PURCHASING

Ethics In Purchasing

By Martin Murray

Every day the media has reports of cases of bribery and unethical business practices that involves the purchasing of materials or services in almost every country in the world. Although we like to think that the people who determine contracts and purchasing agreements are fair and ethical, there are some that will accept coercion that may affect the award of contracts that are worth thousands of dollars to those that are worth millions of dollars.

Purchasing Standards

Every company will hold their employees to a purchasing standard that is put in place with processes, methods and rules to ensure that the procurement process is as fair as possible. However, the purchasing of materials and services is a process that involves the interaction of purchasing staff and potential vendors, which leads to personal relationships and contacts. A purchasingprofessional will naturally call a vendor they have personal knowledge of before they cold call other potential suppliers. The relationship between a company and their suppliers is one that is developed over a period of time and based on personal relationships.

However, the purchasing professional is duty bound to their employer to ascertain the best product or service at the best cost, in the timeliest fashion. Purchasing standards are in place to ensure that the needs of the company are foremost in any negotiations with potential suppliers. The first ethical standards for purchasing professionals were published by the Association of Purchasing Management in 1929.

Actions of Suppliers

Although we expect purchasing professionals to be as ethical as humanly possible, most companies have a sales department whose job is sell your product and that can means having contact with employees of potential clients, which could be purchasing or non-purchasing staff. These sales teams will have budgets to promote products with advertisingsouvenirs, such as pens, calendars, diaries, etc., or more tangible gifts such as lunches. In a number of studies on purchasing it has been found that almost all purchasing professionals accepts something from vendors, even if it as small as an item of stationary.

Although the majority of companies will require purchasing and non-purchasing employees to sign and abide by an ethics policy, smaller companies are less likely to either have or indeed abide by a code of ethics. Small business failure is high and it is vital for companies to win business, and that can come at the expense of ethics.

Non-Purchasing Employees

Although large companies insist on purchasing professionals strictly adhering to ethics codes, the same is not necessarily true for non-purchasing staff. In many companies purchasing is allowed by department heads or even line staff which by-passes the purchasing department all together. This means suppliers sales departments can target non-purchasing staff to gain sales where perhaps they have been rejected by the purchasing department. Much of this rogue procurement is never seen by the purchasing department as it either is paid for a department’s cost center or checks cut by the accounting department.

Rogue purchasing has two major drawbacks for a company. Firstly the spending is never funneled through the purchasing department so there is no way to know if the purchaser obtained the best price for the item. Secondly, the purchaser may have been unduly influenced to make the purchase; perhaps by gifts, personal relationship or even a conflict of interest. Rogue purchases can make up as much fifty percent of a company’s overall spending for a year. If non-purchasing employees are restricted to minor or even zero purchasing, the company would be confident that the purchases were made in an ethical manner and the best product was selected based on price, quality and delivery time.

Summary

Purchasing professionals are an asset to any company. They can save a company thousands if not millions of dollars a year. The way in which they purchase items is vital to the success of a company and a strict code of ethics ensures that all potential vendors are treated equally.

Agility Logistics Expansion in Malaysia

Agility sees trucking, warehouse operations driving growth

By DAVID TAN
davidtan@thestar.com.my

GEORGE TOWN: Agility, a public-listed logistic company in the Kuwait Stock Exchange and Dubai Financial Market, expects its overland trucking and warehouse operations in the Malaysia to spearhead the growth of its subsidiary, Agility Logistic Sdn Bhd, this year.

Agility chief executive officer Morten Damgaard (South-East Asia/Malaysia) said this was due to the improvements made in the highways and land routes connecting Indochina, Thailand, Singapore, and the rising cost of fuel, which made air and ocean transportation expensive.

Agility's trucking and warehouse business in Malaysia generate more than 40% of the subsidiary's 2011 revenue.

“Besides better connecting infrastructure, there is also improvements in the customs services at the borders,” he told a press conference on the launch of Agility's new 60,000 sq ft warehouse in Bayan Lepas by Penang Chief Minister Lim Guan Eng.

Agility CEO (SEA/Malaysia) Morten Damgaard(left) and Agility Penang Branch manager Ali Ahmad at the press conference

Agility also has three warehouses in Kuala Lumpur, two in Johor, and one in Malacca, comprising about 600,000 sq ft of warehouse space.

“We are getting a lot more interest from our customers to transport their goods by land, which is one of the reasons why we moved to a larger warehouse,” Damgaard said, adding that Indonesia, Malaysia, Thailand and Vietnam were the key markets in the Asean region driving growth for the logistics industry.

“In Asia, China and India are still the top two drivers of growth for the logistics business.

“The commissioning of the facility in Penang underpins Agility's emerging markets growth strategy and is a testament to the successful expansion of our contract logistics business in Malaysia and the Asia-Pacific region,” he said.

Meanwhile, Lim said according to Frost Sullivan, the logistics industry in Malaysia was expected to experience a year-on-year growth of 10.3% to reach RM129.9bil in 2012.

“The logistics industry in the country is projected to grow at a compounded annual growth rate of 11.6% to touch RM203.7bil in 2016,” he said.

Agility Logistic Sdn Bhd's new warehouse in Bayan Lepas.

Employing more than 22,000 employees in 550 offices across 100 countries, Agility's annual revenue is around US$6bil.

MALAYSIA'S LOGISTICS SECTOR TO GROW IN 2012

KUALA LUMPUR: The Malaysian logistics industry is expected to grow by 10.3% to RM129.93 billion in 2012 against an estimated RM117.8bil last year, on strong government support for logistics-related development and growth fuelled by foreign investments.

Malaysia's strategic location and focus on improving supply chain efficiency were also key growth drivers, said Frost & Sullivan vice-president, transportation & logistics practice, Asia-Pacific and country head for Malaysia, Gopal R.

“Growth of the country's external trade signifies growth of the transportation and logistics industry especially for import and export forwarding, air freight and ocean freight-related businesses,” said Gopal, adding that external trade for Malaysia was expected to increase 5.9% year-on-year to RM1.32 trillion in 2012.

Foreign direct investments surged to RM21.3bil in the first half of 2011 compared with RM12.1bil in the corresponding period in 2010, reflecting the growing confidence in the wake of Government initiatives to stimulate economic growth.

“The introduction of several initiatives such as the Government Transformation Programme and the Economic Transformation Programme provided a conducive business environment for the logistics market,” he said.

Malaysia's major trading partners are Asian countries which are expected to experience stable economic growth.

“However, the share of trade with Japan and Thailand is expected to shrink due to supply chain disruptions and production slowdown following disasters in the respective countries,” Gopal said.

The country's key trading commodities are electrical and electronic products, chemicals, palm oil, machinery, appliances and parts.

The Malaysian logistics industry is forecast to grow at a compounded annual growth rate (CAGR) of 11.6% to reach RM203.71bil in 2016. In terms of volumes, Gopal forecast Malaysia's total cargo volumes to increase 10.1% to 545.13mil tonnes in 2012 compared with 495.29 million tonnes in 2011.

“Sea-freight is the most favoured mode of transport for cargoes in Malaysia, (comprising) more than 90% of total freight traffic in 2011,” he said. Gopal said total cargo volume by sea was expected to grow 10.1% to 538 million tonnes in 2012.

Cargo volume by rail is expected to increase to 6.2 million tonnes in 2012 compared with 5.9 million tonnes in 2011. Gopal predicted cargo volume by air to grow 3.9% to 925,000 tonnes this year buoyed by steady growth in the economy and external trade.

SENAI AIRPORT FEEDER SERVICE

Strong demand for Senai airport feeder serviceBy S C Chan , Senai, Johor 

Senai Airport Terminal Services (SATS), the operator of Senai International Airport (SIA) in the Malaysian peninsula's southernmost state of Johor, has launched a Singapore-Malaysia road feeder service aimed at helping to transform the airport into a leading cargo and logistics hub in the region.

Called SATS Express, the service operates to and from Singapore's PSA port and Changi airport to Johor. Northbound, the service operates to and from Johor Bharu to Pasir Gudang, Port of Tanjung Pelepas, Kuala Lumpur International Airport (KLIA), Subang Airport and Port Klang. The trucks carry 20 and 40-ft containers and 20-ft reefers. 

There are also northbound services to and from Malacca to KLIA, Subang Airport, Port Klang and Kuala Lumpur and southbound services to and from Malacca to Johor.

The northbound service to and from Johor Bahru covers 16 designated drop-off/pick-up points falling under zones one and two and including Gelang Patah, Larkin, Pandan, Skudai, Tampoi, Tebrau, Pontian, Kota Tinggi, Kulai, Masai, Pasir Gudang, Senai, Ulu Tiram, Taman Johor Jaya and Taman Desa Jaya. Similarly, the southbound Kuala Lumpur service covers designated points under zones 1 and 2 that include Batu Tiga, Petaling Jaya, Shah Alam, Subang, Sungai Way, Ampang, Bangi, Banting, Batu Caves and Cheras.

SATS land logistics manager David Govind told Cargonews Asia the Singapore-Johor Bharu service onward to PTP and Pasir Gudang launched on April 18 had received "overwhelming response'' from both sides of the Johor Causeway.

"We are committed to providing the most efficient, reliable and economical choice [to companies] for cargo transportation [by land],'' he said, adding that the SATS road feeder service offers a combination of facilities and services for organisations to remain competitive in the ever evolving and demanding industry.

Govind described SATS Express' rates as "the most competitive'' in the market.

Among its existing clientele are leading logistics companies such as Maersk Logistics, Kuehne + Nagel, Schenker, ABX Logistics, TNT Express, Yamato Transport, SM Freight, Pro Logistics and Eastern Cargo.

On the refrigerated truck service, Govind said SATS Express is negotiating with Penang-based Dimerco Express and Alfro Cargo Express to bring reefers down to Johor Bharu, Pasir Gudang, Senai and PTP.

"We expect this service to commence at the end of the year,'' he said.

Govind said the northbound dry truck service to and from Johor Bahru was the busiest, and the service to and from Singapore was "picking up steadily''.

Meanwhile, Govind said construction work on the cargo complex at Senai airport is nearing completion and is expected to be ready for use by the end of the year. Twenty units of 2,200 sq ft each will be available and another 20 units will be ready possibly by early next year. 

"We will open the units for booking only a few months before the targeted completion date,'' he added.

Behind the cargo complex there will be a two-tier building for general sales agents (GSAs) and airlines and each unit will offer office space of 400 sq ft.

Under Senai International Airport's phase one cargo facility development, a US$3.42 million 3,000 sq m cargo complex became operational in July last year with annual handling capacity of 80,000 tonnes of cargo and capacity to handle B747-F aircraft. The airport aims to handle 50,000 tonnes of cargo this year. In its efforts to boost throughput, SATS recently clinched rights to prvide cargo handling services to no-frills airline AirAsia. 

Govind said the aim in launching the road feeder service was to improve Senai International Airport's connectivity to other airports and seaports as part of SATS' long-term plan to transform Senai airport into a cargo and logistics hub.

LOGISTICS - DIVERSIFICATION

Freight handlers go for specialisation 


Logistics companies around the world are rushing to invest in specialty cargo facilities in search of wider margins and stable growth in an increasingly uncertain outlook for global trade, reported Reuters.

Freight companies can charge higher prices for handling delicate electronic components, vaccines that have to remain chilled or Arabian race horses than for standard cargo.

"Specialty freight always has a higher margin," said Andreas Baader, managing partner at consultancy Barkawi Management Consultants, which focuses on supply chain and after sales services.

Lufthansa Cargo, the freight arm of German carrier Lufthansa , has invested a double-digit million dollar sum in a new "Cargo Cool Centre" in Frankfurt that handles pharmaceuticals and other medical products.

"In the crisis year 2009, cool products declined only marginally," Joerg Bodenroeder, the director of the Cool Centre, said ahead of its inauguration this month.

The global pharmaceutical drug logistics market is estimated at a little more than US$61 billion and is expected to grow at an average rate of 7.6 percent a year through 2015, according to Transport Intelligence.

The market for biotech drugs, which are typically tolerant to a tighter range of temperatures than traditional chemical drugs, is estimated to grow at an annual rate of about 10 percent through 2015.

That is more than twice the expected rate of growth for traditional drugs, creating opportunities for cargo companies that offer temperature-controlled logistics.

According to Barkawi's Baader, trucking companies that invested in specialised equipment to cater to new industries before and during the crisis also weathered the downturn better.

"If you can transport wind turbines, you are doing pretty well. There are only about 10 to 15 companies that are specialised in wind turbines," Baader said.

Overall, the mood in logistic has become more muted lately, with industry bodies and analysts lowering their expectations for growth in 2012 as economic growth looks set to remain slow.

"There have been periods of hope that this was just a soft patch and that run rates would re-accelerate, but as we approach the end of the year and GDP growth forecasts continue to fall, it is clear that 2012 is going to be another difficult year," Nomura analyst Mark McVicar said in a recent note.

Global trade is expected to grow at a pace of only 5.8 percent this year, compared with 14.1 percent in 2010, as the European sovereign debt crisis buffets developed economies, according to the World Trade Organisation (WTO).

That is still better than the 12.1 percent drop in global trade in 2009, during the financial crisis that followed the collapse of investment bank Lehman Brothers, though the WTO said the outlook was increasingly uncertain.

Deutsche Post DHL runs a high-security warehouse for Philips, distributes drugs made by Bristol-Myers Squibb in the United States and delivers cars to dealerships in Scotland for BMW.

Its supply chain business broke ground in September on a new $18 million euro distribution centre at eastern Germany's Leipzig/Halle airport, where medical supplies can be stored at controlled temperatures, and computers arriving by plane for servicing can be repaired on site before being put back on a plane to be returned to their owners.

"If you look at who sailed through the crisis, it was the big integrators like DHL and Kuehne + Nagel. They are very close to their customers' business," Barkawi's Baader said.

These big companies can handle their customers' entire supply chain if necessary, delivering raw materials and parts to factories, warehousing finished products and distributing them to retail outlets, a bigger job than many companies can do cost-effectively on their own.

Lufthansa Cargo CEO Karl Ulrich Garnadt told Reuters that the whole industry expects 2012 to be a "very strenuous" year, in which it will help to have more than standard shipping containers on offer.

But he said broadening one's product base, for instance into temperature-controlled cargo or animal handling, helps find pockets of growth in a tough economy.

LOGISTICS - Courier Service

DHL launches China-Japan multimodal service 

DHL is launching a new multimodal service operated by its Global Forwarding division between China and Japan, which cuts costs by up to 60 per cent compared to air freight alone, and reduces transit time by up to three days compared to solely using an ocean freight service, reported PR Newswire.

It also promises to emit up to 92 percent less CO2 compared to air freight.

The China-Japan multimodal service was made possible because DHL was recently licensed by the Ministry of Land, Infrastructure, Transport and Tourism to use railway for cargo transportation in Japan.

DHL's China-Japan multimodal service comprises the use of ferries, rail and trucks carrying 12-foot containers. Goods are picked up from any location in China – mainly Shanghai, Ningbo, Hangzhou, Suzhou, Nantong, Wuxi, Nanjing, Hefei and Wuhan –- and brought to Shanghai by truck, taken across to Hakata in Japan by ferry and then transported across Japan via Japan Rail.

In Japan, pick-up and delivery is done through Japan Rail – the country's most extensive rail network – and taken across to Shanghai by ferry, with final delivery to destinations in China done by truck.

Roger Crook, CEO, DHL Global Forwarding, Freight, said, "China and Japan are two of the world's largest economies and the China-Japan trade lane is among the top intra-regional trade lanes in the Asia Pacific region – it constituted over 44 percent of intra-regional trade in 2010. Pioneering, innovative transport solutions such as this, offer our customers yet more flexibility with the reliability of the DHL service quality."

The 12-foot containers used in this service – smaller than the usual 20 and 40-foot containers – can be carried on all three modes of transport – road, rail and ferry – and handled at the majority of Japan rail freight terminals. This significantly cuts handling and transit time as well as the potential for damage to goods by eliminating the need to move goods from one type of container to another to correspond with each transport mode. Additionally, these containers allow customers to ship in smaller amounts for better control over their inventory management.

"The US was Japan's top trading partner until 2007 when China took over as its biggest import and export partner," said Kelvin Leung, CEO, Asia Pacific, DHL Global Forwarding. "While we can ship just about anything to and from China on this multi-modal service starting with electronics, the next big potential we see is from the fashion and apparel sector – the biggest mover of goods from China to Japan – and the automotive sector, a key sector moving goods in both directions.

“The next step for us is to introduce a less-than-container-load (LCL) option into this service, something small and medium enterprises especially can look forward to."

LOGISTICS - Fashionwear Distribution

‘Red carpet logistics' brings Glamour to Asian fashion sector

November 26, 2011 (Asia)

The global logistics service provider Logwin AG is now offering a special product for the fashion sector in Asia – its “red carpet logistics”. The first step in its introduction throughout Asia was taken in Shah Alam, Malaysia, where Logwin opened a warehouse specially dedicated to the requirements of exclusive fashion articles in November 2011. Additional dedicated warehouses are scheduled to follow at locations in Singapore, Hong Kong, Shanghai, Sydney and Jakarta. “Red carpet logistics” combines the transport of high-quality fashion products from and to Asia as well as within Asia with specially equipped warehouses and advanced services for the fashion and lifestyle industry. The first warehouse in Shah Alam is located approximately 30 kilometres from the Malaysian capital Kuala Lumpur. This is where the logistics specialist provides its customers from the fashion sector with exclusive services. In the next phase Logwin will be upgrading its existing fashion warehouses in Hong Kong, Singapore, Shanghai and Sydney to meet the exacting “red carpet logistics” standards. Finally the network will be expanded to include Indonesia, India and additional locations in China. Warehouses are also planned for Thailand and Vietnam. The storage area of these facilities ranges from 9,000 m² to 18,000 m². “The concept is aiming to server the growing demand for premium European brands in Asia”, explains Marc Wijnen, Director Logistics at the Logwin business segment Air + Ocean." "At the same time Logwin will also be focusing its “red carpet logistics” on premium Asian brands intended for export to Europe, Australia and the USA. “Our intention with 'red carpet logistics' is to reposition ourselves on the Asian market. We are rolling out the proverbial red carpet for our customers and their brands,” says Helmut Kaspers, COO of the business segment Air + Ocean at Logwin. Particularly high-value premium products from the fashion and lifestyle field need special service that takes account of their exclusive quality. Logistics for this sector is a niche market with sophisticated requirements. “We have involved experts from the fashion and lifestyle industry in designing the 'red carpet logistics' concept in order to ensure that we are speaking the same language as our customers,” says Helmut Kaspers. The articles that Logwin transports all over the world are very often time-sensitive and logistics must satisfy the highest demands." Logwin can look back on many years of logistical experience in the fashion and lifestyle sector and offers its customers in Europe, for example, the largest logistics network for hanging garments. With its AirTextainer the company developed a special box for the space-saving and carful transport of fashion products around the world. The Asian fashion market is already the largest in the world. It is expected to become 35 per cent larger than that in Western Europe by 2015. Trade in clothing grew by 7.6 per cent in Asia in 2010 alone according to a study by Euromonitor in 2011. PricewaterhouseCoopers has predicted that demand for fashion and clothing will grow by 4.7 per cent in Asia this year, with China leading the way with an increase of 10.8 per cent. The Malaysian International Fashion Alliance (mifa) wants to establish Malaysia as an Asian fashion hub. The company, founded in 1995, specializes in planning, holding and marketing fashion events. mifa has been organizing the Malaysia International Fashion Week (MIF-W) since 2003. Besides organizing events, mifa also develops business models and brands for Malaysian fashion designers.

LOGISTICS - The KANBAN SYSTEM

LOGISTICS - Performance during flood

Thai Floods hobble Japanese logistics firms 

The severe flooding in Thailand has hampered the operations of Japanese shipping companies, inundating some of their warehouses and weakening demand for transporting goods, according to Nikkei Report.

Each of the logistics firms conducts daily updates of maps showing the areas that are flooded so they can deliver products and parts using trucks in areas accessible to vehicles. But making on-time deliveries is difficult due to congestion, they say.

Nippon Express experienced flooding at five warehouses at the Hi-Tech Industrial Estate and Rojana Industrial Park. Although it has managed to avoid damage to clients' cargo by putting it on racks and by moving it to other facilities, "we can't go near flooded warehouses, so we have been unable to check inside," said president Kenji Watanabe.

Even so, more than 80 percent of the floor space of the firm's Thai warehouses is dry, and there has been a sharp increase in calls from customers about moving production equipment.

Nippon Express decided to dispatch about 30 personnel from Japan and Singapore to help out in Thailand. With flood damage spreading in Bangkok, the company may also move the headquarters of its Thai unit from the capital to Laem Chabang.

Yusen Logistics suspended operations at its warehouse at the Nava Nakorn industrial zone, and it moved clients' goods such as electronic devices and autoparts to other locations. However, the movement of freight has been slow because factories that are supposed to receive the shipments have closed down.

Kintetsu World Express has shut its warehouse in the Rojana park after the facility was inundated. Although business has slowed, it is continuing to operate using unaffected facilities.

Kawasaki Kisen Kaisha's (“K’’ Line) containerships departing from Japan make two port calls in Thailand a week, but the firm is considering temporarily scaling back service to once a week.

Nippon Yusen KK (NYK) has discontinued stops at the port of Bangkok because loading and unloading works have been affected, and is using the port at Laem Chabang instead.

With automobile production down in Thailand, NYK’s automobile carriers made half the usual number of port calls in the country last month.

Mitsui OSK Lines (MOL), which transports 10,000 to 20,000 vehicles out of Thailand every month, has cancelled some stops in the country.

“K’’ Line said that it has not yet made plans for its automobile carriers to make port calls in Thailand this month on the view that transport demand will fall by some 17,000 vehicles a month.

Logistics Costs Rising

Wednesday November 2, 2011

Rising services cost a bane for businesses

By EUGENE MAHALINGAM
eugenicz@thestar.com.my

KUALA LUMPUR: Malaysian businesses expect rising services cost and fluctuating exchange rates to be among the top barriers to imports and exports in the next six months, according to findings of the latest HSBC Trade Confidence Index.

In the survey, 52% of Malaysian businesses found the cost of essential services such as shipping, logistics and storage would be the biggest barrier to international trade, followed by fluctuating exchange rates, at 35% and insufficient margins or profitability, at 29%.

Other concerns for Malaysian businesses included government trade regulations, rising interest rates and lack of product demand.

HSBC Bank Malaysia Bhd trade and supply chain director Ng Wei Weisaid that confidence had risen to a positive 106 points in the latest HSBC Trade Confidence Index from negative 97 points in the previous survey. Countries that recorded index points of over 100 are considered “positive,” while those below 100 points are “negative.”

Business concerns: Andrew Grisdale and Ng Wei Wei speaking to the media on the findings of the HSBC Trade Confidence Index.

She said 83% of Malaysian businesses expected trade volume to rise or at least remain unchanged in the next six months.

“In the next six months, 92% of the businesses expect their need for trade finance to rise or remain unchanged and 91% expect their capacity to access to trade to rise and remain unchanged,” she said at a briefing yesterday.

“Despite the rise in confidence in trade, 57% of Malaysian businesses expect the global economy to decline in the next six months,” Ng added.

HSBC managing director for commercial banking Andrew Grisdale said the implementation of key initiatives under the Economic Transformation Programme, combined with the Government’s pro-growth initiatives and regulator’s liberalisation measures would continue to fuel an “optimistic business environment.”

“At HSBC, we see positive growth in trade volumes and we expect growth to be supported by public sector expenditure and domestic private consumption.”

The HSBC Trade Confidence Index covers 21 markets and is the largest trade confidence survey globally.

Of the countries surveyed in Asia, businesses in Indonesia were the most bullish about trade prospects in the next six months with a score of 144 points. This was followed by India and Vietnam with 129 and 115 respectively. Malaysia was the fourth most confident country on the index. The survey comprises the views of 6,390 exporters, importers and businesses from small and mid-market enterprises on trade volume, buyer and supplier risks, the need for trade finance, access to trade finance and the impact of foreign exchange on their businesses.

On another note, Ng said HSBC expected Asian trade to grow 4.8% year-on-year until 2025 versus 3.8% globally.

“Asia trade volumes will grow 96% to nearly US$14 trillion (RM43 trillion) by 2025 and will be the key driver of world trade growth, which is expected to increase by 73% in the same period.

“India, Vietnam, Indonesia and China are among the top five international power houses which will drive world trade growth until 2025,” she said.

LOGISTICS - Malaysia's Roadmap

Monday August 22, 2011

Logistics roadmap will benefit the region

NANNING: Malaysia’s Roadmap for Development of the Logistics Services Industry will see a flourish of trade opportunities in the Pan-Beibu Gulf Economic Cooperation (PBGEC) member countries, according to Deputy Transport Minister Jelaing Mersat.

He said the roadmap commissioned by the Malaysian Logistics Council and the EPU of the Prime Minister’s Department contained recommendations on improving performance of ports, shipping, land transport and freight transportation.

He said the Transport Ministry would play an active role in the roll-out of the plan which would include strategic initiatives to strengthen capital capacity and also to review and revamp regulatory and intuitional framework.

“The ministry will also look into legislations and international conventions involving shipping, liability regimes, air and surface transport to strengthen our governance, regulatory functions and ensure international compliance,” he told Bernama on Saturday.

“With the roadmap, the transportation networks will be connected within the Asean and PBG countries. This will further develop investment, trade and economic cooperation in the region and form cluster of industries, accelerate economic growth in the PBGEC.” – Bernama

Jelaing attended the 6th PBGEC Forum, which concluded here on Friday.

He said Malaysia would play its role in transportation infrastructure to improve the connectivity between Asean and China.

“We are doing everything that we can to speed up the connection, such as the Singapore-Kunming Rail Link.”

The roadmap for the Development of the Logistics Services Industry is an Asean economic blueprint signed by all Asean leader at the Asean Summit, which was attended by former prime minister Tun Abdullah Ahmad Badawi in 2007.

Meanwhile, Jelaing said the Transport Ministry would evaluate and implement relevant strategic initiatives under the roadmap which whould envision the development of world class freight logistics system, including strengthening the role of ports and shipping to support the country’s economic growth and development.

“We will liaise and consult with various stakeholders in the industry through the focus in moving the agenda on freight logistics forward,” he said.

On maritime cooperation, Jelaing said China-Asean Maritime Consultation Mechanism is in the midst of exploring cooperative opportunities.

Under the mechanism, he said both countries conducted numerous activities, including the meeting on Tide, Current, and Wind Measurement Project of Malacca and Singapore Straits (March and April) and the Workshop on Port Facility Security in July. BERNAMA

LOGISTICS - Courier Service

Indian firms offer next day delivery, or money back Domestic Indian courier companies such as Overnite Express and DTDC are tapping the premium express delivery services segment with money back guarantees, reported The Hindu. Simply put, if the companies do not deliver within the next business day, they would return the freight charges. Currently, such services are offered by international express delivery firms such as DHL, FedEx, TNT and UPS. For using this service, users have to pay 20-25 per cent more than the normal express delivery charges. The service has been launched in select metros to start with. The exceptions to returning the charges include delays caused due to earthquakes, strikes, amongst others. So, for instance, if there are delays in delivery due to the ongoing strike call for Telangana in Andhra Pradesh, then, the firms will not refund the charges. Overnite Express, a US$32.53 million company, yesterday launched a service which provides “assured next business day” delivery – with a “money-back guarantee”. DTDC recently launched “an assured next business day delivery service’’ with money back guarantee. O P Rajgarhia, chairman and managing director, Overnite Express, said that over the next two years, the company expects to earn revenues of $4.88 million (about seven to 10 per cent of total revenues) through this service alone. In the current fiscal, Overnite Express hopes to close with a topline of $35.58 million, he added. The company has deployed dedicated delivery boys for this service alone. “The new service is in response to the market's desire for such an assured service platform,” Rajgarhia said

UPTREND MARKET FOR LOGISTICS IN VIETNAM

Japan mid-size logistics firms target Vietnam Mid-size logistics companies are expanding their distribution networks in Vietnam, a growing market where big players have still not solidified their positions, according to Nikkei Report. Japan Logistic Systems Corp will open warehouses in Hanoi, Da Nang and Ho Chi Minh City on October 1. A roughly 20,000 sq m facility in Ho Chi Minh City will receive automobiles and motorcycles from factories in the north and supply them to the domestic market. A similarly sized warehouse in the capital will act as a logistics base for mainly home appliances, with the facility to be expanded by 10,000 sq m in December to accommodate transactions with an air-conditioner manufacturer. The overall investment is estimated at US$5.19 million, and Japan Logistic Systems aims to boost annual Vietnamese revenue from $51.74 million today to $90.55 million in three years. Mitsubishi Logistics Corp, having set up a joint venture with a local firm, has begun transporting products from appliance factories to the parts of Vietnam where they will be sold. The Japanese firm hopes to eventually handle imports and exports of electronic parts, coffee and other products. Nissin Corp has joined hands with Vietnam's national railroad to operate a freight train exclusively for Japanese companies in response to growing demand to transport cars and motorcycles. The train makes two trips a week between Hanoi, where factories are concentrated, and Ho Chi Minh City, where the vehicles are sold. Appliances are shipped on the return trip going north. The products used to be transported on trucks, but deliveries were often delayed and products were sometimes damaged en route. Yusen Logistics Co has begun considering regular truck deliveries between Hanoi and Ho Chi Minh City. Since the firm already operates Bangkok-Hanoi and Hong Kong-Hanoi routes, the new route would connect the former Saigon with Thailand and China by land. Japanese companies have been setting up factories in Vietnam, in part to take advantage of low labour costs and its proximity to the Chinese market. The Vietnamese government has indicated a plan to create a special economic zone for Japanese businesses, another positive factor for mid-size logistics firms.

LOGISTICS

More investments needed

Logistics sector should be able to meet expected increase in demand

SHAH ALAM: The logistics sector must further invest in technology, capacity and talent to offer more value-added services in line with the uptrend in trade volume.

SME Corp Malaysia chairman Datuk Dr Mohamed Al Amin Abdul Majid said the logistics sector capacity should meet the expected increase in demand in view of the growth of the global economy.

Datuk Dr Mohamed Al Amin

“This is the time where the logistics sector must take advantage because as trade grows, the services offered by the logistics sector are much needed to ensure seamless transportation, storing and distribution of goods.

“For Malaysia, the main challenges are to further improve the services offered towards total logistics services and multi-modal transportation.

“To date, there are about 31,168 companies involved in the logistics sector in the country with 30,766 belonging to the small and medium-size entreprises (SMEs) category,” he said in his speech to officiate the Bumiputra Logistics Entrepreneurs Association AGM last week.

Mohamed Al Amin said as the logistics sector remained as one of the strong pillars of the country’s trade growth and competitiveness while the Government had acted as an “enabler” via its support and various incentives.

The private sector specifically the transportation, storage, and communication industry contributed about 8% to the country’s gross national product last year.

“This year, there are about 219 programmes with financial commitment of RM5.9bil to be implemented via various ministries and agencies.

“For SME Corp, we have launched two programmes early this year namely Business Accelerator and Enrichment & Enhancement Programme to support the SME industry and players.

“PPLB members who are interested in this programme are welcome to join and application can be made online.

“We have also collaborated with a prominent logistics player, Kontena Nasional Bhd, to widen the scope of the logistics sector market via talks, site visits and business-to-business sessions,” he said.