Industry Update. Volume 3 Issue 4. April KWE Supply Chain Management Program (Apparel)
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1 Volume 3 Issue 4 Industry Update April 2007 KWE Supply Chain Management Program (Apparel) KWE Japan establishes GFW International, Inc, a joint-venture SCM sales company KWE Japan has established a joint venture SCM program in partnership with an apparel manufacturing management company and 3PL provider. The core business of this new company, which was launched on March 22, 2007, is global supply chain management (SCM) solutions for the wearing apparel industry. Inside This Issue 1 KWE Supply Chain Mgmt Apparel Program 1 KWE Selected by IAE to Provide Logistics 2 Air Cargo Lower Growth Trend Continues 2 Cargo Security for Airports in France 3 Boeing Freighter Sales to Cargolux 3 TAPA s New Name 4 Carrier News In the current apparel market in Japan, about 70% of products are imported from China and the volume continues to increase. This continued growth requires the unification and optimization of manufacturing, transportation, distribution and sales, which is available with the advanced SCM tools provided by the KWE joint venture. This joint venture will provide coordinated, consistent best-of-kind logistics service and solutions from overseas production to local points of sale. The range of services include product inspection and QC in overseas production (primarily in China), appropriate transportation mode selection based upon urgency and volume, management of complicated customs process, and local transportation including processing after the arrival in Japan and delivery to department stores. 5 Lufthansa Increases Service Frequencies 5 SHA Pudong Airport Now World s 6 th Largest 6 Enhanced Security Licenses in Canada 7 Port of Saint John Looking for Long Term Operating Agreement 7 Barcode Labels Introduced in India 7 Hong Kong ATT Grand Opening 8 Revised EBAF and IFC 8 KWE Office Updates 9 Holidays KWE Selected by International Aero Engines to Provide Logistics and Fulfillment Services Kintetsu World Express (USA), Inc. has been chosen by International Aero Engines AG (IAE), which manages the development, production and aftermarket services of the V2500 aero engine family, to provide logistics and order fulfillment services globally for aftermarket spares of the V2500 aircraft engines. KWE will support IAE s global customers from distribution centers in Miami, FL and East Midlands, U.K., by providing inventory management, order fulfillment, distribution and returns processing services. The distribution centers will be staffed by KWE personnel that are FAA Organizational Designated Airworthiness Representatives (ODAR) certified. KWE s ODAR staff is FAA certified to complete Airworthiness certificates on behalf of IAE for all parts dispatched from the distribution centers. KWE is also working closely with IAE to ensure additional 3PL requirements globally for aftermarket spares are satisfied. Continued on page 6 - IAE
2 Page 2 Air Cargo Lower Growth Trend Continues The International Air Transport Association (IATA) has released February traffic results showing that demand for international freight rose by 2.4%. This follows a 3.0% increase in January and continues an 8-month trend of slower growth. Air freight demand rose sharply in the Middle East (15.4%) boosted by oil-led economic growth and increased capacity. However, high fuel costs and strong competition from other modes of transport continue to limit air freight demand in Europe (-0.6%) Africa (-2.0%) and Asia (4.4%), particularly on shorter haul routes. North American airlines saw freight growth decline 0.5% in February compared to 6% in 2006 as the impact of last year's redeployment of capacity to international markets decreases. Latin America saw a 20.2% decline due to what IATA called restructuring. High fuel costs and strong competition from other modes of transport continue to limit air freight demand There have been concerns for several months that the industry is seeing a migration of volumes from premium air cargo to lower cost modes. IATA seems to think that this is one of the key reasons behind lower than expected growth rates. If this is indeed the case then there may be implications for the integrated express carriers, whose customers are highly sensitive to economic pressure. Such a trend would result in the growth of road-based deferred package volumes at the expense of the premium, high margin air express products Cargo Security for Airports in France In order to provide a high level of security while still allowing for the efficient movement of air cargo, new security measures from French airports are being implemented. These measures include the following steps, which will be followed in sequence until cargo status is confirmed as being safe and secure : Use of existing conventional X-ray scanning units - Canine Unit inspection - Trace element detection equipment - Opening of crates / visual inspection of cargo -5 day warehouse quarantine if the above measures are inconclusive. These regulations are imposed by the French authorities. KWE France, including all the offices in Roissy CDG, Lyon, Mulhouse and Toulouse, will implement these new measures from 23rd April KWE France management team will be happy to answer any questions or address any concerns regarding these Aircargo security measures.
3 Page 3 Boeing Announces Freighter sales to Cargolux Boeing has announced that launch customer Cargolux has placed a follow-on order for three Boeing Freighters, valued at $845 million at list prices, and added two options. This brings the Luxembourg-based cargo operator's total Freighter order to 13 airplanes, two options and 10 purchase rights. According to the CEO of Cargolux, the outstanding economics of the Freighter was decisive in its selection as the centerpiece of our future fleet. Another key factor is the environmental performance of the , which offers a 15 percent reduction in emissions and a 30 percent reduction in noise. With the new Program, Boeing is leveraging the technologies from the 787 Dreamliner by creating environmentally preferred commercial jetliners. The new GEnx engines, originally designed for the highly fuelefficient 787 Dreamliner, allow improvements in fuel efficiency, emissions and durability with significantly less noise and weight than present day engines. The Freighter takes the best elements of the 747 and incorporates the latest and most advanced technologies to make it a perfect choice for freighter operators in the large airplane market segment. TAPA s New Name The change in TAPA s name demonstrates that it isn t just technology products that organized criminal gangs now target (TAPA) New Name Reflects High Value Manufacturers Growing Fight Against Multi-Million Dollar Impact of Cargo Crime The Technology Asset Protection Association has changed its name to the Transported Asset Protection Association. This is a reflection that the growing diversity of its members and manufacturers of high value products are joining forces to combat the multi-million dollar impact of cargo crime. Founded in 1997 by security professionals & related business partners from technology companies, its incentives was to address emerging security threats common to high-tech industries & products moving in international supply gains. Consequently, TAPA has been launched in Europe, the Middle East, Africa, Asia-Pacific and the U.S. Working closely with law enforcement agencies around the world, TAPA s aim is to identify target areas where losses occur, sharing of industry best practice, and to provide a forum for managers to exchange professional information for mutual benefit. Thorsten Neumann, Chairman of TAPA EMEA states, The change in TAPA s name demonstrates that it isn t just technology products that organized criminal gangs now target. High value products include pharmaceuticals and items such as watches, sporting equipment, fashion, duty free products and a variety of other consumer goods. The effectiveness of TAPA in reducing supply chain loss ratio has enabled us to attract new members from these sectors. TAPA represents a united voice against cargo crime. We are a group of leading global businesses and their logistic partners that will continue to strive for improvements in cargo security and to help bring those responsible for crime to justice.
4 Page 4 Carrier News KOREAN AIRLINES introduces a B747 freighter Ex-Incheon to Tel Aviv on Thursdays beginning March 29. Additionally, effective from April 2 they will also operate a B747 freighter Ex-Incheon to Seattle on Mondays and two freighters Ex-Incheon to Miami on Thursdays and Sundays. KOREAN AIRLINES has also started regular freighter services to Chengdu, China by adjusting the schedule of its existing Incheon- Delhi-Brussels-Incheon route. In addition to the Incheon-Chengdu route, KOREAN AIRLINES will provide cargo service on the Chengdu- Delhi route and Chengdu-Brussels route directly. AIR CHINA, the nation s largest carrier, has increased the number of flights between Beijing and San Francisco from five times a week to daily. AIR CHINA is the only Chinese carrier offering nonstop flights from China to San Francisco and Los Angeles, as well as offering direct service from Beijing to New York and Vancouver. CHINA SOUTHERN AIRLINES has now launched a new service from Guangzhou to Dubai in the United Arab Emirates. The flights depart Mondays, Wednesdays and Saturdays from Guangzhou in the evening and arrives into Dubai the following morning one hour after midnight. CHINA SOUTHERN will introduce eight other direct, international services later this year, all departing from Guangzhou. Some of the destinations included are Rangoon, Delhi, Sendai and Sapporo. As a result of these additions, the company s international flights from Guangzhou will expand from 136 to 182 per week. NORTHWEST AIRLINES has made the decision to use Baiyun Airport in Guangzhou as its main gateway for cargo from the Pearl River Delta. The airline is almost doubling its freighter flights out of Baiyun which coincides with their action three months ago to pull its freighters out of Hong Kong. NORTHWEST AIRLINES is able to increase the flight frequency under the new SINO-US bilateral and has increased from four freighters a week to a daily frequency all from Baiyun, not Hong Kong..
5 Page 5 Lufthansa Increases Service Frequencies Lufthansa Cargo is to increase its freighter frequencies to Dallas, Sao Paulo and Shanghai and will add a new destination to Lahore and a direct connection from Cologne through East Midlands (UK) to Wilmington (USA). Cargo customers will also benefit additional belly capacities that will come on stream from Lufthansa's introduction of passenger flights to Busan (South Korea) and extra frequencies to Caracas, Denver and Shanghai. Lufthansa Cargo will raise frequencies to Dallas from two to three times weekly; Sao Paulo will be served by six flights weekly from Frankfurt,and frequencies to Shanghai will be increased from eight to nine weekly. Los Angeles will be served twice weekly. Lufthansa Cargo will also operate scheduled flights to and from Lahore in Pakistan. New in the timetable is a direct connection from Cologne through East Midlands to Wilmington. This service will be operated within the framework of the existing intercontinental joint venture with DHL. Aside from network changes in Lufthansa Cargo s freight services in the summer timetable, the Lufthansa passenger business is also extending its route network. Of interest to cargo customers are the increased frequencies in passenger flights to Caracas, Denver and Shanghai as well as the new passenger services offered to Busan in combination with Seoul. Shanghai Pudong International Airport is Now the World s 6 th Largest Airport Shanghai Pudong International Airport has moved up two positions in one year making it now the world s sixth largest airport in terms of cargo traffic. In 2006, the airport moved 2,159,321 tons of freight and mail which is 6.3% more than the previous year. The Pudong Airport ranks No 3 in Asia in terms of freight and mail volume and almost 90% of the total cargo was flying to or from a foreign country or region, increasing 31.7% from Pudong International Airport Express delivery giants UPS and DHL have signed agreements with Shanghai airport to build global and north Asia hubs at the Puding airfield which will further boost the freight volume. A USD $2.5 billion second phase project at Pudong airport, which includes a second terminal and third runway, is expected to be completed within 2007 and put into use prior to the Beijing Olympics in 2008, at which point it will be able to handle 4.2 million tons of cargo and will undoubtedly have moved up the list again. All of this is pretty astounding considering that Pudong airport only opened on October 1, 1999, replacing Shanghai Hongqiao Airport as Shanghai s International Airport. The long term plan long term used in the Chinese sense which means in time for Expo 2010 calls for a total of three terminals, two satellite halls and five parallel runways.
6 Page 6 Enhanced High Security Drivers Licenses in Canada New High-Security driver s licenses which would allow US Citizens returning from Canada without a passport could be adopted elsewhere if an experiment from Washington is successful. The pilot project of new enhanced driver s licenses will look much like conventional driver's licenses, but will include proof of citizenship and other information that can be easily scanned at the border. Endorsement of the pilot project by Michael Chertoff comes as border states prepare for new federal security requirements mandating a passport for travelers -- including US citizens -- who enter the country by sea or land from elsewhere in the Western Hemisphere. The enhanced licenses will appear much like regular ones but will be loaded with information that can easily be scanned at the border That requirement is expected to take effect between early 2008 and mid Washington state officials say they are particularly sensitive to the new rule because of the extensive tourist traffic between the state and neighboring British Columbia, home of the 2010 Winter Olympics in Vancouver. The announcement comes shortly after the Ontario government okayed the launch of a similar state-of-the-art license. There is not any word yet on whether or not a driver s citizenship will be included on the license, however, officials did say they will continue to pursue efforts to have the high-tech license accepted in place of a passport under the Western Hemisphere Travel Initiative. The new card will be available in late Continued from page 1 - IAE For further information, contact John Cunningham, Director Aerospace Services, of Kintetsu World Express at (630) , or Neil Williams of International Aero Engines at (860) The IAE V2500 engine powers the Airbus A319, A320 and A321, the Airbus Corporate Jetliner and the Boeing MD-90 aircraft. More than 135 customers from around the world have made the V2500 the preferred choice on the A320 family, and more than 1,300 aircraft in service have accumulated more than 34 million flight hours. The V2500 boasts class-leading fuel burn, lowest noise, lowest total emissions and operating costs. Its high-tech design and world-class reliability have ensured total orders worth over $35 billion with more than 5,000 engines delivered or ordered. The V2500 engines produce between 22,000 and 33,000 lbs of thrust required by 150-seat passenger aircraft, the fastest-growing market sector in the aviation industry.
7 Page 7 Saint John, New Brunswick Port Authority looking for Long Term Operating Agreement The Saint John, New Brunswick Port Authority is inviting proposals from stevedoring companies, terminal operators and other interested parties for a long term operating agreement for the Rodney Container Terminal located at the Port of Saint John, New Brunswick since the existing operating agreement expires December 31, The terminal is comprised of 36 acres of open space, two deep water berths, two gantry cranes and other terminal equipment as well as an efficient on-dock rail and truck access to the Trans Canada Highway within 100km of the US Border crossing at Calais, Maine. Port of Saint John is being promoted as the Atlantic Canadian center of marine activity linking North America to the world. Officials say the port is ideally situated for trade in the north / south corridor and is also accessible to trans-atlantic trade. The location of the Port of Saint John, its productive labor force, and fully equipped terminals, already create a real advantage to shippers and shipping lines which transport goods to / from the Maritime Provinces, Quebec, Ontario and numerous destinations worldwide. Barcode Labels Introduced at Mumbai International Airport Effective March 15, 2007, self adhesive barcode labels are being introduced at Mumbai International Airport Pvt. Ltd (MIAL). As per the Government of India directives, MIAL, is using barcode labels for automatic data capturing in the process of export cargo handled. All export cargo handled by MIAL should go to the Air Cargo Complex with the labels affixed as per IATA resolution 606 specifications. The new barcode labels will be replacing the manual processing of export cargo Hong Kong Celebrates Grand Opening at Asia Freight Terminal With the Grand Opening of Hong Kong s Asia Freight Terminal 2, the capacity is now at 1.5 million tons per annum The Asia Freight Terminal (ATT), the second largest terminal operator in Hong Kong, celebrated a Grand Opening of its Terminal 2 on March 8, With the expanded capacity now at 1.5 million tons per annum, there are high hopes that it will speed up the cargo handling with less congestion in the cargo terminals. There is also an expectation of better service levels due to the increased competition between cargo terminal operators.
8 Page 8 REVISED : Emergency Bunker Adjustment Factor (EBAF) Inland Fuel Charge (IFC) It is a notice of the fuel surcharge increases by ocean carriers for export shipments. There are two separate charges. One is the standard quarterly Emergency Bunker Adjustment Factor (EBAF), which it is for ocean portion. The second is a new Inland Fuel Charge being assessed due to continue rising fuel costs in the States for intermodal (truck & rail) portion. These two increases will be effective May 01 May 31, EBAF: Eastbound (to USA) Westbound (from USA) 20 container USD USD container USD USD HQ container USD USD container USD USD IFC: Inland transported by truck: $56.00 per container Inland transported by truck and rail combination: $195 per container Should you have any questions or require further clarification on the above increases please contact your local KWE office or your account executive. KWE Office Updates The Beijing Kintetsu World Express Co., Ltd. Guangzhou Branch office has relocated as of March 5, 2007 New Address : Shajiaowei Industrial Area, Houshan Road, Nangang Street, Huangpu District Guangzhou, China New Tel : New Fax : Effective April 1, 2007 there will be a change of telephone area code in Zurich / Switzerland. KWE Zurich s new numbers are below : New Tel : New Fax : Kintetsu World Express (RUS), St. Petersburg Branch has relocated as of April 13, 2007 New Address : Office 313, 315, 6A Vasi Alekseeva St St. Petersburg New Tel : New Fax : KWE-SPB@kwe.co.ru Please note that KWE Russia does not belong to the KWE Group Network server and we may not be able to receive s addressed
9 Page 9 Holiday Schedule April & May Apr Freedom Day South Africa KWE Skeleton Operations 30 Apr Dutch Queen s Birthday Netherlands 28 Apr 7 May Golden Week Japan KWE offices closed 4/28-4/30 & 5/3-5/6 1 May Worker s Day South Africa KWE Skeleton Operations 1 May Labor Day Singapore All offices closed 1 May May Day Germany All offices closed 1 May Labor Day Hong Kong KWE Skeleton Operations 1 May Labor Day India All offices closed 1-7 May Labor Holiday China 5 May Children s Day Korea 17 May Ascension Day Germany, Netherlands 21 May Victoria Day Canada Bank, gov t and KWE offices closed 24 May Buddha s Birthday Korea 27 May Pentecost / Whit Sun Germany All offices closed (Skeleton staff at KWEFRA) 28 May Memorial Day United States All offices closed 28 May Whit Monday Netherlands 31 May Vesak Day Singapore All offices closed Recently we have been seeing announcements from several carriers regarding pending Fuel Surcharge increases. The continued fluctuations of the global barrel prices are the driving force behind these actual and anticipated increases. KWE will continue to monitor the situation and provide updates as soon as more specific information is available. If you have any questions, please feel free to contact your local KWE office or Sales representative
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