03.26.08
Posted in Cross Cultural, Logistics, Oceania Cruise at 12:32 pm by Administrator
South Korea has moved into the developed country category. You can see it in Seoul not only in the impressive skyline but also in the incredible shopping districts. The stores were filled with shoppers at mid-day on a Wednesday and the young population seems confident in their own future. This is still the land of the small shopkeeper and the mega-retailers have had limited success. On the way to and from the port of Inchon to Seoul, you could see the small hardware and grocery stores that line the sides of the main highways.
Seoul is largely built out but there is incredible amount of in-fill development and renovations to structures that were built during the go-go years of the 70’s and 80’s. The heavy manufacturing locations have largely left the city but there are nevertheless quite a large number of decaying factories. It’s ironic that a country that made its debut on the world market as a low-cost labor country is losing business to countries with even lower wage costs.
One common thread of all of the East Asian countries is dealing with congestion. Seoul, with a metropolitan area population of 23 million, faces gridlock 24/7. The same challenge faces Japan, Taiwan and China. Beijing, with a rush to finish infrastructure, has traffic jams throughout the city. As with other cities around the world, you can’t seem to build enough highways or public transportation to meet the demand for additional time. The same is true on the US side – - because of the deteriorating state of the interstate routes and railroads, congestion is lengthening time to move goods from the port to the final destination.
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Posted in Logistics, Oceania Cruise at 12:30 pm by Administrator
Today is an at-sea day for the cruise. What struck me was the huge volume of inter-coastal freighters going from Japan and Korea to Tianjin. I presume this reflects the flow of semi-manufactures to China for final assembly.
Over the past five years, the economies of East Asia have prospered as interregional trade has increased. Given the geography of the area, goods flow by these small freighters using the Yellow Sea. The more apparent route from Korea to China by land is blacked by North Korea. In addition, the Chinese rail system is largely focused on the movement of people, not goods. Thus the solution is that goods are shipped by container on these small coastal freighters. This trend will likely intensify as manufacture and investment flows become more intertwined over time.
China has financed an incredible expansion in its highway system by using toll roads, at fairly steep prices for a developing economy. In California, the current debate is on expanding the roads leading out of the ports. The state passed a multi-billion dollar bond package to relieve port congestion. Maybe we should be investing more in toll roads? After all, we’re just at the other end of the Yellow Sea Asian Highway.
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01.14.08
Posted in Logistics at 6:05 am by Administrator
When I first started working in international trade, the shipper was simply a link to get the goods from one country to the other. Companies sent complex sheaves of documents to get goods cleared and telexes gave an update of the arrivals of ships. With the arrival of the internet and global communications, the logistics provider has taken on many functions. No longer do companies have to find and fill out complex import and export forms. These are available on-line from the logisitcs provider. The concepts of F.O.B. or F.A.S. bear less relevance since frequently the logistics provider picks up the shipment at the exporting company mnaufacturing location, ships them worldwide, pulls it though customs and delivers it to the door of the customer. Many also provide financing and insurance.
The good news for the exporter is that the logistics field is very competitive. Companies specialize in certain niches of the market. No company should settle for just one logistics provider to provide all of their shipping. The exporter can demand, and get, competitive rates and service no matter how big or small. Thus the key to finding competitive logistics support is to continually shop around and remember that you are in the driver’s seat.
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