In the second quarter, the TNT group achieved a 10.8% revenue increase. Express reached another record margin of over 10%, with double digit growth, and Mail achieved a margin of almost 21%, with revenue growth in both European Mail Networks and Mail Netherlands. Logistics, affected by the continuing difficulties in France, saw a slight margin decline.

In Logistics France, the TNT group announced plans to refocus their operations to areas where TNT can earn its cost of capital, reasserting their commitment to the French logistics market. The logistics activities in France consist of transportation, which represents around 60% of the business, and contract logistics, which represents the remaining 40%. Losses in the first half of this year were ? 17 million, on revenues of ? 117 million. TNT intend to sell their transportation activities. Strong
network coverage is a key success factor in this business, which TNT does not possess.

On 18 April, TNT signed a cooperation agreement with Norway Post, with both parties then forming a task force to identify areas of mutual interest in the Nordics. On 24 June, TNT announced that it is not participating in the Belgian Post sales process and reconfirmed its strategy of challenging incumbent postal operators through its European Mail Networks, in cases where the terms of cooperation with the incumbent would not be mutually beneficial.

Source: TNT Q2 Results

The European Commission (”EC”) and the United States Department of Justice (”DOJ”) have cleared the envisaged acquisition of Royal P&O Nedlloyd by Maersk.

In order to get EC clearance Maersk and Royal P&O Nedlloyd have committed to divest the business of Royal P&O Nedlloyd on the trade between Europe and South Africa if the offer is completed. Maersk will maintain its existing business on the trade between Europe and South Africa.

Further, if the offer is completed, Royal P&O Nedlloyd will withdraw from some conferences and consortia, notably on the trades between Europe and Africa, Australia, New Zealand, North America and Central America. These withdrawals will take effect at the expiration of the relevant notice periods. Maersk will remain in the conferences and in the consortia of which it is a member.

As for the United States, the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (”HSR Act”), as amended, applicable to Maersk’s envisaged acquisition of Royal P&O Nedlloyd, has expired without further action by the DOJ which means that the requirements of the HSR Act have been satisfied. The EC cleared the transaction on 29 July 2005.

Royal P&O Nedlloyd’s shareholders have the opportunity to tender their shares until expiry of the acceptance period on 4 August 2005 at 15:00 hrs. Amsterdam time.

Source: PO Nedlloyd

Global express company UPS has released its results for the second quarter of 2005. For the three months ended June 30 the company reported revenue of $10.19 billion, an increase of 14.9% from the $8.87 billion reported last year. This in part reflected the acquisition of Menlo Worldwide Forwarding at the end of 2004. Consolidated operating profit rose 18.2% to $1.55 billion compared to $1.31 billion for the prior-year period. Net income totaled $986 million compared to the $818 million.

Its package division also reported strong growth. Average daily worldwide volume for the second quarter rose by 557,000 packages, or 4.1%, to 14.1 million. Worldwide average revenue per piece showed a 4.7% increase. All international regions saw double-digit growth in export volumes whilst in the United States there was an increase of 387,000 packages per day.

U.S. domestic package revenue grew 5.7% during the period to $6.94 billion on a volume growth of 3.2%. Operating profit rose 13.2% to $1.12 billion and operating margin increased 110 basis points to 16.1%. Pricing remained firm with an increase in average revenue per piece of 2.4%.

International package revenue increased 22.7% to $2 billion whilst operating profit climbed 41.3% to $397 million. Export volume grew by 18.2%, led by Asia export volume gains of 39.5%. China again drove Asia with export volume rising 99%. Average revenue per piece increased 9.4%.

Revenue for the supply chain solutions segment increased 84.9% to $1.25 billion primarily through the addition of Menlo Worldwide Forwarding. Profitability declined due to the expected costs of integrating the Menlo operation. However, the company expects $50-to-$100 million in synergies in 2006 and at least $200 million in 2007.

The strength of the second quarter and prospects for the remainder of the year have prompted UPS to update the 2005 outlook toward the higher end of its previous guidance.

Source: Transport Intelligence

In recent times it seems that the trend towards out-sourcing or re-locating production to remote, low cost centres of manufacturing has been inexorable. Systemic change in production patterns has resulted in several waves of migration over the last three decades.

The first involved multi-nationals re-locating to the least economically developed members of the EU (for instance, Spain, Portugal and Ireland) aided by large subsidies or tax breaks from national governments. As these economies grew, living standards and GDP per head increased, and this resulted in rising labour costs forcing manufacturers to look for a region with a lower cost base. Such a region was to be found in fast developing Central & Eastern Europe and this prompted a second wave of re-location facilitated by increasing integration of these countries with the EU.

Long before full membership of the EU was achieved in May, money had flowed into the region to help with reconstruction and development in the post-communist era. Transport infrastructure was improved which allowed multi-nationals to supply western European markets, especially Germany, from the region. The removal of customs barriers following accession has made it even more attractive to foreign companies.

However, even when this region was at an early stage of development, companies in some industries were looking further afield for lower cost production sites. Where transport costs are not a major factor in the total value of a product (e.g. high tech goods), re-location to developing markets in the Asia Pacific Rim region is a real option. China, Indonesia and even Vietnam are some of the most popular destinations.Whether to Central & Eastern Europe or Asia Pacific, the migration of production has had a profound effect on the logistics industry. Local and national carriers have lost out to the major logistics companies which were able to provide regional or global services. At present the major freight forwarders and integrators have been the main beneficiaries.

Although this trend has been well documented, there is growing evidence that things may be about to change. The motivation behind out-sourcing production to remote, low cost regions has come from companies? need to stay competitive. National and European initiatives over the last decade, including the 35-hour week, minimum holiday entitlement, works councils and other measures which have made labour markets inflexible have forced companies to look elsewhere. Governments, unions and other employee organizations are starting to realize that in order to save jobs, it is necessary to create a more competitive labour market within Europe itself.

Source: Transport Intelligence

Barcoding Inc. has released three radio frequency identification (RFID) kits that enable companies to address Wal-Mart mandates regarding customers, technology and future investments.

The RFID Mandate Kit creates EPC-compliant global trade identification numbers. The software extracts data from the ERP system, which is included in an RFID tag that is placed on each carton and pallet that is shipped. The kits allow continual sales to Wal-Mart, the Department of Defense and other RFID-tag customers.

The RFID Evaluation/Lab Kit–equipped with an RFID printer/encoder, a portable RFID reader, a fixed-mount RFID reader, RFID tags and RFID encoding software–allows companies to experiment with RFID technology in a controlled environment to better understand how it can be used in their supply chain.

The RFID Readiness Kits–which comprise Zebra Technologies printers and Intermec mobile computers–are designed for companies that anticipate RFID future use but do not want to lose any of their current automated data collection technology investments. The items in these kits are RFID upgradeable.

The textiles and clothing industry has a long tradition in the countries of Central and Eastern Europe. German companies in particular began transferring labour-intensive activities to these countries some decades ago to exploit cost advantages. Often this was in the form of so-called outward processing trade, with semifinished textiles being exported at favourable tariffs from Western to Eastern Europe, where they were made up into finished garments and then re-exported to Western Europe. This led to intensive trade relations between the old EU member states and the new EU entrants and candidate states. As a result, the countries of Eastern Europe as well as North Africa and Turkey are therefore not only among the top suppliers of clothing to Western Europe but also among the top markets for textiles produced in Western Europe.

These trade relations face tough strains in the coming years. The clothing industry not only in Eastern Europe but also in Turkey and
North Africa will come under increasing pressure. Obviously, this holds for a number of countries in Southern Europe, too, where
garment manufacture especially still plays an important role today (e.g. Italy, Portugal, Greece). This is due to the expiry of the
Agreement on Textiles and Clothing (ATC) at the end of 2004. This liberalisation of world trade has hugely intensified competition on the world market for textiles and clothing. Unlike before, the big Asian producers ? especially China ? are no longer subject to any volume restrictions on their textiles and clothing exports to the EU (or the US).

Deutsche Bank Research give us three strategic advices:

1. In future, Eastern Europe’s textiles and clothing industry will need to focus more strongly on its specific advantages over the
competition from China.

2. End of the ATC: challenges for the Eastern European textiles and clothing industry

3. Return to textile quotas makes little sense ? press for reciprocal liberalisation

Read the full DB Research Report

Read full report

Outsourcing is not a new idea. The idea of a vertically integrated manufacturer has been out of vogue for many years. However, under the banner of business process outsourcing (BPO), the outsourcing trend has accelerated, and today companies are outsourcing portions of their businesses that they would never have considered outsourcing just a few years ago.
In the case of logistics, freight forwarders and third-party logistics (3PLs) companies have been around for many years and were early providers of logistics outsourcing services. These service providers typically focused on a subset of a company’s logistics needs, such as warehousing, or export logistics. Today, however, lead logistics providers (LLPs) are emerging to provide deep logistics knowledge, transactional processing capabilities for all modes of transport and supply chain technology that together add up to a complete logistics outsourcing solution.

The entrance of LLPs is providing a new alternative for companies who wish to use leading edge supply chain software technologies. Initially, the only way to access supply chain software was to license it and install it on a company’s own servers. Then, hosted, or application service provider (ASP), models became fashionable - at least it became fashionable to talk about them. For the most part the hosted software model has not met with widespread adoption in the area of supply chain software. Today, however, a new model is on the rise, incorporating a complete logistics outsourcing offering with supply chain software — the best of both worlds.

LLPs are emerging as an alternative supplier of supply chain technology to manufacturers. This marriage of outsourcing models — obtaining logistics expertise and supply chain technology all from the same supplier — truly offers the best of both worlds. Today LLPs can provide better supply chain technology expertise and functionality, at a lower cost than traditional software licensing models while offering a complete package of services and technology, all from a single supplier.

Source: Read full article

Shortsea transhipment in The Netherlands of containers (all types) amounted to 26,8 million tons in 2003, a growth of 9% compared to 2002. This according to the publication of the figures of 2003. The transhipment of containers (in tons) constitutes 11% from the total shortsea transhipment in 2003. In 2002 the percentage was only 10,2%. From the modal shift notion, the container is the loading unit that can be an alternative to the road trailer. Hence the attention for this form of shortsea transport, in order to increase the share in European transports, is justified.

The United Kingdom, Ireland, Spain, Portugal and Norway are countries in the top 5 as far as container shipments are concerned between the 5 and the Netherlands. Together these countries represent 72% of the container transhipment in the Netherlands.

Slight growth of total shortsea transhipment
The shortsea transhipment of containers grows much faster than the total shortsea transhipment. In 2003 shortsea transhipment in Dutch ports grew slightly with 0,5 % (+ 1,2 million tons). This is a good achievement given the fact that deepsea transhipment decreased with 0,25%. Shortsea transhipment in Dutch seaports amounts to 56% of the total transhipments in 2003.

Main transhipment countries
The top 5 countries with the largest transhipment in tons have not changed very much in the last few years. Also in 2003 places 1 till 5 are occupied by the UK, Norway, Egypt, Russia and Estonia. This is the same top 5 as in 2002 with one difference that Russia and Egypt have changed places. Though the UK is still number one, the share in the total Dutch transhipment has declined slightly from 30% in 2002 to 28% in 2003. The diversity of handled products in the trade with the UK is great. This does not count for the other 4 countries. For these countries applies that the transhipment of oil products is 70 ? 98 % of the total transhipment between those countries and the Netherlands.

Largest growth in tons
The countries with the largest growth in tons are Egypt, Russia, Denmark, Morocco and Ireland. For the first four applies that the high ranking is largely the result of the transhipment of oil products. Ireland is an exception as 78% of the growth has been caused by containers en flats.

Shortsea shipping means the movement of cargo by sea between ports situated in geographical Europe or between those ports and ports situated in non-European countries having a coastline on the enclosed seas bordering Europe. Therefore shortsea shipping also includes sea transport between member states of the EU and Norway, and Iceland, as well as other countries bordering at the Baltic Sea, the Black Sea and the Mediterranean Sea.
Source: short sea

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South-African fruit exporters have addressed their concerns to the European Commission regarding the upcoming sale of PO Nedlloyd to the Danish Maersk. They expect that the new combination will get a to dominant position on the transportation of fruit from Africa to Europe. PO Nedlloyd, Maersk and its South African subsidiary Safmarine will get a market share of 60% of all container shipments on this route. Maersk will then be able to set all the tariffs on this route.

The European Commission is currently investigating the merger of the two companies, and announced that it needs more time to place their final judgement. It is expected that the EU will say yes or not at July 29th. At July 21st PO Nedlloyd will have its share holders meeting to get the approval from the shareholders. It is expected that this meeting will just be a formality.