<![CDATA[ Interview with ShipHero: why the 4PL model doesn’t always work ]]> Nia Hudson, Research Analyst at Ti, recently caught up with Aaron Rubin, CEO of ShipHero, to discuss the beginnings of ShipHero, which started off as a 4PL.

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If you’re someone who has been paying close attention to newer entrants in the logistics market, then chances are you’ll know about ShipHero. The logistics provider is multi-faceted and runs its own 3PL fulfilment business which is facilitated by ShipHero’s own proprietary technology, though this accounts for just 5% of its business. The company largely uses its buildings to learn what 3PLs need and to prove that its technology works. By far the majority of ShipHero’s business is centred around being a SaaS provider for 3PLs and brands that ship for themselves, although the fulfilment side continues to generate profits too.

Nia Hudson, Research Analyst at Ti, recently caught up with Aaron Rubin, CEO of ShipHero, to discuss the beginnings of ShipHero, which started off as a 4PL.

In one of Aaron’s recent LinkedIn posts, he revealed that ShipHero used to be a 4PL – where a company acts as a middleman between various different parties – before pivoting to a more traditional 3PL fulfilment model.  Thanks to the advice of Maggie Barnett, who was brought in to run the 4PL side of the business, ShipHero then opened its first warehouse in Las Vegas and pivoted its fulfilment side to a more traditional 3PL model. Barnett had told Rubin that the “4PL model will never work”.

Rubin’s post raises an important point regarding the difficulties and the issues with the 4PL model, which can increasingly put margins at risk. One of the most prominent examples of a company abandoning its pursuit of this business model is Shopify, which recently announced it was selling off its asset-light logistics business acquisitions after senior leadership said it became a distraction from the software company’s core offering.  

When asked about the key challenges of running a 4PL, Aaron highlighted several:

Issues with inbound stock and communication, and capacity and margins hamper the 4PL model. Aaron said that “inventory would often land at a 4PL partner’s dock that is non-compliant. The logistics partner wouldn’t want to deal with this – fixing non-compliant inventory is a pain and hard to charge for, and it is more lucrative to receive compliant inventory. The next issue was the communication chain with non-compliant inventory. ShipHero was ultimately just a middleperson, and the game of telephone would take days instead of hours, making it incredibly frustrating for all parties”.

He continued: “When Covid hit, our 4PL partners were suddenly at capacity. Our orders were their last priority. Why? Because with a middle layer of management, there is less margin. This means the 3PL made less money on the orders they shipped on ShipHero’s behalf. Our orders were always the last out because they were less valuable to the 3PL. Further, the reputational hit didn’t fall on our 3PL, instead, it was ShipHero’s reputation that was tarnished by late orders.”

According to Aaron, the shift from 3PLs to 4PLs stemmed from critical shortcomings in the brand-facing experience offered by 3PLs. Aaron highlighted that many 3PLs failed to provide brands with real-time inventory visibility, prompt order adjustments, or a satisfactory mobile interface. Recognising this gap, 4PLs capitalized on the opportunity to enhance brand interaction by developing superior interfaces. However, this advantage diminished with the widespread adoption of platforms like that developed by ShipHero by numerous 3PLs, equipping them with robust web and mobile portals. Additionally, 4PLs once leveraged VC-subsidized pricing to undercut costs, but this strategy has since become unsustainable. As a result, many 4PLs are struggling. Most recently, 4PL provider Airhouse announced a round of major layoffs and transferred customers to partner 3PLs.

What’s next for ShipHero?

Exciting developments are on the horizon for ShipHero, according to Aaron. The company is growing its SaaS customer base rapidly and entering new geographies including Mexico, Oceania and Europe. Additionally the company is launching an in-person training centre in Fort Worth, Texas, scheduled for June. This facility will offer warehouse operators a comprehensive three-day certification course on the ShipHero Warehouse Operating System, empowering them with advanced skills and expertise.

Author: Nia Hudson

Source: ShipHero

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<![CDATA[ China shipbuilding boom triggers talk of tariffs ]]> The quantity of supply of new ships is very important in determining container freight rates. The strength of the supply of new ships has enabled prices to remain, if not low, then moderate in the face of disruptions to traffic through the Suez Canal.

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The quantity of supply of new ships is very important in determining container freight rates. The strength of the supply of new ships has enabled prices to remain, if not low, then moderate in the face of disruptions to traffic through the Suez Canal.

Whilst the anxiety of major container shipping lines to sustain capacity and market share in 2020-2022 was the major cause of the wave of new ships hitting the market today, there were also supply-side reasons as well. In particular, the Chinese shipbuilding sector has been offering the market low-cost products delivered quickly.

For example, reports from China cite figures from the China Association of the National Shipbuilding Industry that assert that Chinese yards have seen a 59% increase year-on-year in production in the first quarter of 2024. Chinese shipbuilding now accounts for more than half of completed ships and possibly 70% of new orders. 40% of completed ships were container vessels, whilst container vessels make up 12% of new orders. The largest proportion of ship types, built and on order, are tankers and bulk vessels. 

However, this growth in Chinese shipbuilding is drawing the sector into the trade frictions between China and its trade partners. The American government and major ship-building nations of South Korea and Japan have been discussing some form of protection from Chinese ship production. The Americans have been suggesting to the South Koreans that they invest in yards in the US, although this appears to have few implications for the market for large merchant vessels. More importantly, there appears to be a suggestion that tariffs could be placed on Chinese-built ships. This would benefit South Korean yards in particular as it is they who provide the most significant competition to the Chinese for very large container, bulk, and LNG vessels. 

Although at one time such a notion would have seemed unlikely, such are the levels of tension between China and much of the rest of the world that tariffs on any product cannot be dismissed. The medium-term implications of all of this may be that the cost of new ships may increase. Although it will be hard to implement tariffs on all vessels from China, the major shipping lines may come under pressure to change their procurement policies.

Author: Thomas Cullen

Source: Ti Insight

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<![CDATA[ The Critical Role of the Canadian Oil Pipeline in World Trade ]]> The Canadian pipeline will provide better access to Asian markets, which is becoming even more important given that America will probably go through a political change in November, and an alternative to the Panama Canal.

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Julia Swales, Senior Editor at Ti, interviewed Punit Oza, Founder of Maritime NXT and asked him “What problems will the Canadian oil pipeline solve and how will it be critical for Canada and world trade?” 

It is quite clear that the centre of gravity in world trade is moving more towards Asia in general. India and China have been quite clear that while they will try to adhere to the Paris Climate Accord, they will need some dispensation and additional time. The net zero targets of India and China are not in line with the American or the European targets. They are well into 2050-2060 which means that they will probably be the biggest importers of fossil fuel in the next 30-40 years, to fuel their growth & progress.

If that is needed, then this kind of infrastructure which connects Central Canada or Eastern Canada to the Western Canadian ports, which are much closer to Asia, is very critical for Canada. This infrastructure will also bypass the Panama Canal completely. Currently, tankers and bulkers are reluctant to pay the kind of auction fees for transits that the container ships are willing to pay, not to mention the huge delays in transiting the canal, which create greater uncertainty. The Canadians have been smart to eliminate that and say, let’s take the crude down to Vancouver, and simply supply their biggest markets in Asia in a most timely and secure manner.

Canada is also one of the largest suppliers to America through its own pipeline and now want to try and hedge their bets, as politically, they are concerned about Trump coming back. Trump’s attitude towards the erstwhile NAFTA and the current US-Mexico-Canada Free Trade Agreement has been a tough one for Canada.

Further, Canada has got commitments from all the major oil companies to use this particular pipeline. They will start sending part of their production into the pipeline, rerouting the cargoes into Asia, from West Coast Canada, instead of doing it from the Eastern Seaboard. Interestingly, while the usual suspects are there, that is the Canadian and the US oil companies, there are a few Asian companies too. An example being PetroChina Canada.

This inclusive model is being used by many countries, such as Saudi Arabia – who have divided the export regions and refineries and formed joint ventures and marketing arrangements, according to the countries which are key demand markets. They have a joint venture agreement on the Middle East Gulf side, transiting through Straits of Hormuz, with Total Energies, the French oil giant. Similarly, they have joint venture partnership with Sinopec, the Chinese oil major, in Yanbu, in the Red Sea coast, where all the problems are. Essentially, it’s a good model to have, if Canada can ensure a committed volume coming out from there.

There is one big issue though – the weather, which is getting worse due to global warming. The actual sea transit from Vancouver to Asia during the winter months is tough. We know that on the dry cargo side, that creates difficulties, because obviously cargo loading is open to elements and therefore, the efficiency really suffers. For the oil trade, this may not be a major concern as most of the operations are through hoses & pipelines.

This pipeline doesn’t solve all the problems, but it does provide a genuine alternative to the uncertain Panama Canal & a better access to Asian markets, which are becoming even more important for Canada, given that America will probably go through a political change in November.

Author: Julia Swales

Source: Ti Insight

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<![CDATA[ Improved logistics links crucial to Caribbean economic growth, UN conference hears ]]> John Manners-Bell, Chief Executive of Ti Insight and Founder of the Foundation for Future Supply Chain, recently spoke and moderated a panel at the United Nations Global Supply Chain Forum in Barbados. One of the aims of the conference was to identify action-oriented recommendations, setting out how stakeholders and policy makers from transport and trade could better understand the evolving trading and shipping landscape, address the underlying challenges and leverage the associated opportunities.

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John Manners-Bell, Chief Executive of Ti Insight and Founder of the Foundation for Future Supply Chain, recently spoke and moderated a panel at the United Nations Global Supply Chain Forum in Barbados. One of the aims of the conference was to identify action-oriented recommendations, setting out how stakeholders and policy makers from transport and trade could better understand the evolving trading and shipping landscape, address the underlying challenges and leverage the associated opportunities.

In his preliminary remarks, Manners-Bell commented that the transformation of the global supply chain environment and a combination of political, environmental and economic factors presented the Caribbean region with a range of systemic risks. He mentioned that Small Island Developing States (SIDS) had suffered significantly in the past from natural disasters such as hurricanes, floods, volcanic eruptions and Covid had severely impacted societies and economies in the region. Climate change was also having an impact through reduced volumes of ships through the Panama Canal and even the disruption of the Suez Canal was having an effect.

Despite this, when he took a poll of audience opinion, the majority of those present responded that they were optimistic about prospects for the future, although there was a significant minority who expressed the view that risks outweighed the benefits.

This view was echoed across the panel of industry experts. One panellist, for instance, talked about being ‘guardedly optimistic’ although greater levels of coordination across the region were required. The consolidation in the shipping industry around a small number of shipping lines and larger vessels was regarded as a particular threat.

Manners-Bell also asked the audience whether they believed that near-shoring would be a driver for future economic growth. There was a unanimous ‘no’ from the audience, although the view of the panel was more nuanced. They believed that there could be opportunities accruing to countries in the Caribbean, but these would not be as great as in countries such as Mexico where manufacturing eco-systems already existed. Instead, the biggest opportunities would be in ancillary services. One panellist commented that it was all about ‘getting the right pieces in place’.

At the conclusion of the session, Manners-Bell asked the panel to identify specific recommendations which could be taken to government ministers attending the forum. These included:

  1. Trade facilitation must be a priority, with one system across the entire region. However, it was admitted that the prospects of having a single document to facilitate the movement of goods between Caribbean countries was ‘not close’.
  2. There should be a region-wide logistics strategy including public/private investment in shipping hubs.
  3. A shipping ‘centre of excellence’ should be created, putting training of logistics workers at the heart of any development plans.
  4. Foreign investment should be encouraged and facilitated which would ultimately drive down logistics costs.
  5. There must be more efforts to standardise rules across the region reducing the administrative burden on shippers and logistics providers.

Manners-Bell commented, ‘It is clear that the supply chain and logistics industry knows what needs to be done to stimulate economic growth across the Caribbean region as well as improve resilience. However, it will need resolve, collaboration between private and public sector, investment and the sweeping away of unnecessary trade rules. The development of logistics hubs and improved freight services, including cool chain, could facilitate growth of the manufacturing sector and allow the region to become far more self-sufficient.’

Despite clarity at an industry level, there needs to be a real desire to make the reforms. Whether politicians throughout the fragmented Caribbean region are willing to take a more ‘joined up’ approach to trade and logistics is yet to be seen.


Author: John Manners-Bell

Source: Ti Insight

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<![CDATA[ Rumours about Schenker bids ]]> Rumours are emerging about the sale of Schenker by Deutsche Bahn. A just released report from the news organisation Bloomberg claims to have knowledge of the bidders and how much they are offering. Amongst what it calls a “handful of confirmatory bids” for Schenker, Bloomberg asserts that “according to people familiar with the matter” there …

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Rumours are emerging about the sale of Schenker by Deutsche Bahn. A just released report from the news organisation Bloomberg claims to have knowledge of the bidders and how much they are offering.

Amongst what it calls a “handful of confirmatory bids” for Schenker, Bloomberg asserts that “according to people familiar with the matter” there is one leading offer from a combination of two financial companies, CVC Capital Partners plc and Carlyle Group. The report says that the offer “could fetch more than €15 billion” but then goes on to state that CVC Capital Partners and Carlyle Group have submitted a joint bid of “around €14 billion”. There also seems to be some implication that the two companies are attempting to draw on funds from the Abu Dhabi Investment Authority and Singapore sovereign wealth fund, GIC, “according to the people”.  

Bloomberg suggests that the logistics companies DSV, Maersk and MSC have placed bids for Schenker but that these are lower than those of CVC and Carlyle.

It is unclear where these reports originate from. Caution should be exercised when reading reports concerning these sorts of transactions as it is hard for any but a few participants to gain an accurate picture of the whole process. There may also be a temptation for some of the participants to influence the process by briefing journalists. However, the price of €15bn does seem to be reasonable and it would be unsurprising for private equity companies to bid for such an asset.

It is also worth noting that Deutsche Bahn is coming under pressure to consider the position of another of its ‘logistics’ subsidiaries, DB Cargo. Not only is DB Cargo loss making but it is accused by private rail freight companies of unfair competition due to Deutsche Bahn’s continued injections of cash to keep DB Cargo viable. Deutsche Bahn announced earlier this year an extensive restructuring of DBCargo.

Deutsche Bahn is under considerable pressure to improve its financial position which is characterised by a considerable level of debt and heavy expenditures in infrastructure. The Deutsche Bahn that may emerge in a few years’ time could look quite different to that of today. Its exposure to freight transport could be quite low.


Author: Thomas Cullen

Source: Ti Insight

Supply chain strategists can use GSCi – Ti’s online data platform – to identify opportunities for growth, support strategic decisions, help them stay abreast of industry trends and development, as well as understand future impacts on the industry.

Visit GSCI subscription to sign up today or contact Michael Clover for a free demonstration: mclover@ti-insight.com | +44 (0) 1666 519907

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<![CDATA[ Bolloré insulation against cyclicality sorely needed in another tough quarter for CMA CGM ]]> Even with the acquisition of Bolloré Logistics to insulate itself against the cyclicality of the container shipping trade, profits at CMA CGM were down 30.3% y-o-y in Q1.

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Even with the acquisition of Bolloré Logistics in a long game to insulate itself against the cyclicality of the container shipping trade, profits at CMA CGM were down 30.3% y-o-y to US $2,390m in the first quarter. The acquisition was completed midway through the quarter but failed to insure against the difficult conditions in container shipping, and revenues were down 7.0% y-o-y to $11,834m.

Things could be a lot worse!

According to CMA CGM, the Red Sea situation turned out to be a benefit to freight spot rates. Due to so many larger vessels diverting via the Cape of Good Hope there has been an effective reduction in global capacity. Additionally, an uptick in consumer demand in the EU and US helped volumes grow 11.7% to 5.61m TEU but even so the division saw EBITDA down 35.8% y-o-y to $1,950m on revenues that fell 11.4% to $7,858m.

There is a core structural problem to global container shipping trade – overcapacity with new ships erroneously ordered during the pandemic only now coming into service. CMA CGM has been one of those. Even while suffering the consequences of softening consumer demand it is bringing new ships into service, with average revenue per TEU falling 20.7% y-o-y to $1,400 as a result. If the Red Sea situation is actually benefitting the company, things could be a lot worse if peace breaks out in the Middle East.

Logistics division fails to insulate against shipping woes

The Bolloré Logistics acquisition was completed on Feb 29, 66% of the way through the quarter. As such it failed to have much of an impact on revenues of the Logistics division let alone that of CMA CGM as a whole. Revenues were up 0.6% in the quarter to $3,887m and EBITA up a reasonable 6.9% to $361m.

Group Chairman and CEO Rudolph Saadé said, “The acquisition of Bolloré Logistics gives us the critical mass we need to withstand cyclical challenges”. This may well show in the current quarter, but failed to materialise in the last one.

It’s interesting that despite the strategic turn toward logistics as a business line being apparently so important to the company, its margins are less than half that of container shipping. Even with the downturn the shipping trade is experiencing, it had a 24.5% margin (down 9.4 points y-o-y) where Logistics is up slightly to 9.3%. As such, it provides a fairly thin blanket to insulate the Group at best.

Looking forward 

There’s no sign of peace breaking out in the Middle East and the Red Sea situation will carry on impacting global trade. Saadé continued, “CMA CGM will continue to meet its customers’ needs as effectively as possible”.

Even with US and European consumer demand recovering, there are unavoidable structural problems in the supply chain – growing overcapacity being the elephant in the room. It’s not clear what will happen with the sea cargo industry in the coming year, but the slow and steady logistics investments may well be one that keeps the ship on an even keel. 


Author: Richard Shrubb

Source: Ti Insights

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<![CDATA[ Hapag-Lloyd admits uncertainty ]]> Unsurprisingly Hapag-Lloyd saw profits fall in Q1 2024 as compared to Q1 2023. On a year-on-year basis, revenue was 23% lower at US$4,623m.

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Unsurprisingly Hapag-Lloyd saw profits fall in Q1 2024 as compared to Q1 2023. On a year-on-year basis, revenue was 23% lower at US$4,623m whilst EBITDA (Earnings Before Interest Tax Depreciation and Amortisation) was down 60%, EBIT (Earnings Before Interest and Tax) down 79% and total group profits was 84% lower at US$325m. At the core Liner Shipping business, volumes were up by 6.8% to 3million TEU but compared to the year before average freight rates were down 32%. Of course, the profits in 2023 were exceptional and comparisons are not that useful.

What is useful to measure is the degree to which the Red Sea crisis has driven-up both freight rates and profits in the sector, as compared to the latter half of 2023. As Hapag Lloyd commented “Even though our results are significantly below the exceptionally strong figures from the previous year… rates stabilised in the first quarter due to the rerouting of ships around the Cape of Good Hope and higher demand for capacity. The numerous new ships that have and will be delivered across the industry in 2024 have been instrumental to keep the Supply Chains going without too much disruption”.

The “rate stabilisation” of course is what has delivered Hapag-Lloyd’s profitability. There remains of course, the question of whether this will be sustained. Hapag-Lloyd’s commentary on this is interesting as it admits the high degree of uncertainty in the container market at present. The company said that it expected EBIT for the year to be in the “in the range of USD 0 to 1.1 billion” and that “it is still assumed that a large part of the projected result will be generated in the first half of the year” continuing that “in view of the highly volatile development of freight rates and major geopolitical challenges, this forecast remains subject to a high degree of uncertainty”.

Hapag-Lloyd is one of the most focused and profitable of the large container shipping lines, yet even it is facing a very uncertain short-term prospect.


Author: Thomas Cullen

Source: Ti Insight


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<![CDATA[ Ti’s CEO speaks at UN conference on maritime logistics ]]> John Manners-Bell is moderating and speaking at a United Nations conference entitled ‘Global Supply Chain Forum Transport, logistics, and trade facilitation for sustainable development’ taking place in Barbados, May 21-24th 2024.

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John Manners-Bell is moderating and speaking at a United Nations conference entitled ‘Global Supply Chain Forum Transport, logistics, and trade facilitation for sustainable development’ taking place in Barbados, May 21-24th 2024.

Whilst political, technological, environmental and economic trends are having a transformative effect on supply chains on a global basis, their impact is being felt most acutely at a local level, not least in Small Island Developing States in the Caribbean.

Although the world’s economy has been fragmenting for the past decade, the risks involved in supply chains became most apparent during the Covid crisis. Governments across the region experienced difficulties in procuring a whole range of goods supplied from abroad including personal protective equipment (PPE) and medicines. However, in addition to this, tourism and agricultural supply chains were hit hard as a result of border closures and airline and cruise line cancellations. At a basic level it proved impossible for exporters in the region to procure packaging such as cans, bottles and plastic containers, affecting small and medium-sized businesses in particular, the bedrock of the Caribbean economy.

Since then, the region has also felt the impact of disruptions to the shipping industry, most recently the drought which reduced the transits of the Panama Canal, delaying shipments from China and increasing shipping costs, and even the diversion around the Suez Canal which has pushed up global shipping rates.

Whilst disastrous in the short term, many governments believe that the Covid pandemic could be a watershed moment for the region. It has focused minds on making supply chains more resilient through a wide range of policy initiatives. These include far more localization and regionalization of supply, making islands less dependent on the USA, Europe or China. This would ideally involve more on-shoring of manufacturing presently undertaken elsewhere. In order to facilitate the movement of goods on an intra-regional basis, some believe that there needs to be investment in faster and more frequent ferry services linking the islands more effectively. Also supply chains need to be more circular, enabling products to be reused and recycled, reducing the need for so many imports.

Some politicians also believe that there could be benefits from the present trend of near-shoring, already a major force for economic growth in Mexico. For example, Roberto Alvarez, Minister of Foreign Affairs of the Dominican Republic, believes that some supply chains could be restructured to include the Caribbean region, helping manufacturers avoid the tariffs which have been imposed by successive US administrations on Chinese imports. He has gone on record as saying, “In the case of the world’s largest market, the United States, nearshoring represents a big opportunity for countries in the Caribbean and Central American regions”.

However, for these opportunities to become reality, much work needs to be done in terms of logistics infrastructure and services. Reports have highlighted that many ports lack equipment and that which exists is often in a poor state of repair; accessibility of ports is often difficult; ports often lack autonomy and investment (private and public); IT systems are weak and labour needs restructuring at key ports.

The region is also being disadvantaged by the longstanding shipping industry trend towards more efficient but ever larger vessels. According to the Caribbean Development Bank, new generations of ships can only call at a small number of large hub ports and this will mean an increasing level of transhipment to vessels small enough to call at many of the islands. In turn this will add cost and time to deliveries.

In summary, high costs, inefficient logistics operations, limited investment and constrained competition mean that it is challenging for Caribbean exporters to compete on a global scale.

However, there are government initiatives which could reduce trade friction. The new Maritime single window CARICOM IMPACS, developed in collaboration with national border control agencies, will facilitate the movement of low risk shipments across the region whilst identifying those which present a security risk. Governments must also invest in logistics, financial and ICT infrastructure as well as providing a secure, stable and business friendly environment for foreign investors. Manufacturers and logistics companies can also play a role by undertaking risk assessments and crisis training to ensure the resilience of their supply chains.

There is no doubt that Small Island Developing States face many challenges from the global forces which are presently transforming supply chains and the logistics and shipping industry. However, the right policy decisions can ensure that the region’s economy can become more robust and better able to cope better with high levels of volatility, complexity and uncertainty which are likely to characterize markets for many years to come.

Author: John Manners-Bell

Source: Ti Insight


Supply chain strategists can use GSCi – Ti’s online data platform – to identify opportunities for growth, support strategic decisions, help them stay abreast of industry trends and development, as well as understand future impacts on the industry. 

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<![CDATA[ IDS moves to accept Křetínský’s £3.5bn offer ]]> The deal to sell Royal Mail looks as if it is moving to a conclusion.
The Board of Directors of ‘International Distributions Services plc’(IDS), which is the group that owns both Royal Mail and GLS, has recommended that a proposed revised offer from EP Group be accepted.

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The deal to sell Royal Mail by IDS looks as if it is moving to a conclusion.

The Board of Directors of ‘International Distributions Services plc’(IDS), which is the group that owns both Royal Mail and GLS, has recommended that a proposed revised offer from EP Group be accepted. Since EP Group, owned by the investor Daniel Křetínský, made its first offer on April 9, there have been discussions with the Board over the deal.

The Directors of IDS have now stated that the offer of UK£0.37 per share which is worth £3.5bn, is a good valuation of the company. They also seem to have discussed issues other than price, such as what they describe as “a set of contractual undertakings to protect key public interest factors and recognise Royal Mail’s status as a key part of national infrastructure” such as “a financially sustainable Universal Service in the future, namely a one-price-goes-anywhere service for the entire United Kingdom and the continuance of six-day delivery for First Class letters”. In addition, the Board states that it has sought “contractual commitments to protect employees’ current rights and continue to recognise the existing unions of both Royal Mail and GLS”. The Board of Directors of IDS has also requested that EP Group maintains “an investment grade rating profile” for IDS.

Formerly, it is not certain that Daniel Křetínský will accept this new revision of the original proposal, although that seems unlikely as EP Group has been involved in its formulation. It is also possible that another bidder could emerge, although at this stage there is no sign of one. What seems most likely is that sometime in the near future EP Group will take ownership of IDS. Then Daniel Křetínský will have the task of making money from these assets. How he will do this is unknown. It is quite possible that he will break up the group, selling GLS, which may emerge as an attractive asset to either a financial buyer or a rival express provider. He will also be faced with the task of improving the financial performance of Royal Mail. Bearing in mind the commitments to service levels, employees, and the level of debt that Royal Mail has, this may prove to be hard work.

Author: Thomas Cullen

Source: Ti Insight


Supply chain strategists can use GSCi – Ti’s online data platform – to identify opportunities for growth, support strategic decisions, help them stay abreast of industry trends and development, as well as understand future impacts on the industry. 

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<![CDATA[ Japan Post Postal Business Hit By Macroeconomic Headwinds ]]> Its small parcel service, Yu-Pack saw a 3.0% increase in volumes that didn’t offset the volume declines in mail.

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In the financial year ending March 31, 2024, Japan Post’s postal operator business Japan Post Co achieved a 0.01% margin on revenues that grew 2.2% y-o-y to JP¥3,357bn (USD $22.7bn). Parent company Japan Post Holdings saw a 1.6% growth in net ordinary income to ¥668bn and a 7.6% growth in revenues to ¥11.98tn, with much of its income from the financial sides of its business. 

Postal and Domestic Logistics business

•   Revenue ¥1,966bn

•   Net income ¥68.6bn

The sub-segment of Japan Post Co had volume declines of 6.0% y-o-y in mail, and Yu-Mail saw a decline of 7.7% y-o-y. Its small parcel service, Yu-Pack saw a 3.0% increase in volumes that didn’t offset the volume declines in mail. According to the company, a substantial fall in New Year postcards and an increase in personnel expenses as well as expenses associated with collection, transport and delivery impacted the bottom line. Offsetting these issues were collaborations with online marketplace Rakuten and a number of independent parcel carriers in Japan, including Yamato Transport for which it delivers Mail-Bin parcels. Japan Post acting as a line-haul parcel operator has improved the efficiency of all carriers involved and reduces overall costs associated with otherwise part-loaded long distance trucks.

International Logistics

•   Revenue ¥448.8bn

•   EBIT ¥9.5bn

The restructure of Australia based, wholly owned Toll Holdings is well underway, though as its focus is being moved to growth markets in Asia, it has also faced macroeconomic headwinds. These include the global slowdown in air and ocean freight forwarding that both hit revenues and profits, in part because falling expenses associated with lower volumes failed to outstrip the fall in revenues.

Post Office

•   Revenue ¥1,112.9bn

•   Net income ¥72.9bn

The Post Office business is more closely related to Japan Post Bank and the life insurance business than the postal operator side and is more of a financial institution than a postal operating business. Consequently it was hit by lower commissions from the Japan Post financial businesses but these were more than offset by a bumper year for its real estate business. The real estate business fed a 48% growth in net operating income.

As with many postal operators, Japan Post Holdings has diversified away from being a postal operator, and where some have gone big on parcels or being an interface with government, Japan Post has become more of a financial institution. Its postal operator and global logistics businesses make up for a smaller proportion of its revenues and profits as a result. Much of this is exposed to the domestic and international macroeconomic factors that have beset much of the industry worldwide. Where for Japan Post, growth stems mostly from its financial activities, it is less exposed as an institution as a whole to those issues than other postal operators. 

 

Author: Richard Shrubb

Source: Ti Insights

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