ISSUE 10 - Oct 2011 Facing the challenge of change Welcome to the tenth edition of 'Service Without Boundaries', the U-Freight Group's customer newsletter. The U-Freight Group (UFL) and the companies we serve need a reliable and regular supply chain free from restrictions, constrictions and unhelpful challenges. Readers will have noted the news that in the USA, the Transportation Security Administration (TSA) has decided not to proceed with the December 31st 2011 deadline for 100 percent screening of cargo on international passenger aircraft bound for the United States. At the time of writing, no new deadline date had been set and whilst UFL remains committed to thwarting anyone intending to disrupt the global supply chain, we are pleased to hear that the TSA will continue to work closely with private-sector and international partners to progress risk-based screening of international inbound air cargo on passenger and all-cargo aircraft. We judge the news as one significant challenge temporarily suspended. Other challenges were much discussed at our recent annual conference, which took place in Qingdao, China, late last month. I am pleased to report that the 150 or more senior managers from our offices and agents across the globe who were present gave a clear commitment to further investment in our niche services, IT hardware and infrastructure as UFL’s response to the ongoing difficulties faced by the global economy. Office investments in Asia were highlighted, service developments on the trans-Pacific introduced; planned investment in new cargo management software discussed and development of niche operations announced. News about some of these are included in this edition of 'Service Without Boundaries'; some will be included in future editions. All are examples of the manner in which we will invest our way out of the recession for the benefit of our customers and partners. As ever, I invite you to take some time to read the contents of this issue. LATEST NEWS U-FREIGHT LOGISTICS NOW OPEN IN JOHOR BAHRU, MALAYSIA We are pleased to announce that we have opened a branch in Johor Bahru, a fully own subsidiary of U-Freight Logistics (S) Pte Ltd. to promote the Trans-Border Trucking between Thailand/Malaysia/Singapore. Read more U-FREIGHT SINGAPORE GAINS KEY CUSTOMS AWARDS U-Freight Singapore has been awarded Warehouse Type II Zero GST (Goods and Services Tax) Warehouse certification as well as Container Freight Warehouse (CFW) status. Read more U-FREIGHT UPDATES GUANGZHOU CONTACT INFORMATION We would like inform customers of the most recent contact details for our branch in Guangzhou, China, a branch which prides itself in offering a perfect package of services for freight clients involved in the global supply chain. Read more U-FREIGHT MAKING HEADLINES IN THE WORLD’S PRESS A U-Freight staff member from the United States has been interviewed for an international newspaper with a truly global circulation in a story that neatly demonstrated the global nature of our business. Read more UFL OPENS FOR BUSINESS IN CHONGQING We are pleased to announce that our first class coverage of China has just got better with the opening of a new office in Chongqing. Read more MOVING FREIGHT THROUGH SHANGHAI? CALL U-FREIGHT'S T-TEAM! The U-Freight Group (UFL) is pleased to announce a new cross-department initiative that is set to revolutionise freight services over its Shanghai Pudong International Airport (PVG) gateway for Chinese manufacturing and industrial clients operating in the country’s inland cities. Read more US PILOT PROGRAMME SET TO SPEED UP ENTRY OF US-BOUND CARGO We would like to inform shippers that the US Customs and Border Protection (CBP) service is set to launch a simplified entry pilot project, the first step in a planned move to ease the entry of goods into the USA in exchange for detailed import data at least one full day in advance. Read more INDUSTRY SECTOR FOCUS SIMPLIFIED INTRA-ASIAN SHIPPING SOLUTIONS What is Intra Asia Door Service? It is U-Freight's latest effort to make shipping your products within Asia easy and pain free for our internationally minded customers. In today's fast moving global economy, it is important to have the capabilities to move your products from one end of Asia to the other at a moment's notice. We at U-Freight have such capabilities and expertise to handle your needs. Read more NOTA BENE CATASTROPHIC RISK HIGH ON SUPPLY CHAIN AGENDA The World Economic Forum's Global Agenda Council which has just taken place in Abu Dhabi, UAE is described as the 'world's largest brainstorm' bringing together 800 experts from a range of different sectors in 79 different Councils. Read more IATA CALLS FOR SECURITY UNITY The International Air Transport Association (IATA) is pushing governments and other aviation stakeholders to adopt Checkpoint of the Future (CoF), a supply chain approach to cargo security, harmonisation of measures among governments and constant vigilance about new threats. Read more SEMICONDUCTOR TRAFFIC INCREASE POINTS TO PEAK SEASON GROWTH IN 2011 U-Freight notes with cautious interest that worldwide sales of semiconductors were USD25.03 billion for the month of August, a slight increase of 0.7% from the prior month when sales were USD24.9 billion. Year-to-date sales grew 2.2 % year-on-year. Read more REPORT SAYS HALF NEWBUILDS HAVE MORE THAN 10,000 TEU CAPACITY We note that according to analysis by Alphaliner, almost half of the containership capacity on order, or 48 percent, has capacities of more than 10,000 teu, with the average new containership size around 6,100 teu. Read more MORE SHIPS LAID UP DUE TO WEAK PEAK SEASON We note that the number of idle container ships in the last two weeks of September came to 156, with carriers idling vessels or redelivering them as a weak peak season unfolds, according to a report by the Paris-based maritime consultant Alphaliner. Read more FRANKFURT AIRPORT BANS NIGHT FLIGHTS A planned night flight ban at Frankfurt Airport will go into effect on October 30, 2011 for a temporary period. Read more Anyone who has any questions about the items contained in this newsletter should get in touch with your ufreight office. Please visit our website on a regular basis for more items of breaking news. U-FREIGHT LOGISTICS NOW OPEN IN JOHOR BAHRU, MALAYSIA We are pleased to announce that we have opened a branch in Johor Bahru, a fully own subsidiary of U-Freight Logistics (S) Pte Ltd. to promote the Trans-Border Trucking between Thailand/Malaysia/Singapore. The new branch initially offers services including air and sea freight forwarding, trucking, customs brokerage, packing and relocation services. We will be able to take advantage of the convenient location to access the Port of Tanjung Pelepas (PTP), a new development for the hub of Maersk Line, Evergreen and other shipping lines in the region which will act as the city’s port. There is also the Port of Pasir Gudang (PGU) for bulky, LCL and feeder services to catch mother vessels from Singapore. Also convenient is the Sultan Ismail Airport (JHB) located at Senai, only a 30-minute drive from the office. Clients in the region will now have access to world markets through our office network, while clients around the world will be able to access customers in Johor Bahru. Contact details of the office are as below: U Freight Logistics Sdn. Bhd. Suite 12-05, Menara cyberport Jalan Bukit Meldrum 80350 Johor Bahru Johor Malaysia Manager: Mr. Borhanudin Kidon E-mail : din@ufreight.com Tel : +607 2211069 / 2211070 Mobile : +6012 773 8834 U-FREIGHT SINGAPORE GAINS KEY CUSTOMS AWARDS U-Freight Singapore has been awarded Warehouse Type II Zero GST (Goods and Services Tax) Warehouse certification as well as Container Freight Warehouse (CFW) status. This certification allows U-Freight Singapore the flexibility to deconsolidate its LCL containers in its own premises at Changi South instead of the congested Free Trade Zones and Keppel Distripark. Our Changi South warehouse permits the receiving and transhipment of cargo for distribution without any hindrance. The Zero GST (ZG) Warehouse Scheme is administered by Singapore Customs (SC), for companies that wish to suspend GST on their imported non-dutiable goods. There are three licence types, namely Warehouse Type I, Type II and Type III, to cater to the different needs of companies. A Warehouse Type I licensee has to ensure that at least 80% of its imports are re-exported. Type II and Type III licensees are not subject to this export requirement. In addition, a Type III licensee can operate, and move goods freely between, multiple ZG warehouse locations under a single licence. The ZG scheme was introduced in 2006. U-FREIGHT UPDATES GUANGZHOU CONTACT INFORMATION We would like inform customers of the most recent contact details for our branch in Guangzhou, China, a branch which prides itself in offering a perfect package of services for freight clients involved in the global supply chain. In order to facilitate ease of communication and to provide a focus for clients, Flora Liang Freight Manager, is available to co-ordinate and suggest freight options from the wide range of modal options as well as supply chain solutions that we can offer from Guangzhou. Ms Liang can be reached directly: yyliang@ufreight.com Direct: 86-20-8755-8344 Mobile: 86-139-2422-4692 With immediate effect, the following executives are available to discuss freight operations and operational matters: Air Operations David Choy - Air Operations Manager hlchoy@ufreight.com Direct: 86-20-8755-8372 Mobile: 86-135-3558-2343 Ocean Operations Isabella Xie - Ocean Operations Supervisor isabellaxie@ufreight.com Direct: 86-20-8755-8377 Mobile: 86-189-0300-2280 Sales & Marketing Christopher Wong - Account Manager christopher@ufreight.com Direct: 86-20-8755-8373 Mobile: 86-135-0968-0690 Customer Services Jenny Yao - Customer Services Manager jennyy@ufreight.com Direct: 86-20-8755-8360 Mobile: 86-139-2422-4691 U-FREIGHT MAKING HEADLINES IN THE WORLD’S PRESS A U-Freight staff member from the United States has been interviewed for an international newspaper with a truly global circulation in a story that neatly demonstrated the global nature of our business. Jake Hug, a recent graduate of Elmhurst College in Illinois, was interviewed for a recent article in USA Today looking at how US students are seeking a wider, international angle to their studies by leaving the country and studying in a foreign country. Some, however, are avoiding the easy option. Hug, who now works in sales for U-Freight America, Inc at Chicago O’Hare international airport, was one of the growing number of US students who want to study abroad, but avoid the usual student destinations of London, Paris or Rome. Instead, he told the newspaper, he went to Morocco to study for a year despite having very little knowledge of the country or the language. He discovered he was the sole American at that institute and he was made very welcome by the Moroccans. During his time in the country, he stayed away from the expatriate US population there. He told USA Today: "I know Americans pretty well. I didn't go there to learn about them.” Now working for U-Freight America, Inc, Hug is convinced that selecting a destination such as Morocco to study abroad demonstrates self-reliance in not choosing the easy foreign study option, something which will help in his negotiations with customers. UFL OPENS FOR BUSINESS IN CHONGQING We are pleased to announce that our first class coverage of China has just got better with the opening of a new office in Chongqing. U-Freight is driving its expansion in China westwards, just five years after it opened its first full office in the interior of the country, as China’s manufacturing and business communities expand into new regions. Chongqing is one of the fastest growing cities in Western China and has seen a rapid increase in demand for warehousing and logistics services as well as connections to China’s key gateways of Shanghai and Hong Kong. Its connections with world trade began as long ago as 1891 when Chongqing became the first Chinese inland commerce port open to foreigner traders. The city has attracted high end, international IT manufactures who will appreciate UFL’s expertise in moving electrical, electronic and semi-conductor products. Factories such as Foxconn, Inventec and Quanta Group who manufacture products for clients such as HP, Acer and Asus have been established, all within one hour of the UFL location. Exporters shipping from Chongqing are offered UFL services across all modes, with direct airfreight shipments either via the increasing number of flights which now call at Chongqing, by river along the Yangtze to Shanghai, or more likely, via an efficient road transport service to Shanghai in under 40 hours by for onward connection via ocean, and airfreight to Europe and North America. U-Freight (Shanghai) Ltd, Chongqing branch is based at the city's Commercial Centre. MOVING FREIGHT THROUGH SHANGHAI? CALL U-FREIGHT'S T-TEAM! The U-Freight Group (UFL) is pleased to announce a new cross-department initiative that is set to revolutionise freight services over its Shanghai Pudong International Airport (PVG) gateway for Chinese manufacturing and industrial clients operating in the country’s inland cities . The T-Team (T for Transit) is a strong team of managers and executives across all UFL’s functions who work with clients to ease the movement of cargo and freight through PVG. The value of the T-Team will be in the preparation of truck and road services well in advance of the ETD and ETA of flights at PVG, leading to deliveries from PVG in good and timely conditions as well as allowing access to further value-added services such as repacking. Chinese Customs clearance is complicated to master, but UFL clients can be certain that UFL’s long experience or knowledge of Chinese Customs and bonded storage regulations will ease freight through the rules and regulations at PVG, thanks to the T-Team. The T-Team offers a computer system delivering customs clearance and CIQ which is authorised and is staffed by an experienced customs declaration team: both inbound and outbound; with a pre-clearance service available. The team also benefits from UFL's owned bonded warehouse and new logistic warehouse at Pudong International airport as well as its owned bonded trucks equipped with GPS. Given the 24/7 nature of the global freight industry, the T-Team is on call 24/7/365, as Chinese industry never sleeps. US PILOT PROGRAMME SET TO SPEED UP ENTRY OF US-BOUND CARGO We would like to inform shippers that the US Customs and Border Protection (CBP) service is set to launch a simplified entry pilot project, the first step in a planned move to ease the entry of goods into the USA in exchange for detailed import data at least one full day in advance. The pilot project allows qualified importers to submit entry data on cargo well in advance of its arrival at US ports, at which point Customs can release the goods. This simplified entry combines elements of the Importer Security Filing (ISF) rule with the entry document itself, effectively eliminating one step in the traditional process. CBP began to enforce the ISF rule, also known as 10+2, in 2010. The scheme requires importers to report 10 data elements – and carriers two elements – about the cargo, no later than 24 hours before it leaves a foreign port. The new process will require further information, including a Harmonized Tariff Code number to 10 digits, an estimated value and entry number. Simplified entry filers will not have to co-ordinate data with carriers, which must report the vessel stowage plan and container status messages. No date has been set for the start of the pilot programme but we will maintain a constant watch on developments, both in the USA and throughout the world, in cargo security and Customs regulations as authorities worldwide work to secure even higher levels of security in the global supply chain. With that in mind we note that the US Transportation Security Administration (TSA) will no longer require all air cargo inbound for the USA to be screened by the end of the year and has not set a new deadline for such intensive security to be implemented. While in no way questioning the need for aviation cargo security anywhere in the global supply chain, many in the industry question the intensive nature of the TSA’s requirement to screen all air cargo, even freight transiting over the country, entering what is still the world’s most important air cargo market. UFL remains second to none in its determination to thwart anyone intending to disrupt the supply chain. We are pleased that the TSA will continue to work closely with private-sector and international partners to further risk-based screening of international inbound air cargo on passenger and all-cargo aircraft. It is set to continue to seek screening agreements with countries that have flights to the USA. Security in the air cargo chain remains of paramount importance to UFL and we will never compromise the safety of our staff, our clients or our stakeholders. For further information on air cargo security, please contact your local UFL office. SIMPLIFIED INTRA-ASIAN SHIPPING SOLUTIONS What is Intra Asia Door Service? It is U-Freight's latest effort to make shipping your products within Asia easy and pain free for our internationally minded customers. In today's fast moving global economy, it is important to have the capabilities to move your products from one end of Asia to the other at a moment's notice. We at U-Freight have such capabilities and expertise to handle your needs. Imagine if you have to move your products, whether it be Integrated Circuits or Wafers, from your assembly plan or suppliers in Taiwan to your various distributors or vendors in Shanghai, Hong Kong, Singapore and Japan. Who do you call to solve your dilemma? One phone call to your local U-Freight office and we will take care of everything for you. With offices all over Asia, U-Freight has the resources and experience to handle your shipments within Asia with care, accuracy and urgency. Benefits of Intra Asia Door Service: One Stop Shopping - whether you have only one shipment going from one supplier to one distributor or multi-shipments going from various suppliers to various vendors in different parts of Asia, you will have only to deal with one point of contact who will take care of all your needs and concerns. One phone call to U-Freight and all your problems will be solved. One Rate for Each Level of Service - whether your level of service required is Door to Door (DTD); Door to Airport (DTA); or Airport to Airport (ATA), you will be offered one competitive rate for the service level you require, which will be inclusive of most origin and destination charges for that level of service. You will no longer have to sort through the myriad of add-on accessorial charges which will make your price comparison much easier. One Central Billing Process - you will receive only one easy to understand invoice per shipment. No more multi-billings for origin and destination charges to process which will save time and money for your company. No more currency fluctuations to contend with as all invoices are denominated in US dollars no matter what Asian origins or destinations were involved. Billing inquiries can be directed locally to South San Francisco office for your convenience. One Excellent Team Ready to Serve You - we have offices and expert personnel in most major Asian cities to handle all your Intra-Asia shipping needs. Let us be part of your international team and we can help you to think and act global and local. CATASTROPHIC RISK HIGH ON SUPPLY CHAIN AGENDA The World Economic Forum's Global Agenda Council which has just taken place in Abu Dhabi, UAE is described as the 'world's largest brainstorm' bringing together 800 experts from a range of different sectors in 79 different Councils. The Logistics and Supply Chain Council, chaired by Professor Alan McKinnon, included representatives from all parts of the logistics industry: academics, professionals and consultants. One of the key topics discussed was the critical issue of Supply Chain Risk. Modern integrated supply chains are complex, global and lean. This, in some respects, has become a double edged sword. It has meant that when supply chains are working well, inventory is minimised whilst customer service improves. However, it has also left them vulnerable to external 'shocks' and in recent years their fragility has been exposed. For instance, the Japanese tsunami earlier in the year had a major impact on many automotive and high tech manufacturers' production systems. The effects were felt throughout Europe and North America as production was either slowed or even brought to a complete halt through a lack of components. The year before, the Icelandic ash cloud closed European air space, leading to air cargo backlogs at airports throughout the world. Although individual events such as these happen only rarely, the chances of similar supply chain disruption occurs much more frequently. Take into account for example; terrorist attacks, industrial disputes and blockades, piracy, meteorological disturbances, environmental disasters and as we've seen, even volcanoes, and a pattern builds of disruption ranging from the localised and short term to global and catastrophic. The risks do not stop there. Given the present economic environment, it is not unimaginable that the air and shipping sectors might suffer some sort of meltdown in the not-so-distant future. If the economy slumps in 2012, many carriers could go bankrupt; possibly producing a crisis of supply. With governments creaking under high levels of debt, there might not be the same willingness to bail some of them out a second time round. The market no doubt would eventually sort this out, but there could well be disruption for shippers in the intervening period. Identifying these risks, mitigating them as well as developing a robust response is one of the key projects in which the Logistics and Supply Chain Agenda Council is involved in for 2011/12. Only by highlighting the potential impact of these risks will manufacturers and retailers start to fully realise the exposure of their business. IATA CALLS FOR SECURITY UNITY The International Air Transport Association (IATA) is pushing governments and other aviation stakeholders to adopt Checkpoint of the Future (CoF), a supply chain approach to cargo security, harmonisation of measures among governments and constant vigilance about new threats. “Today’s security checkpoint was developed in the 1970s when hijackers carrying metal weapons were the threat. It is a 40 year-old-concept that needs to fundamentally change,” Tony Tyler, IATA’s chief executive officer, said. In the aftermath of last year’s incident concerning printer cartridges being shipped from Yemen, governments continue to look for ways to further tighten air cargo security. “The future of air cargo security is a multi-layered approach involving the whole supply chain and including both advanced electronic information and physical screening. But we don’t want to see 100 percent screening at airports, which would grind global commerce to a halt,” Tyler said. This year airlines are expected to carry some 46 million tonnes of air cargo, which will account for about 35 percent of the total value of goods traded internationally. Airlines are concerned over the proliferation of bespoke requirements by governments for advance data on passengers and cargo. “ICAO [International Civil Aviation Organisation] and the World Customs Organization have developed recognised standards. If governments don’t use them, we face spending time and effort to meet requirements that do not improve security,” said Tyler. We remain determined to play an active role in the development of freight security in the supply chain and our aim is to maintain a secure environment and preserve the integrity of each of our freight facilities around the world to protect our customers' assets at every stage of their transportation. SEMICONDUCTOR TRAFFIC INCREASE POINTS TO PEAK SEASON GROWTH IN 2011 U-Freight notes with cautious interest that worldwide sales of semiconductors were USD25.03 billion for the month of August, a slight increase of 0.7% from the prior month when sales were USD24.9 billion. Year-to-date sales grew 2.2 % year-on-year. The figures for August were published by the Semiconductor Industry Association (SIA), which is the trade body representing US businesses involved in semiconductor manufacturing and design. "Sales in August were in large part driven by strong demand in tablets and PCs," said Brian Toohey, president, SIA. "Growth in these areas is encouraging, however lower consumer and industrial demand across a wide range of products and markets is keeping overall sales lower than expected at this point. “A strong month-to-month increase in sales from Japan due to recovery efforts and output from fabrication facilities, after the natural disaster earlier this year, helped to increase semiconductor sales throughout August. Additionally, due to the compounding effect of increased semiconductor content in cars, automotive application specific semiconductors have experienced double digit growth year-to-date. In the midst of a slow and soft global economic picture, growth in the semiconductor industry is promising.” Our technology logistics solutions are built around core services that include inbound logistics to production facilities including vendor hubs; turnkey production of hardware and software kits; integrated warehousing and transportation; and delivery and installation, including reverse logistics. For more information, contact your local U-Freight office. REPORT SAYS HALF NEWBUILDS HAVE MORE THAN 10,000 TEU CAPACITY We note that according to analysis by Alphaliner, almost half of the containership capacity on order, or 48 percent, has capacities of more than 10,000 teu, with the average new containership size around 6,100 teu. "It appears that the container carriers’ answer to the challenges of sustainable shipping and the reduction of emissions is to build ever-larger ships," the information service said in its current newsletter. On high-volume north-south trades covering Africa, the Middle East and South America, carriers have deployed ships of 7,000 to 9,000 teu in the past year. For further information about U-Freight's oceanfreight forwarding services, please contact your local office. MORE SHIPS LAID UP DUE TO WEAK PEAK SEASON We note that the number of idle container ships in the last two weeks of September came to 156, with carriers idling vessels or redelivering them as a weak peak season unfolds, according to a report by the Paris-based maritime consultant Alphaliner. The report stated that total idle capacity has increased to 335,000 teu, compared to just 75,000 teu three months ago. The non-operating owner (NOO) idle fleet stood at 232,000 teu, against 103,000 teu for the carrier-controlled idle fleet, with carriers re-delivering chartered tonnage as a first option. "More capacity will be withdrawn in the next two months as carriers omit sailings for the Chinese National Golden Week holidays in October and apply winter deployment adjustments in November-December," said Alphaliner analysts. The idle tonnage is expected to rise to above 500,000 teu by the end of the year compared to 360,000 teu in December 2010," said their report. As a freight forwarder, we buy capacity on container ships throughout the world to move containers replete with our clients’ cargo 24/7. Our services depend on the availability of ships able to move these containers, often half way around the world, on time and to the printed schedule. We suffer frustration every time a container is bumped off a crowded service or delayed on the quayside because lines have withdrawn capacity and you can rest assured that our ocean freight teams do everything they possibly can to your box in times of reduced capacity. FRANKFURT AIRPORT BANS NIGHT FLIGHTS A planned night flight ban at Frankfurt Airport will go into effect on October 30, 2011 for a temporary period. The date, marking the beginning of the new winter flight schedule, will ban all night flights between the hours of 2300 and 0500 at Frankfurt Airport and is expected to have significant economic consequences across the entire logistics sector, manufacturing industry and the exports of Germany. We will monitor the situation carefully and see whether carriers utilising Frankfurt Airport will be looking into other options for its scheduled night flights, which may include postponement or cancellation. We will check as quickly as possible if, and which flights might be transferred from night flights to day flights and if alternate airports can be utilised. We will continue to do whatever we can to facilitate deliveries as safely, timely and efficiently as possible In 2009, Frankfurt Airport agreed to a winter schedule of 17 movements for its night flight schedule in exchange for a new fourth runway. The new runway will be used for landings, increasing the airport's capacity from 82 movements per hour to 126 movements per hour. Hasse's Court, however, has decided to totally ban the airport's night flights due to a long standing legal dispute by local residents and environmentalists against aircraft noise. The temporary ban is expected to stay in place until a final decision from Germany's Federal Administrative Court in Leipzig.