SUPPLY CHAIN STANDARD OCTOBER 2008
www.supplychainstandard.com
www.supplychainstandard.com
50 Poland Street, London W1F 7AX Tel 020 7970 then 4-digit extension Fax 020 7970 4119 ● Editor Malory Davies FCILT (4100) malory.davies@centaur.co.uk ● Reporter Jessica Davies (4184) jessica.davies@centaur.co.uk ● Online News
Reporter Lucy Tesseras (4813) lucy.tesseras@centaur.co.uk ●Contributing Editor, Supply Chain Nick Allen (01444 467 307) nick.allen@supplychainintelligence.co.uk ●Contributing Editor, Property Liza Helps (01449 673 952) mesquita@tinyworld.co.uk
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All at sea
The 17th of October promises to be a major landmark for the international
logistics market – on that day the Far Eastern Freight
Conference terminates operations, opening the liner shipping
market between the Far East and Europe up to unfettered competition.
It will certainly be a day for celebration at the Freight Transport
Association. In its British Shippers Council guise it has spent years
campaigning for an end to the conference system, which it argues
keeps liner shipping rates artificially high.
It has been able to point out that such cartels in other areas of the
transport market have been illegal under European Union law for
many years.
Of course, the shipping lines have never accepted this analysis
arguing that the conference system brings stability to the market and
ensures that there is adequate capacity available.
So will there be a noticeable fall in freight rates? According
to Purvinder Tesse, logistics director of freight forwarder FCL,
eastbound rates of as little as $25 per TEU are being quoted as larger
shipping lines look to fill slots.
Westbound, individual TEU rates which were as high as $1,000 per
TEU at the end of last year, have now sunk to as low as $300 in some
cases and may go lower as the market continues to struggle.
However, there are also the CAFs and BAFs to be taken into
account. For September, the Currency Adjustment Factor went up to
17.9 per cent while the Bunker Adjust Factor rose to $766 per TEU.
Tesse reckons that even in an open market, inward rates
from the Far East are unlikely to drop much below $300 in
the near future as it is simply uneconomic for vessels to
operate at these levels.
Whatever the rate when the post-conference regime arrives on the
18th of October, it is clear that the market will take some time to
adjust to the new reality. The significance for global supply chains
should not be underestimated.
MALORY DAVIES FCILT
EDITOR
SCS:CONTENTS 03
NEWS ANALYSIS 4
EUROPEAN SUPPLY
CHAIN EXCELLENCE
AWARDS 6
VIEWPOINT:
Penelope Ody,
John Lamb 8
FEATURE:
Africa 12
Set to become the next lowcost
manufacturing centre?
SUPPLY CHAIN
TRANSFORMATION 14
FEATURE:
China 16
Illuminating the hidden links
in the supply chain.
FEATURE:
E-fulfilment 20
Online sales are now critical
to the overall profitability of
many high street brands.
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