Friday, 27 March 2009

K+N global logistics

Here’s another set of company results showing that this is not a recession for the biggest power players in global supply chains. K+N is one of the world’s biggest logistics firms. Here is a photo of one of their lorries. You might be less likely to see its giant warehouses, which K&N began construction of and expanded in many locations in 2008, including Hamburg and Kuala Lumpur. K+N posted its best financial results for 2008, with turnover up 3 per cent from 2007, and a 21 per cent increase in the shareholder dividend.

Air freight was up 2.1 per cent for 2008 in spite of fuel costs and the downturn. K+N’s recent air freight highlights include collaborating with carrier Volga-Dnepr to fly 300 tonnes of heavyweight oil drilling equipment from Parchim in Germany to Siberia in three giant Antonov An-24 planes. K+N also provided the logistics for the solar taxi which travelled around the world including flying it from Calcutta to Bali, where it carried environmental ministers around at the climate change conference in December 2007. This air freight leg of the journey will have resulted in far higher greenhouse gas emissions than the shipping legs between Perth and Singapore and from Jebel-Ali to Mumbai.

The solar powered vehicle is a remarkable achievement and it is important to build up enthusiasm about progress in renewable energy. But we also need to recognise the likely limitations. Even at the pinnacle of innovation with renewables, we are unlikley to be able to transport heavyweight items all over the world as quickly as fossil fuel dependent air freight allows. Social changes like forward planning and patience are just as important as technological progress.

Wednesday, 25 March 2009

Air rage debate in windy Blackpool

Monday was a very windy day in Blackpool on the North West coast of England. So windy I couldn’t hold the camera steady to take photos outside. But here is a photo of the very bling ceiling of the Winter Gardens conference centre, with the chandelier lights. Wandering around Blackpool was a contrast; it looked pretty bleak with lots of empty shops, and could do with investment in local services and infrastructure.

Yet, in the face of the recession and plummeting passenger numbers and freight volumes, Blackpool Airport has just started a £2.5 million improvement programme including upgrading the runway. Blackpool Airport’s passenger numbers fell from 558,278 in 2007 to 439,200 in 2008. January 2009’s passenger statistics showed an enormous 63 per cent drop from the same month in 2008, to just over 7,000 people. Airports all around the world are still going ahead with gigantic expansion programmes in spite of plummeting traffic.

I was on an “Air Rage” panel discussing aviation expansion at the Green Party conference. Also on the panel were Rupert Read, lead candidate for the Eastern Region in this year’s European elections (the Green Party is the only UK political party to unequivocally oppose aviation expansion) and Robbie Gillett of Plane Stupid, a campaigning group recently hitting the headlines when an activist threw green custard over Peter Mandelson to highlight his support for aviation expansion as an unelected official.

Saturday, 21 March 2009

UK’s retail big 4 keep growing

Retail gloom has not been affecting the biggest 4 retailers in the UK. Tesco, Asda, Morrisons and Sainbury’s all reported growth and increased profits for 2008, and even as the economic downturn increases in severity, the Big 4 continue to report growth with rising profits and new stores.

This picture is of the expansion of Sainsbury’s biggest store in Huddersfield which includes a bigger petrol station. Sainsbury’s reported half year profits of £272 million in October 2008, a rise of 13.3 per cent. Then, in March 2009 Sainsbury’s announced that it is buying 24 stores from the Co-operative Group, which will increase its retail estate by nearly 22,000 square metres. Morrisons is buying 38 stores from the Co-operative Group and reported £637 million annual profits to February 2009, a 13 per cent rise, and. Asda outperformed its sales and profit plans reporting a 6.5 per cent rise in full year sales for 2008, and reported growth in its market share to its highest ever level.

The UK’s biggest retailer is Tesco, and although some recent results, like its Christmas sales, were below expectations compared to its record profits of £2.8 billion announced in April 2008, growth plans continue. Tesco has lodged hundreds of planning applications for new stores, including for the sites of what were Woolworth’s and MFI stores before they went bust. But Tesco’s growth plan is not just for giant and expanding stores. Tesco is also honing in on smaller sites in town centres and is even targeting pubs, which are closing in droves, for turning into small stores, see article Tesco Planning for Monopoly. This could be the final straw for many of the UK’s struggling independent retailers.

Monday, 16 March 2009

Mangoes and motorbikes

As reported in FreshPlaza, Indian mangos constituted 40% of the India’s fruit exports in 2008, the volume doubling since 2007 to 300 tonnes. Indian mangos are now popular in the US, which only permitted imports of Indian mangos in 2007. The mango imports to the US were subject to a bilateral trade deal with two conditions. Indrajit Basu reported in Asia Times that the US agreed to import Indian mangos in exchange for India relaxing its emissions standards that normally apply to vehicles to allow the import of Harley Davidson and some other high-end, large engine, more polluting motorbikes.

The other condition was that all the mango imports to the US must be irradiated. This mandatory irradiation is being given a positive spin as preventing the risk of food poisoning and as an alternative to pesticides. I think it is more about extending the shelf-life of the produce and using trade deals to ensure the expansion of industrialisation of our food supply. Construction of massive irradiation plants for mango and other produce exports is underway all over India including at Hyderabad and Lasalgon near Nasik.

Now, the Financial Express reports that exporters, courier services and even plane passengers are being informed by APEDA, India’s Agricultural and Processed Foods Export Development Authority, that no movement of mangos of any form into the US is allowed unless the fruit is irradiated.

Friday, 13 March 2009

Giant logistics and oil firm rides out the downturn

While the big retailers’ stores are prominent landmarks and always in the news, further back along the supply chain the logistics firms distributing the goods are less visible. Maersk is the world’s biggest container ship firm, and in this picture of Bilbao Port on the North coast of Spain you can see some Maersk containers. In 2008 Maersk continued the growth of its 500 strong fleet, ordering 16 ships, each of which can carry a record 1,700 refrigerated containers.

Maersk is part of the Moller-Maersk group of shipping, logistics and oil companies and you might see the trucks on the road with the distinctive blue and white logo. Moller-Maersk reported growth in profits to $3.33 billion in 2008, as reported in Commodity Online. While 2008 revenues from container shipping were negatively affected by higher fuel costs and falling freight volumes, the higher oil prices stimulated oil and gas production. As oil prices rose to a historic spike in July 2008, Moller-Maersk reported a first half net profit rise of 40 per cent to $2.3 billion as reported in the Montreal Gazette, due to almost double earnings in its oil and gas division, and Offshore Magazine reported that the firm’s application for further development of the North Sea Hadfan oil field was approved.

Moller-Maersks’s ownership and control of several links in the supply chain is an example of vertical integration. This can help firms keep growing in times of economic turbulence as losses in one segment of the supply chain might be balanced out with increased revenues elsewhere. This is efficient for the firm but just one example of extending, fossil fuel dependent, supply chains. Moller-Maersk is more cautious for 2009 but still expecting profits and growth.

Monday, 9 March 2009

Flying fruit salad

The fruit salads in the photo were from Marks & Spencer in Huddersfield and the label says that they were air freighted, and packed in South Africa. The ‘classic fruit salad’ is ‘produce of more than one country’ and the chopped mango is ‘produce of various countries’. As always, unravelling the entire food supply chain is just too complicated, but these products could have been prepared at Lonhro Agriculture’s Rollex fruit processing and packing facility at Tambo Airport Johannesburg. This article from African Agriculture reports that this facility was expanded from 3,500 metres square to 4,908 metres square in 2008. From here, prepared fruit products are flown to Europe for major retailers including Marks & Spencer and Tesco. The revenues from the facility for the 2008 were 25 per cent higher than 2007, and a turnover of $20 million is anticipated for 2009.

Refrigeration technology has improved so even highly perishable fruit like blueberries and raspberries can have a long enough shelf life to be shipped rather than air freighted to distant markets. But sales of prepared fruit products like diced and sliced single fruits, and fruit salad are growing, and are an air freight growth sector. These products often include types of fruit like pineapple and apple with a longer shelf life. Cutting fruit makes it more perishable, but the shelf life is extended with modified atmosphere packaging, which some studies have shown to reduce levels of nutrients like vitamin C.

Shifting from air freight to shipping means major reductions in greenhouse gas emissions. Research of the environmental impacts of food transport by AEA Technology commissioned by Defra in 2005 showed that, even though air freight accounted for just one per cent of food tonne kilometres, this small proportion of food that is air freighted accounted for 11 per cent of the CO2 equivalent emissions from food consumed in the UK.

Friday, 6 March 2009

Is this bananas?

There are so many kinds of bananas in the supermarkets here in England. It’s Fair Trade Fortnight so there’s a promotion on those, and today and tomorrow there is an attempt to break the banana eating world record. You can still buy unfair trade bananas but it does not say that on the label. You can buy bananas loose or packaged in plastic, choose economy bananas, organic bananas, children’s bananas - though I can’t see what’s different about them.

The choice could reach dizzy new heights as a banana for diabetics is being devleoped by scientists at the Chandra Shekhar Azad University of Agriculture and Technology in Kanpur, India. Apparently, it’s suitable for diabetics as the fruit’s conversion of starch into sugar has been controlled. I suppose this new banana might be slightly helpful for people who have already developed diabetes. It would be more helpful to address the reasons why more people are developing the condition in the first place, in particular growing consumption of processed sugary foods.

Our fruit choices are set to proliferate as the day is approaching when you will be able to buy a strawberry flavoured banana, or maybe a lemon flavoured watermelon. Biochemists at the University of Texas Medical School have successfully manipulated the enzymes responsible for flavour in the Arabidopsis thaliana plant, which was the first plant to have its genome sequenced. Now they are optimistic that the GLV (green leaf volatiles) which are responsible for plants’ individual aromas can be altered in other plants. Apparently, the genetic modification is could lead to environmentally friendly pest control, so nothing to do with lucrative patents then?

Monday, 2 March 2009

Total advertising immersion at Frankfurt Airport

Just had a look at Frankfurt Airport’s advertising brochure at Media Frankfurt. There is an abundance of promotional opportunities with 55 million passenger per year spending an average of 2 ½ hours waiting for their flight. Prominent ad sites include the welcome tower, enormous banners at gates and check-in, double sided lightboxes, 175 branded flat screen monitors and airport TV at over 130 gates. Wallwraps cover entire walls up to 60 metres long and column wraps go right up to the ceiling.

Less prominent advertising is everywhere, on flight information panels, security checkpoints, baggage pushcarts. Movement catches the eye so sliding doors, lifts, moving stairways and walkways are effective advertising space. In the future there will be 3D illuminated suitcases in the middle of the baggage carousels where passengers wait for an average of 25 minutes.

Advertisers with deep pockets can go for ‘Airport Domination’ with over 30 ‘coloramas’ (backlit ads) at strategic points around the airport. A 290 metre ‘Ambient Corridor’ promises to ‘immerse international transit passengers in your brand world’ by bathing the entire area in a specific colour. A backlit advertising wall extends the full length of a 400 metre light corridor between Terminal 1 and the parking garages. In the car park areas companies can advertise on the barriers, ticket dispensers, parking tickets and on the floor. Advertising extends beyond the airport site with 30 metre high towers along the exit and approach roads and the interior and exterior of buses.

Advertising revenues to Fraport, the airport operator, came to €18.9 million for the first nine months of 2008. This helps keep the cost of servicing the flights down. It also keeps passengers’ minds off what is going on around the airport site, like protest against the airport’s expansion. Here is a link to Zimbio photos of protests in woodland threatened by the development.

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