Logistics executives say trade rebounding

Logistics executives say trade rebounding    Senior logistics executives with two forwarding and logistics companies say they are seeing a strong rebound in cargo volumes, and that in some trades shippers are facing capacity constraints.
   'Right now if you look at the volumes month over month, they are clearly ahead of what they were last year,' said Rolf Habben-Jansen, chief executive officer of Damco, the forwarding/logistics arm of the A.P. Moller Group.
   Volumes began to pick up in the second quarter and Damco will finish 2009 with freight forwarding volumes off about 8 percent to 9 percent this year, he estimated.
   Habben-Jansen said his company was able to make slightly more profit this year than in 2008 because it was aggressive in reducing costs, including a reduction in staff of about 10 percent to 11 percent since the first of the year.

Habben-Jansen

   'In the second half, we have been a bit more successful on the commercial side. Now that volumes are coming back to some extent, the key thing is to keep costs under control,' he said.
   'I do not think 2010 will be easy year,' added Habben-Jansen. 'Quite a lot of carriers — both air and ocean — are trying to raise rates, understandably so, because they have been losing a fortune in this year. I think that will put quite a bit of pressure on margins. I think it will be important to continue to grow our volumes and also extend our market share.'
   Amadou Diallo, chief executive officer of DHL Global Forwarding South Asia Pacific and Angola, said, 'Since June we are seeing resurging activity in most of the markets.' In 2008 DHL handled about 1.1 million TEUs in 2008 and 2.2 million tons of air cargo in Asia where it has more than 400,000 customers.
   'Last month we have seen doubling of volumes that we saw last year out of China and Hong Kong,' he said, speaking during a visit to the United States.
   Volumes are so strong that 'if you go today to find Hong Kong airport you see a lot of cargo that is needed to be shipped because of lack of capacity. The same applies to mainland China. We have a capacity shortage in most of the markets out of Asia,' Diallo said.
   'With the ocean freight there is a lot of difficulty to find capacity, even in the intra-Asia trade lanes. It is a big struggle to find enough capacity to provide the services from China to India, for example,' he said.
   Diallo, who is based in Singapore, said, 'The only regional market where we see there is a lot to do is Penang in Malaysia. In all the other markets we have seen a lot of activity: good sustained activity in Indonesia, a lot of investment taking place in Vietnam.'
   He said that with the cessation of fighting in Sri Lanka, that market is picking up and that 'Pakistan is very active in many areas.'
   Damco's Habben-Jansen said capacity may be a challenge in 2010, but, 'I personally expect that there will not be so much capacity laid up next year as we saw in the beginning of 2009.'
   'I think that we are going to see a fairly volatile market in 2010. Carriers had a terrible year in 2009, so it is understandable they will continue to manage capacity,' he said.
   Because of slow steaming and other initiatives, he predicted, 'the balance between supply and demand will be a little better than a lot of people thought six month ago.'
   Looking ahead to 2010, Habben-Jansen said his company plans to revamp its less-than-containerload product globally. He was in Florida to mark the recent launch of Damco's Americas Bridge LCL service between Miami and 33 locations in Latin America.
   'This is just one of the trade lanes where we are relaunching that service,' he said. 'Over the next three to four months you will see us make similar announcements. We believe that by enhancing our service we will see very healthy growth.'
   The company hopes to grow its LCL business from its current size of 300,000-400,000 cubic meters to at least 1 million cubic meters annually, the equivalent of about 10,000-13,000 TEUs. In comparison, the company's forwarding side handles about 550,000 TEUs.
   DHL's Diallo said another sign of the improving freight market is that some shippers who had abandoned air freight in order to move cargo by ocean are returning to air. He said the focus of some shippers have shifted from controlling their costs to a focus on serving their customers on time.
   Diallo said his company is seeing a surge in business in several different sectors: technology, automotive, fashion and apparel.
   'It's multifold, not just one particular sector moving up because of Christmas,' he said. ' Chris Dupin