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Issue 2 2015 - Freight Business Journal


Kintetsu to take over NOL forwarding arm...


Japan-based forwarder Kintetsu World


Express has agreed


terms to buy APL Logistics from Singapore’s Neptune Orient Lines, for US$1.2 billion, subject to shareholder and regulatory approval. The move would allow NOL to focus on its main liner shipping business said president and CEO, G At Chung. At the same time it would strengthen its balance sheet and unlock shareholder value. NOL added that the divestment


will allow APL Logistics to realise its full potential. Group president and CEO of


KWE, Toshiba Rakish, added: “We intend to retain the headquarters


of APL Logistics in Singapore and to run it as a separate unit... We warmly welcome customers and employees of APL Logistics into our group. To them, I would like to give my assurance that when this transaction is completed, KWE will continue to invest in and expand APL Logistics’ services so as to serve our customers better, and to create exciting career growth opportunities for all employees of the KWE family.” He said the move would APL


allow Logistics fundamentals and “to


expand its business with the backing of a company with strong


a


commitment to grow in the logistics space. We believe that KWE has the ability and the ambition to continue APL Logistics’ growth strategy.” APL Logistics was the logistics


arm of US-based American President Lines – since absorbed by NOL - set up at a time when many


shipping lines saw


diversification into logistics as a means of boosting profitability at a time of low margins in the container transport industry. Many of these shipping line logistics arms have since been sold or abandoned, making NOL one of the few lines to persist in the value-added logistics field.


...as Japan postmen take on Toll


Hot on the heels of Kintetsu World Express’ announcement that it was to buy APL Logistics from NOL Group, another logistics company is heading for a Japanese takeover – Australia’s Toll Group, which has had what it describes as a very attractive offer from Japan Post. Toll will though appoint


an independent expert to investigate whether the offer is in the best interests of


shareholders; a report is due in mid- April. Toll Holdings


is Australia’s


largest international logistics company and will be sold for


its


about AUS$8bn. Toll will become a division


of Japan Post but will retain its name and management. Chief executive Brian Kruger will


report to his Japan Post


equivalent. The acquisition will help the Japanese Post Office in its bid to become a leading global logistics player and to provide some respite from the sluggishness of the domestic postal market in Japan, ahead of its own planned flotation in the current financial year. Japan Post says there will be


no redundancies as a result of the takeover.


Toll was once one of the


rising stars of the global logistics industry, making a string of acquisitions from the 1980s until about 2005 in its home country, in Asia Pacific and the US, but has since lost its way somewhat. Then chief executive Paul Little has moved on – although he remains a major shareholder – and the ports and rail operations were taken by former Toll director Mark Rowthorn into a new company, Fascia. Toll has also suffered from


a marked slowdown in the Australian market and a fall-off in oil and gas project work.


GAC has been appointed as the official logistics partner to the FIA World Rallycross Championship. The shipping and logistics provider is charged with meeting the complex operational challenges


transporting up to 30 World RX Supercars to the 13 events to Europe, Asia, North America and South America, starting with Montalegre, Portugal, on 24 April.


Freight audit firms fleece Philips


Dutch Electronics giant Philips has been defrauded of an estimated €20 million by freight audit and pay companies, according to a report in the Het Financieele Dagblad (HD) newspaper on 19 February. The fraud, which came to light


during bankruptcy hearings, took place in Germany and the US and were perpetrated by firms that were supposed to audit and control the payment of freight charges worth billions of euros. However, some of these subcontractors took advantage of the lack of control by Philips and created surpluses which they then diverted to private accounts over several years up to 2013.


Asian logistics is turning Japanese


John Manners-Bell, chief executive of consultants Transport


Intelligence, told


FBJ that the industry should not be surprised to find Japanese logistics companies in an acquisitive mood. “We should be expecting some consolidation in Asia,” he said. “Japan’s supply chain has been spreading throughout Asia for some time. Their


domestic economy is stagnant and it is a high cost place for manufacturing, so companies are unbundling their supply chains throughout the region, to China, the Philippines and so on – and they need logistics services to support that.” Japanese companies prefer


to work with Japanese – or at any rate, Japanese-owned - logistics companies in other countries – so it is no surprise that logistics service providers are expanding in the region. For the moment at least, does


Manners-Bell see


not Japanese acquisitions


extending much outside Asia, although Kintetsu’s purchase of APLL does bring it extensive involvement in North America. Toll, on the other hand, is much more Asia-Pacific and


Australasia-based. Despite the long-stagnant


domestic economy, Japanese firms are cash-rich and, with little prospect of growth at home, they have every incentive to step outside into the wider region. The idea of logistics outsourcing is also gaining ground, along with increased privatisation of state bodies such as the post office. Currently, Japanese manufacturers oſten own their own logistics companies, and in some cases even shipping lines, but some unbundling may occur in future. There could even be some


opportunities in Japan for overseas logistics companies, adds Manners-Bell. The then Exel Logistics (now part of DHL) bought into the market at


around the turn of the century, but there hasn’t exactly been a floodgate of foreign operators setting up there. Japan still has strict rules on trade and foreign investment – free trade negotiations with the European Union have made only halting progress and the country is well behind the likes of South Korea and south-east Asia in opening up its markets to foreigners. But change could be


coming to Japan, Manners- Bell believes. The current government is reform- and liberalisation-minded – and there are a lot of family owned smaller firms set up in the post- war period whose owners are now approaching retirement – which could be just the opportunity that foreign investors need.


According to the report,


Bauknecht, L’Oreal and Husqvarna were victims of similar frauds. Directors of the freight audit and


pay companies funnelled Philips money into houses, sports cars and expensive club memberships. One of the companies named


in the report is Inspeg, a former Philips subsidiary in Germany and the other US-based Trendset. Neither company is now trading. Inspeg has been bought by a UK- based company, Trax Universal Group (no connection with Trax Technologies, Trax Holdings or Trax Tech Europe) in 2010 while Trendset was purchased by Shreveport, Louisiana-based freight audit firm AFS for only $1.1m in June 2013. A spokesman for Philips


confirmed that the company had been a victim of fraud by the two companies, but that the actual loss to the company was only €5m as it had taken out insurance against fraud. He said the company had since tightened up its procedures and now employed companies only to audit, but not pay, its freight charges. The Dutch newspaper also


reported that one of the companies now doing audit work for Philips, nVision, has since been the subject of an investigation. These related to the tendering procedure and allegations that foreign workers were being employed on tourist visas. Philips said that the complaint about working conditions was unfounded but that the investigation into the tender is still ongoing. Freight audit and pay


companies are used by a number of firms – especially in the US – to


both verify bills from freight and transport service providers and, in some cases, pay freight bills on their behalf. There have been problems with unscrupulous or even insolvent companies accepting money but then failing to pay the freight operator, with freight audit firms operating what is effectively a ‘Ponzi’ scheme with money taken from one shipper used to pay the freight bills of another. There have been cases of


companies handing over millions of dollars, only for the money to ‘disappear’ into the FA&P company’s accounts. Trendset had already come to


the notice of the US authorities; in March 2013, it went into Chapter 11, owing millions of dollars to customers who had advanced it money to pay their freight bills with initial reported claims from five clients alone of over $25 million. Trendset director of administration Julie Tucker had, together with her husband, James Tucker, embezzled funds between 1996 and July 2011 which they used to fund a “lavish lifestyle”. Julie Tucker was sentenced to 33 months in jail in April aſter pleading guilty to charges of embezzlement. James Tucker was sentenced to eight months’ house arrest. This case was followed, in


May 2013, by another in the US involving TransVantage Solutions of


Branchburg, New Jersey –


which also operated as Freight Traffic Services, FTS Industries and FTS - filed a voluntary petition for Chapter 11 bankruptcy in its local Bankruptcy Court. President, Shirley Sooy admitted to a multi-million dollar “hole” in TransVantage’s accounts.


///NEWS


Fast cars demand high-speed logistics


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