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UPS has released its ‘2016 Made in China 2.0’ report, according to the company’s official press release.

The MiC 2.0 report provides a clear way forward for China’s manufacturing sector, as it faces challenges and headwinds and is intended to provide insight and information to Chinese export manufacturers and leaders who can then use it to implement successful strategies.

Export manufacturers are more pessimistic than before, with 29% of the companies saying the economy is worse than in 2014.

Chinese export manufacturers are facing challenges on demand and supply, two of the most commonly-cited challenges are increasing competition from Chinese companies (39%) and decreasing demand from Chinese customers (37%).

It’s not enough to offer a lower price to remain competitive, instead higher quality products (83%), showing an understanding of the customers’ business (82%) and offering a faster and more efficient supply chain (82%) are the top reasons for customers to switch suppliers.

MiC 2.0: no longer enough to think domestic

  • 97% of MiC 2.0 leaders sell to at least one market in Asia and are more focused than other export manufacturers on key markets in Asia and Europe such as Thailand (161%), Hong Kong (151%), France (126%), Indonesia (116%) and the UK (115%).
  • It is also important to serve a diversified customer base of both B2B and B2C customers. Export customers that are focused on B2B manufacturing are associated with low quality production and lower margin operations.
  • Industry leaders are more likely to recognize the importance of logistics and emerging trends such as industry ecommerce (29%) and consumer ecommerce (24%). Identifying these trends can set manufacturers apart.

UPS’s role in boosting China’s manufacturing sector

UPS wants to provide support for businesses in China as they facilitate global markets. The company is rolling out a new initiative to include later pickup time and faster time-in-transit in key cities such as Beijing, Shanghai and Tianjin.

Customers in Beijing and Tianjin can benefit from faster transit times up to 24 hours, and pickup- cutoff time extension up to 2.5 hours in Beijing, and 3 hours in Tianjin. These changes will help Chinese businesses that are seeking presence in global markets by providing the flexibility to import and export goods more effectively.

Find the official press release here or download the full report here.

SingPost ecommerce delivered positive sales growth in the last quarter by 30.9% to $248 million (S333.4 million), but saw a decrease in net profit by 23%.

The increase reflects expansion in cross border ecommerce activities, as well as the integration of new US subsidiaries TradeGlobal and Jagged Peak. Both of these companies run ecommerce fulfillment and logistics operations, acquired in November 2015 and March 2016, respectively. The company recently won Japanese fashion brand UNIQLO’s ecommerce business in Thailand.

Ecommerce related revenues more than doubled from $54.3 million to $122 million. They now make up 49.3 % of Group revenue, up from 28.7% last year. 

Ecommerce related revenues now make up 49.3% of the total Group revenue, up from 28.7% last year. 

Logistics revenue rose 11.9% to $116.7 million, with steady organic growth at Quantium Solutions and CouriersPlease, as well as the inclusion of a new subsidiary under Famous Holdings. Increased cross border ecommerce related activities led postal revenues to a 1.5% rise, indicating an increased demand of cross border services. 

Increased cross border ecommerce related activities led postal revenues to a 1.5% rise, indicating an increased demand of cross border services. 

Total expenses increased 33.6%, driven largely by growth in international mail traffic and ecommerce logistics volumes that reflect the change in the Group’s business mix.

Net profit attributable to equity holders declined 23.0% to S$35.9 million, due largely to one-off gains from the divestments of Novation Solutions and DataPost HK in the corresponding period last year.

From the SingPost Press Release:

Underlying net profit, which excludes one-off items, was down 11.2%, due to investments in business transformation. Rental income declined as the Singapore Post Centre (“SPC”) retail mall is being redeveloped, while depreciation charges were incurred for the Regional ecommerce Logistics Hub, which obtained a Temporary Occupation Permit in April 2016.

SingPost also continued to invest in ecommerce IT and operational capabilities. Mr Mervyn Lim, Covering Group Chief Executive Officer, said, “We are investing in our business transformation and that will take time to contribute materially to earnings. We are focused on executing our strategy to create value from our acquisitions and build an integrated global ecommerce logistics ecosystem. SingPost’s strategy to protect the postal core and grow its ecommerce logistics network remains on track.”

The good news will be welcomed by SingPost, following the company’s spell of negative headlines regarding internal investigation over board members, and the stepping down of Director Keith Tay in May.

Access the press release here

By Anutra Chatikavanij & Felicia Moursalien

 

DHL’s ambitious restructuring agenda in 2015 is starting to pay dividends, with the company posting record-high Q2 results, reports Air Cargo World.

Earnings before interest and taxes rose to 40% to a record $832.25 million for the second quarter, prompting DHL to reconfirm its expected financial position for full year 2016. This occurred despite revenues for Q2 falling by 16%.

The ecommerce ‘megatrend’, as coined by the company, was a key driver for DHL Express volume and a key contributor to revenue growth.

“DHL took the right decision and made the right investments in 2015, a year of transition, to set the stage for improving our profitability this year,” said CEO Frank Appel.

CFO Larry Rosen stated that DHL Express segment was a continuing success story, driven by fantastic growth in time-definite international shipments. Volumes for express were up 8.2% in the second quarter. This was evidence that DHL was adding market share despite the overall slow growth in the market.

The general slow growth in the market were contributed by low fuel costs and surplus capacities, which put prices under pressure.

With the success of ecommerce logistics contributing to a strong Q2 for DHL, it does not come as a surprise that the company is set to expand its ecommerce operations to empower cross-border logistics capabilities. The company will be investing $137 million through 2020 to build eight fulfillment centers and upgrade existing warehouses in the US.

All of it will be aimed at supporting the growing global cross-border ecommerce market by allowing online vendors in the US to stock their merchandise in DHL’s fulfillment centers for quicker international deliveries.

A version of this appeared in Air Cargo World on August 4. Read the full version here.

United Parcel Service (UPS) reported a 3.2% increase in profit fuelled in part by ecommerce growth, writes Wall Street Journal.

However, the delivery giant warned that a weaker industrial environment will continue to drag on.

Revenue increased 3.8% to $14.62 billion for Q2, while profit rose to $1.27 billion.

UPS predicts that its ecommerce business will grow faster than expected through the end of the year as US consumers continue to show strength.

The company has expanded its margins on the domestic side, despite the slow economy. However, as Chief Executive David Abney said, “We have realized that the key to us is not what the economy may hand to us or may blow against us, but its more about staying focused on our strategies.”

The results show that the company’s efforts to improve profitability in the higher cost ecommerce delivery segment are starting to pay off. But the strength in ecommerce and consumer spending was countered by slowing exports due to an inventory overhang among industrial customers, which is negatively impacting B2B shipments, a traditional stronghold for UPS.

Delivering ecommerce packages tend to be more expensive, due to the scattered nature of the residential deliveries. UPS raised prices across the board, with specific increase targeted at bigger packages that take longer to deliver.

UPS has also been working to pool more consumer deliveries, adding retail locations and lockers for self-service pickup.

Cross border and export shipment growth in Europe helped boost the company’s international results. Shipments from Europe to the US alone grew at a double digit pace in the quarter. UPS has been expanding their operations in Europe and other international markets, executives in the company have also said that they would be keeping an eye out for potential acquisitions in emerging markets.

UPS is a solid example of how companies, whether a global giant or a smaller operation, can focus on strategy which will protect them from a volatile market. It also hints at the logistics giant’s global expansion aspirations.

A version of this appeared in The Wall Street Journal on July 29. Read the full version here.

Popular German produced Smart Cars will become delivery boxes for DHL package operations in Germany this year in the largest test of the mail and auto industry working together to leverage connected cars, reports Bloomberg.

Owners of Daimler AG’s Smart models can arrange for DHL to deliver parcels to the trunks of their parked cars starting in September in the parent company’s hometown of Stuttgart, with the service eventually rolled out to a total of seven cities in the following months, including Cologne and Berlin.

The program is called “Smart Ready to Drop” will be Germany’s biggest trial yet of in-car delivery for ordinary vehicle owners, with several hundred customers targeted in each city. This service is designed to ease logistics in everyday urban life.

Missed deliveries don’t just annoy shoppers, they’re a profit-sapping cost burden to package handlers such as Deutsche Post, Europe’s biggest mail operator.

Similar efforts to use cars as delivery sites include a joint test last year by DHL, online retailer Amazon.com Inc. and Volkswagen AG’s Audi luxury-car division and a Volvo Car Group project in Sweden. Amazon is now focusing on drone delivery of its products.

How Smart Ready to Drop works

Smart Ready to Drop will be available on models equipped with so-called connectivity box detectors that will become standard equipment as of September. The customer will use a mobile application to agree on delivery details. A  code will allow the DHL courier to open the vehicle during a specific timeframe to place the goods in the back of the car, and to pick up returned items.

DHL is forecasting 5-7% average annual growth in parcel volume through 2020, with e-commerce a key demand driver.

The program’s replication potential is relatively high. There is even a chance that this model could work in Southeast Asia once the region has caught up with the technology advancement, popular Asian car brands such as Toyota could team up with local postal companies to pilot a similar model in the future.

A version of this appeared in Bloomberg on July 25. Read the full version here

Singapore Post (SingPost) has launched Singapore’s first island wide open parcel locker service called “Rent-a-POP”, reports Post & Parcel.

The service allows retailers and customers to rent a SingPost POPStation locker to deliver their parcels 24/7. SingPost is opening up the POPStation network to third parties.

The company also expects that the new service will be particularly appealing to marketplace sellers and blogshop owners, effectively empowering smaller businesses and merchants.

Users can rent from about 140 POPStations locations in Singapore, including commercial and neighborhood areas such as shopping complexes, community centers and clubs, post offices, and tertiary institutions.

Lim Ann Nee, Senior Vice President, SP Parcels, SingPost said, “Rent-a-POP continues to revolutionize last mile delivery for the growing ecommerce industry. SingPost is the first in Singapore to offer an island wide open parcel locker service.”

Smart lockers aims to give retailers and consumers parcel delivery flexibility that caters to today’s busy lifestyles.

The launch of POPStation for rent has encouraged the development of a sharing economy. Parcels can be delivered by retailers and consumers to a rented POPStation at their convenience, and recipients can collect their parcels easily near their homes or offices.

Prior to the launch of Rent-a-POP, SingPost carried out a one month trial with online marketplaces and blogshops. During the trial, it was found that 50% of these parcels were delivered outside of office hours, there was a 100% collection rate with almost 90% of the parcels being collected in the next day. This gives SingPost the confidence to launch smart lockers all across the nation.

The rates for the service are dependent on the size of the POPStation lockers (three sizes available) and the number of rental days.

A version of this appeared in Post & Parcel on July  27. Read the full version here