retailers drawing online shoppers into stores with ship-to-store tactic – DC Velocity

October 30, 2018

Approach avoids expensive last-mile delivery, tempts consumers with extra purchases, report says.

By DC Velocity Staff

As retailers head into the make-or-break holiday peak shopping season, many companies will try to cap off a strong year by doubling down on strategies to draw online shoppers into stores, CBRE Group Inc., the Los Angeles-based real estate and logistics services giant, said today.

One of the most common approaches in the effort to combine online and in-store shopping is to offer buy-online/ship-to-store—or BOSS—a fulfillment technique that helps stores avoid expensive, last-mile delivery fees, even as they lure shoppers into brick and mortar stores where they may be tempted to make additional purchases, CBRE said in its annual Holiday Retail Trends Guide.

According to CBRE, BOSS is a refinement of the popular buy-online/pickup-in-store (BOPIS) strategy that allows retailers to ship items to stores that are not regularly stocked there, allowing them to offer more inventory than they could typically stock at a single store.

The two approaches have been rising in popularity, with Zara saying that nearly one-third of its online orders are picked up in-store, The Home Depot using in-store pickups for 47 percent of its online orders, and craft retailer Michaels forecasting that its BOPS and BOSS programs will account for almost half of online sales this holiday season, CBRE said.

An additional retail trend expected this season will be a push by stores to reward customer loyalty in ways aside from discounts. For example, chains such as Macy’s, Kohl’s, Target, Sephora, Nordstrom and Victoria’s Secret are offering exclusive experiences such as invitations to a Fourth of July fireworks show, exclusive cooking classes from famous chefs, or trips to New York Fashion Week, CBRE said.

One more holiday trend described in the report will be an expansion of sales opportunities for toys, as retailers scramble to capture consumer dollars that were put into play by the recent closure of Toys R Us.

The various strategies all feed into one common goal: using enhanced capabilities to seamlessly cater to shoppers in stores, online, and on their mobile devices. “Retailers have been refining and improving their omnichannel playbooks for several years, and those efforts now appear to be paying off,” Melina Cordero, CBRE’s global head of retail research, said in a release. “Several of the trends we see this holiday season – including buy-online/ship-to-store services and enhanced loyalty programs – are designed to encourage and reward shoppers’ use of multiple channels.”

Retailers are optimistic about a busy holiday season, on the heels of recent reports by the National Retail Federation (NRF) and other groups, predicting a 4 percent rise in consumer holiday spending compared to 2017.

“This looks to be a strong holiday season for retail for several reasons,” Brandon Famous, chairman of CBRE’s Global Retail Occupier Executive Committee, said in a statement. “In addition to the tailwinds of the robust economy and strong consumer confidence, retailers as a whole have gotten smarter and more efficient with their omnichannel strategies and their programs for attracting and retaining customers.”

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Supply Chain News on Share of Trucking Costs Related to Driver Pay and Benefits Continues to have Biggest Again Tops the List

As usual, the American Transportation Research Institute is back with its annual analysis of the cost components of running a fleet of freight trucks, and as always the results are interesting.

The just released 2018 report, based on 2017 operating data from carriers, finds driver wages and benefits comprise 43% of marginal truck operating costs, the same as in 2016 but up from 40% in 2015.

Since 2008, ATRI has published “An Analysis of the Operational Costs of Trucking,” an annual report that provides detailed marginal cost data on motor carrier operations.

Supply Chain Digest Says…

When it comes to marginal costs per mile driven, ATRI found it was $1.84 in the LTL sector and $1.49 for truckload carriers.

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To gather the data, ATRI sent carriers a web survey, similar to previous questionnaires but with new questions. For example, carriers were asked this year to enter their total fleet mileage for 2017 as submitted to government carrier authority IFTA. Respondents were asked for the first time to provide the number of drivers employed by type of equipment (e.g., company drivers in a company truck, leased drivers in a company truck, and owner-operators). This question was added to capture the different types of employment arrangements that exist between drivers and motor carriers

Data collection efforts commenced in April 2018, with data collection forms being sent electronically to a representative group of for-hire carriers which included truckload (TL), less-than-truckload (LTL), and specialized fleets. ATRI also solicited carrier participation through targeted industry mailings and emails, a news alert, and coverage in major industry news outlets. Many of the 50 state trucking associations also solicited carrier participation from their respective memberships as well.

Participants were provided several options for submitting data to ATRI: utilizing the on-line response form, or transmitting the data to ATRI via email or fax. All responses were carefully reviewed by the research team for clarity, and the research team contacted respondents to clarify any ambiguous responses as needed. Responses were collected through the end of August 2018.

Due to the highly competitive nature of the trucking industry and the extreme sensitivity associated with corporate financials and expenditures, the operational cost information was collected confidentially from motor carriers, and the data is presented in aggregate form only. ATRI also provided respondents with non-disclosure agreements as requested.

ATRI does not list the total number of carrier respondents, but does provide various profiles of those participating.

For example, 43% of respondents were primarily truckload carriers, 36% LTL, and 21% other, which could be for example specialized carriers (e.g., expedited). Those numbers were a little different than industry data on percentages by segment, so ATRI weighted those responses they received to reflect those national numbers, where for example 52% of carriers are in the truckload segment.

There was a good mix of large, mid-sized and smaller carriers, with 55.3% of respondents being smaller carriers operating fleets with 250 or fewer power units. The remaining 44.7 percent of respondents were split evenly between carriers operating between 251 and 1,000 power units and fleets with 1,000 or more power units.

Interestingly, ATRI notes that as trip lengths across the industry continue to decrease, the respondents in this year’s sample were again predominantly focused on local and regional pick-ups and deliveries where the average haul lengths were less than 500 miles per trip. An average of 62% of respondent trips were of the local and regional variety, up from 55% of respondent trips in the 2011 data sample.

The increase in local and regional truck trips has come at the expense of inter-regional trips, as 19% of the respondents’ trips were inter-regional in 2017 compared to 26% in 2011. The remaining 19% of the respondents’ trips were national or long-haul trips in excess of 1,000 miles traveled.

The survey’s focus was primarily on components and sub-components of carriers’ marginal costs per mile (CPM), which allows for comparative analysis across the different industry business models. In order to convert line-item CPM figures into marginal cost per hour (CPH) calculations, a GPS-generated, industry-vetted average operational speed of 39.42 miles per hour (MPH) was used in these calculations. It should be noted that this speed relates to moving trucks only, and includes all roadway speeds rather than solely highway speeds.

ATRI notes that truck mileage remains pretty low. For average loads at 80,000 pounds or more, for example, carriers reported achieving just 4.9 miles per gallon. Mileage rates were slightly better, around 6-7 MPG, at lower average freight weights.

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As usual, the analysis broke the carrier cost analysis into vehicle-related and driver-related factors. The money graphic, showing the cost breakdown by percentage, is shown below:


Source: ATRI

As can be seen, driver wages and benefits account for 43% of marginal truck costs, the same as in 2016. Fuel costs were next, at 22% of the total. Those fuel costs as a percent were way down from the 39% seen in 2012, as diesel costs remained low for most of 2017. That percent will surely be higher for next year’s survey, with oil and fuel costs well up in 2018.

All told, marginal costs were up 6.2% in 2017. Driver wages were up 6.6% last year, while benefit costs rose a substantial 11.2%. Tolls, interestingly, were up 9.9% last year.

When it comes to marginal costs per mile driven, ATRI found it was $1.84 in the LTL sector and $1.49 for truckload carriers.

Interestingly, 20.7% of these miles were non-revenue or “dead-head” miles, up slightly from the 19.5% reported by respondents in 2016 and in-line with figures reported in previous years.
The full report is available from ATRI here: ATRI Carrier Cost Report 2018


Any reaction to this ATRI cost analysis? Let us know your thoughts at the Feedback section below.


Your Comments/Feedback


Senior Consultant, Infosys

Posted on: May, 22 2016

Great article. I am a little suprised not to see BNSF in the mix while I understand their financial mode/operation is a little different. 

That would only give a complete perspective with all the players in the pool.

Mike O’Brien

Senior editor, Access Intelligence

Posted on: May, 26 2016

Surprised to see Home Depot fall off the list; thought they were winning with Sync?

Julie Leonard

Marketing Director, Inovity

Posted on: Jun, 27 2016

Using the right tool for the right job has always been a best practice and one of the reasons, we feel, that RFID has never taken off in the DC as exponentially as pundits have been forecasting since 2006. While these results may seem surprising to those solely focused on barcode scanning, the adoption of multi-modal technologies in the DC makes perfect sense for greater worker efficiency and productivity.

Carsten Baumann

Strategic Alliance Manager, Schneider Electric

Posted on: Aug, 19 2016

The IoT Platform in this year’s (2016) Hype Cycle is on the ascending side, entering the “Peak of Inflated Expectation” area. How does this compare to the IoT positions of the previous years, which have already peaked in 2015? Isn’t this contradicting in itself?

Editor’s Note: 

You are right, Internet of Things (IoT) was at the top of the Garter new technology hype curve not long ago. As you noted, however, this time the placement was for “IoT Platforms,” a category of software tools from a good number of vendors to manage connectivity, data communications and more with IoT-enabled devices in the field.

So, this is different fro IoT generally, though a company deploying connected things obviously needs some kind of platform – hoe grown or acquired – to manage those functions.

Why IoT generically is not on the curve this year I wondered myself.



Jo Ann Tudtud-Navalta

Materials Management Manager, Chong Hua Hospital, Cebu City, Philippines

Posted on: Aug, 21 2016

I agree totally with Mr. Schneider.

I have always lived by “put it in writing” all my work life.  I am a firm believer of the many benefits of putting everything in writing and I try to teach it to as many people as I can.

This “putting in writing” can also be used for almost anything else.  Here are some general benefits (only some) of “putting in writing”:

1. Everything is better understood between parties involved.  There are lots of people types who need something visual to improve their understanding.
2. Everyone can read to review and correct anything misunderstood.  This will ensure that all parties concerned confirm the details of the agreements as correct.  This is further enhanced by having all parties involved sign off on a hard copy or confirm via reply email.
3. Everything has a proof.  Not to belittle the element of trust among parties involved, it is always safest to have tangible proof of what was agreed on.
4. There will be a document to refer to at any time by any one who needs clarification.
5. The documentation can be useful historical data for any future endeavor.  It provides inputs for better decisions on related situations in the future.
6. This can also be compiled and used to teach future new team members.  “Learn from the past” it is said.

There are many more benefits.  Mr. Schneider is very correct about his call to “put it in writing”.

Sandy Montalbano

Consultant, Reshoring Initiative

Posted on: Aug, 24 2016

U.S. companies are reshoring and foreign companies are investing in U.S. locations to be in close proximity to the U.S. market for customer responsiveness, flexibility, quality control, and for the positive branding of “Made in USA”.

Reshoring including FDI balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the U.S. lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate!

The Reshoring Initiative Can Help. In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the nonprofit Reshoring Initiative’s free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring.


Transportation Manager, N/A

Posted on: Aug, 30 2016

 Good article!  I am sending this to my colleagues who work with me.  We have to keep this in mind.  Thanks!

Ian Jansen


Posted on: Sep, 14 2016

SCM is all about getting the order delivered to the Customer on date/ time requested because happy Customers = Revenue. Using the right tools to do the right job is important and SCM is heavily dependent on sophisticated ERP systems to get right real data info ASP.

I’ve worked in a DC with more than 400,000 line items and measured the Productivity of Pickers by how many “picks” per day.

I’ve learned that one doesn’t have to remind Germany about your EDI orders.

Don Benson

Partner, Warehouse Coach

Posted on: Sep, 15 2016

Challenge – to build and sustain effective relationships at the level of the organizations that are responsible for effectively coordinating and colaborating in an otherwise highly competitive environment 


Admin, Fulfillment Logistics UK Ltd

Posted on: Oct, 02 2016

Of course we all need to up our game. We need to move with the times, and always be one step ahead of what the future will bring.

Mike Dargis

President of asset-based carrier based in the Midwest, Zip Xpress Inc. (at

Posted on: Oct, 03 2016

Thanks for the article, but I know there’s a lot more to this issue than just the pay rates. Please check out my blogs on the subject at


Inventory Specialist, Syncron

Posted on: Nov, 16 2016

Lora, great article! I agree that companies choose the ‘safe’ solution more often than not. My solution is a bolt-on for legacy ERP’s and we even face challeneges of customer adoption. Most like to play it safe and choose an ERP upgrade, which is more costly, time consuming, and has lower ROI across the board. Would love to learn more about your company, we are always looking for partnerships.


Bob McIntyre

National Account Executive, DBK Concepts LLC

Posted on: Nov, 21 2016

This is a game changer in GE’s production and prototyping.  It also has huge implications across the GE global supply chain with regard to the management of their support and spare parts network. 

Kai Furmans

Professor, KIT

Posted on: May, 22 2017

I am referencing to the comment that leasing of warehousing equipment (beyond forklift trucks) is a vision for 2030.
Just recently in Europe, such a business model has started, see here:

I am following with a lot of interest, how the business develops.

Stuart Rosenberg

Supply Chain Consultant, First Choice Supply Chain

Posted on: Jun, 05 2017

If we limit the standard on judging or determining the best supply chain to just three calculations it does not tell the entire picture.  Financial performance metrics are valuable as they capture the economic consequences of business decisions.  But supply chain managers make decsions and use organizational resources that impact a company’s financial well being.  Where is a firm’s earnings over a period of time determined by sales less product costs and general/adminsitrative costs?  Where is the metric for determining the sources and uses of cash from three perspectives – operational, investment and financial?  Where are these supply chain metrics: on-time delivery, lead time, response time to customers, product returns, procurement costs, network distance, inventory carrying costs, forecasting accuracy, sourcing time, etc,.  Without knowing the results of all these supply chain calculations the there must be a question as to the accuracy of the 25 top supply chains.

Dustin Calitz

Project Commercialization Manager, Mondelez

Posted on: Jun, 06 2017

I feel this ranking misses the mark in SC. It does not seem to consider a key indicator in days inventory on hand, which is key to determining a SC company’s ability to forecast, manage inventory costs and reduce aged stock. In additiion I realize it’s difficult to understand what goes into the customer survey, but would I assume specific metrics are being asked. For examples customer’s opinion on service level differentiation and the ability to deliver the right product on time, which should then be allocated a bigger weighting than 10%. It would also be interesting to take a view of the above list’s SKU portfolio complexity, seasonality and launches/promotions. I would again assume some companies on the list above have a far more complex SC to manage and lead, ultimately requiring a lot more innovation within a SC to stay ahead of competitors, and ultimately satisfy their customers demands.  I understand above metrics are difficult to measure, as mentioned in the article, but they somehow need to be considered to give a true reflection. 

Michael Hurd

Lean Consultant, Unemployed

Posted on: Jun, 10 2017

A Very Good Article…

While some feel that lean is a scam that pushes for more out of the personnel and out of the companies through reduction of waste and adding value for the customer, there are several things to remember:

1) Lean methodologies are designed and implemented to reduce time wasting, so this may seem that you are working harder as an employee.

2) Lean methdoligies only work when everyone from the janitor to the owner of the company get involved and back the program.

3) Lean methods are there to make you work smarter not harder, although it may feel you are working harder.

4) YES… Sometimes lean methodologies fail! This is due to project overun or taking on too large a problem and trying to fix it all in one go and not taking the smaller problems that are associated with the large problem and fixing them first. Sometimes fixing the small problems leads to resolution of the larger problem.


Director Supply Chain , skuchain

Posted on: Jul, 31 2017

The Supply Chain technology is not considered a problem because traditionally supply chains are thought to be cost centres unlike sales functions. The tendency, in general, to limit expenses and cost cutting on upgrades for technology and for talent have been hindering progress for the businesses. Supply chains lack real time visbility and above all trust across the value chain (not that the participants are dishonest) rather it’s about the cascading effects referred to as the bull-whip effect which causes higher magnitudes of disruptions. 

Supply chain real time information should top the list .

Another problem is that of multi homing as so much data is available across several feeds of IOT/Email/Internet /Mobility/ERP that organisations tend to have issues around finding a single platform to collate them for meaning analysis. 

Blockchain (if deployed appropriately) can be a great solution for solving the issues around the supply chain.

Mike Ledyard

Vested Program Faculty, Vested Way / University ofTennessee

Posted on: Aug, 04 2017

Excellent article.  It very much points to the need for Shared Risk / Shared Reward as we teach at Vested.  Suppliers will respond when they are made part of the team, and they have a lot to bring to the game.  The service provider is the subject matter expert in the services provided, and in an excellent position to enhance the capabilities and services offered by the shipper.

Andrew Downard

Managing Director, AD Supply Chain Group Pty Ltd

Posted on: Aug, 05 2017

As the article points out it is not a lack of technology that is holding back performance but rather a failure to form the right sort of relationships.  As well as the length of such relatiohships, practitioners should consider employing arrangements that incentivise both parties to innovate and deliver levels of performance and profit that neither thought possible.  By far the best model I have come across to achieve this is the Vested Outsourcing model developed by researchers from the University of Tennessee.  See for information on the model and case studies that show how others have benefited from creating a Vested deal.


logistics, threelineshipping

Posted on: Aug, 23 2017

Very informational article. The major focus of logistics is on e-commerce. There is a need to optimize every component of logistics by following the latest trends and technologies. Thanks for uploading this article.

Sameer Shukkla

Consulting Partner, Wipro Inc.

Posted on: Sep, 17 2017

I have recently co-authored a white paper with my colleague wherein we have looked at 2 fundamental guiding principles  –

1. Always have enough to Sell / Produce
2. Do not have excess to Sell / Produce

These 2 Golden Rules can be the foundation of keeping optimal inventory levels and for organizations to achieve the same. We have looked at a framework which tries to reduce the phase mismatch between Demand & Supply, and tries to bring the shape of the supply curve closer to shape of the demand curve.

We have classified symptoms and underlying root causes for the above “Phase mismatch” and “Curve Mismatch” between Demand and Supply, and then talked about addresssing those individual root causes to strive towards Leaner Inventory levels while maintaining or improving service levels.

So to answer your question, we feel the Companies which have addresed these causes have been able to keep DIO horizontal or even going down, while others have not been able to control rising DIO because of not addressing the root causes.

Simon Eagle

SCM Consultant, Camelot MC

Posted on: Sep, 17 2017

You ask why turns are flat or declining despite lots of attention and technology. The answer is, I think, 2 fold: the supply chain environments VUCA (Volatliity, Uncertainty, Complexity, Ambiguity) is on a continuous upward curve and this means that forecast accuracy inevitably declines in parallel – and much of that inaccuracy is hidden by the statistics. For instance a company with, seemingy good, 80% mix accuracy will find that figure is skewed so high by the few high volume / low variability items. 80% of the items will be achieving considerably less than 60% error.

So most item level forecasts used for driving replenishment through an MPS (be it ERP or APS) are simply leading to unbalanced stocks, service threats and continuous expediting / fire-fighting. These schedule interrutions are “variability” that is disrupting flow and, thereby, increasing lead-times, using unplanned capacity and generating excessive (and still unbalanced) inventories.

The replacement in ex-stock supply chains is “enterprise(s)-wide” pull which also uses “push” for extreme/exceptional events. Its other key characteristics are that the supply chain is decoupled and is demand-driven. And now it can be implemented using SAP since they announced they they have co-developed an enhancement for IBP that supports this transformational way of working – up to 50% inventory reduction, requiring less capacity and shorter lead-times all while achieving planned service levels. See and

John Smith

Research & Development, Octopus Tech Solutions

Posted on: Sep, 18 2017

IoT is without a doubt starting to become a major factor in the profitability of various companies. In the manufacturing sector, we will see it come into the front by the end of 2020 completely. Various sectors have already adapted IoT solutions like the security industry or companies offering BPO Services India. Contact centers not just in India and China but across the world have adapted technology following the principles of IoT. The manufacturing sector is soon going to follow.

Girish Maniyar

Chief Manager Development Initiatives, Asian Paints

Posted on: Sep, 28 2017

I  can speak with some context. While efficiency and tools can reduce inventory, we also see the number of SKUs and new products increasing, and also the number of sales/depot points. This means the inventory in such cases, can start with very high number and with more customization and choices available to the consumer, so there is no end to the long tail of products available within a category. It is unlikely that the slow/dead goods are written off so easily to be not included here.

A larger question, would it be purely an IO problem or also a Demand Planning (Forecast Error) problem? A higher cycle time of service but a better fill rate can improve inventory performance, by aggregation. But a bad forecast can do away all the good work you do in inventory planning.

Do you have numbers for decorative coatings in the list? I did not see something there only for decorative coatings.

Reo B Hatfield

Chief Operating Executive , BestTransport

Posted on: Oct, 20 2017

My opinion is that peaks and valley are just nice graphics to explain.  Smooth responses save the day.   3PLs  just adjust to the climate and the areas of movement of Logistics.    One purpose of the 3PL movement was to adjust to an always changing market.   They will never be fixed and will flex as the logistics changes.   3PL companies have vast knowledge of their business.  Their success is their ability to move up and down as the market flows.  They bring a level playing field to the transportation world that in the past was rigid but looked good on spreadsheets.  Industry graphic personnel like to be able to answer all the changes because they can only see documents.  3PLs see the needs, the issues, the positive changes and the knowledge to know why and when to adjust.   They (3PLs) have smoothed the waves of the past and everybody likes to see the spikes so they know something is there to clearly report on. Smooth sailing is boring but sure gets you where you want to go. 

Catherine Dennis

Supply Chain Manager, Indak Mfg Corp

Posted on: Oct, 26 2017

So the horrific and severe worldwide allocation of electronic components is not an issue?  Don’t tell that to the automotive buyers.  It’s HORRIBLE.  Lead times out to up to 76 weeks.  Why not write about that?  It’s killing us, our customers and the big automakers.   


Logistics Manager, Shell

Posted on: Nov, 11 2017

I suggest McKinsey to do a bit more research in Prof Gattorna’s dynamic alignment. This article only scratches the surface a tiny bit. Much more to be found reading about the alignment concept.

Joseph George

Farmer, Field Vista

Posted on: Dec, 07 2017

Primarily Vision is required followed by Assigned Focus on objectives.  Or maybe just love for USA.  The market will not find its way unless it’s for organic vegetables and RRR.  Two to three years later will take two to three years longer to the end of the decade, and this is viable today.  God bless america from its present distraction.

Gary Buchs

Owner Operator , Self, Landstar Business Capacity Owner

Posted on: Dec, 17 2017

In My Opinion, the fact that capacity will tighten should be obvious to everyone engaged in the transportation. 
Capacity to move freight isn’t how many trucks or trailers are in the system or what a computer 
program says, it still is truck driver based and poorly-managed companies won’t be able to imporove
this fact.  Investing in people is still most important!

Get ready to pay higher prices for goods and services. I think we could lose 10% of Capacity in many areas. 


Pres., Bioptechs

Posted on: Dec, 20 2017

After all the ground we have lost in the productive sector and the additional burden that loss of our productive momentum has placed on our society, somebody tell me why so many people are against the actions necessary to restore our vital productive infrastructure! It is like the left enjoys shooting itself in the foot!


Business Development, Raghava Logistics

Posted on: Mar, 04 2018

Great article and thank you for summerizing the predications. 

What does it mean to country like India where the labour is still cheap? Where the logistics cost is still on the higher side compared to some of the developed nations?

Herb Shields

President , HCS Consulting

Posted on: Mar, 06 2018

 I agree that robots can replace some amount of manual labor in logistics centers.  However as you mention, the labor pool is shrinking.  We need more training programs such as the one provided by the Greater West Town organization in Chicago.  (It is a program that your readers should find interesting.)


Associate, BJO

Posted on: Mar, 13 2018

Thanks for this very informative article.

Doug Murless

Country Manager, krunchbox (

Posted on: Mar, 18 2018

Gone are the days when consumers will wait for a retailer to have the product back in stock, those days are done. We live in the “I want it now” society and with Amazon in their pocket consumers can easily “now” it to themself the next day right from their phone.

The importance of product availability is under the microscope at all retailers as an empty shelf equals lost customers, a poor customer experience and entirely abandoned purchases.

We are on a mission at krunchbox to help suppliers fix their product availability and sell thru and improve their buyer relationships, hopefully before their retail partner fines start rolling in and or we see more retailers close.


Executive, Carmatec INC

Posted on: Mar, 21 2018

You are correct There are government programs to encourage investment at small and mid-size manufacturers, but McKinsey says these programs generally have smaller budgets, less certainty of ongoing funding, and more constraints on their mandates than comparable programs in other countries. Policy makers should examine which existing initiatives are producing the most promising results, then scale up those efforts and commit to them for the long term.

Cathay posts positive results despite ‘turbulent’ conditions

Cathay Pacific Group saw a 1.7% year-on-year increase in cargo and mail volumes for September, with Cathay Pacific and Cathay Dragon carrying a combined total of 180,623 tonnes during the month.

Capacity increased by 0.7% to 2,633,060 available freight tonne-km and the load factor rose to 69.2%, up by  1.1 percentage points over September last year. In addition, cargo and mail revenue freight tonne-km climbed 2.3% to reach 1,014,477 for the month.

The positive results stand against a challenging backdrop.

Jenny He, regional head of cargo, China, at Cathay Pacific Cargo, outlined: “September was a turbulent month. Flood damage from Typhoon Jebi closed Kansai International Airport in Japan for more than a week and then Hong Kong was rocked by Typhoon Mangkhut – the biggest to hit the city in many years. That shut down operations at our home base for a day, disrupting schedules and shipments.”

Other difficulties included economic instability as tariffs continued to escalate. Cathay Pacific director commercial and cargo Ronald Lam said the carrier would “continue to closely monitor external factors that are impacting global trade”.

Jenny He went on: “Notwithstanding that, we are now in the middle of the peak season for cargo. We do not have the figures for October yet, but exports from mainland China grew to peak levels following on from the lull of the Golden Week Holiday period.”

For the first nine months of 2018, the combined carriers’ tonnage rose by 6.4% against a three percent increase in capacity and growth in revenue freight tonne-km of 6.1%, Cathay said.

Cathay Pacific is adding extra flights to Adelaide, Frankfurt, Madrid and Tokyo – as well as new destinations such as Seattle – as it continues to grow, meaning additional bellyhold space for cargo on those routes.

Read more freighter operator news

DSV airfreight grows above market rate in third quarter

The DSV Air & Sea division reported a 10% increase in airfreight volumes for the first nine months of 2018, with seafreight recording 4% growth.

The Denmark-based logistics operator says the airfreight increase was mainly driven by a strong performance on EMEA and American exports and compared well with an estimated 4% market growth overall.

The Air & Sea division (which accounted for 45% of net revenues and 53% of gross profit) achieved a net revenue growth of 7.2% to reach DKK27.1bn in constant currencies. The Road division achieved 4.5% growth with Solutions up 14.9%.

The group achieved a gross profit of DKK13bn for the first nine months of 2018 compared with DKK12.5bn last year – an increase of 7% in constant currencies.

Group chief executive Jens Bjørn Andersen said: “We delivered strong results in the first nine months of 2018, including healthy top-line growth across all business areas and continued improvement of our margins.

“The implementation of trade tariffs continues to create uncertainty in our industry, but so far, we see a negligible impact on our activities. Based on our performance so far and expectations for the rest of the year, we are adjusting our earnings outlook.”

The consolidated full-year outlook for 2018 previously announced is adjusted as follows: Operating profit before special items is expected to be in the range of DKK 5.4-5.6bn (previously DKK 5.3 -5.6bn).

The company added that “after a two year period where the growth in global air freight volumes has outpaced the underlying economy, we have now seen a normalisation and estimate that both the airfreight and seafreight markets will grow 3-4% in 2018.”

The Q3 report made no mention of DSV’s recent offer to acquire CEVA Logistics. DSV announced on October 23 that it decided not to pursue its revised offer of SFR30 a share “due to the unwillingness of the CEVA Board of Directors to engage directly with DSV”.

Knud E. Hansen, DTU Aqua Pact on Marine Research Vessel

Danish naval architectural firm Knud E. Hansen has signed a contract with the Technical University of Denmark’s DTU Aqua (National Institute of Aquatic Resources) on consultancy assistance for a project study and concept design of a 65M multidisciplinary marine research vessel to replace the aging R/V DANA IV from 1981.

“Knud E. Hansen signed the contract on the basis of our references in designing fishing vessels and in-depth know how in marine research vessels and icebreakers for scientific operations, like the RSV NUYINA for the Australian Antarctic Division,” said a press release from the Danish company.

The concept study will clarify design drivers and evaluate on the preliminary construction, requirements and budget for a new R/V DANA V. The objective for the concept study is to evaluate on the feasibility of the project and provide the business case and documentation for the ongoing process of raising finances for the construction of the ship.

Knud E. Hansen and DTU Aqua will be working closely together optimizing the concept design within the requirements for a approx. 65M marine research vessel.

The project team stress the importance of cost efficiency in all aspects of the concept study as well as creating a design with minimal operating and lifespan costs. Such a ship will in a European context become a unique platform for marine research and polar exploration in the Arctic regions at an attractive price.

Like the R/V DANA IV the new research vessel will be designed for operations in icy waters in both the Baltic Sea and the North Atlantic. The vessel should be classed to Polar Code PC B 6/7 as well as comply with high standards for low level of underwater radiated noise during scientific operations.

The ship will be designed with an efficient fishing gear configuration and will have several laboratories. Also, the vessel will be designed for multiple scientific equipment on board as well as operational installations and sensors at the bottom of the hull. On deck, a large A-frame will be designed for handling various equipment and fishing gear. Smaller cranes operating from the side of the vessel will handle smaller nets and sampling equipment.

The project study and concept design will be finished by Knud E. Hansen in 6 months and will be completed with a technical report and a general arrangement for the continued design process as well as a report for the use of government officials in further processes.

Air Partner freight profits rise in steady first half trading

Air Partner reports “continued strength in freight” with gross profits up 36% to £1.5m in its results for the first six months of the year to July 31, 2018.

Chief executive Mark Briffa noted that freight, which contributes 8% to group gross profit, “is an especially volatile sector, [so] these results are a great achievement in what we consider a strategic offering that enables us to provide our customers with a full suite of aviation services.”

He added: “As well as bringing on board new clients through targeted marketing campaigns and successful cross selling with our commercial jets division, we have continued to invest in our teams across regions. We are quickly seeing the benefit of this investment with the experience, customers and opportunities it brings with it.”

The global aviation services group saw total gross profit of £18m, down 1% compared with the same period last year. Gross transaction value of £132.8m was down 2%. It noted that US profit increased across all divisions and that commercial Jets performed well against a tough comparative period, buoyed by strong FIFA World Cup and tour operator flying.

Briffa said: “We are making excellent progress in implementing our long term growth strategy. Our focus is on both organic growth and growth through acquisition. We are benefiting from a growing aviation market, and our broad offering and portfolio approach enable us to cross sell between our divisions and extensive customer base whilst driving internal efficiencies.”

Panalpina increases profitability in a ‘very volatile environment’

Panalpina’s airfreight volumes increased 4% in the first nine months of 2018, in line with estimated market growth of 4%. Compared to the same period of last year, gross profit per ton increased 12% to CHF705, resulting in a gross profit of CHF530m compared with CHF456m.

EBIT in airfreight increased from CHF69.4m to CHF80.2m. The EBIT-to-gross-profit margin for the first nine months of 2018 came in at 15.1% compared to 15.2% a year before.

Panalpina chief executive Stefan Karlen said: “In a year that so far has been characterised by strained international trade relations, we have increased profitability of the group compared to the first nine months of 2017.

“The macroeconomic uncertainties of the third quarter resulted in air and ocean freight markets that were not as strong as predicted. We saw a market where ocean freight peak season was weaker than anticipated. The airfreight rates went up, which impacted our margins as expected. In all, we have stood our ground in a very volatile environment.”

From January to September, the international freight forwarding and logistics company saw gross profit increase from CHF1,024.8m to CHF1,116.2m. Year-on-year, Panalpina’s EBIT increased from CHF72.1m to CHF83.2m and the consolidated profit increased from CHF48.4m to CHF51m.

Looking to the future, Karlen said: “Due to macroeconomic and political uncertainties, it is challenging to accurately predict the dynamics of the airfreight peak season and the impact on rates and volumes this year, but we have prepared meticulously, securing capacity for our customers and ensuring readiness on the ground at strategic airports.

“In ocean freight, we expect fairly strong flows into the USA, but otherwise moderate market growth globally and our focus remains on unit profitability improvement. The volatile freight forwarding environment is a constant reminder that we need to do everything in our control to continue to build an organisation that is fit for sustainable, profitable growth.”

Profit-making idea: Using blockchain to help intra-country trade in Africa

Profit-making idea is a series of short posts, each with a piece of information that we think you might find useful: for investment, for growing your company or to start a new business. Read our previous posts here.

John Wainaina Karanja, founder and consulting lead of Nairobi-based incubator BitHub Africa, reveals in which industry, other than his own, he would bet his money.

“In the blockchain space I usually see many fantastic ideas that would really blow one’s mind if they ever came to fruition. However, I think the truly disruptive ideas are the ones that solve basic problems like moving money across borders cheaply and instantly. Remittances still cost 12% of the transaction amount.

“One particular area that I feel remains unexplored is peer-to-peer e-commerce. This is where one can connect buyers and sellers of commodities remotely without having middlemen charge exorbitant listing or ridiculous transaction fees. These kind of permission-less and friction-less markets have huge potential in Africa as they will facilitate trade between people. We still need good roads and rails to transport goods efficiently, but this technology can go a long way in driving the case for intra-country trade amongst Africans.”

AAPA concerned by tensions between major trading nations

With Asian airlines carrying more than one third of global airfreight volumes, concerns over ongoing trade tensions are being closely monitored given the potential negative impact on trade flows and global supply chains, said the Association of Asia Pacific Airlines (AAPA).

The association’s Assembly of Presidents is holding its 62nd meeting in Jeju, South Korea, to discuss a wide range of industry issues and long-term growth prospects.

It reported that Asia Pacific air carriers have seen international cargo demand increase by 4.8% during the first eight months of the year, but “growth rates have moderated following the surge in 2017, with some concern over rising tensions between major trading nations”.

The association said that rising fuel costs and currency fluctuations are putting margins under pressure although, overall, Asia Pacific airlines are expected to deliver substantial profits for the fourth year in succession. International passenger numbers grew by 8% in the first eight months.

A key area of concern is the need for investments in new air transport infrastructure in the form of additional runways, terminals and air traffic management capacity to cope with traffic growth and the expected deliveries of new aircraft to the region over the next ten years.

There is an ongoing debate on how such infrastructure should be funded, and the need for more effective cooperation between airlines, airports and governments. 

“Air transport is widely recognised as a key contributor to economic and social development, built around strong global networks offering both passenger and air cargo services. The dynamic airline sector epitomises the way in which region’s carriers are at the forefront of global air transport industry development,” said Andrew Herdman, AAPA director general.

Read more cargo Airline news

Port of Hamburg, Metrans Group Join for Intermodal

The Port of Hamburg and Metrans Group are intensifying their links with Lithuanian Railways. Axel Mattern, Joint CEO of Port of Hamburg Marketing, and Egidijus Lazauskas, Deputy Director-General and Director Freight Traffic for Lithuanian Railways, have signed a Memorandum of Understanding in Vilnius to strengthen cooperation on the routes to and from the Port of Hamburg.

In addition, Hamburger Hafen und Logistik AG – HHLA’s intermodal subsidiary Metrans, and Lithuanian Railways signed a Letter of Intent to promote and improve cross-border freight flows.

For years, the Lithuanian economy has been experiencing a tremendous upswing. In the first quarter of 2018, the Confidence Index maintained by the Lithuanian Statistics Office reached its highest level for ten years.

With extremely full order books and capacity utilization already at a high level, Lithuania’s companies will be steeply increasing their investments in new machinery, plant and buildings. In addition, there are the subsidies from the European Union (EU). The Lithuanian Ministry of Finance sees these as doubling in 2018 on last year.

Seaborne freight transport between the Port of Hamburg and Lithuania set a fresh record last year, with around 128,000 standard containers setting a fresh record and producing a 7.8 percent upswing on the previous year. However, rail also plays a big part in freight services between Hamburg and Lithuania.

The partners in the new cooperation attach special importance to implementation of the Rail Baltica and East-West Transport Corridor infrastructure development projects.

Rail Baltica is a rail link planned to run from Warsaw via Kaunas and Riga to Tallinn – with a ferry or tunnel connection to Helsinki. EU member states Poland, Lithuania, Latvia, Estonia and Finland are involved.

Lithuanian Railways transports freight along tracks with gauges of both 1,520 mm and 1,435 mm in various directions. Freight traffic is mainly with Byelorussia, Russia, Ukraine, Latvia, Poland, Kazakhstan, China, Turkey, Germany, Scandinavia and Italy.

In future the Port of Hamburg and Lithuanian Railways will exchange market-related data, promote inter-market deals with joint marketing activities, and cooperate in developing and implementing logistics projects.