With pirates looming on one horizon and federal court justices throwing up hurdles on the other, it’s no wonder that logistics companies see obstacles everywhere they turn. The job of quickly and inexpensively moving goods around the world never stops getting harder, so it’s time to call in the specialists. AmCham Germany member companies outline their methods for keeping their logistics operations on track, whether they’re on rails, waterborne or flying high.

In the second issue of 2012, commerce germany features companies  Lufthansa Cargo,  E.R. Capital Holding, and  Schenker Deutschland.

How do the differences in security regulations in effect in various countries impact your logistics business? 

A lack of harmonized security regulations is still a major burden on our industry. Mutual recognition of EU directives and US regulations is long overdue. For instance, it is not acceptable that the US authorities recognize air
cargo security measures from some European countries like France or Switzerland, but do not recognize virtually identical measures that apply
in Germany. Insufficient harmonization is creating inefficiencies, lengthy processes and high costs without necessarily resulting in any security gains.

How are rising fuel costs and dwindling nonrenewable-energy sources affecting Lufthansa Cargo’s operations? What steps is the company
taking to address these challenges?

Our fuel costs rose to some D500 million in 2011, making fuel the most significant cost factor on our freighter flights. This alone is reason enough to work hard on the reduction of our fuel consumption. Another reason is our aim to cut emissions by 25% by 2020. We have developed dozens of measures to reduce the fuel burn of our aircraft and are investing heavily in new,  fuel-efficient planes such as the Boeing 777F. We are also working toward this goal through the use of more advanced loading equipment, such as lightweight containers.

What is Lufthansa Cargo’s position on the court decision to ban night flights between 11 p.m. and 5 a.m. from Frankfurt Airport?

Lufthansa Cargo fears severe long-term repercussions for Frankfurt’s position as a logistics center. A strict night-flight ban without any operational flexibility is completely unreasonable and ignores the realities of international competition in our globalized industry. Out of the 10 biggest airports worldwide, Frankfurt is the only one with such strict night-flight regulations. 
However, we at Lufthansa Cargo have no real alternative to Frankfurt because the airport connects our freighter operations with the passenger services. Therefore, we will work hard to continue offering our customers an excellent product – despite the challenging framework conditions.

Which recent trends in air travel have been affecting Lufthansa Cargo’s logistics business?

The traditionally high volatility in our industry has further increased in recent years. It is therefore crucial for cargo airlines to be able to remain flexible and quickly shift capacities according to demand. Lufthansa Cargo is able to change flight schedules on short notice or even open new destinations within weeks. In 2011, Asian markets weakened considerably. In response, we
were able to shift some of our capacity from Asia to stronger-developing regions in the Americas, thereby ensuring high load factors and profitable
operations.

Contact

Achim Martinka
Vice President, The Americas
Lufthansa Cargo AG
 www.lufthansa-cargo.com

Without a doubt, cargo ships are the great facilitators of globalization. With more than 90% of goods traversing the oceans on ships, sea freight represents the flow of international trade like no other mode of transport. This has much to do with the fact that the transport costs are an unbeatably good value. For mass-market products like textiles, consumer electronics and food,
transport costs tend to be negligible.

Today’s challenges

The global financial crisis has slowed growth rates, and therefore growth of international trade, across the world. At the same time, a large number of new ships has entered the market. These two developments coincided to create significant overcapacity in the shipping industry. And despite rising trade volumes, a rapid recovery in freight and charter rates is not expected. Off the coast of Africa, the safety of international seafarers is at risk every day. Piracy is no longer an isolated phenomenon, but represents large-scale organized crime. This has led to new and expensive safety precautions such as the installation of special safe rooms on board cargo ships. Given the current political instability in Somalia and neighboring countries, there is little hope that this criminal activity will be dealt with at the source in a decisive manner. However, the single greatest challenge for the cargo shipping industry remains the price of oil. As cheap as this mode of transport is for exporters and producers, the costs of bunker fuel have cut deeply into the profits of many shipping companies. Currently, heavy fuel oil costs more than $700 per ton. In one day at sea, a ship with 8,000 containers on board can burn up to 200 tons of fuel. That makes for a hefty daily fuel bill of $140,000.

Perfect timing

Globalization is a dynamic process – none of its current features should be taken for granted. Today, outsourcing and technology transfers seem to be the name of the game. Tomorrow, though, companies will shift their focus more toward synchronizing logistics. The ultimate goal will be an improved flow of goods and an optimized production schedule, ensuring that the logistics chain operates with perfect timing – that is, just in time. Ships will therefore become floating warehouses in the international division of labor.

Environmentally friendly future

With a fleet of over 100 vessels, our group’s shipping company, E.R. Schiffahrt, is one of the largest in Germany. Last year E.R. Schiffahrt received the GL Excellence – 5 Stars certificate, an honor held by just six other shipping companies worldwide. The award recognizes reliable ship operations with above-average safety, environmental and quality standards. With more and more producers and retailers demanding a sustainable supply chain, environmental protection and efficiency in the shipping industry are steadily increasing in importance. The future belongs to those whose shipping operations are punctual, reliable and environmentally friendly – while consuming as little fuel as possible.

Contact

Nicholas Teller
CEO
E.R. Capital Holding GmbH & Cie. KG
 www.er-ship.com

The time: Tuesday morning. The place: Bremerhaven seaport. A container loaded with sensitive equipment for automotive production arrives from Hong Kong aboard the huge container vessel MS Example. Its destination: a production site in Poland. 

The container, over six meters long, two-and-a-half meters wide and another two-and-a-half meters high, is equipped with a DB SCHENKERsmartbox device that supplies all the information necessary for comprehensive data recording. Through DB Schenker’s customer information system CIS 2, the client, a supplier for the automotive industry, has been provided with regular updates on the entire journey across the ocean, including transport time and conditions. 

As soon as the vessel arrives at the quay in Bremerhaven, one of the world’s largest container terminals, it is automatically discharged via a huge container bridge. Meanwhile, Schenker Deutschland AG’s ocean-freight experts have already arranged for customs clearance for the container and its valuable goods. This particular customer has chosen DB SCHENKER’s “door-to-door” service, which includes pre- and post ocean-freight hauls via rail, truck or river barge throughout DB Schenker’s global network. 

Colleagues from DB Schenker Rail are therefore looking after the next leg of the journey, in which the container is booked onto a shuttle train connecting the Bremerhaven seaport with a new hub terminal in Poznan, near the Polish
city of Gadki. For this trip, the container is loaded onto a multisystem locomotive that is able to operate on both German and Polish networks. Thanks to these multisystem trains, DB Schenker has improved transit times
and reliability for intermodal transport services. 

After a brief stop at the German-Polish border for supervision of cross-border services, the container arrives at the Poznan hub terminal of DB Schenker’s partner Polzug Intermodal, the market leader in intermodal traffic between Poland and western Europe. The automotive supplies are now ready to be shipped off to business centers in Warsaw, Lodz, Wroclaw and Katowice. 

Only one day has passed since its arrival in Bremerhaven from Hong Kong, and the container has already completed its journey to the client.

Contact

Thomas Hauck
Board Member, Ocean Freight/Projects
Schenker Deutschland AG
 www.dbschenker.de