Thursday, 24 November 2016

New forklift attachment breakthrough transforms warehouse costs

 As all warehouse operators know, the cost of space has many facets and so is not confined to fixed costs like rent/rates, maintenance and security. Space can also affect forklift productivity in terms of pallets moved per hour and even road transport. With that in mind, the British forklift innovator, Translift Bendi, developed its mould-breaking articulated forklift in the 1980s that transformed warehouse economics like no other but there was always a perceived barrier in the minds of some users who were subject to large swings in truck usage and therefore felt they could not justify the cost of articulated trucks full-time owing to their significantly higher initial cost compared with counterbalance and reach trucks.

To resolve that issue Translift Bendi has patented what they claim is a unique breakthrough, called the SpaceMate, which is an attachment like no other that fits any forklift with no modification and without compromising the truck's sideways' stability. This means that potential buyers could use the SpaceMate to reduce operating aisle widths to 1.8 mt at one third of the cost of an articulated truck or one fifth of a conventional VNA truck.

The SpaceMate would allow conventional forklifts to provide back-up in narrow aisles during busy, seasonal periods or as a standby if a truck breaks down. It is not meant to replace the articulated forklifts but rather complement them because many potential users are deterred from narrowing their aisles by the perceived high initial cost of an articulated truck. Thus, SpaceMate is an entry level solution, with the additional benefit for some users who can only afford one narrow aisle machine and may feel too vulnerable to depend on one machine and so stay with reach or counterbalance trucks.

Weighing 450 kg, with plans to make it lighter, the SpaceMate will take up only one pallet position in the racking, while waiting for breakdowns or on standby for busy periods. The Spacemate is not just designed for end users. It is also aimed at truck manufacturers and dealers who now have a low-cost "off-the-shelf" VNA solution, that can fit in the back of a service van, and be fitted by the end user with a bare minimum of training.

In operation, lasers visually positon the forklift in the ideal spot. The truck's sideshift function extends two bridge arms out of the SpaceMate into the pallet racking either side of the pallet location. The arms are tilted down slightly and placed anywhere from two to 700 mm above the racking beams. The arms are lowered until they rest with four points in contact with the racking. The "bridge" positon actuates the fork carriage, allowing it to travel out in between the bridge arms and lower the pallet into position on the racking beams.

Also suited to both gas and diesel, the SpaceMate's electrical requirement is provided by a rechargeable battery, so electrical supply from the truck is not needed. Having consulted with SEMA, Britain's experts on safety standards for pallet racking, Translift Bendi built in safety features which they believe make it far safer than conventional trucks in a number of areas. The SpaceMate's working height is only limited by the truck's maximum working height, and is easier to use at height than conventional forklifts because height selection is designed out of the system.

As any user of articulated forklifts knows the mast arrangement can swivel to either side when within racking aisles, thus enabling them to deposit and retrieve a pallet load on different sides of the aisle without having to leave the aisle and then turn around for access re-entry. This is not possible with SpaceMate, but probably more than half of all forklift pallet movements do not require that function.

Verdict: Certainly worth a second look for certain operating scenarios.

SpaceMate in action

Friday, 11 November 2016

Will Trump learn history's lessons?

Whenever making statements at the hustings Presidential candidates often make political promises that remain unfulfilled after being elected. Hopefully, we can expect the same from Donald Trump in certain arenas, provided his advisers' words are heeded, and where they must be heeded most of all is in the field of economics. It is here that he will stand or fall in any post Trump presidency assessment and it is here, if all his pre and  post election promises are carried out, the greatest dangers lurk for all Americans and the world beyond.

Not all of Trump's pledges are unsound. The promise to shore up America's parlous, crumbling infrastructure will go down well with job-strapped voters. His economic policies with a foreign element to them, however, leave much to be desired, and could even lead to unrest at home. Take, for example, his promise to slap a 45% tariff on Chinese imports as part of a home jobs protection move. Trump should remember that according to the US Treasury the largest foreign holder of US debt is China, which owns more than $1.24 trillion in bills, notes and bonds, or about 30% of the over $4 trillion in Treasury bills, etc, held by foreign countries. In total, China owns about 7.2% of publicly- held US debt. If China stops buying America's IOUs then interest rates could rise, with knock-on effects for inflation.

China's trade with America over the last 20 years or so has been of enormous benefit to both countries, especially in helping to keep America's inflation down. Slapping huge tariff rises on Chinese imports in general would be another inflationary move that would hit the poor much harder than the rich and plunge an already battered merchant marine into greater despair. China is now ostensibly switching its economy away from an export-oriented one to a home consumer-led one and so the last thing America needs is to suffer retaliatory tariff measures. Trump's tariffs would be blatantly WTO inconsistent and so China could go straight to the WTO and would easily win the right to impose retaliatory tariffs on US exports.

In the political arena, Trump has threatened to rip up America's commitment to protect smaller NATO nations. One of the figures wrongly bandied about is that of NATO's 2015 total spending of about $900 billion the US share was $650 billion, or 72%. When looked at in detail, however, the US share is only about 22%, a good example of deception by omission, so favoured by many politicians. Weakening NATO now would not be a smart move.

In the social arena Trump's promises will also have serious economic repercussions if carried out. He has promised to deport 12 million illegal immigrants, something many Californian employers will view with palpable alarm. Trump's na├»ve views over building a 1,000-mile long wall along the Mexican border are the stuff of cloud cuckoo land. There is no wall that could not be breached, as history shows from the Great Wall of China to Hadrian's wall.

Most of all, Trump should remember two things. In terms of votes cast, Clinton polled fractionally more than Trump and already we have seen the first of riotous rumblings in Oakland, perhaps partly showing dissatisfaction over the electoral college system, so in essence he does not carry the majority support. Secondly, trade is the handmaiden of prosperity and prosperity is the surest guarantor of peace. Failure to see that would be what the ancient Greeks called hubris --- the outrageous arrogance that leads to abuse of power.

Monday, 5 September 2016

Do Amazon et al operations worsen health risks?

Some 35 years ago I wrote in Britain's leading logistics journal about the coming boons of online shopping and how it had the potential to disintermediate bricks and mortar retailing. One boon, in particular, was environmental, and by extension health and safety. Through their TVs and computers customers could order their whole weeks shopping from one centre and specially-equipped delivery vans would deliver to home addresses, typically fulfilling up to 50 orders in one tight delivery area, and thus replacing up to 50 customer car journeys to their local superstores. That would mean far less air pollution, traffic congestion and accidents. What was there not to like? But then came Amazon, followed by Ali Baba, et al.

Now when it comes to logistics Amazon is no slouch; how could it be when this year it is estimated they are going to sell 7.2 billion items, which could hit 12.6 billion in just four years, according to one estimate. It has taken warehousing to new levels with automation and has a patent for "anticipatory package shipping" technology. When a Prime subscriber ($99 a year) orders just one item for delivery within two days at no extra charge, Amazon already has a box standing by, ready to label and ship, a service made possible by hundreds of Ph.D mathematicians concentrating on optimising logistics.

In their quest to make their service most attractive Amazon saw prompt delivery as giving competitive edge and it has worked but others are doing likewise, with Britain's leading retailer, Tesco, now promising a three-hour delivery service. The problem, however, arises over environmental risks because more customers than ever are ordering only one or two items for home delivery which previously they would have picked up on the weekly shopping trip to their superstores. That means far more road journeys and concomitant accidents and air pollution.

Air pollution is now the number one ultimate cause of death in Britain, estimated at 60,000 a year and about 80% of air pollution is road transport related. Diesel emissions are the worst single offender, primarily owing to its sub 2.5 micron oily particulates which engine filters cannot contain and which lodge permanently in the body. These particulates are known carcinogens and a major cause of pulmonary diseases like asthma, which afflicts six million persons in Britain alone and is worsening. The health bill for all this growing air pollution is rocketing into billions of pounds a year.

Now it is true that new motive power technologies are now available, like hydrogen fuel cells and electricity generated by solar, wind and hydro, which are clean at both points of production and use. But these are still likely to take many years to replace dirty oil.

There is growing pubic resentment against Amazon's surging flood of cardboard boxes spewing forth from its many distribution centres. In Hamburg, for example, city officials said Amazon withdrew its plan to put a distribution centre near a seniors' centre and kindergarten after residents, local politicians and police complained. The mayor of Paris, Anne Hidalgo, was miffed at the advent of Amazon's Prime Now centre in her city, warning that it would foul the air, snarl traffic and damage local businesses.

Now, of course, none of this is to say that Amazon, Ali Baba, et al deliberately set out to harm the environment and people's health. The early stages of online shopping must have delivered a net benefit on air pollution but by pandering to people's wants for instant gratification for just one or two products has reversed the early promise of a cleaner environment. Now that Amazon is going into home food deliveries it has a chance to dilute the air pollution issue by offering tempting discounts if buyers agree to fulfil all their household purchases in one hit, say once a week. Rushing through cities to deliver, say, just toilet paper and condoms, two popular Amazon items, is asinine.


Sunday, 4 September 2016

Why logisticians should be global business savants

In recent years businesses have come to appreciate the value of good logistics to give competitive edge, with many board members now having a logistics title, but that does not mean the logistics profession gets meaningfully better, as mayhem in the container shipping world has just revealed. Just as in 2011, when the Japanese tsunami caught many logisticians with their pants down because they had put too many of their supply chain eggs in one basket (Japan), leading to multi-billion pound losses from stalled auto plants around the world, now we have a foreseeable risk from the receivership of Hanjin Shipping Co, South Korea's largest container line and the 7th largest in the world. Fortunately, it accounts for only 2.9% of the world's share of sea container shipping but it threatens to derail the supply chain of global companies that need to send goods well in advance of the year's busiest shopping season.

It will not be a swift mess to untangle because, like airlines, container lines operate in capacity-sharing alliances. That means that customers who booked cargo with other lines, like Evergreen and China Cosco, might all discover that their goods are on Hanjin ships. Meanwhile, around the world Hanjins's ships are being arrested or refused port entry because ports are worried they will not be paid. It could, therefore, take months for owners of cargo trapped on board to retrieve their cargo.

At the root of the container shipping lines' misery is not so much stalled world trade but new ship supply capacity far outstripping world trade growth, leading to a mismatch between supply and demand growth which, says Paul Slater, a Florida-based ship finance adviser, means the whole industry is in "terrible trouble. Frankly, I don't think there's a container shipping company in the entire world that's making any money," he adds.

Hanjin's collapse has caused shipping rates to spike but the benefits are likely to be short-lived. Hyundai Merchant Marine, which itself flirted with bankruptcy this year, said it will take over operating many of Hanjin's directly-owned ships, while its chartered vessels are likely to return to the market for lower lease rates. The risk from this is that unless demand grows faster than supply of vessels then further container line collapses cannot be ruled out.

It's not as though Hanjin's collapse could not be foreseen. Drewry Shipping Consultants said: "We've been warning since 2013 that Hanjin was living on borrowed time because its debt to equity ratio was over 600%."

So what lessons does this have for logisticians? It is not enough for them to know how to ensure goods flow through the global supply chain as smoothly as possible. They must be able to identify all possible risks and put in place contingency plans that either allow rapid recovery or some sort of insurance when goods are delayed by events like Hanjin. The present capacity-sharing alliances of container liners are not in the cargo owners' or forwarders' best interests. What is the point, for example, of logistician studying the final accounts of shipping lines, which should also include the crisis-hit bulkers, to apply formulae that can reasonably predict bankruptcy two years ahead with 90% accuracy, if they don't know in which container line's care their goods will end up? If reform
of the arcane complexity of the industry cannot be had then shippers should see if insurance can be obtained at a reasonable rate to protect them from supply claim risks like Hanjin

There are other measures logisticians should take to warn them of trouble ahead. They could, for example, become more aware of global economic and financials trends, that if left unchecked could create mayhem down the line. Back in January 2007 I warned in print of serious trouble ahead for the banking industry caused largely by their reckless involvement in America's sub-prime housing market. At the time, shipbuilding was on a roll with substantial orders on the blocks. That led to excessive ship capacity overhanging the market because the credit crunch stalled world trade growth. Today's shipping world is still feeling the effects of that. But it is not only shipping that is in trouble. Banks are heavily involved in underperforming shipping loans and so far have suffered heavy losses. Britain's RBS bank is now trying to exit its entire interest in Turkish shipping loans and hopes to be rid of its much bigger Greek shipping exposure. It will be lucky if it avoids a big haircut.

Saturday, 6 August 2016

Logisticians: Are you prepared for war in the South China Sea?

It would be difficult to overestimate the threat to logisticians' best laid plans for trade with Asia than the worsening relations between China and its neighbours over the former's illegal territorial claims to 'islands' it has developed from reefs and shoals in the South China Sea, around which there may be rich reserves of oil and gas. These 'islands' are up to 650 miles from China's coast but less than half that from other nations like the Philippines and Vietnam who are also claiming rights over the Spratly and Paracel islands.

The permanent court at the Hague recently ruled against China's so-called nine-dash line that lays claim to almost all of the South China Sea, through which about US$5.5 trillion of sea-borne trade passes every year, but China has intimated that it has no intention to respect the Hague's rulings. The sabre rattling has consequently risen. The AFP, for example, reported that a Beijing minister urged preparations for a "people's war at sea."

China's state-backed media is awash in bluster over the subject of their military and sovereignty. China's Global Times even went so far as to challenge Australia directly, saying: "If Australia steps into the South China Sea waters it will be an ideal target to warn and strike. Lian Fang, a professor at the military-run National Defence University, said: "The Chinese military will step up and fight hard and China will never submit to any country on matters of sovereignty."

Beijing has even gone so far as to unilaterally announce a "no sail zone" in international waters which directly violates international maritime laws. Such Chinese insouciance will undoubtedly invite a response from the US Government whose Navy regularly patrols the South China Sea where it now faces new militarised islands.

"The People's Liberation Army is ready," a military source told Reuters. "We'll go in and give them a bloody nose like Deng Xiaoping did in Vietnam in 1979". Not all Chinese commentators are such belligerent sabre rattlers. One Chinese source seemed especially aware of the potential catastrophe of a shooting war which could so easily emerge from the military posturing. In a statement to Reuters he said: "We cannot take on the Americans. We do not have the technology yet," implying that when they do the risk of unpleasantness will rise. He want on: "The people who would suffer would be the ordinary Chinese." But the problem is that in the Chinese psyche losing face is worse than losing honour and irrespective of the enormity of a hot war it would not take much to tip the Chinese government hotheads over the edge.

If wise counsel prevails the Chinese authorities will realize that globalisation of trade has made them more interdependent on foreign markets to sustain the growing ambitions of ordinary Chinese people who want nothing more than to be left alone to scratch an honest living in an atmosphere that nurtures working people's labour conditions. China has enough internal problems from unsustainable debt levels to rising discontent among the people over living conditions (Google my blog: China facing a double bust?). If that were not bad enough, there is always Nature preparing for the next costly disaster through earthquakes and typhoons.

In my blog of June 2015 headed: "Should China's South China Sea ambitions be thwarted?" I warned that "The potential of the rising tension has huge implications for global logistics that stretches far beyond the cost of higher insurance and the re-routing of ships to avoid the South China Sea." Since then, the tension has risen sharply and so logisticians should review their South-East Asia supply pipelines by making sure they have robust plan Bs in the event of supply disruptions. This could mean having alternative supply centres ready to swing into action, especially given the amount of trade flows geared to JIT deliveries. Logisticians, for example, might like to consider sourcing their rare earths from outside of China, which dominates the market. Another precaution could be a temporary increase in component stocks until signs of tension have eased, even if that does mean rising costs.

The alternative, if push comes to shove, could be a re-run of the 2011 Japanese tsunami chastisement in which the asininity of western corporations over reliance on Japan for 100 key products geared to JIT deliveries left car plants and other industries around the world idled for want of parts, incurring multi-billion pound losses in sales and profits.

Tuesday, 2 August 2016

China facing a double bust?

Since the abandonment of collectivism Chinese governments have done well to boost their economy and prosperity in a remarkably few years but are they now putting all that at risk through tightening political control and ever-more reliance on horrifically high debt levels? Potentially worse still, is the strength and size of the economy being used to cow much smaller nations as China, for instance, illegally lays claim to 'islands' it has developed and militarised from shoals and reefs in the South China Sea, up to 600 miles from its shores?

China's development has come at a big social cost, from an environmental disaster that kills over one million citizens every year, mainly through air pollution, to a hardening of central government repression as the people agitate for fairer rights and conditions, a process the government sees as squeezing the party out of leadership at the local level and therefore becoming a serious form of political opposition. One former Chinese government official, who has left the country, sensibly remarked: "I don't understand why the government doesn't let the people vent the way it used to. It relieves some of the pressures and you can see where the grievances are."

One reason why the Chinese government is tightening its grip by cracking down hard on legitimate dissent and free expression is the slowing economy -- a trend that current government economic policies seem wrong-headed or ambiguous to head off, though there are some glimmers of hope here. Chinese governments have repeatedly promised that they would keep a lid on borrowing and implement reforms. But the latest data suggests that government-owned banks are lending more, not less.

Cheap credit has played a key role in boosting GDP by 6.7% in the latest quarter to June from a year earlier but the result of all this debt bingeing is that government debt is now 2.5 times GDP and consumer and corporate debt at all-time problems highs. In June alone total lending soared US$244 billion but the problem is that many of the loans are going to unprofitable state-owned enterprises (SOEs) kept alive only to avoid heavy job losses. It would make sense instead to lend the money to private companies to expand their hiring. But the government knows it must, as promised, shift the economy from manufacturing towards services and consumption and that means slashing industrial overcapacity by closing inefficient SOEs and so initially raise unemployment -- a reason, perhaps, for its more repressive regime buttressed by the strengthening of the People's Liberation Army because it sees potential trouble ahead. The risk is that if the regime feels threatened by home-grown problems it will try to deflect them through nationalism and the most likely flash point is in the South China Sea.

This excessive debt has been described as China's "original" sin, which has led to some ratings agencies to warn that the banking system may need $500 billion more in capital to offset rising bad loans. Despite some bright spots in the economy and the authorities making some right moves, long-term growth prospects have hardly improved as risks continue to rise. The risk of an economic and social bust, therefore, is considerable.

Sunday, 5 June 2016

Should and will Britain vote for Brexit?

Inability to adapt has often spelt extinction and so could it be said that the European Union (EU) faces such a risk, if not fate, by dint of its inflexibility to adapt to pressing, changing circumstances? What began out of the ashes of post-war Europe as an experiment at economic union, with ultimate political union a far-off goal of its founders, but not, evidently, the common man, to save Europe from any more disastrous wars now appears to have foundered on that oldest barrier to political integration -- self interest taking precedence. The economic experiment was a laudable one that has promoted internal growth and arguably helped keep the peace among Europe's club members, though as a customs union it was to the disadvantage of the developing world and EU consumers who pay higher food prices. But the experiment came at a price -- uncontrolled immigration on a hitherto unprecedented scale, an issue that is likely to be decisive on June 23, when Britain votes to stay or leave. An integral part of that immigration issue is the economic issue, the facts of which, in weighing up the pros and cons of immigration, have been prostituted by the most beguiling of effective lies -- deception by omission, to which I shall return.

If ever an election campaign was fought so crassly and deceptively, Britain's EU referendum on stay or leave must surely be it. Both sides have gone over the top in their wild claims but they have guardedly hedged their fear-mongering and alarmism with words like 'could', 'might' and 'likely', with the most favourite choice being Britain's Prime Minister, David Cameron, and his Chancellor of the Exchequer, George Osborne, frequent warnings about "a leap in the dark" if Britain leaves. George Osborne's latest scare is his claim that leaving the EU could add £1,500 a year to the cost of an average mortgage, based on figures that in turn are based on assumptions, and as most of us know economists are past masters at getting their forecasts hopelessly wrong because their assumptions underlying their forecasts proved false. And in any event could not a leap in the dark turn out to be a leap in prosperity? When Drake's ships steered to glory was that not a great leap into the dark which redounded to the whole world's benefit by creating the greatest empire that spawned the industrial revolution and its effusion of inventions and discoveries that changed the world for the better?

To return to the immigration issue, let it not be thought that Britain's past immigration was anything other than of immense value at enriching the national gene pool and subsequent economic progress. The problem is not immigration per se, it is the need to limit the numbers to sensible levels that do not overwhelm the social services and give rise to simmering resentment, and worse down the line, which under current EU rules is not possible. There are already ugly signs developing in Europe over the high numbers entering from war-torn regions and even higher numbers of illegal economic migrants taking advantage of the political refugees' plight. Germany, France, Sweden, Austria and Denmark are lurching to the hard right and that would be tragic if the trend continued to the detriment of recently-arrived immigrants contributing to the economy.

Earlier I said that the economic cost and benefits of immigration were subject to that most beguiling  and effective of lies ---deception by omission, but what did I mean by that? Immigrants generate costs in ways which are not factored into any cost/benefit exercise for public consumption. One good example is the administration of justice, where the legal aid bill is about £2 billion a year. Why is this relevant? The answer is that Muslims account for 1 in 7 of all Britain's jailed population while accounting for only 4.5% of the total population. That is not part of the administration of the justice bill but is nevertheless a huge annual expense. Then there is the cost of running the immigration courts, where there is a backlog of  500,000 cases. The taxpayer picks up 75% of the cost of immigration asylum proceedings. Then there is the well over £100 million a year spent on interpreters to help people who cannot speak English, something that 50 years ago hardly existed. All of these legal-related issues are never included in any cost-benefit analysis of immigration, so it is a clear case of deception by omission, the most plausible of all lies, and something all newspapers wallow in. People cannot make the best decisions if they are not in possession of all the facts.

The expansion of the EU from its original five members to include over 25 members today, with more waiting in the wings, was bound to founder on the very different levels of economic development of its new members and differences over moral/cultural mores. Greece, for example, has been a recidivist debt welcher since ancient classical times and its populace thinks it is their God-given right to evade taxes come what may. This, combined with Greece's notorious corruption and cronyism, was bound to lead to ever-more Government borrowing to pay for what it could not afford to placate the people. The huge sums lent to Greece and other member countries exposes the economics of the madhouse and has seriously threatened the stability of Europe's banking system.

Nobody knows for certain that leaving the EU poses Britain significant economic risks. Fundamentally there is no reason to believe it should if both parties think and act sensibly. The risks are much higher for Europe in the political arena, mainly because politics has been allowed to trump sound economics, and the belated attempts by France to reform its labour laws in the face of fierce, lawless union opposition is stark testimony to this disturbing fact. Politics is like a harlot. The harlot can be beguiling but there is always a bill at the end to pay, and it could be far worse than one thinks.

So should Britain leave the EU and will it happen? For the present it seems the wiser course for Britain is to concentrate more on distant shores, as once did Drake, and leave open the option of a return when EU obduracy over badly-needed reforms has been removed. The chances are the Brexiters will win.