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Global Cargo News

Gartner top 8 technology trends 27 How blockchain can create opportunities


Automated warehouses


September - October 2019

Global Outlook

US-China tension adds to slowdown

EDITOR’S COMMENTARY Editor Wael Elazab explores how businesses are adapting operations. 2 LOGISTICS: NEWS IN REVIEW Americas EMEA APAC

5 7 9

GLOBAL OUTLOOK US-China tension adds to global slowdown.



According to IATA the period Q2 2019 saw air freight tonne kilometres (FTKs) fall by 1.8 percent, down 3.3 percent in year-onyear terms.


Following up on the success of its pharma corridors initiative, Emirates SkyCargo has expanded its initial network of 12 pharma stations to 20.

Swissport targets growth in the pharma sector


Swissport is investing in a new air cargo facility at Brussels Airport as it targets

TRANSPORTATION: MARITIME Container market disruption seems likely as uncertainty mounts 15 Global shipping consultancy Drewry highlights concerns of a slowing global

May sees decline in contracted ocean freight rates 16 May saw an eye-catching 11.5 percent rates surge, with US container rates for imports climbing by close to 20 percent.


The Hong Kong Seaport Alliance (HKSPA) welcomed OOCL Hong Kong on its maiden call to Hong Kong.


CN’s greater Montreal and Southern Ontario areas, and the CSX-served ports of Philadelphia, New York, New Jersey and the New York City metropolitan are working together. September - October 2019

Wabtec completed delivery of five dieselelectric PowerHaul® series locomotives to Körfez Ulastırma, the subsidiary of Turkey’s largest refinery Tüpras operating in railway

TRANSPORTATION: ROAD Predicting an efficient and cleaner journey ahead 23 optiTruck teProject puts predictive fuel optimisation to a long-haul test, driving from Turkey to Italy; 5,000km later, numbers were collated and the journey



The Great White North welcomes truckers


PrePass Safety Alliance and British Columbia Ministry of Transportation and Infrastructure allow users to bypass weigh stations in British Columbia.


Despite the ongoing economic uncertainties in the country, with currency volatility and inflation, Turkey remains one of Davies Turner’s most important trade





CN and CSX announce new intermodal service offering


Locomotive delivery boosts Tupras Refineries 22

Maintaining Turkish trade lanes

growth in the pharma sector.

World’s largest container vessels cement Hong Kong’s status


The new service serves different cargoes, including car parts and equipment, from the Republic of Korea to the European countries.


IATA: Air cargo continues to face difficulties as trade tensions increase 11

Emirates SkyCargo expands its pharma capabilities

FESCO and JSC launch Korea to Europe service

Gartner top 8 technology trends for 2019


AI, digital twins and blockchain are some of the trends transforming supply chains.

How blockchain can create opportunities


For companies reliant on strategic partnerships or those seeking to increase the transparency of interactions between consumers or business partners, blockchain presents a world of




How to build an automated warehouse system: which new technologies do you need and why? 30 Building an efficient automated warehouse system requires careful selection of the right technologies.



Global Cargo News Managing Editor Wael Elazab Email: Deputy Editor Lisa Head Email: Production Manager John Farrell Email: Accounts Manager Iris Brown Email: Subscriptions Manager Natalie Kramer Email: Advertising Manager Ed McCauley Email: Subscription Rates £300/€370/USD480 Contact Global Cargo News 80-83 Long Lane London EC1A 9ET United Kingdom Tel: +(0) 20 395 0227 Fax: +(0) 20 395 0228 Whilst the information and articles in Global Cargo News are published in good faith and every effort is made to check accuracy, readers should verify facts and statements directly with official sources before acting up on them, as the publisher can accept no responsibility in this respect. Global Cargo News is published by Vickard Limited. It is available on a subscription package basis only and is distributed by air mail bi-monthly. All contents copyright 2019 Vickard Limited. No part of this publication may be reproduced or stored in any form by



ith US-China trade tensions continuing to focus opinion, in this issue we take a look at the impact on the global economy and explore how businesses are adapting operations in response. For some businesses, adaptation involves acquiring a competitor or forming a joint venture, and for others it means launching a new service or targeting a new market segment. Across the global cargo community, there’s evidence that this process of adaptation is currently underway — DSV acquiring Panalpina, eBay launching a managed service, Maersk entering online trucking and Amazon Air expanding its cargo fleet. This issue of Global Cargo News magazine also looks at transportation providers targeting pharma in the air sector, cargo diversification in the rail sector and predictive technology for fuel optimisation on roads. Supply chains are becoming increasingly globalised and complex, and included is a review of the top eight technology trends that Gartner has identified as having broad industry impact, but are yet to be widely adopted. There’s also blockchain on the agenda, what’s the potential for creating opportunities for joint ventures between customers or business partners? Finally, with the growing interest in automated warehouse systems, we highlight some of the new tech you need and why you need it when building an automated warehouse. We hope the news and insight in this issue adds to your understanding of the opportunities and challenges in the global cargo sector, and as always, we welcome your feedback.

an mechanical, electronic, photocopying,

Editor Wael Elazab

recording or other means without the prior written consent of the publisher. Vickard Limited | Registered in England:11909757 | Registered Address: 80-83 Long Lane London EC1A 9ET United Kingdom |


September - October 2019



XPO Logistics announces second quarter 2019 results XPO Logistics second quarter revenue was $4.24 billion, compared with $4.36 billion for the same period in 2018, while operating income was $258 million, compared to $228 million for the same period in 2018. Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, “We’re implementing innovations in North American LTL to drive the next leg of profit improvement. Our workforce

productivity tools are returning positive results in 18 pilot service centers ahead of the national roll-out to all 290 LTL centers this year. In addition, we’re developing an entire suite of proprietary tools that utilize machine learning for dynamic pricing, route optimization of pickup and delivery, linehaul efficiency and yard management. We’re on track to deliver at least $1 billion of EBITDA in LTL in 2021.”

eBay to launch Managed Delivery, an end-to-end fulfilment service for sellers

eBay is introducing Managed Delivery, a cost-effective fulfillment service to launch next year, beginning in the US, that will provide shoppers faster and more reliable delivery on millions of popular products. The initiative will enable sellers with high-volume inventory to meet rising

September - October 2019

consumer expectations while reducing cost and complexity. Managed Delivery will provide sellers the ability to store, pack and ship their products through expert logistics partners managed by eBay. The new service allows sellers to store inventory closer to buyers in strategically located warehouses across the country, resulting in faster delivery time and lower shipping costs. eBay will power the Managed Delivery experience through a global technology platform and third-party partners will run the operations, creating a seamless end-to-end fulfillment process for sellers that will allow them to manage their inventory through Seller Hub and other industry-standard solutions. The new

service will give sellers the ability to offer the free shipping buyers want with a more reliable and faster delivery promise – and hence drive their sales on eBay. “A common request we hear from our high-velocity sellers is to help make delivery of high-volume items easy and fast,” said Devin Wenig, eBay President and CEO. “Managed Delivery will be a competitively-priced logistics solution for businesses selling high-volume goods in popular categories like electronics, home and garden, and fashion. The implementation of this service will dramatically lessen the shipping burden on sellers, while improving the shopping experience and making unboxing fun for buyers.”




Amazon Air expands its cargo fleet Amazon announced a partnership with GE Capital Aviation Services (GECAS) to lease an additional fifteen Boeing 737800 cargo aircraft. These 15 aircraft will be in addition to the five Boeing 737-800s already leased from GECAS and announced earlier this year. The aircraft will fly in the US out of the more than 20 air gateways in the Amazon Air network. “These new aircraft create additional capacity for Amazon Air, building on the investment in our Prime Free OneDay program,” said Dave Clark, senior vice president of Worldwide Operations at Amazon. “By 2021, Amazon Air will have a portfolio of 70 aircraft flying in our dedicated air network.” “We’re delighted to support Amazon Air’s dedicated air network,” said Richard Greener, GECAS Cargo’s senior vice president. “The capability of the 737-800

freighter will further Amazon’s ability to provide reliable and regional delivery to its customers for years to come.” Amazon Air’s operation launched in 2016 supporting package delivery to the rapidly growing number of customers who love fast delivery, affordable prices and vast selection. With advanced algorithms and software used for capacity and route planning, the Amazon Air operation can transport hundreds of thousands of packages per day. Amazon will open new air facilities this year at Fort Worth Alliance Airport, Wilmington Air Park and Chicago Rockford International Airport. The main Air Hub at the Cincinnati/Northern Kentucky International Airport will open in 2021. Since its launch, Amazon’s air cargo operation has invested millions of dollars and created thousands of new jobs at locations across the US.

DHL invests $150m in pharma and medical device network

DHL Supply Chain is expanding its pharmaceutical and medical device distribution network by 40 percent this year with an investment of $150 m. With the ultimate goal of bringing critical healthcare products closer to trade partners and patients, DHL Supply Chain plans to build nine new facilities by the end of 2019. “This expansion allows DHL Supply Chain to continue to deepen the connections between our customers and the patients they serve,” said Scott Cubbler, president of Life Sciences & Healthcare at DHL Supply Chain. “This most recent expansion also helps us leverage differentiated routes to market, driving even greater efficiency and productivity across the supply chain for our customers. With this expansion, DHL Supply Chain will have a total of 30 sites designed to support pharmaceutical, biotech, and medical device companies.” These facilities, strategically located within the US, are fully licensed with temperature-controlled space that supports pharmaceutical storage requirements. The facilities also allow for packaging and managed transportation for integrated solutions.

Kuehne + Nagel continues expansion of its perishables network Kuehne + Nagel successfully completed the acquisition of Worldwide Perishable Canada Co. (WWP). The company is one of the largest freight forwarders in Canada, in particular perishables cargo. With a strong footprint on the East Coast, WWP will strengthen the existing Kuehne + Nagel perishables network in Canada. Perishables logistics is one of our strongest growth drivers at Kuehne + Nagel,” says Greg Martin, regional airfreight manager Kuehne + Nagel North America. “Thus, we have been continuously investing in the expansion of our dedicated network: through selected acquisitions and by connecting key production countries to major markets. 4

Setting up global certified standards which are reflected in our KN FreshChain solution, has further strengthened our perishables network worldwide, making it the largest in the industry.” “We are looking forward to joining the Kuehne + Nagel Group. Combining the strengths of both companies, we will add outstanding value in the regional and international perishables business. For both, our customers and our employees this will generate growing perspectives and services,” comments Doug McRae, chief operating officer WWP. Jamie Wood, national manager Kuehne + Nagel Canada adds, “Acquiring

a specialised player in seafood logistics, Kuehne + Nagel consolidates its leading position in the market. Using the network and experience of both companies, our customers can benefit from an enhanced offering and the best possible solution to their needs.” September - October 2019



CEVA announces revenue increase for first half of 2019

CEVA Logistics, part of the CMA CGM Group, announced its results for the second quarter and the first half of 2019. For the first half of 2019, revenue increased by 2.5 percent in constant currency to US$3,514 million. On a reported basis, revenue in the first half declined by 3.4 percent yearon-year due to negative translation of foreign currencies such as the TRY, the EUR and the GBP into USD. Group’s EBITDA was US$281 million, which on a pre-IFRS 16 basis represented US$85 million (same period of 2018:

September - October 2019

US$119 million) resulting in an EBITDA margin of 2.4 percent (same period in 2018: 3.3 percent). Nicolas Sartini, CEO, CEVA Logistics, commented: “CEVA went through significant and structural changes in the first half of 2019 against a challenging macroeconomic backdrop. We are currently focusing on the turnaround of the Company through deep operational changes and on achieving positive free cash flow as early as the fourth quarter 2019.” The new management team is focusing on top line improvement with stronger business development structures and stronger contractual protections, a quicker resolution of situations currently holding back performance: underperforming contracts in Contract Logistics, including Italy, Ground operations, notably in North America, quicker roll-out of technology both in Freight Management and Contract Logistics in order to achieve more automated processes and better standardization. Finally, actions are underway to reinforce internal processes, more systematic sharing of best practices, performance measurement tools and employee engagement with the objective of higher retention.

Kizad cuts fees to attract investors

Khalifa Industrial Zone Abu Dhabi (Kizad), has waived the charges for over 75 percent of its services, in line with the Abu Dhabi Government directive to encourage further investment into the emirate. CEO of Abu Dhabi Ports Captain Mohamed Juma Al Shamisi said, “We continue to support the government initiatives to build an investor-friendly environment by providing our partners and customers with the incentives they need for their businesses to thrive and grow. We are committed to Abu Dhabi’s drive to become a global gateway for businesses from all parts of the world. The cost of setting up and maintaining a successful business at Kizad is more achievable now than ever before. It is an ideal opportunity for companies of all sizes to benefit from such incentives for either growing their business or entering new markets.”




Maersk enters Indian online trucking market

Maersk has announced its partnership with BlackBuck, India’s largest online marketplace for trucking, to provide an online marketplace for containerised trucking in EXIM logistics in India. Announcing the collaboration with BlackBuck, Arjun Maharaj, head of sales, Maersk South Asia, said, “Our customers are dealing with fragmented vendors with varying service levels of communication, geographical, financial and infrastructural dis-parities resulting in suboptimal supply chains. We have committed our-selves to working with partners who understand these challenges, match our set of values and have expertise in both logistics and technology.” Speaking about the collaboration with Maersk, Ramasubramaniam B, co-founder and COO Strategic Initiatives said, “At BlackBuck, over the last four years, we have developed our robust products and technology that maximise the billable kilometres of a truck, delivering higher realisation to the truck owners and driving a low-cost transportation network to the shippers. Our product will add significant value to the EXIM containerised trucking industry in India that has the additional complexity of meeting the timelines of sea freight connections, apart from other regular trucking related challenges. Maersk with their industry specific knowledge and expertise, will help us transform this space through digitisation.”

Aramex announces rise in second quarter revenue

Aramex announced a 4 percent rise in second quarter revenue to AED 1,279 million, compared to AED 1,232 million for the same quarter in 2018, while net profit reached AED 123 million, compared to AED 122 million for the same period in 2018. Commenting on the results, Bashar Obeid, Chief Executive Officer of Aramex, said: “Strong demand from e-commerce continues to spur growth in volumes we handled over the second quarter. Our Domestic Express registered out6

standing performance and International Express also enjoyed double digit growth. This is a testament to our strong brand, efficient services and increasingly competitive positioning. However, lower yields, mainly on the cross-border International Express business and changes in fulfillment models, moderated our top line figures and profitability. Freight-Forwarding business performance came below expectations as it was affected by the regional economic uncertainty, however, today our efforts continue to be focused on commercial restructuring, which will enable us to grow that business line over the long term. Our Integrated Logistics and Supply Chain Management business had another great quarter, as a result of our efforts to capitalize on the growing demand for those services, especially from regional retailers wanting to tap omni-channel sales.”

DSV completes acquisition of Panalpina

DSV has completed the acquisition of Swiss logistics group Panalpina. Panalpina is among the globally leading providers of supply chain solutions with approximately 14,500 employees in 70 countries. The combination with DSV creates one of the world’s largest transport and logistics companies with a pro forma revenue of approximately DKK 118 billion and ($17.5 billion) a workforce of 60,000 employees in 90 countries. Jens Bjørn Andersen, DSV’s CEO, commented; “We are very excited to welcome Panalpina’s customers, employees and shareholders to DSV. Our two companies will achieve more together, creating even more value for all our stakeholders. The settlement of the deal marks the beginning of the integration process, during which we will strive to provide the high level of service our customers know and rely on.” Pe n d i n g t h e a p p r o v a l a t a n extraordinary general meeting, DSV A/S will change its registered name to “DSV Panalpina A/S”. As the integration progresses, all subsidiaries and operational activities, however, will be united under the DSV name and brand. DSV expects to achieve annual cost synergies of around DKK 2,200 m ($325 m). The cost synergies are expected to have full-year effect by 2022 and will primarily be derived from the consolidation of operations, logistics facilities, administration and IT infrastructure. September - October 2019



China to reduce logistics costs by $17.8 billion

China aims to reduce logistics costs by nearly 121 billion yuan ($17.8 billion) this year, the Ministry of Transport announced at a news conference of the State Council Information Office. Spokesman Wu Chungeng said the ministry will unveil a string of measures not only to cut costs but to promote innovative development of the industry. China will continue to increase railway freight volume, upgrade its water transportation system, regulate highway freight transport and speed up multimodal transport in a bid to improve its logistics network and optimize its structure, Wu said.

September - October 2019

The country will also expand the use of pilot programs to deepen reform of the administrative law enforcement system in the logistics industry to improve its efficiency; and it will streamline certain fees related to ports, highways and airports, he said. In addition, the ministry will step up its efforts to manage the effects of eliminating highway toll stations at provincial boundaries. The ministry also called for small and medium-sized enterprises to forge alliances for common development to consolidate the fragmented logistics sector.

UrbanFox expands to Vietnam and Malaysia

UrbanFox, whose parent company is Keppel Logistics, is expanding to Vietnam and Malaysia with support from Enterprise Singapore. The company worked with Keppel Land to establish online-to-offline (O2O) capabilities at Estella Place shopping mall in Ho Chi Minh City, Vietnam. The O2O features allow shoppers to purchase the mall’s products at its physical stores or webstore. Customers can also opt for in-mall collection or home delivery. In Malaysia, UrbanFox was recently appointed as a cross-border e-commerce initiative partner by the Malaysian Digital Economy Corporation (MDEC). The company plans to set up a corporate office and digitally enabled warehouse in Shah Alam, Selangor.




JD Logistics posts break- Rivigo receives US patent for its driver relay system allocation system” through algorithms, even result in 2Q 2019 developed by the firm, to pick the right

JD Logistics, the logistics arm of Chinese e-commerce giant JD, which had previously reported losses in its operations, has broken even. “Four years ago, JD Logistics marched into the third- to sixth-tier cities. At the beginning, the number of orders was small, so the logistics cost was high,” said Liu Qiangdong, chairman and chief executive of JD “However, along with our rapid expansion into the lower-tier cities, especially the flocking of a large number of third-party orders, the cost of logistics is dropping dramatically,” the CEO added. “Meanwhile, we will continue to invest in new categories, such as fresh food and supermarkets,” Liu said. JD reported its net revenue for the second quarter of 2019 at 150.3 billion yuan ($21.5 billion), 22.9 percent higher when compared to the same period last year, while net profits surged 644 percent year-on-year to 3.6 billion yuan ($500 m). Xu Lei, chief executive officer of JD Retail, said the users’ growth rate from third-to sixth-tier cities is higher than that from first- and second-tier cities, and nearly 70 percent of new users are from lower-tier cities. JD Logistics CEO Wang Zhenhui said the unit will ramp up efforts in low-tier cities and would focus on enhancing users’ experiences in first-to third-tier cities.

Indian tech-enabled logistics firm Rivigo announced that it has been granted patent rights by the United States Patent and Trademark Office (USPTO) for its unique driver relay system. The system uses “intelligent driver

driver for a duty based on multiple p a ra m e t e r s i n c l u d i n g e q u i t a b l e distribution of driving hours, rest hours and transit hours. “This is yet another milestone for us at Rivigo. Our global first relay model being recognized by the United States Patent and Trademark office is an endorsement of our pilot-first model predicated on innovation at a technological and human level,” said Gazal Kalra, co-founder, Rivigo.

Walmart invests $1.2 billion to upgrade logistics in China

Ryan McDaniel, senior vice president of Walmart China Supply Chain, announced that Walmart will increase its investment in its supply-chain logistics. In addition to building the first customised perishable food distribution centre, the South China Fresh Food Distribution Centre, the company plans to increase investment in its supplychain logistics in China by RMB 8 billion ($1.2 billion), building or upgrading more than 10 logistics distribution centres over the next 10 to 20 years. Walmart invested more than RMB 700 m ($100 m) to build the South China Fresh Food Distribution Centre, which has been in operation since March 2019. It currently serves more than 100 Walmart stores in Guangdong and Guangxi, with daily distributing capacity

of up to 165,000 cases of products. The new fresh food distribution centre passed the Brand Reputation through Compliance, BRCGS, Warehousing and Distribution Global Standard Cer tification, making it the first distribution centre in China’s retail industry to attain this certification. Walmart South China Fresh Food Distribution Centre is Walmart China’s first distribution centre specially designed and built according to leading international standards. At 33,700 sq. m, it is the largest, multitemperature perishable distribution centre in the domestic retail industry that can store and process more than 4,000 kinds of temperatureregulated, refrigerated or frozen goods simultaneously.

DHL implements first smart warehouse in Asia-Pacific region DHL Supply Chain has successfully implemented an integrated supply chain for Tetra Pak in Singapore. The project includes one of the largest Tetra Pak warehouses in the world and is also the first smart warehouse for DHL, in the AsiaPacific region, that exists as a digital twin. The digital doppelgänger of the Tetra Pak warehouse is continuously fed with realtime data from the physical warehouse in 8

Singapore and maps changes in real time. “The joint implementation of such a digital solution to improve Tetra Pak’s warehousing and transport activities is an excellent example of the smart warehouses of the future. This enables agile, cost-effective and scalable supply chain operations.” commented Jerome Gillet, CEO, DHL Supply Chain Singapore, Malaysia, Philippines. September - October 2019


US-China trade tension adds to global slowdown As US-China trade tensions intensify, momentum in the global economy was hit by a slowdown in manufacturing activity. Ed McCauley reports.


gainst a difficult backdrop that included intensified China-US trade and technology tensions as well as prolonged uncertainty on Brexit, momentum in global activity remained soft in the first half of 2019, according to the International Monetary Fund (IMF). Growth was better than expected in the United States and Japan, and one-off factors that had hurt growth in the Euro area in 2018 appeared to fade as anticipated. Among emerging market and developing economies, the first quarter GDP in China was stronger than forecast, but indicators for the second quarter suggest a weakening of activity. Elsewhere in emerging Asia, as well as in Latin America, activity has disappointed. From a sectoral perspective, service sector activity has held up, but the slowdown in global manufacturing activity, which began in early 2018, has continued, reflecting weak business spending and consumer purchases of durable goods.

September - October 2019

In July 2019, automobile and parts producers saw the sharpest drop in global output of all sectors for the fourth successive month, f o l l o we d by m a c h i n e r y a n d equipment makers, according to the Global Sector PMI Output Index. Both sectors are seeing the sharpest downward trend in produc tion since the global financial crisis ten years ago. The best performing sectors in July were often those considered to be non-cyclical, such as insurance, pharmaceuticals, and food and drink. Eight of the top nine sectors were all service sectors, led by other (non-bank) financials. The topranking manufacturing sector, other than food and drink production, was household and personal use products. See Table 1. Business sentiment and surveys of purchasing managers point to a weak outlook for manufacturing and trade, with par ticularly pessimistic views for new orders. While global growth is projected at 3.2 percent for 2019, on the trade front, the forecast reflects

Table 1

the May 2019 increase of US tariffs on $200 billion of Chinese exports from 10 percent to 25 percent, and retaliation by China.



September - October 2019


IATA: Air cargo continues to face difficulties Latest figures from IATA highlight continuing difficulties for air cargo as trade tensions increase.


ndustry-wide freight tonne kilometres (FTKs) fell again this quarter, down 3.3 percent in yearon-year terms, as shown in Table 1. The decline is broad-based across all of the four major air cargo trade lanes. Most notable is the decline for international traffic within Asia where FTKs are down 12.6 percent year-onyear. International freight tonnes flown have also fallen by a similar magnitude as FTKs, currently 3.2 percent down year-on-year. Market drivers There has been an ongoing softening in a number of key demand drivers which have been adversely impacted by trade protectionism and trade wars. World trade volumes are currently 0.4 percent higher year-on-year. In addition, global consumer and business confidence have both been trending downwards for around a year and the new export orders component of the global PMI remains weak. Downward revisions to the near-term global growth outlook are doing little to support business confidence or demand for air cargo. Capacity, costs and yields The growth in available freight tonne kilometres (AFTKs) has halved over the past year, to around 3 percent currently. The slowing is

September - October 2019

most pronounced in Asia Pacific where AFTKS are up just 0.0 percent year-on-year. Widebody freighter utilisation has fallen significantly in recent months, since its peak at the start of 2019. The industry-wide freight load factor has trended downwards since around mid2017 and cargo yields are almost 6 percent lower in year-on-year terms. Heads of cargo back to optimism on yields Despite the weaker prevailing conditions, IATA’s April 2019 Business Confidence Survey showed that around 40 percent of respondents expected higher cargo yields in the next twelve months, up from 20 percent in January. This is reflected in a higher weighted score in Chart 1. Respondents also maintained their optimism in relation to cargo volumes, with the majority expecting to see higher volumes over the coming twelve months. H o w e v e r, t h e w e a ke r t h a n expected start to 2019 has resulted in a downward revision to IATA’s forecasts for air cargo volumes this year; FTKs are now expected to be unchanged over the year as a whole compared with 2018.

Table 1. Key Data Overview

Chart 1. IATA survey of heads of cargo



Emirates SkyCargo expands its pharma capabilities Following up on the success of its pharma corridors initiative, Emirates SkyCargo has expanded its initial network of 12 pharma stations to 20.


mirates SkyCargo has commenced handling pharmaceutical cargo at a new purpose-built facility in Chicago. T h e f a c i l i t y, d e d i c a t e d solely for pharmaceutical shipments, is spread over 1,000 sq. metres, with scope for additional expansion and provides comprehensive protection for pharma cargo through temperature controlled zones for acceptance and delivery, pharma cargo build up and break down, storage and direct ramp access. Developed in par tnership with ground handling company Maestro, the facility has a capacity of 15,000 tonnes of pharma shipments per annum. “Emirates SkyCargo is committed to the safe and secure transportation of temperature sensitive pharmaceutical shipments. Having a dedicated

Emirates SkyCargo unveils new purpose built facility for pharma cargo in Chicago 12

facility for pharma at one of our busiest stations for pharma in our network is a big boost to our pharma handling credentials and capability,” said Nabil Sultan, Divisional Senior Vice President, Emirates SkyCargo. The facility offers temperature controlled zones (2-8 degree Celsius and 15-25 degree Celsius) for acceptance and delivery, pharma cargo build up, breakdown and storage. The proximity of the facility to the ramp also means that cargo has to spend lesser time in transit to and from the terminal to the aircraft. Expansion of global pharma corridor network The dedicated pharma facility in Chicago is part of Emirates SkyCargo’s broader strategy t o e n h a n c e p ro t e c t i o n f o r temperature sensitive pharma shipments not just at its hub in Dubai but from origin to destination. Following up on the success of the pharma corridors initiative which was announced in Jan 2018, Emirates SkyCargo has expanded its initial network of 12 pharma stations to 20. As part of pharma corridors, Emirates SkyCargo works with ground handling partners and other local stakeholders at the stations that are important

origin or destination points for pharma, in order to ensure a high standard of handling operations for pharmaceuticals in line with Emirates SkyCargo’s stringent norms.

Above: The pharma corridors initiative was announced in Jan 2018.

GDP Recertification for Emirates SkyCargo’s hub operations in Dubai Emirates SkyCargo first received GDP certification in 2016 which was then revalidated in 2017 and 2018. In 2019, the air cargo carrier went through a rigorous audit by Bureau Veritas where its pharma handling facilities and processes were evaluated completely from the ground up. With over 8,000 square metres of dedicated pharma storage and handling space, Emirates SkyCargo operates the world’s largest multiairport GDP certified hubs in Dubai. During the financial year 2018/19, the carrier transported more than 75,000 tonnes of pharmaceuticals through its network. “Emirates SkyCargo is committed to the safe and secure transportation of temperature sensitive pharmaceutical shipments.”

Nabil Sultan divisional senior vice president, Emirates SkyCargo

September - October 2019

September - October 2019



Swissport targets growth in the pharma sector Swissport is investing in a new air cargo facility at Brussels Airport as it targets growth in the pharma sector.


wissport is investing in a state-of-the-art air cargo facility at Brussels Airport. While Brussels Airport Company is constructing the building, Swissport has signed a long-term lease and is investing several million euros in equipment and fittings for the new facility. The building will consist of a 25,000 sqm warehouse, a material handling system, office space and 3,620 sqm of end-to-end facilities in the new Swissport Pharma Center. An advanced warehouse, a brand-new, four-story office building for Swissport and its customers and state-of-theart pharmaceutical facilities will provide Swissport with the necessary infrastructure to take its cargo service delivery at Brussels Airport to the next level.

Warehouse will be equipped with an automated Material Handling System (MHS) 14

The brand new Swissport Pharma Center will feature an increased surface area for pharmaceutical products. Ambient pharma space (+15° to +25°C) will more than triple from 800 sqm to 2,620 sqm. Additionally, a 1,000 sqm cooling facility (+2° to +8°C) will be available. With its new end-toend cool chain, Swissport intends to further grow its share in the pharma air transport business in Brussels and worldwide. “Our new warehouse and the state-of-the-art Swissport Pharma Center will be the benchmark for modern and efficient air cargo and pharma logistics”, says Luzius Wirth, executive vice president Europe, Middle-East & Africa (EMEA) for Swissport. “The investment underlines our commitment to the Belgian market. In parallel we are working to improve the profitability of our Belgian business activities in order to create long-term job security for our staff.” Construction of the new Swissport facility started in January 2019 and will take about two years to complete, following a phased approach. Both demolition and construction works are in full swing. The 25,000 sqm warehouse will be equipped with an automated

Material Handling System (MHS) and is set to meet the highest industry standards. Landside it will feature 50 truck loading bays in a closed perimeter and a highly efficient acceptance zone. Airside there will be “speed gates”, enabling time efficient logistics processes from the warehouse into the aircraft cargo hold. Swissport Belgium, with a workforce of some 2,000 employees, handles more than 550,000 tons of air cargo. Its ground services division serves approximately 7.5 million passengers per year. In 2018, Swissport International AG provided best-in-class airport ground services for some 282 million airline passengers and handled roughly 4.8 million tons of air freight in 115 cargo warehouses worldwide. Several of its warehouses have been certified for pharmaceutical logistics by IATA’s CEIV. 

Above: Swissport Belgium handles more than 550,000 tons of air cargo.

“The state-of-the-art Swissport Pharma Center will be the benchmark for modern and efficient air cargo and pharma logistics.”

Luzius Wirth executive vice president, EMEA, Swissport

September - October 2019


Container market disruption seems likely Global shipping consultancy Drewry highlights concerns of a slowing global economy.


he recently published Container Forecaster from global shipping consultancy, Drewry, highlights concerns of a slowing global e c o n o m y, s t o k e d b y t h e ongoing US-China trade war, escalating geo-political tension in many regions of the world and an industry grappling with challenging new emission regulations. Beyon d t h e se, h owever, a series of existential fears are also beginning to present themselves that could dent demand for shipping in the future; namely, the regionalisation of manufacturing supply chains and growing momentum behind a low carbon, environment-first campaign that has the potential

New emission regulations as of January 2020 September - October 2019

to fundamentally change global consumption habits. It is for all these reasons that Drewry has downgraded its forecast for global port throughput growth in 2019 to 3.0 percent, from our previous prediction of 3.9 percent. “We remain confident that world trade will rebound in 2020, but much will depend on developments outside of carriers’ control,” said Simon Heaney, senior manager, container research at Drewry and editor of the Container Forecaster. “Further spreading of protectionist policies could stunt growth, particularly if the US aims its tariff target at other trading partners. However, there could be some upside for trade if more manufacturing production is relocated outside of China. The Asian export powerhouse has progressively reduced its requirement for foreign inputs, choking off demand for intermediate goods, so any shift to less self-reliant economies should give trade a bit of a kickstart,” Heaney said. In such unpredictable times, Drewry believes the risk of temporary supply disruption is heightened.

In the Transpacific market, for example, differences of opinion over the strength of the third quarter peak season have led to divergent strategies from carriers. Some lines are placing extra loaders into the trade, indicating they expect a repeat of last year’s cargo rush, while others are more circumspect, announcing blanked sailings to protect load factors and spot freight rates. “Carriers can be forgiven for not having all of the answers in such times. One suspects that even Nostradamus would throw his hands up in despair; such is the volatility of the leading characters. There will undoubtedly be some errors along the way and the risk of temporary supply issues has undoubtedly been raised, either from too many cancelled sailings or misplaced capacity transfers between trades,” said Heaney.

“Carriers can be forgiven for not having all of the answers in such times.”

Simon Heaney, senior manager, container research, Drewry



May sees decline in contracted ocean freight rates May saw an eye-catching 11.5 percent rates surge, with US container rates for imports climbing by close to 20 percent. We take a closer look at the factors in play and get a commentary from Patrik Berglund, CEO, Xenta.


fter an unexpected leap in long-term contracted ocean freight rates in May, June was a calmer month for the container industry, with a slight decline of 1.7 percent in global rates. According to the latest XSI® Public Indices report from Xeneta, the leading ocean freight rate benchmarking and market analytics platform, performances were mixed across the major trade corridors, with strong import results for the US and Far East offsetting falls in exports, and across the board In Europe. The index currently stands 7.2 percent up year-on-year. Calmer waters? May saw an eye-catching 11.5 percent rates surge, with US container rates for imports climbing by close to 20 percent.

China-US ‘trade war’ is continuing to exert an influence on the market 16

This reversed previous falls on the XSI® – compiled from the very latest crowd-sourced shipping data, covering over 160,000 portto-port pairings, with 110 million data points – neatly showcasing the constantly fluctuating nature of the global rates landscape. June’s performance, however, shows something of a return to a ‘pattern’. Or, as Xeneta CEO Patrik Berglund points out, as near to a pattern as the unpredictable segment gets. “I don’t think any industry commentator could put their hand on their heart and say they expected what happened in May,” he notes, “but I think a few will have predicted this slight ‘correction’ in June. Influential figures As with last month, US imports were the star performer, with a 2.7 percent month-on-month climb in the benchmark – a small increase, but significant as it maintains the upward trajectory. The US export figure declined by 3.7 percent. A similar pattern was identified in the Far East, as the import indices rose 2.5 percent against a 1.4 percent decline in exports. Both import and export figures fell for Europe, by 1.7 percent and 0.8 percent respectively, but the benchmarks remain above the 2018 year-end levels.

The value of intelligence It is, as ever, ‘too complex to call’, says Berglund. He notes: “One of these days I’d love to declare, ‘this will happen on corridor x next month, while trade y will develop in this direction’, but I’m afraid I may be waiting some time. “The reality is there are too many factors, with too many actors, feeding into the segment to predict with any certainty. Trump’s trade war is an obvious culprit, but even if that were resolved reaching any degree of clarity on long-term fundamentals at present would be challenging. We have Brexit, the future of the EU, wider geopolitics, the carriers themselves, macroeconomics – who can tell how these issues and players will evolve. “Stay informed of the very latest rate developments and you’ll get the best value for your assets, cargoes and businesses. That’s the only thing any of us can say with any certainty.”

Above: US container rates for impor ts surged close to 20 percent.

“Nothing can be taken for granted in this increasingly dynamic segment.”

CEO Patrik Berglund Xeneta

September - October 2019

September - October 2019



World’s largest container vessels cement HK’s status The Hong Kong Seaport Alliance (HKSPA) welcomed OOCL Hong Kong on its maiden call to Hong Kong.


he Hong Kong Seapor t Alliance (HKSPA) welcomed OOCL Hong Kong, one of the world’s largest container vessels, on its maiden call to Hong Kong at the HKSPA’s facilities at Terminal 8. The vessel, together with ten other mega vessels from Orient Overseas Container Line Limited (OOCL) and Cosco Shipping Lines Co., Ltd (Cosco Shipping), has been deployed on the Ocean Alliance’s Asia-North Europe Service since late June. The inclusion of Hong Kong as a port of call in this service re-affirms the city’s status as an international shipping hub and a key gateway to Mainland China. In welcoming the Ocean Alliance’s new service and Cosco Shipping Galaxy to Hong Kong, Angela Lee, Commissioner for Maritime and Port Development and Deputy Secretary for Transport

Hong Kong has been in the league of the world’s top ten ports for the past 30 years 18

a n d H o u s i n g ( Tr a n s p o r t ) , emphasized the multi-faceted appeal and new prospects for the Hong Kong Port. “Hong Kong, despite being small in size, has been in the league of the world’s top ten ports for the past 30 years or so. This is an enviable achievement not easy to accomplish. Credits must go to our port operators for the provision of highly efficient and professional services to the international shipping community. Coupled with our sound fundamentals built over the years, including our free port status, strong international connectivity, trusted common law system, and a level playing field for business, I am confident that our port would be able to further leverage on new opportunities presented by the Greater Bay Area Development, the Belt and Road Initiative and the New Land-Sea Corridor, and continue to thrive as a regional transshipment hub,” Lee said. Andy Tung, co-chief executive officer of OOCL said, “As a Hong Kong company deeply rooted in the city, OOCL Hong Kong’s maiden call has a very special place in many of our hearts. Containerships like the OOCL Hong Kong are important ambassadors of world trade and as a home carrier, we are very proud to have

this vessel carry the name of Hong Kong, flying the flag of Hong Kong, and continue serving the industries of Hong Kong. OOCL is very blessed to call Hong Kong our home and being an integral part of the city’s vibrant business community over the last 50 years, providing a vital link to global trade. We like to thank the HKSPA for the wonderful hospitality and celebrating this milestone event together with us.” Chen Xiang, deputy managing director of Cosco Shipping said, “The Port of Hong Kong is an important hub in our network. In 2017, the reorganized Cosco Shipping adjusted the South China network and strategically shifted more cargoes to Hong Kong. At the same time, the strong support of Hong Kong terminals on schedule reliability and service quality has contributed to our rapid and sustained growth in Hong Kong.”

Above: The biggest container ship in the world; OOCL Hong Kong in the Port of Rotterdam.

“Containerships like the OOCL Hong Kong are important ambassadors of world trade.”

Andy Tung Co-chief executive officer of OOCL

September - October 2019


CN to acquire New York Massena rail line from CSX CN announces strategic acquisition from CSX in the State of New York.


N announced the signing of an agreement that will see it acquire the Massena rail line from CSX, which represents more than 220 miles of track between Valleyfield (Quebec), in Canada, and Woodard (New York), in the U.S. The Massena rail line also serves many cities in the province of Quebec, including Beauharnois and Huntingdon, and in the state of New York, including Massena, Norwood, Potsdam, and Gouverneur. “CN is excited to be expanding its reach in New York. With this acquisition from CSX, we are opening up new opportunities for our existing customers and local businesses who will be able to access new markets through CN’s unique three coasts network,” said JJ Ruest, president and chief executive officer at CN.

CN and CSX announced a new intermodal service September - October 2019

“By acquiring the Massena rail line, CN continues to expand our network and foster additional supply chain solutions. CN is pleased to welcome communities along the Massena rail line to its family and we look forward to meeting our new neighbors.” On August 8, 2019, CN and CSX announced a new intermodal service offering between CN’s greater Montreal & Southern Ontario network, and the CSXserved ports of Philadelphia, New York, New Jersey and the New York City metropolitan area. This agreement will come into effect on October 7, 2019 and will help move freight from trucks to rail, reducing congestion in New York in a sustainable manner. “Over the long term, the freight market will increasingly d e p e n d   o n d e m a n d d r i ve n by the consumer economy a n d   t h e   ra i l i n d u s t r y m u s t create new intermodal services t h a t c a n s u c c e s s f u l l y r i va l the over the road options,” said JJ Ruest, president and chief executive officer at CN. “This interline service fits perfectly with our strategic focus on feeding our unique network through organic and inorganic growth opportunities, including extending our reach into new geographic markets.”

“This new intermodal offering a i m s t o c o nve r t   l o n g - h a u l trucks to interline rail services,” explained Keith Reardon, senior vice-president of consumer product supply chain at CN. “Trains will run directly into the heart of the metropolitan markets of Toronto and Montreal via CN intermodal yards, making t h i s p a r t n e r s h i p a n a t u ra l opportunity for both railroads.” “CSX is pleased to work with CN to deliver superior all-rail intermodal service into the Montreal and Toronto markets,” said Jim Foote, president and chief executive officer at CSX. “Answering a need expressed by our customers, this new service positions us to capture market share from trucks and increases capacity in these expedited lanes, as larger container ships call at the Port of Philadelphia and Port of New York and New Jersey.”

Above: CN transports more than CAN $250 billion worth of goods annually, across 20,000 miles of track.

“We are opening up new opportunities for our existing customers and local businesses.”

JJ Ruest, president and chief executive officer, CN



FESCO and JSC launch Korea to Europe service The new service serves different cargoes, including car parts and equipment, from the Republic of Korea to European countries.


s part of the development of transit cargo express delivery service, Trans-Siberian LandBridge, JSC RZD Logistics, subsidiary of JSC Russian Railways, and FESCO Transportation Group are expand its geography to the route from the Republic of Korea to Europe. The first container was sent from Busan on June 25, from where it was delivered by sea to FESCO Korea Express to the Vladivostok Commercial Sea Port (VMTP, part of the FESCO Group), then with the help of Russian Railways Logistics it proceeded by rail to Brest station, then after 1435 containers were loaded onto the gauge rolling stock; the container was transported to the Brzheg Dolny

FESCO provides sea and truck delivery, port handling and container fleet. 20

railway station (Poland). The goods were delivered to the customer’s warehouse in Wroclaw (Poland) by truck. The total transit time left 21 days, which is twice as fast as when transported by sea through the Suez Canal. As part of the joint transit product, FESCO provides maritime and auto delivery, handling at the port and the provision of a container fleet, while Russian Railways Logistics is responsible for organizing transportation by rail. From the Republic of Korea to European countries, goods of various nomenclatures, including auto parts and equipment, will be delivered. “Europe is one of the largest consumer markets in the world, in addition there is a large number of manufactures of high valueadded goods, components and components for which are supplied from countries in the Asia-Pacific region. For them, the speed of delivery is of great importance, and taking into account the peculiarities of logistics, the route through the Far East is one of the most promising in terms of opportunities to save time and ensure the rhythm of deliveries, ”said FESCO President Alexander Isurin.

“The test shipment within the Above: Korea to framework of the Trans-Siberian Europe via TransLandBridge service implemented Siberain Railway with FESCO from Japan to Europe has already demonstrated the promise of the route through the VTSP and the Trans-Siberian Ra i l w a y. S h i p p e r s b e c a m e convinced of the safety and quality of such transportations, and most importantly, they saw a significant saving in delivery time by rail in comparison with transportation on deep sea. Now we offer to use the new service to customers from the Republic of Korea, who will also be able to evaluate its economic efficiency. After all, the more cargo will be transported using TransSiberian LandBridge, the more accessible it will be for shippers from countries in the Asia-Pacific region, ”said Vyacheslav Valentik, Director General of JSC Russian Railways Logistics. “The route through the Far East is one of the most promising in terms of opportunities to save time and ensure the rhythm of deliveries.”

Isurins Alexsandrs, President of FESCO

September - October 2019

September - October 2019



Locomotive delivery boosts Tupras Refineries Wabtec completed delivery of five diesel-electric PowerHaul series locomotives to Körfez Ulaştırma, the subsidiary of Turkey’s largest refinery Tüpraş operating in railway transportation.


örfez Ulaştırma is the first private operator in Turkey to make such a purchase since the government began issuing licenses to use its mainlines two years ago. The locomotives will provide faster and more efficient transport of products between Tüpraş refineries and related fuel terminals. “ We h a v e b e e n w o r k i n g t o i n c re a s e t h e s p e e d a n d productivity of our logistics as we expand our operations,” said General Manager Körfez Ulaştırma Tufan Başarır, “Now that we have five powerful new locomotives added to our fleet, we are able to move goods between Tüpraş Refineries and the fuel terminals more efficiently and better meet our customers’ needs.”

Sirkeci Train Station in Istanbul City, Turkey. 22

The PowerHaul series is a top-per forming mid-weight locomotive, compliant with EU Stage IIIa emissions and TSI interoperability standards. It is equipped with a technologically advanced 16-cylinder 3,700 HP PowerHaul P616 engine with common-rail fuel injection. The locomotive can achieve maximum power output, while providing an 18-percent reduction in fuel consumption. It also has improved reliability and tractive effort with high-performance AC tractioncontrol technology and individual axle-control. “We have a long-standing partnership with Turkey that will continue beyond the delivery of these new locomotives,” said Gökhan Bayhan, Middle East and North Africa Regional General Manager, Wabtec RussiaCIS. “With the locomotives in operation, Wabtec will be providing service support and technical expertise to maximise performance throughout their lifecycle.” he added. The diesel electric locomotives were built by Tülomsaş, Wabtec’s strategic regional business partner, at its plant in Eskisehir, Turkey. Tülomsaş produces Wabtec’s PowerHaul locomotives for the European, Middle Eastern and North African markets. Under the

partnership agreement, Wabtec Above: Diesel electric provides leading technology and locomotives supplied design, while Tülomsaş provides by Wabtec local manufacturing, assembly and final testing. “The delivery of these firstclass locomotives is an important m i l e s t o n e , ” s a i d Tü l o m s a ş General Manager Hayri Avcı, “At Tülomsaş, we are supporting the production of the cutting-edge locomotives on the basis of our knowledge, qualified workforce, and skills.” Avcı also expressed that the production of locomotives contributes to the strengthening of the subsidiary industry and creates a real added value for the national economy. Körfez Ulaştırma, Tülomsaş and Wabtec originally announced the order for these locomotives in September 2018 at the InnoTrans. The delivery is double the size of Kör fez Ulaştırma’s fleet, which consisted of five leased locomotives.

“The delivery of these firstclass locomotives is an important milestone.”

Hayri Avcı, general manager Tülomsaş

September - October 2019


Predicting an efficient and cleaner journey ahead optiTruck Project puts predictive fuel optimisation to the test with a long-haul drive from Turkey to Italy.


his summer, the EU-supported project optiTruck carried out real-life tests of its innovative fuel optimisation module, as part of a long-haul delivery mission across Europe. The project is aiming to reduce greenhouse gas emissions of heavy-duty vehicles by up to 20 percent, and the international t ra n s p o r t m i s s i o n t h ro u g h Turkey, Greece and Italy will carry shipments for Ikea Transport & Logistics Services and Electrolux in a baseline truck and a testbed truck equipped with the optiTruck Global Optimiser.

Ford F-Max Comfort Plus tractor used in the test drive September - October 2019

Two Ford F-Max Comfort Plus tractors with Otokar semi-trailers departed from Uşak, Turkey on 18 July carrying a shipment for Ikea Transport & Logistics Services, who supported optiTruck during the test phase. After taking the ferry from Igoumenitsa (GR) to Brindisi (IT), the drivers reached the Ikea logistics centre in Piacenza, near Milan, on 23 July. For the return journey, optiTruck partnered with Electrolux: after loading cargo at the Electrolux plant in Porcia (IT), near Treviso both trucks travelled back through Brindisi and Igoumenitsa, reaching Istanbul on the 30 July and completing a 5000km, 11-day journey through three countries. Bringing together the most advanced technologies from powertrain control and ITS to improve fuel efficiency in heavyduty road haulage, the optiTruck partners have created a global optimiser consisting of a set of dynamic, intelligent control and prediction components for effective powertrain management. Based on a predictive control system, the optiTruck global optimiser is expected to deliver a reduction in fuel consumption of up to 20 percent on a typical road transport mission for a 40-tonne truck, while achieving Euro VI emission standards.

The objective of this experiment Above: The optiTruck is to test and fine-tune the fuel team in Piacenza, optimiser, the driver interface, Italy and the algorithms underpinning the system. Throughout the journey, sensors will record fuel consumption, urea consumption (AUS 32), CO2 and NOx emissions, as well as impac t on driver workload and comfort. “In addition to the ten Innovation Elements developed by optiTruck, our biggest challenge is to test the system with a real mission on this international route that will highlight the importance of our work,” says Jean-Charles Pandazis, project coordinator for optiTruck. “We are very excited to add to our portfolio another sustainable solution in transport and continue our strong commitment of reducing emissions,” says Marcelo Marcal, Electrolux logistics purchasing director BA Europe. “We are very excited to add to our portfolio another sustainable solution in transport and continue our strong commitment of reducing emissions.” Marcelo Marcal, logistics purchasing director, Electolux



The Great White North welcomes truckers PrePass Safety Alliance and British Columbia Ministry of Transportation and Infrastructure allow PrePass users to bypass weigh stations in British Columbia.


he most utilised truck-weigh station bypass platform with over 620,000 trucks enrolled, PrePass®, is now expanding into Canada and helping trucking fleets and drivers save more time and money than ever before. A new agreement between PrePass Safety Alliance and British Columbia Ministry of Transportation and Infrastructure allows PrePass users to bypass weigh stations in British Columbia, adding 11 locations to PrePass bypass sites. PrePass users who want to bypass at Weigh2GoBC locations only need to visit the

PrePass drivers and fleets operating in British Columbia previously had to obtain a Weigh2GoBC transponder from the Canadian government. 24

Weigh2GoBC website, www., to register for the BCeID (British Columbia electronic ID), and enrol their truck(s) with the PrePass transponder for the Weigh2GoBC service. No additional fees are required for carriers to enrol PrePass transponders in or to participate in the Weigh2GoBC program. However, service at Weigh2GoBC s i t e s i s a va i l a b l e t h ro u g h transponder-based bypassing only and is not compatible with cellular bypass services. The agreement also allows Canadian-based trucks and fleets that are using Weigh2GoBC to fully use PrePass bypassing in the United States, subject to individual states’ PrePass bypass criteria. These same trucks and fleets can also use PrePass’ electronic toll payment services within the program’s area of operation. Transponders allow qualified trucks to bypass weigh stations by electronically verifying a truck’s legal weight, safety rating and credentials while the truck operates at highway speeds. Based on the carrier’s

safety score, credentials and truck weight, drivers receive on their transponder either a green light to continue driving or a red light indicating they must report to the weigh station for a possible inspection or weighing on a static scale. Transponder use keeps safe and compliant trucks on the road, reduces travel time, improves overall highway safety and reduces fuel consumption. Previously, PrePass drivers and fleets operating in British Columbia obtained a Weigh2GoBC transponder from the British Columbia government, meaning some drivers had to carry two transponders. The new agreement means drivers can carry just one transponder — PrePass or Weigh2GoBC — because the systems are now fully interoperable.

Above: The PrePass Safety Alliance and British Columbia Ministry of Transportation and Infrastructure have agreed PrePass users can bypass weigh stations in British Columbia, Canada.

“Over 600,000 commercial vehicles from pre-qualified fleets utilise PrePass services.”

PrePass Safety Alliance

September - October 2019

September - October 2019



Maintaining Turkish trade lanes despite uncertainty Despite the ongoing economic uncertainties in the country, combined with currency volatility and inflation, Turkey remains one of Davies Turner’s most important trade lanes.


he UK’s leading independent freight forwarder says that Turkish trade fluctuations have been a challenge to operations on its largest overland and multimodal routes, but careful management of traffic flows has enabled Davies Turner to maintain regular services and even to increase revenues in very challenging market conditions. Davies Turner operates daily two-way overland and trailer, ferry and rail services between the UK and Turkey with Ekol Logistics, typically moving around 70 to 110 trailers a week between the two countries, mainly groupage, plus air cargo and sea freight containers. The company reports that southbound business has fallen since the onset of Turkey’s currency volatility leading to an

Davies Turner operates daily services between the UK and Turkey 26

imbalance in north-south trade that was heightened by European importers seizing the opportunity for increased purchases from Turkey. Company chairman Philip Stephenson explained that export-import imbalances were a long-standing feature of the UK-Turkish trade lane, but the company’s historic experience of the country’s trade with the UK and the EU has helped it to manage successfully in the current market. “The business model has to be very flexible both inbound and outbound and there has to be clear and constant management of the volumes moving, particularly northbound loads, in order not to worsen the imbalance,” he added, “Equipment availability northbound had become an issue, but with careful planning and control, we’ve been able to contain it. Volumes carried by ourselves and by our partner Ekol, both in the past and present, show that we’ve handled any weakness in southbound volumes well, thanks to some large contracts we share with our Turkish partners and this provides excellent coverage to collect shipments from not just the UK but also the rest of the EU to maximise our southbound traffic.”

Commenting on the outlook Above: Trucks waiting for the service, Stephenson on the Bulgarian said, “You can get various and -Turkey border. many analyses from different authorities on the way ahead and there will be conflicting views. We didn’t anticipate the improvement we witnessed in the first quarter of 2019, but the [political uncertainty] remains problematic, making it difficult to forecast long-term. Despite high levels of inflation and interest rates affecting investment and hindering sustainable economic growth, Turkey continues to be a strong and pivotal market which, although subjec t to fluctuations, certainly should never be underestimated as a trading partner. As for Davies Turner, we’ve managed to retain both our northbound and southbound business at a high level. Continuing success will depend on the resilience and openness to trade of the UK and EU economies as much as on Turkey in isolation.”

“Turkey continues to be a strong and pivotal market”

Philip Stephenson, company chairman, Davies Turner

September - October 2019


Gartner top 8 technology trends for 2019 IoT, AI, digital twins and blockchain are some of the trends transforming global supply chains.


upply chains are becoming increasingly globalised and more complex. Gartner has identified eight top strategic supply chain technology trends that have broad industry impact, but haven’t yet been widely adopted. These technologies are experiencing significant changes or reaching critical tipping points in capability or maturity. Artificial intelligence AI supports an organisation’s vision for broader supply chain automation. The level of automation could be semiautomated, fully automated or a mix, depending on the circumstances. Through self-learning and natural language, AI solutions can help automate various supply chain processes such as demand forecasting, production planning or predictive maintenance. Along with automation comes augmented human decision making, because the human is then no longer involved in the decision making. Advanced analytics The impact of advanced analytics on supply chain is significant. Advanced analytics are increasingly being deployed in real time or near-real time in areas such as dynamic pricing, product quality testing and dynamic replenishment. The availability of supply chain data — such as Internet of Things (IoT) data, dynamic sales data and weather patterns — provides the ability to extrapolate the current environment to better understand future scenarios and make profitable recommendations.

September - October 2019

IoT IoT adoption is growing in select supply chain domains, but rarely as part of a complete end-to-end supply chain process. Some manufacturers are assessing the business value of expanding beyond their current use of operational technology, OT — digitised devices often having closed or proprietary connectivity. Logistics groups already use sensors to track assets or containers. Robotic process automation (RPA) RPA tools cut costs, eliminate keying errors, speed up processes and link applications. RPA has proven to be very effective in simple use cases, mainly where a third party in the supply chain will not provide an API or other means for automated data integration. However, the potential to achieve strong return on investment is entirely dependent on the applicability of RPA in each individual organisation. Autonomous things The rapid explosion in the number of connected, intelligent things has given this trend a huge boost. Robots, drones or autonomous vehicles enable new business scenarios and optimise existing ones. Autonomous things are often physical devices operating in the real world, such as robots carrying out jobs in a coordinated fashion to create a seamless and connected process in manufacturing facilities or by using drones for inventory quality assurance through taking images with the drone’s camera to reduce time for inventory checks.

Blockchain Blockchain is aligned to potentially fulfil critical and long-standing challenges presented across dynamic and complex global supply chains that traditionally have held centralised governance models. Current capabilities offered by blockchain solutions for supply chain include a loose portfolio of technologies and processes that spans middleware, database, verification, security, analytics, and contractual and identity management concepts.  Digital supply chain twin A digital twin is a digital representation of a real-world entity or system. A digital supply chain twin is a digital representation of the relationships between all the relevant entities of an end-to-end supply chain — such as products, customers, markets, distribution centres/warehouses, plants, finance, attributes and weather. It creates endto-end visibility by being in sync with the real-world supply chain. Immersive experience The user experience will undergo a significant shift in how users perceive the digital world and interact with it. The integration of virtual reality and augmented reality with multiple mobile, wearable, IoT and sensor-rich environments and conversational platforms will extend immersive applications beyond isolated and singleperson experiences. Contributing author, Christy Pettey, Gartner 27


How blockchain can create opportunities For companies reliant on strategic partnerships or those seeking to increase the transparency of interactions between consumers or business partners, blockchain presents a world of possibilities.


ost people recognise blockchain as an underlying technology for cryptocurrencies, but few truly grasp the potential for it to substantially reduce operating costs for companies, and enable new ways of creating value. Ultimately, as companies co-invest in blockchain solutions, we will see supply chains and business partner ecosystems become increasingly interconnected, enhancing a sense of shared fate and creating opportunities for joint ventures. To understand the value of blockchain to companies, both as a cost savings and value creation mechanism, we will explore three key use cases. As we lay out these three examples, it will become clear how blockchain can enable a substantial evolution of partnerships along the supply chain. Our three use cases are how blockchain can: • increase transparency in the supply chain by validating provenance; • reduce costs and complexity in asset tracking and smart contracts; and • drive upsell opportunities through data purity. Understanding what blockchain does and what it looks like in practice First, it’s important to understand what blockchain does, how companies can cooperate to implement blockchain solutions and what that looks like in practice. Blockchain is a digital, distributed transaction ledger shared across a public or private computing network. Transactions are added to the blockchain only after the computers

September - October 2019

in the network confirm their validity through cryptographic challenge-response authentication. This feature eliminates the need for third-party intermediaries, as the network uses a consensus mechanism to execute trans- actions. Transactions are stored on the blockchain in groups called “blocks.” The blockchain ledger is immutable and append-only, meaning new transactions can be added to the ledger but previous transactions can never be edited or deleted. Each block that is added to the blockchain contains a cryptographic reference, called a hash, to the previous block in the chain. The hash ensures the immutability of the blockchain. To tamper with any transaction in the chain, the hashes of all subsequent blocks would need to be decrypted — a feat that many consider to be virtually impossible. While this may sound technologically advanced, it is relatively easy for companies to join a public blockchain or even build out their own. Blockchain runs over the Internet, with each computer in the network maintaining the identical database of transactions. To join a public blockchain, one simply needs a computer to download and run the open-source code. Running the code sets up the computer as a node in the network. To set up a private blockchain, the easiest approach is to use a Cloud service to host the net- work. These services allow you to define the number of nodes in the network and connect each device accordingly.

Use Case 1: Increasing transparency by validating provenance and handoffs along supply chain The first supply chain use case, that illustrates how companies can reduce e x p e n s i ve a u d i t a n d c o m p l i a n c e operations and greatly enhance their transparency, is monitoring provenance. Validating points of origin and handoffs along the supply chain has become increasingly difficult, with greater numbers of diverse stakeholders in a global business ecosystem. With shifting and often tightening regulations, companies have a greater financial incentive to minimise compliance costs, as well as to control the operating costs of reconciling transactions between an ever-widening network of partners. Simultaneously, transparency has become a key attraction for consumers who are increasingly demanding ethically sourced goods and transparent business practices. Block- chain has the unique ability to create a perfect, un-hackable and accessible single source of truth for every transaction along the supply chain. A blockchain-based system can help improve transparency and monitor provenance by amassing trustworthy and verifiable data on how goods are made, where they originate from and how they are managed. Sales receipts and other records exist today. However, their legitimacy rests on whether the party can be trusted to record accurate information. Blockchain ensures that data can be trusted through automated, immutable records. One example of how block- chain can help validate provenance 29

TECHNOLOGY is in preventing the use of banned conflict minerals in high-tech microchips. US regulation requires American microchip manufacturers to audit their supply chains to ensure compliance. Using blockchain, each transaction would be validated by and visible to each participant in the network, substantially reducing the cost of compliance while also reducing the risk of inadvertently supporting illegal and unethical practices. Use Case 2: How blockchain can reduce costs and complexity in asset tracking Another key example of how blockchain can reduce costs and complexity for companies can be seen in the example of asset tracking. Asset tracking has long been an expensive, time-consuming process with significant leakage, especially for telecom and products companies. The bureaucracy and paperwork meant to safeguard players in the case of reneged contracts is a core source of unnecessary complexity and introduces room for error as supply chains scale. Just as blockchain can help validate a point of origin and handoffs along the supply chain above, so can blockchain create a record of handoffs between OEMs, maintenance partners and consumers. That record not only significantly reduces leakage but also creates a clear set of data, mutually agreed upon, that can be used as the foundation for performance analysis and maintenance partner optimisation efforts. A use case that illustrates the benefits of blockchain can be found in customerpremises equipment (CPE) tracking for telecom companies. A complex ecosystem of leases, maintenance and transfers surrounds CPE, which is essentially any terminal or related technology in end-user possession but connected to a carrier’s telecom network. In addition to the telecom company itself, there are also multiple third parties involved that lease and manage CPE owned by carriers. The result is suboptimal utilisation of assets, poor visibility into asset location and status and leakage as physical assets disappear in the system, leading to higher capex for the CPE original equipment manufacturers.


Blockchain can lower data costs, generate insights and reduce friction across the partner network. By tagging CPE devices with unique identifiers and logging each handoff, carriers create exceptional supply chain visibility. Device transactions, CPE taken off-line for maintenance and reintroduced, are recorded. This prevents asset loss and de facto creates a utilisation log as well. Now, the length of time an individual asset spends undergoing maintenance is visible to the telecom carrier. This enables them to proactively manage both their asset pool and their supplier con- tracts, informed by visibility into the time and success of service from different maintenance providers. Use Case 3: How blockchain can drive upsell opportunities through data purity With blockchain comes pure and immutable data, creating a strong foundation for analytics and insights that can identify upsell opportunities. The use case outlined above, of the server manufacturer that was able to reduce leakage in maintenance contracts, provides a perfect example. Through their blockchain solution, the server manufacturer had newly clean, accurate records of all maintenance performed for customers, the amount of maintenance required by each user, and other critical lifecycle data. These records created the opportunity for the server manufacturer to identify customers to target with better service packages, important CLV data for each customer and finally insight into the optimal service packages to offer, as well as the packages that were costly to offer but underutilised by customers. Blockchain: An opportunity in the age of mutual investment and the conscious consumer The digital revolution has resulted in increased connectivity and innovation, preventing companies from existing in a siloed world. Strategic partnerships and mutual investments have become necessary to boost competitive agility in almost every industry. Furthermore, the digital revolution has left consumers with

higher expectations surrounding brand engagement and transparency. The new conscious consumer is demanding visibility into the origin and handling of all products to assess the social, environ- mental and political implications across the production and consumption chain. Blockchain is the technology that will alleviate the pain points that the digital revolution has brought upon businesses. The distributed, immutable ledger will enable trust between stakeholders, regulators and consumers due to its transparent and secure nature. This trust will lead to a substantially greater level of joint investment, communication and collaboration. Overall, block- chain has the potential to evolve today’s increasingly complex network of diverse, independent stakeholders toward more frictionless, cost-effective and transparent partnerships. Theoretical or tangible? Blockchain is still in the early stages of development and few companies have pushed beyond the proof of concept stage to full implementation. This is largely because implementing blockchain inhouse through open source code has proven to be expensive. Investment in server infrastructure and the necessary addition of specialised resources for development and governance has deterred companies from exploring it further. However, 2019 is poised to see a significant increase in blockchain adoption due to the blockchain-as-a-service offerings of the largest cloud providers. These Cloud-based services eliminate the need for investment in supporting infrastructures and blockchain developers. Regardless of the route chosen for implementation, it is important to note that the cost of blockchain will be dependent on the number of transactions that are being processed and required transaction speed. Furthermore, IoT integration will drive up costs because of the sensors needed to track physical goods and environmental conditions. Blockchain has tremendous potential to transform the way entire industries operate, beyond the use cases detailed above. As more companies adopt blockchain technology, it will become even more valuable as a digital connector between companies. To allow it to reach its full potential, companies need to first look internally to adopt a collaborative, technology-first mindset to push for organisational change. This piece was co-authored by Alex Olea, Accenture Strategy functional senior manager with contributions from Madeleine Stanich, Bernice L. Hsu and Madeleine Cooney. September - October 2019


How to build an automated warehouse system: which new technologies do you need and why? How to build an automated warehouse system: which new technologies do you need and why?


uilding an efficient automated warehouse system requires careful selection of the right technologies. Many warehouses are seeking ways to leverage automation for better efficiency, but achieving efficiency requires choosing technologies that integrate well and work seamlessly together to fully optimize your processes. Let’s take a look at the new technologies you need — and why you need them – when building an automated warehouse system.

Cloud computing and storage Cloud computing and storage offers several benefits, including reduced infrastructure and maintenance costs. Rather than setting up and maintaining an on-site data centre, cloud computing provides a more scalable solution while reducing the need for an in-house IT department. Cloud computing also makes

system integration possible, meaning you can integrate multiple systems for ease of access. Real-time tracking mechanisms Modern warehouses use real-time tracking mechanisms like RFID, which use radio waves to transmit data between tags or labels and computer and information

Interoperability between warehouse systems and software First and foremost, interoperability is key. Your warehouse systems and software need to be able to share data between them, but those systems are not all the same and may have different data formats. Interoperability solves this challenge by allowing applications to seamlessly share data, such as inventory data, shipping information and purchase orders. Without interoperability, data remains siloed and you can’t benefit from a comprehensive, bird’s-eye view of your warehouse operations. September - October 2019


“The benefits include increased visibility into your inventory throughout the supply chain,” systems. The benefits include increased visibility into your inventory throughout the supply chain, including shipping and delivery, ensuring that the right items get to the right customers at the right time. Real-time tracking mechanisms like RFID improve stock and demand generation visibility, allowing warehouses to maintain leaner inventory to reduce overhead costs. Some innovators are experimenting with pairing RFID with drones to automate delivery processes. Collaborative mobile robots In 2016, CBRE Group released a report exploring the impact of robotics and automation, autonomous trucks and 3-D printing on supply chains, predicting that these three technologies would have a transformational impact on distribution over the next decade. Adoption of automation in warehouses and on highways is driven by the growth of faster fulfilment cycles and e-commerce, according to CBRE, noting that these three technologies are on track to achieve widespread use by 2025. Access to on-demand warehousing gives companies access to additional warehouse space that’s used, rented or leased on a temporary basis to accommodate short-term capacity needs. Warehouse matching services connect companies in need of warehouse space with those that have space available, serving as a middle-man of sorts to facilitate share-economy warehousing. The benefits of on-demand warehousing are obvious: it allows warehouses to adapt more readily to shifts in market demand, while reducing or eliminating t h e n e e d t o i nve s t i n a d d i t i o n a l infrastructure that would otherwise go unused for part of the year. Conversely, the on-demand warehousing model also enables warehouses who have unused infrastructure to monetize that space and reduce overhead costs.

realtime and even taking proactive measures in response to predictive analytics data. Cartonisation software It’s not always easy to estimate the correct carton size, even for seasoned packing associates. When an associate chooses the wrong carton size, they end up back-tracking and repeating tasks for the same order. If the carton isn’t too small for the order, associates may pack the order in the too-large carton anyway, which isn’t an efficient use of resources. Cartonisation software calculates the ideal carton size for each order based on SKU dimensions, product weight data and other factors. That means associates don’t need to guess the right carton size, eliminating wasteful spend on too-large shipping boxes and subsequent shipping costs and the labour spent repacking orders. Cartonisation software supports lean, single-touch pick and pack processes, especially when it’s paired with an efficient picking technology like collaborative mobile robots. Drones While they’re not yet considered an essential technology for an automated warehouse system, there’s a lot of hopeful speculation about the role of drones in the future warehouse. Some companies are already experimenting with drones for inventory management and delivery. For example, drones can speed up inventory counts by scanning barcodes and recording item location information in the warehouse management system up to 50 times faster than manual data capture. Automated forklifts While they’re not among the newest warehouse automation technologies, the use of automated forklifts has grown in

recent years. Like collaborative mobile robots, automated forklifts don’t require investing in new infrastructure, particularly newer models that don’t require special floor tape or other fixed infrastructure to direct them throughout the warehouse. For the most part, they can operate in the same routes used by your human workers but handle tasks that would typically require a long walk for stock picking or put-away tasks. Typically equipped with sensors that detect activity in their path, automated forklifts can avoid collisions with other vehicles or human associates. As many forklift accidents are attributed to inadequate training or human error, automated forklifts can improve safety assuming sensors and other safety mechanisms are functioning properly. Thanks to these same sensors, automated forklifts offer more precise and secure load handling, resulting in reduced product damage from handling. They can also improve productivity by handling timeconsuming and repetitive tasks, freeing up your associates up for more valueadded tasks. Older automation technologies Automation technologies as a whole aren’t new; warehouses have been embracing them for years. As such, there are older automation technologies that are being replaced by flexible collaborative picking robots, such as: • Automated Storage and • Retrieval Systems (ASI RS) • Pick-to-light and put-to-light systems • Voice tasking technology • Automatic guided vehicles (AGVs) • Automated sortation systems Contributing author John Gomez, 6 River Systems

Data analytics and artificial intelligence Collecting raw data with real-time tracking and other tools is useful, but data analytics and artificial intelligence (AI) are the solutions that turn raw data into actionable insights. Data analytics and AI tools enable operators and managers to make timely data-driven decisions, responding to existing information in 32

September - October 2019

September - October 2019



September - October 2019

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