group2 kuehne&nagel

7/30/2019 Group2 Kuehne&Nagel

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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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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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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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