a 3.6% decline in European transhipments.

Rotterdam ascribed the growth in containers to growing demand in Asia and South America as well as North America. Feeder volume in particular grew strongly (21% in TEU) for all European shipping areas and in particular Scandinavia and the Baltic states.

The incoming and outgoing flows of mineral oils and oil products fell by 10.8% to 79.2m tonnes, mainly due to fall in the exports of fuel oil from Russia as well as the fall of oil going to Asia. LNG throughput on the other hand increased by 16.5%, mainly as a result of higher deliveries to the gas network and the development of LNG bunker facilities. The throughput of chemical products remained stable, while biofuels rose due to a rise in European demand for biodiesel.

Healthy profit development has been a prerequisite for the implementation of the port’s ambitious investment plans. The Port Authority invested a total of €213.8m last year and expects to maintain the high level of investment in the coming year. Important projects include the development of the Hartel Tank Terminal and the changes to the port railway via Thamesweg, eliminating the clash between transport by rail and ocean-going vessels.

In an increasingly digitalised world, the Port Authority is also investing in the development of new digital services that can further strengthen the port of Rotterdam’s competitive position. Its focus lies on optimising logistics processes in the port area and logistics chains that run via Rotterdam. The underlying objective is to facilitate companies and make processes more efficient – improvements that should ultimately increase Rotterdam’s competitive edge. 

The Port Authority stated that it plans to develop the port into the foremost location where the energy transition can take shape. To realise this ambition, it facilitates existing, fossil-based industrial parties in the reduction of their CO2 footprint and is also investing heavily in the development of sustainable, circular and bio-based industries and renewable energy.

In its forecast for 2018, Rotterdam expects container volume to continue increasing, although the throughput growth levels will not be as large as those of 2017, suggesting that underlying demand for container shipping looks positive.

Source: Transport Intelligence, March 19, 2018

Author: Violeta Keckarovska

<![CDATA[ STEF grows with European food consumption ]]> The annual results of Stef confirmed the good progress the French company has made in the past couple of years – and was reflected by a stock market performance of over +50% since the end of 2015.

The annual results of Stef confirmed the good progress the French company has made in the past couple of years – and was reflected by a stock market performance of over +50% since the end of 2015, with its shares now trading at all-time highs, and were further boosted this week by a solid trading update.

The cool chain logistics provider exploited favorable trends last year supported by growth in European food consumption, the improvement in core transport activities domestically as well as the opening of new sites and the roll-out of new operational schemes.

Growth was visible in its international operations, with an efficient development model in Italy; notable advances in the Iberian Peninsula; and structural transformations in Switzerland and the Netherlands.

Group turnover rose 5.4% to €2.97bn from €2.8bn in the prior year, but remarkably its EBIT and net income lines rose at a much faster pace, up 7.4% and 7.6%, respectively, which showed strong financial discipline, among other things, including operating leverage. Both EBIT and net income margins were stable, at 4.4% and 3% respectively.

Almost 50% of EBIT was generated by the Transport France unit, whose operating profit rose almost 19% to €60.5m. Its Logistics France division, meanwhile, felt the pressure, with EBIT down 12% to €17.6m, but that decline was offset by a rise in profits in the international business, which experienced EBIT growth of 16.7% to €32.2m.

Maritime activities saw EBIT fall to €8.2m from €15.4m but as the group acknowledged “La Méridionale recorded a capital gain of €7m in 2016 on the sale of the Scandola ship”, so those numbers should be adjusted for comparable purposes, yielding flat earnings.

Its capital structure appears to be more properly balanced following recent events, as it “increased its equity from €559m in 2016 to €628m and made significant investments. During the period, the group benefited from a low financing cost, which amounted to 1.68% at 31 December 2017, compared with 2.41% at 31 December 2016.”

The company also discussed the prospects of a dynamic market that is swiftly “undergoing a strong transformation” but it will continue “its development and its investments in order to respond in a long-term perspective to demand from its clients for support.”

Commenting on the annual results, chief executive officer Jean-Pierre Sancier said: “2017 was a good year in terms of both turnover and profitability, thanks to the growth of Transport France activities and the dynamism of International Operations. These results mean that we are looking forward to 2018 with confidence.”

Source: Transport Intelligence, March 15, 2018

Author: Alessandro Pasetti

<![CDATA[ Evolution of retail market makes predicting demand for air cargo capacity tougher ]]> Lack of data for cross-border e-commerce shipments is making it harder to forecast air freight demand, but in the short-term, demand remains strong.

Lack of data for cross-border e-commerce shipments is making it harder to forecast air freight demand, analysts warned yesterday.

But, as forwarders look to book space through the year to avoid a capacity crisis like last year’s, analysts indicate that demand for air freight may slow slightly. But in the short-term, it remains strong – and the peaks are here to stay.

Brian Pearce, chief economist for IATA, told delegates at the World Cargo Symposium in Dallas the strong cyclical upturn seen 12 months ago was, in part, due to low inventory levels.

“Businesses were caught out, facing a run down in their inventories. They needed to re-stock, and quickly. They hadn’t quite anticipated the strength of consumer demand.

“But inventory restocking cycles don’t last for ever…businesses will turn back to cheaper modes of transport.”

However, those low inventory levels could instead be related to the growing e-commerce sector. Brian Clancey, MD of Logistics Capital & Strategy, pointed to the changing shape of retail cycles, and decreasing reliance on holding stock.

“The conventional retail supply chain has a 125-day cycle,” he explained.

But, he pointed out, the e-commerce retail supply chain runs on a weekly cycle, stock is built to order and there is no need to hold inventory, suggesting that the inventory:sales ratio could now be a less useful indicator.

Mr Pearce acknowledged: “Up to last year, you could explain the changes by the sales inventory. But for the current upturn, we have only been able to explain about half of it,” he said. “There are other things happening, such as e-commerce and a rise in pharma.

“Inventory cycles are getting shorter, there are lower inventories for retailers and manufacturers and Amazon and others can get stuff moved around very quickly, so there is no need for high inventory levels.

“We are starting to see things changing that are unexplained. One big problem is the lack of data in e-commerce. There is more uncertainty – but we do take that into account.”

Along with the rise in e-commerce volumes has been lack of growth in capacity, caused by the slowdown in air freight demand. In seven of the past 10 years, capacity growth (ATK) has outpaced demand (FTK).

But demand growth significantly exceeded capacity growth in 2017, said Marco Bloemen, senior vice president for Seabury.

Meanwhile, belly capacity is increasingly gaining share over scheduled freighter capacity, accounting for 67% of the market in 2017, against 62% in 2010. And capacity growth up to 2021 will be driven by bellies. Of future freighter deliveries, 78% will be for the integrators and, by 2021, 100% of orders will be for the integrators, noted Mr Bloemen.

He added that the peaks, some of which were attributable to particular commodities and regions would remain, causing further headaches for balancing supply and demand.

Machinery parts, raw materials and hi-tech contributed most to air cargo volume growth, he said. Fidget spinners, popular with children, accounted for a surprising additional 38,0000 tonnes of air freight, out of China last year, primarily in May and June. Milk powder, imported to China, was more stable throughout the year, but accounted for 32,000 tonnes.

Meanwhile, while international mail parcels grew 10% between 2006 and 2016, and express grew 5.4%, air express average shipment sizes have decreased dramatically – by 16% since 2010, an indication of growing e-commerce.

Regionally, while Chinese exports were “spearheaded” by east and south China, imports were centred around Shanghai. Germany, which saw 16% air freight growth, accounted for 32% of western European growth last year, while Vietnam accounted for 54% of South-east Asia’s growth.

Source: The Loadstar March 14, 2018

Author: Alex Lenanne



<![CDATA[ IPO-funded Link buy boosts Waberer’s profits – more acquisitions promised ]]> Waberer’s Optimum Solution reported solid 2017 results last week, confirming organic and inorganic growth have propelled its core business units.

Waberer’s Optimum Solution reported solid 2017 results last week, confirming organic and inorganic growth have propelled its core business units.

Annual group revenues rose 17.8% to €674.4m, with a steeper growth rate recorded in the fourth quarter, when its top line rose 21% year-on-year to €179m.

The bolt-on acquisition of Polish haulier Link contributed to the rise in many key financial metrics, with a headline-grabbing +163% growth rate in earnings per shares the biggest highlight for the year.

On a reported basis, the Hungarian haulier enjoyed a 57.5% surge in net income to €21.4m, for a net income margin of 3.2%, up 0.8 percentage points on a comparable basis.

Meanwhile, group EBIT and EBITDA rose 16.6% and 37.8%, respectively, to €85.8m and €29.7m, but we witnessed conflicting trends in terms of profitability, with EBIT margin up 60 basis points to 4.4% and EBITDA margin falling 20 basis point to 12.7%.

Chief executive Ferenc Lajkó said the “financial performance surpassed expectations across the board for our shareholders”, adding that strong annual results “demonstrate the successful implementation of our strategy aimed at revenue growth through organic and inorganic expansion, supported by efficiency gains and the adoption of cutting-edge technologies”.

He said 2017 was an important year due to its long-awaited IPO in July, which aimed to release value from its two pillars: International Transportation and Regional Contract Logistics (RCL).

Core international transportation revenues last year were up 13.3% to €511m, boosting gross profit. Costs rose but were well managed, determining a rise in unit EBITDA to €61.6m, although the associated EBITDA margin dropped 0.5 percentage points to 12%. Meanwhile, RCL revenues came in at €124m, generating €17.3m of EBITDA.

Group operating cash flow also rose, although rising investment meant free cash flow was marginally lower at €74.8m, while cash outflows from investing and financing activities increased to €57m due to the “Link acquisition and higher total lease payments on an enlarged fleet, as well as higher capital expenditure for IT solutions, which were not fully offset by IPO proceeds”.

Cash and cash equivalents grew by €27m annually, while net financial indebtedness and net leverage are under control and remain financial tools that management plans to use to preserve competitiveness and returns.

The company said net leverage – a multiple of rolling recurring EBITDA which includes Link’s figures from 1 July 2017 – decreased to 2.7x from 2.9x a year earlier, versus 3.4x at the end of September. Fleet refinancing costs remained below a 1.7% implied rate, it noted.

The marginal improvement notwithstanding, its funding plans remain under the spotlight.

Following recent speculation that it was considering an “ABB/follow-on offering, as stated in the IPO prospectus”, the company said it had agreed with its IPO arrangers that for a year after the first day of trading it would not conduct “any capital raising through the issuance of new shares”, and has concluded not to issue new shares or conduct capital raising in the near future.

Source: Transport Intelligence, March 13, 2018

Author: Alessandro Pasetti

<![CDATA[ Chart of the month: Online retailers will outsource more logistics functions over next five years ]]> Survey data published in Ti’s latest report, Global e-commerce Logistics 2018, suggests that e-commerce logistics providers will not only benefit from the rapid growth of online retail, they will also prosper thanks to retailers outsourcing more logistics functions.

Survey data published in Ti’s latest report, Global e-commerce Logistics 2018, suggests that e-commerce logistics providers will not only benefit from the rapid growth of online retail, they will also prosper thanks to retailers outsourcing more logistics functions.

According to Ti’s survey of 108 shippers and LSPs conducted in the months of December 2017 and January 2018, more than two-thirds of both shippers and LSPs believe that the propensity to outsource will increase over the next five years.

Just 10% of LSPs believe less logistics functions will be outsourced, while 18% asserted the situation will remain virtually unchanged. As one might cynically expect, shippers are more circumspect than LSPs, with over 20% stating online retailers will outsource less logistics functions over the next five years.

How do you expect online retailers’ outsourcing habits to change over the next five years?













Source: Transport Intelligence

On one hand, the notion that outsourcing rates in logistics are expected to increase is not that surprising; it is something of a common assumption across the industry. However, there is good reason to be sceptical about this when it comes to e-commerce logistics, specifically e-fulfilment logistics.

Looking back to our research in 2013/2014 of the UK e-commerce market, Ti found that of 20 large online retailers, 18 managed their distribution centres in-house. Interviews suggested that the main factors behind this were 3PLs’ lack of investment in developing bespoke solutions and existing systems not necessarily being best-suited to the very different demands of multi and omni-channel retail.

The latest survey evidence is therefore painting quite a different picture.

Perhaps this is in part a reflection of LSPs upping their game. Among large contract logistics providers, there seems to be a narrative of some early movers really capitalising on the opportunities in e-fulfilment logistics, while others have only seriously moved in over the last five years.

In addition, technological solutions have improved and 3PL e-fulfilment logistics service offerings have deepened and broadened. For example, the provision of digital e-commerce services by LSPs is increasingly common.

Such service improvements are often achieved through partnerships with niche specialists. Recent examples include Wincanton joining up with Virtualstock, a UK-based SaaS provider in January 2018, Kuehne + Nagel partnering with e-retail automation and optimisation software specialist 4SELLERS in November 2017, while Bollore started working with Californian software company OroCommerce in the same month.

The upshot is that a greater willingness to outsource is yet more good news for e-commerce logistics providers. However, uncovering the outsourcing intentions of retailers is just one piece of the puzzle in understanding the growth opportunities in e-commerce logistics. Ti has also delved into other elements, such as how fast online retail is growing across countries, as well as the underlying logistics cost structures of online retailers. We reveal how e-commerce logistics costs typically vary by geography, vertical sector and retail channel (marketplace vs non-marketplace sellers; pure plays vs multi/omni-channel) in addition to how logistics costs as a proportion of sales have evolved over time for almost 20 e-retailers.

Acknowledging the complexity of understanding e-commerce logistics growth prospects, Ti’s forecasts by country present three scenarios: expected, high and low. These forecasts are however of total e-commerce logistics spending by retailers; the propensity to outsource does not enter the equation. What our survey findings on outsourcing reveal is that our growth rates forecast for logistics spend by retailers should be thought of as lower bounds for e-commerce logistics provider growth.

Source: Transport Intelligence, March 13, 2018

Author: David Buckby


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