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Air Logistics Overview & Challenges

Air Logistics Overview & Challenges. Michael Leong District Manager Expeditors (Malaysia) Sdn. Bhd. Agenda. Major global events in the industry Local challenges Implications What is required. Air Logistics Overview & Challenges. 5 th July 2007. Major Global Events in the Industry.

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Air Logistics Overview & Challenges

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  1. Air Logistics Overview & Challenges Michael Leong District Manager Expeditors (Malaysia) Sdn. Bhd.

  2. Agenda • Major global events in the industry • Local challenges • Implications • What is required Air Logistics Overview & Challenges 5th July 2007

  3. Major Global Events in the Industry • Mergers and acquisitions • Pandair / Air Express International / Danzas / DHL (Deutsche Post) / Exel (MSAS) • Schenker (Deutsche Bahn) / BAX • UPS / Fritz • Apollo / TNT Logistics = CEVA Logistics / EGL (Circle Freight) • Lep International / GeoLogistics / PWC Logistics = Agility • Increased security measures • Customs Trade Partnership Against Terrorism (C-TPAT) • Automated Manifest System (AMS) Air Logistics Overview & Challenges 5th July 2007

  4. Major Global Events in the Industry • Surcharges • Fuel Surcharge (FSC) • Security Surcharge (ISS) • Peak season • Trade imbalance’s effect on • Rates • Carrier equipment (redeployment of Unit Load Devices) • Carrier’s route development • Wood packaging requirements Air Logistics Overview & Challenges 5th July 2007

  5. Local Challenges • Airport Cargo Terminals • Insufficient warehouse space for forwarders • KLAS Terminal lack of suitability for forwarders’ operations • Insufficient direct flights and space to/from Europe and to/from Australia/New Zealand • Lack of international passenger flights • Not all carriers operate freighters • More cost effective for some carriers to carry cargo in the belly holds of passenger flights than to operate freighters • Rate competition with North Asia • Massive rate hikes during peak periods (China and Japan’s rates can be as high as >USD5.00/kg) Air Logistics Overview & Challenges 5th July 2007

  6. Local Challenges • Penang Bridge congestion • Missed flights • Delayed deliveries • Security incidents (hijackings, robberies, theft) • No available land or warehouse on the island for public bonded warehouses • More and more manufacturers are looking at outsourcing their non core competencies such as warehousing and inventory management • Inaccurate statistics (MAB) • Perceived as a only a hi-tech manufacturing base Air Logistics Overview & Challenges 5th July 2007

  7. Local Challenges • The logistics profession is still not well known, leading to insufficient number of highly skilled personnel in both the manufacturers’ shipping departments and the 3PLs/forwarders. Air Logistics Overview & Challenges 5th July 2007

  8. Implications • Mergers amongst forwarders • Less competition and choice of forwarders • Increased security measures (C-TPAT, AMS, local) • Increased costs • Affect investors’ confidence • Surcharges (FSC, ISS, peak season) • Additional cost of doing business • Trade imbalance • Higher export freight costs Air Logistics Overview & Challenges 5th July 2007

  9. Implications • Infrastructure bottlenecks (cargo terminals, Penang Bridge, public bonded warehouses, etc.) • Inefficiencies • Increased costs • Unattractive to foreign, as well as local investors • Insufficient flights (passenger as well as direct flights to/from Europe and to/from Australia/New Zealand) • Limited choice of carriers • Higher rates (less competition) • Longer transit times Air Logistics Overview & Challenges 5th July 2007

  10. Implications • Rate competition with North Asia • Lack of space during peak seasons • Inaccurate statistics • Affect decision making • Perceived as only a hi-tech manufacturing base • Unattractive to other type of investors • Limited type of industries • Severely affected by major downturns in the hi-tech industry • Insufficient number of skilled workers • Affect professionalism, efficiencies, competitiveness Air Logistics Overview & Challenges 5th July 2007

  11. What is Required • Strengthen local security measures (transportation, warehouses, employees, etc.) • Ready infrastructure to prepare for projected growth (cargo terminals, Penang Bridge, public bonded warehouses, etc.) • Attract more carriers (cargo, as well as passenger) directly into Penang • More comprehensive and relevant trade statistics • Expand growth opportunities for other industries (wood based, rubber, garments, etc.) Air Logistics Overview & Challenges 5th July 2007

  12. What is Required • Expand pool of skilled workers • Can we be the gateway for Southern Thailand? • Find a balance amongst all these • Collaboration, not competition amongst all parties, i.e. state government, MAB, MAS/KLAS, carriers, manufacturers and 3PLs/forwarders (the competition is out there, not in here) • State government to take the lead Air Logistics Overview & Challenges 5th July 2007

  13. Thank You Air Logistics Overview & Challenges 5th July 2007

  14. MAB Statistics Air Logistics Overview & Challenges 5th July 2007

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