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Kuehna & Nagel in the Asia-Pacific
Group-2
Balram Kumar Baigyanik
Danish Raza
Dhiraj Jha
Dinman Pratap NarayanGirijanand Choudhary
Ishu Kumar Nirala
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Q1. What do you understand by freight
forwarding? Explain the global environmental
changes that affected the freight forwarding
industry in 1990s.
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Freight Forwarding
Evolved in Venice, Europe In the 13th century.
Integral link between the movement of goods from
suppliers to buyers.
Intermediary between a consignor or consignee of
goods and the transport carriers, wharfingers,custom authorities and other parties in customs
brokerage, ship brokerage, and export car-loading.
Acts as a receiving agent for the goods.
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Freight Forwarding Cont.
FF paid the duty up front, later importer reimbursed
the FF.
Works like a financial institution.
Major activities were
Custom Clearance.
Custom Brokerage.
Frachter:- combination carrier and forwarding agentwho transported a merchant and accompanying
goods to a destination of sale.
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Global environmental changes that affected the
freight forwarding industry in 1990s.
The global integration of world market
Advent Of WTO
Single European Market
Trade-Barrier Free Market In The EU
The North American Free Trade Agreement
The Association Of Southeast Asian Nations Free
Trade Agreement
Rapid Advancement Of Information Technology.
Changed demand supply pattern.
Emergence of new markets.
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Q.2 How did the expectations from freight
forwarding industry changed with the above
environmental changes? What did freight
forward do to meet these expectations?
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Change in expectations from FF Industry
Focus shifted to supply chain management to shorten product
cycle
Detailed product flow information
Superior information technology and system
World wide reaching capability
High level service capabilities and credible work force
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Q.3 Explain the trends in freight forwarding
industry in the Asia-Pacific region in 1990s.
What were the difficulties faced by freight
forwarders in trying to provide integrated SCM
logistics capabilities in the region?
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Trends in Freight Forwarding(FF) industry in Asia-
Pacific region in 1990s
Vast geographic expanse of the region coupled with
diversity (countries, cultures & language, economic,
political conditions) created both opportunities andchallenges to FF industry
Hong Kong: one of the largest & most efficient trade
and transportation hub
Physical goods distribution market: Underdeveloped
physical goods distribution industries presented
growth opportunities for FF providers
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Categories of countries
Wealthy
Democracies
Trading Tigers Burgeoning
Industrialists
Future
Powerhouses
Representative
member
countries
Japan, Australia,
New Zealand
Singapore, Hong
Kong
Taiwan, Korea,
Malaysia,
Thailand,
Philippines
China, India,
Indonesia
Custom
processes
Mature Free Complex Informal
Duty levels Low Zero Medium High
Logistics
Infrastructure
Relatively
advanced &
mature
Mature Dynamic &
Immature
Emerging
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Q4. What was the nature of competition in theAsia-Pacific region?
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Nature of Competition in Asia-Pacific region
Freight Forwarding(FF) had both local as well asInternational players.
Hong Kong had 700 FF providers; 20 MNCs & restsmall operators.
FF providers could be one of the following:
I. Local FF providers: Little or no SCM capabilities,concentrated on lower end of physical distribution,competitive pricing.
II. Integrators: Specialists in express carriage ofdocuments, small parcels etc., own transportation
fleets.
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Nature of Competition in Asia-Pacific region
Cont..
III. Third-party outsourcing agents: owed existence to
outsourcing of SCM logistics functions by FMCG,
chemical, computer, pharmaceutical industries in the
late 1980s and early 1990s.IV. IT-service providers: opportunities to integrate
downstream by purchasing forwarding or
distribution business.
V. Consultants: Specialists in SCM combined with IT-
service provider to acquire FF companies.
VI. Other FF competitors: Multi service solution
provider based on one stop- shop concept.
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Q5. Over the years Kuehne and Nagel has
adapted its supply chain to maintain a strong
position in all regions and across all core
business activities. Explain.
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First to introduce modern Euro Logistics, one of the
most important products in market of transportation
First step towards building up the airfreight sector
(own Far East operation)
Recognition of opportunity in United Europe and
created world wide network by expanding into
Europe and the Americas
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First German forwarder to acquire an Electronic
Data Processing (EDP) system
Upgraded continuously electronic data
interchange (EDI) services and offered electronic
links between KN and customer sites
Became a leading forwarder in project
forwarding (increased shareholdings in thelarger forwarding companies in Europe and set
up industrial plants worldwide)
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Cont.
Core business activities across all spheres of SCM
ranging from ocean-freight to project forwarding
services were expanded
Project forwarding activities covering the delivery of
shipments to port by rail, road or inland waterway,
export packing, port handling, storage and FOB
deliveries, in addition to a host of other services.
KN also supplied some IT solutions to customers in
continental Europe
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Airfreight services included maintaining a worldwide
network, providing high-frequency services to key
destinations, combined sea-air services, and the
provision of aircraft and ship spare parts and charter
services.
across four key sectors logistic centre for competence
were developed (consumer electronics and high-tech
products; the automotive industry; chemical and
industrial goods and consumer durables, and a range
of logistics services)
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Q. 6 Kuehne and Nagels Asia-Pacific operation
was not comprehensive enough to give complete
geographical coverage within the region. Do
you agree with the statement? Explain.
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Yes, because of the following reasons,
Operation was limited to Sea and Airfreightdistribution only i.e. Port to Port capabilities.
Port-to-interior service was limited.
Operation were limited by nature of physical FFservice offered.
Providing superficial services.
Services beyond Ports was inadequate to meet
growing demand from Multinational companies forfull FF services.
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Problems and Opportunities
Highly diversified market (Social and Cultural
changes).
Differences in legal and trading issues.
Lack of basic infrastructure to take a market otherthan docks.
Competition has been increased on a global level and
hence in Asia-Pacific region also.
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Problems and Opportunities
Entering into strategic alliance with DHL
Growth of SCM Logistic services is expected to be
high, as invasion of multinational national
corporations. Limited services of Kuehne & Nagel were inadequate
to meet growing demand from MNCs for full Freight
Forwarding services.
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Problems and Opportunities
Shift in Market
0%
2%
4%
6%
8%
10%
12%
1%
10.70%
ASIA AND PACIFIC REGION
ASIA AND PACIFIC
REGION
1990 1997
0%
5%
10%
15%20%
25%
30%
35%
40%
39%
19.18%
NORTH, MIDDLE AND SOUTH
AMERICA
NORTH, MIDDLEAND SOUTH
AMERICA
1990 1997
Kuehne and Nagel Regional revenue in Asia Pacific region which was contributing
an insignificant portion now (1997) contributing 10 times more. It is forming 10% of
the revenue.
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Q8. What are the possible alternative strategiesthat can be adopted by Dolder? What strategy
would you recommend him to adopt?
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