Archive for March 2010 – Page 2

(Editor’s Note: The following is an excerpt of a paper written by ARC Advisory Group on behalf of Wared Logistics. The opinions and observations stated are those of ARC Advisory Group. You can download the full report at this link).

Many logistics professionals equate Dubai with logistics in the Middle East, and for good reason. Dubai is home to the busiest container port in the region, which is also the third largest re-exporting hub in the world, handling almost 12 million TEUs in 2008. It is also the headquarters of DP World, one of the largest marine terminal operators in the world, with terminals across thirty-one countries.

But logistics in the Middle East goes far beyond Dubai and the United Arabs Emirates (UAE), particularly when you consider other important business and consumer markets in the region, such as the Kingdom of Saudi Arabia (KSA) and Egypt.

The total value of goods exported from the United States to countries in the MENA region totaled almost $47 billion in 2008. Prior to the global recession, which negatively affected world trade in 2009, MENA was among the fastest growing export markets for the United States. For example, the total value of goods exported to the United Arab Emirates (UAE) grew by 33.7 percent in 2008 compared to 2007, while the value of goods exported to the Kingdom of Saudi Arabia (KSA) grew by 20.1 percent.

2008 U.S. Total Export Value for Goods (Source: U.S. Dept. of Commerce, Census Bureau, Foreign Trade Division; click to enlarge)

MENA is also an important export market for the European Union (EU). In 2008, EU27 exports to the Kingdom of Saudi Arabia, United Arab Emirates, and Egypt totaled €66 billion, while imports from these countries totaled €35 billion.

Simply put, MENA may not be the largest trading block for the United States or the European Union, but it is among the fastest growing. According to data from the World Trade Organization, GDP and import trade growth in the MENA region has outpaced the growth in North America and the European Union over the past three years.

2008 EU27 Trade with Select MENA Countries (Source: Eurostat; click to enlarge)

According to information published by the U.S. government at, the following are some of the leading commercial sectors for U.S. export and investment in KSA, Egypt, and UAE:

In short, the MENA region is a growth opportunity for companies across many vertical industries, with countries such as KSA, Egypt, and UAE leading the way.

Categories : Middle East
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The logistics industry is obviously interested in what sorts of taxes might be applied to fuels that emit carbon dioxide (CO2). Whatever laws are enacted will depend partly on the public’s opinion on these issues. Recent surveys show somewhat contradictory reactions in the American public as to whether green house gases are causing global warming, and if so, what should be done about it. 

A recent poll by the Yale School of Forestry and Environmental Studies and George Mason University, conducted December 24th 2009 through January 3rd 2010, shows a decline in public concern about global warming (see “After errors, global warming gets a cold shoulder,” Beth Daley, Boston Globe, March 8, 2010). This poll of more than 1,000 randomly selected respondents had 50 percent of the respondents saying they are “somewhat’’ or “very worried’’ about global warming. However, this was a 13-point decrease from the fall of 2008. Sixteen percent of the respondents believe that global warming isn’t happening and is probably a hoax, up from 7 percent in 2008.

Source: “After errors, global warming gets a cold shoulder,” Beth Daley, Boston Globe, March 8, 2010; click to enlarge.

This decline could be explained by the “Climategate’’ controversy, which skeptics publicized late last year as evidence that global warming data is not credible. Or it could be explained by an unusually cold and snowy winter in much of the U.S. For the first time in recorded U.S. weather history, snow was on the ground in all 50 states last month. Or it could be that economic pressure is leading some in the public to put more focus on their own economic interests. 

Meanwhile, a report by the Pew Research Center points in the opposite direction. Their survey included almost 1,400 respondents and was conducted from February 3-9 2010. A majority (52%) of Americans favor setting limits on carbon dioxide emissions and making companies pay for their emissions, even if it may mean higher energy prices; about a third (35%) oppose the proposal. In this case, the number of respondents in favor of setting limits actually increased by two percentage points since the last survey was conducted in October 2009. However, as was the case in October, those who have heard a lot about the legislation are more likely to oppose it (54%) than those who have heard a little (27%) or nothing at all (36%).

Most economists believe that if your goal is to reduce CO2 emissions, a carbon tax makes more sense than cap and trade. Cap and trade is, in reality, an indirect tax on the public. Carbon taxes on fuel would work best if: (1) fleet owners are provided invoices that clearly separate the carbon tax from the fuel sales tax; and (2) they are fairly constructed, meaning that fuels that emit more CO2 (diesel) are taxed at a higher rate than less polluting types of fuel (gasoline). 

While a direct tax would send a clear signal to fleet owners, it would take several years, perhaps as long as a decade depending on how big the tax was, to replace inefficient trucks with newer models. This is another way of saying that the price elasticity of fuel is low, that upward changes on price have a relatively small effect on the quantity bought. Thus, any carbon tax should be combined with tax incentives to buy newer trucks. Further, early introduction of cleaner engines could also be stimulated by financial instruments such as preferential road toll rates. In Germany, for example, road toll discounts were introduced in 2005 which stimulated early launch of trucks that complied with Euro 5 emission standards.

Categories : Sustainability
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We were briefed a few months ago by BabbleWare, a new entrant to the Supply Chain Execution (SCE) market. BabbleWare sells warehouse management, manufacturing execution, and mobile execution applications. It offers both software-as-a-service (SaaS) and license pricing. BabbleWare’s solution integrates to paper-based systems (as well as systems that generate telnet/terminal emulation, XML transactions, and even Excel spreadsheets), pulls the data needed to create mobile scanning applications with the appropriate process logic, then puts the data back into the legacy system in the required format. The solution also generates other data the legacy database is not designed to handle, so it stores this data in a separate BabbleWare database. 

I saw a demo of the solution and it is very flexible. This loosely-coupled solution creates multiple small tables that can link to each other, instead of one massive table to power the application. This architecture allows a BabbleWare implementer to go into a warehouse that wants to streamline its processes and work with just one employee to trial the application, while everyone else continues to work with paper. This allows for an iterative implementation process where the implementer can get feedback, change the application, trial the new process with a few more users, get their feedback, and again make changes before introducing the solution to the entire warehouse staff. The solution also offers very quick implementation cycles.

This is a difficult solution to describe, but there are two key points.  First, this is a low cost solution. Second, there is less risk around an implementation because if there is a problem, it only affects one warehouse employee initially. 

More recently, we were briefed by Synergy Logistics, a 30 year old, privately-owned warehouse management system (WMS) company headquartered in the UK. The company stopped selling its client/server WMS solution in 2008 and began selling a single-instance, multitenant SaaS solution called SnapFulfil. Synergy opened an office in the U.S. earlier this year with the goal of selling this solution in North America. Implementation, RF hardware, and training are all part of the monthly fee (there is a one year minimum contract). The company offers redundant Internet connections via data centers in London and Boston. Unlike other WMS SaaS solutions, this is not an extremely low cost solution, but it is economically priced. 

Synergy’s Vice President for North American Operations made the argument that the way we look at the risks of picking and implementing software needs to change. If you have a low cost solution that can be implemented quickly, why would you spend a year laboriously picking the software? Those are wasted months during which you could have been garnering value from the solution.

The implementation argument works even better for a BabbleWare-style solution. With high-end software, you can spend months implementing the software. Much of that time is spent carefully documenting the “as is” and the “to be” processes. Then there is extensive testing, followed by a cut over process where everyone holds their breath and hopes for a relatively painless start up. The incremental implementation process of BabbleWare’s solution described earlier is designed to alleviate the need for highly rigorous and lengthy project management cycles.

Between cleaning out my flooded basement and going on the road, keeping up with this week’s news was a bit challenging. But here’s what we found interesting this week:

It shouldn’t be surprising that Sterling Commerce’s announcement caught our attention. We’ve written about TMS mobile apps many times before (see “An App Store for Logistics Software” and “TMS for iPhone: There’s an App for That!” and “Software for the Masses: The iPhone, Crowdsourcing, and Logistics”), and just last week we highlighted how Google launched its Google Apps Marketplace.

I believe TMS mobile apps will ultimately transform the industry by (among other things) substantially increasing the number of TMS users, which will lead to increased productivity and cost reduction as companies replace spreadsheets and fax machines with apps connected to a software-as-a-service network, and they will enable users to execute transportation processes and access transportation information from anywhere using a multitude of different computing devices. The next generation of TMS users will not be tethered to their office computers.

Sterling Commerce TMS Carrier Mobile App (Source: Sterling Commerce; click to enlarge)

I have not seen a demo yet of TMS Carrier Mobile App, so I can’t comment on its capabilities. But according to the press release, the app, which is available at Apple’s App Store, “enables shippers and carriers to optimize their relationships by responding to tenders and providing real-time shipment status using iPhone.” A couple of customers, Allen Lund Company and Chemlogix, are already using the app, which is only currently available in the United States.

Infor’s announcement about Infor ERP SyteLine Shipping and Logistics caught our attention because in the past “ERP” and “shipping and logistics” were rarely used in the same sentence—i.e., shipping and logistics capabilities have historically been a missing or weak spot of many ERP solutions. Infor has partnered with Pacejet to integrate the latter’s shipping and logistics functionality into Infor ERP SyteLine. I haven’t been briefed on this solution yet, but I hope to learn more soon (you can watch a demo of Pacejet’s solutions online). According to the press release, Infor ERP SyteLine Shipping and Logistics is available in three options: Standard Shipping; Advanced shipping; and Shipping, Warehouse and Mobile.

If the financial and operational performance of transportation companies like FedEx are a leading indicator of the economy, then the company’s announcement this week is very encouraging. Revenue increased 7 percent in the fiscal quarter compared to the same period last year. Operating Income (+129%), Operating Margin (+2.2%), and Net Income (+146%) were also all up for the quarter. FedEx also increased its full year earnings guidance, which sent its stock up 7.5 percent this week, as of yesterday’s closing.

Finally, how weather data can potentially influence supply chain and logistics processes and decisions is something that we’ve highlighted in the past (see “Nestle Waters and Weather-Driven Demand”). The DOT’s announcement this week falls under the same umbrella (yes, pun intended). Research and Innovative Technology Administrator (RITA) Peter Appel summed it up nicely in the press release: “Applications developed using Clarus data [Clarus provides near real-time atmospheric and pavement observations from more than 2,000 environmental sensor stations and 45,000 road sensors deployed by state departments of transportation] could help someone decide not only whether to grab an umbrella, but also when they should travel and what routes they should take. This competition will lead to new safety products and ideas that are bound only by the limits of our imagination.” This is yet another example of how real-time, location-based data can potentially transform fleet management in the years ahead.

Have a great weekend!

(Note: Infor and Sterling Commerce are ARC clients)

Categories : Mobile Technologies, This Week in News
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Today is my 11-year anniversary at ARC Advisory Group. A decade plus one working in an industry that I never knew existed back when I was in college, and as a kid it certainly wasn’t on my short list of “what I wanted to be when I grew up” (if you must know, on my morning walks to grade school, I would pretend to be an astronaut, jumping in zero gravity over the sidewalk cracks, my backpack filled with oxygen).

Before ARC, I worked in new product development and manufacturing at Motorola, Clare, and Polaroid. I enjoyed what I did, but I eventually reached the point where I needed a new challenge. So, I searched and stumbled across this opportunity with ARC. The company was looking for someone with semiconductor experience and good analytical and communication skills. I fit the billing and got the job. The plan was for me to help ARC build its semiconductor industry practice, but for training purposes, I was assigned to update our transportation management systems (TMS) study. I knew nothing about transportation management at the time, but I was looking for a new challenge after all, so I executed the project, did a good job on it, and the rest is history.

So much has changed over the years, and so much has stayed the same.

The dotcom era was just beginning when I started at ARC. Placing an “e” in front of everything was all the rage: e-business, e-commerce, e-logistics, e-collaboration, e-procurement, e-fulfillment, and so on. In April of 2000, I came close to changing my name to and issuing an IPO on myself. Luckily, my wife talked me out of it, but I sometimes wonder what my stock would be worth today if I had gone public.

Of course, the dotcom bubble eventually burst. But it wasn’t all a total bust. The era served as a catalyst for companies to “think differently” about how they could leverage Internet technologies to transform their supply chain and logistics processes. It also ushered in the next evolution of software development, where client/server architectures gave way to web-based platforms. And in many ways, today’s software-as-a-service providers are this decade’s dotcoms, but with real business models and more mature and scalable technology.

Is today’s buzz about social media technologies, like Facebook and Twitter, a case of history repeating itself? I think so, both in terms of a potential bubble burst down the road and in how these technologies will lead to innovative changes in supply chain management processes and software (see “Facebook in Supply Chain Management” and “Supply Chain Twitter”).

What hasn’t changed?

  • Data quality remains a huge problem in the industry, and it’s only getting worse. Garbage still flows in, and garbage still flows out. I highlighted this point in “My One Page Logistics Book” last year.
  • Companies still want their 3PLs to be more proactive, and 3PLs still want their customers to view them as partners instead of suppliers.
  • Everyone talks about collaboration, but when times get tough, as it did last year, it’s every company for itself.
  • Forecasts are always wrong.
  • It’s about people, processes, and technologies, but not necessarily in that order.

And the list goes on.

And today is Day One again, and so will every day after. I have no idea where the days ahead will lead me, or what the industry will look like a year or a decade from now. But in many ways, I don’t want to know. If I have to know something before I do it, I will only do what I’ve already done.

The heavy rains this past weekend flooded my basement, and despite the blue skies and sunshine, the water is still flowing in. My kids have been aching to go downstairs to jump in the puddles. I may join them, if I can find my moon boots and backpack.

Categories : Just for Fun, Social Media
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