“Proprietary control over this key ‘last mile’ is a critical missing component of Amazon’s arsenal as it competes with brick-and-mortar, and depending on how much capability this new venture generates, will serve to close this gap,” Moody’s Lead Retail Analyst Charlie O’Shea said in an e-mailed statement.

Amazon has frequently relied on established third-party logistics providers (3PLs) like UPS and FedEx to fulfill the last mile. But the e-commerce boom has strained capacity for carriers, leading to high rates and even delays during peak shipping periods, such as the holiday season.

“Customer demand is higher than ever and we have a need to build more capacity,” Dave Clark, Amazon’s senior vice president of worldwide operations, said in the news release.

While Clark claims Amazon has “great partners in our traditional carriers,” the company will offer Amazon-branded vehicles and uniforms to entrepreneurs, appearing to be a direct hit at FedEx and UPS.

The 6,541 TEU ship has been delivered to its new owner, Diana said.

Although Diana has not disclosed the name of the buyer, VesselsValue’s data shows that the ship was sold for USD 20.5 million to Japanese shipping company MOL in May this year.

After the delivery of the 2006-built vessel, the company intends to prepay approximately USD 19.4 million of its existing indebtedness, after which the outstanding indebtedness will be approximately USD 19.5 million. That amount is expected to be settled upon completion of the previously announced sale of the m/v Hamburg, latest by July 31, 2018, according to Diana.

Upon completion of the sale of m/v Hamburg, Diana Containerships’ fleet will consist of four container vessels — two Post-Panamaxes and two Panamaxes.

Over the course of 2016, real revenue and volume growth in the air and sea freight forwarding markets was remarkably similar globally, but this disguises significant differences across important countries and regions, say analysts who keep a close eye on the market.

For example, airfreight forwarding growth in China is thought to have been robust this past year, while sea freight growth was much weaker. Conversely, the United States saw moderate expansion in sea freight as air cargo growth faltered over the same period.

Looking ahead to the next 12 months, the market is anticipated to grow at a real compound annual growth rate of 4.1%, as global trade volume growth accelerates. Meanwhile, logistics managers moving freight globally should plan their budgets accordingly.

According to the new “Global Freight Forwarding 2017 Report” compiled by the London-based think tank Transport Intelligence (Ti), a continuation of excess capacity issues and lower average oil prices in 2016 led rates to fall in both air and sea freight, meaning most forwarders reported lower year-on-year revenues.

Top 25 Global Freight Forwarders

Ranked by 2016 Logistics Gross Revenue/Turnover and Freight Forwarding Volumes*

“While air and sea volume growth picked up a bit in 2016, most forwarders experienced declining revenues on the back of substantial rate declines,” says David Buckby, an economist at Ti. “However, and as usual in such circumstances, the fall in forwarder sell rates did not match the drop in their buy rates, leading to improved gross profit margins.”

Over the medium term, Buckby expects growth to pick up in line with higher global trade volume forecasts in 2018, though risks are tilted to the downside due to factors such as political uncertainty and continued trade protectionism rhetoric.

Deep dive into the market

The Ti report also explores the performance of the top players against the rest of the market; disintermediation; regionalization; vertical sector opportunities and the effectiveness of online booking platforms.

On profitability performance, survey results indicate that excluding the impact of volume and rate changes, margin pressures for forwarders will intensify over the next five years. Indeed, researchers feel that with investment in technology and offering new or more value-added services, middlemen will develop more successful strategies to sustain margins. In addition, it appears that conventional forwarders are set to lose volume share to other parties like smaller, more technologically savvy 3PLs, but the threat may be “asymmetrical” for air and sea.

A deep dive into the world of freight forwarding technology reveals the disruption caused by digitization, changes to the competitive landscape, and, ultimately, whether forwarders can adapt and survive the upheaval being caused by the continued evolution of the digital supply chain.

“The research we’ve conducted indicates that there’s substantial demand for online interfaces that allow forwarders to better serve shippers,” says Ti analyst Alex Le Roy. “Nonetheless, it’s clear that the scope of these solutions, in terms of geographic coverage for example, needs to broaden in order for them to deliver value. This will occur, but we are now bearing witness to a race for scale amongst the start-ups.”

John Manners-Bell, CEO of Ti, also asserts that the forwarding sector is facing a challenging time, not least because the global economic environment has remained volatile and difficult to anticipate—though this was nothing new, and the sector has always coped well in such circumstances. He warns, however, that structural challenges such as trends toward regionalization and near-sourcing, coupled with greater technological demands, will prove more difficult to manage.

“Political, economic and technological pressure will continue to shape the industry in the coming year,” says Manners-Bell. “One thing is certain, whether large or small, freight forwarders will need to remain agile if they are to flourish in an uncertain and complex world.”

Digitize or die

The Ti report mirrors much of what’s contained in a recent survey conducted by the consultancy Logistics Trends & Insights. According to “The Evolving Freight Forwarding Market 2017,” digitization is looming large in the immediate future.

Cathy Morrow Roberson, president of the consultancy, maintains that the advent of non-traditional players riding the wave of e-commerce growth—such as Amazon, Alibaba, and the many new tech-based startups—are changing the face of forwarding.

“The digitization of supply chains has forced many traditional forwarders into investing and automating their processes,” says Morrow Roberson. “The new generation entering the logistics markets have grown up with the laptops and smartphones and expect business transactions to be the same or just as easy as ordering a pair of shoes from Amazon.”

When asked what improvement will be utilized the most over the next five years, 58% of responding shippers named “digitization,” with 92% of survey respondents saying “digitization adds value.” Furthermore, says Morrow Roberson, 58% of survey respondents view online freight marketplaces as an opportunity for traditional forwarders.

“In fact, we’re seeing partnerships being established between traditional forwarder and non-traditional,” says Morrow Roberson. “DB Schenker and uShip, for example. Schenker acquired an equity stake and is using uShip within the European road freight market. Drive4Schenker uses uShip technology to connect the some 30,000 transport partners in the European land transport network to their freight.”

Morrow Roberson adds that partnering with an online freight marketplace allows a traditional forwarder to offer a digital solution in a faster manner. As an example, she points out that DHL introduced its online marketplace—CILLOX—that matches full truckload and less-than-truckload shipments with available transportation providers.

“A big plus for digitization is that it levels the playing field for small- to medium-size forwarders as well as the larger ones,” says Morrow Roberson. “And it’s not only forwarders, but also shippers of all sizes. Shippers can take advantage of numerous online marketplaces, such as Freightos, to obtain a rate, book the freight and track it from beginning to end.”

According to Morrow Roberson, a drawback to many, if not all of these marketplaces, is that not all trade lanes are included; so shippers will need to choose wisely which marketplace to use and remember to compare rates among all of them, including those of traditional forwarders.

“The big question to ask,” cautions Morrow Roberson, “is as if the rates are published or negotiated.”

Margin watch

Dr. Zvi Schreiber, CEO of Freightos, a technology provider focused on instant freight quotes for freight forwarders and shippers, admits that the last quarter “ended on a somber note for digitization” due to cyber-attacks that temporarily crippled some of the major global forwarders.

“However, the shipping community will remain vigilant in safeguarding the progress we’ve made toward transparency,” says Schreiber.

The most recent Freightos newsletter, “LogTech Review: Q2 2017,” notes that during the second half of June, Amazon and Alibaba both held conferences in the United States, appealing to small and midsize businesses selling on their platform.

“While Alibaba was advocating sales to China as Amazon encouraged cross-border importing, both were clearly pursuing a small- to medium-sized business focus, as Big Box retailers continue to struggle,” says Schreiber.

For enterprise forwarders and carriers, the marching orders for the second quarter appeared to be freight visibility, as a number of companies unveiled solutions to enhance cross-supply chain visibility of shipments. The last-mile drone delivery space stayed hot, both in the air and on the ground. Meanwhile, Uber Freight formally launched its product, while continuing to face strong competition from other on-demand trucking startups.

“The second quarter of this year was a strong quarter for visibility technology,” says Schreiber, “particularly for DHL’s varied divisions.” DHL Global Forwarding launched Ocean View, which offers real-time updates on maritime shipments; DHL SupplyWatch, an AI program for identifying supply chain disruptions; and Saloodo, an online trucking marketplace.

Meanwhile, DP World also released a container visibility solution in the UK, as French startup Traxens unveiled a smart freight train tracking solution. In Germany, Panalpina launched a pilot ocean shipment management system. “Finally, CHAMP took tracking further with voice-based air cargo tracking via Alexa,” says Schreiber. “And the timing couldn’t be better.”

Brandon Fried, executive director of the Air Forwarders Association (AfA), agrees with Schreiber positive take on the innovation being pushed into the market, noting that while air cargo volumes have increased, margins remain depressed and most of AfA members are looking forward to more tech-driven opportunities in which profitability may improve.

“One influencing factor to consider is the growth of capacity we’ve seen over the past couple of years, keeping pricing at lower levels,” says Fried. “This increase in space is attributable to the large amount of new and efficient wide-body aircraft, each with generous belly space flying the popular trade lanes.”

Another significant factor inhibiting this growth in many cases lies with lower customer pricing agreements that may no longer reflect today’s market conditions. Once these contracts expire, says Fried, prices and margin should improve overall.

“However, new transport pricing agreements alone will not assure increased profitability, and this is why forwarders must be searching for more operational efficiencies that only technology can provide,” says Fried. “People still play a crucial role in our business, but technology will help them work smarter and provide an improved customer experience.”

According to a press release, Ikea initially aims at using electric vehicles, upto 20 per cent of its total customer delivery fleet and subsequently increase them up 60 percent over three years.

Deputy Country Manager of IKEA India, Patrik Antoni said the company will be installing charging pods at its store in Hyderabad to encourage both employees and customers to switch to electric vehicles.
“To meet the Indian customers’ service expectations home delivery will be an important component of our offer. As a company, we have ambitious plans to adopt electric vehicles across our operations and in our first year in India, around 20 per cent of our customer delivery fleet will comprise electric vehicles.

That number is planned to increase to 40 per cent in the second year and 60 per cent in the third year of IKEA’s operations,” the Ikea official said.

“We will be installing charging pods at our IKEA store in Hyderabad to encourage both our employees and customers to switch to electric vehicles.
The initiative concerns our own vehicles at our stores and offices, but also includes our partners who take care of our home deliveries,” he further said.

Meanwhile Ikea said it has chosen Gati-KWE,an express distribution services firmas logistic partner for its upcoming store here.

The store is expected to be open next month here.

The press release issued by Gati,the partnership will enable Ikea to efficiently manage home deliveries of its products (Do-It-Yourself) sold from its first ever India store to customer homes across Telangana.

The overall scope of partnership is a combination of contract logistics, last-mile distribution and reverse logistics,it said.

Matthias von Randow, managing director of the Federal Association of German Air Traffic Industry (BDL), told a symposium in Berlin that a “significant increase in demand” meant that airfreight’s logistics supply chain is facing capacity constraints in infrastructure and administrative procedures.

“If we want to successfully cope with growing demand in air traffic we have to make massive efforts in all areas,” said von Randow, addressing an audience that included representatives from the Federation of German Industries (BDI), the German Forwarding and Logistics Association (DSLV) and the Board of Airline Representatives in Germany (BARIG).

Von Randow added: “Especially the interfaces with authority functions such as customs administration and air security controls can and must be organized much more efficiently.”

BARIG secretary general Michael Hoppe said that his airline members had identifed an urgent need for action in a number of areas:

• Capacity expansions in airspace

• Need-oriented development of important airport infrastructure

• Optimization of air and ground services

• Significant improvements of security controls

• Digitalization of processes of the logistics chain

Digitalisation was the main focus of the industry symposium, which also featured representatives from the Federal Ministry of Finance and the Federal Ministry of Transportation.

A BARIG statement issued after the meeting said: “Since especially the cross-border online business is rapidly growing, the corresponding air cargo volume is also experiencing steady increases.

“To handle the additional volume, integrated digital processes along the entire logistics chain are inevitable.

“Today’s reality and the current legal framework however are trailing far behind these requirements.”

BDL presented an analysis of the current situation, which stated that paper documents continue to play an “immense role” in air cargo and are “massively slowing down” the related processes, with consignment notes, customs declarations and insurance documents a major part of the problem.

Efficient solutions such as electronic consignment notes from IATA “are not implemented comprehensively at the moment,” the industry and regulators heard.

BARIG and the participating industry associations demanded that politicians “create the framework for electronic handling of relevant documents and information” while the air cargo sector in Germany plans to “further enhance the good basis of cooperation with the customs authorities”.

BARIG’s Hoppe explained: “The extremely competitive situation regarding the development of logistics’ global future is endangering Germany’s leading position in this area. A mutual campaign on the other hand could strengthen the location Germany. This requires a joint spirit.

“All parties involved must act as a team and organise the necessary projects mutually and in a targeted manner. Other countries have identified by now that airfreight and logistics are motors of their national economies.

“The majority of goods comes from overseas and Asia and thus demands a reliable anchor point in Europe.”

Hoppe made the points that Frankfurt airport is currently Europe’s largest cargo hub [by volumes] while Leipzig has established itself as a integrator gateway for the Germany’s DHL and Aerologic, while Cologne is the overnight freighter hub for Federal Express and UPS.

He added: “European airports such as Luxemburg, Brussels, Liège and others are competing for the best positions in the attempt to master the novel streams of goods driven by growing e-commerce.

“The current challenge is to bring all system partners in Germany together and mutually develop new processes as well as interfaces and electronic procedures. If this is the case, Germany will have a good chance of further expanding their leading role in Frankfurt, Leipzig and Cologne.”

He said that BARIG and its over 30 German and international cargo airlines are “ready to tackle these challenges” and contribute to “a successful and competitive development of the future of the German air cargo and logistics industry.”