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12 signs you’re suffering from freight & logistics stress

How do you know if your Freight Forwarder is giving you the best possible service? There are a number of symptoms of freight & logistics stress. To get to the bottom of them you need only ask a few simple questions:

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When cutting supply chain cost costs you more

Finding a happy medium between price and service is the Holy Grail when it comes to most things. Cutting supply chain cost and optimising your logistics service is no exception.
Ideally, logistics partners should do more than simply move the freight.  They should be extension of your organisation, guiding your supply chain operations in line with your strategy.  In short, they should ‘have your back’.

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GST on low value goods imported into Australia

From 1 July 2018, GST will be payable on low value goods (AUD1,000 and under) supplied by overseas retailers to Australian consumers.  Under these changes, the Government will use the vendor collection model for collecting goods and services tax, where vendors (including online stores) will collect the GST on low value imported goods at the time of

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The ‘not so’ surprising link between supply chain optimisation and maturity.

Many of the discussions I have in the course of my work are around the different perspectives businesses have on how best to approach supply chain optimisation.  It all comes back to where their business sits in terms of logistics maturity.

Gone are the days where the cost alone matters. In order to survive, businesses need to constantly change with the dynamics of their industries and innovate to maintain competitive advantage.  This is the same with supply chain optimisation; technologies evolve, disruptions arise and new value add services emerge to address them.

The best companies continuously monitor, develop and reinvent their supply chains, even if they are leaders. As a result, they can manage risks; respond to changes in the economic, technological, and competitive environment; and explore new opportunities more effectively than their competitors.

Some recommendations to assist with supply chain optimisation in your organization include:

·         Define and distinguish between your corporate and supply-chain strategies. Ensure your supply chain supports delivery of the key parts of your strategy.

·         Collaborate with experts and create a modern, end-to-end supply-chain organisation.

·         Maintain complete visibility and utilise sophisticated statistical analysis. This allows you to manage supply chains end-to-end. Make sure your supply-chain combines operational excellence with strong analytical capabilities and data-driven, cross-functional decision-making.

·         Strive for supply chain excellence. Set performance standards for the organisation and measure accordingly. Give incentive to your supply-chain organisation to work in ways that deliver the most value for your business while protecting against its biggest risks.

There is a strong correlation between supply chain maturity and optimisation. Successful companies know their supply chain is much more than the cost and process of getting products into customers’ hands. These companies appreciate that a properly designed supply chain enables the implementation and realisation of corporate strategy. The day-to-day interactions both within and beyond the organisation make it happen.  The inclusion of this broader perspective on supply chain in business planning reaps rewards.

“The path to logistics excellence is partly defined by an organisation’s current level of logistics maturity.”

says James Lisica, research director at Gartner. Gartner has created a 5-step model to logistics maturity. I have summarised the 5 steps below:

Step 1: React — Silo-ed Autonomous Operation

Characterised by autonomous departments, such as sales and manufacturing, driving logistics priorities via manual processes and disparate, disconnected systems. This aims at bringing departments together.

Step 2: Anticipate — Functional Scale and Efficiency

There is a focus on creating standardised processes and methods to benefit from economies of scale and increased efficiency. Performance focuses internally on fulfillment percentage, productivity, costs and return on assets.

Step 3: Integrate — Integrated With the Supply Chain

The focus now is on integrating the logistics function into the overall supply chain.

Step 4: Collaborate — Collaborating With the Value Chain Network

By this stage, there is collaboration and visibility with suppliers and customers, as well as strategic partnerships with logistics providers that go beyond simple transactional services.

Step 5: Orchestrate — Network Orchestrator of Profitable Customer Value

Logistics and the rest of the supply chain facilitate processes across an ecosystem of partners to capitalise on unique business opportunities. As a result, information flows across the supply chain network in real time. This enables broader visibility and timely, fact-based decisions, which increases market share and growth opportunities.

At what stage of logistics maturity are you? Do you feel your supply chain is fully optimised? It’s not easy to answer.

Your supply chain is one of the most critical parts of your business – you should always be looking for ways to improve it.  Choosing a logistics partner you can trust to navigate in this uncertain environment is essential if you want to get ahead and stay there. Magellan’s experienced professionals can help you consider and implement optimisation techniques that suit your business and put you on the path to supply chain maturity. For a confidential discussion about your supply chain get in touch with me today on +612 9153 0864 or via email.

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The State of Global Fashion 2017 – Uncertain, Changing and Challenging

Looking back at 2016 — one of the toughest years on record for global fashion

As fashion executives around the world reported in the first BoF-McKinsey Global Fashion Survey, 2016 can be summarised in three words: uncertain, changing, and challenging.

Indeed, this has been one of the toughest years ever for the global fashion industry. Terrorist attacks in France, the Brexit vote in the UK, and the volatility of the Chinese stock market have created shocks to the global economy, which has not been this volatile since the depths of the financial crisis of 2009. Meanwhile, consumers have become more demanding, more discerning, and less predictable in their purchasing behaviour, which is being radically reshaped by new technologies. But the shockwaves have not only been external. Fashion companies have also been looking inward, implementing changes to their core operations—from shortening the length of the fashion cycle to integrating sustainable innovation into their core product design and manufacturing processes—re-evaluating the entire fashion system itself.

Perhaps unsurprisingly then, 67 percent of the executives surveyed reported that conditions for the global fashion industry have worsened over the past 12 months, a fact that is clearly borne out in the industry’s financial performance this year. Sales growth is on track to slow to just 2–3 percent by the end of 2016, with stagnating profit margins. Speculation and uncertainty over the impact of the outcome of the election in the United States could further impact sales if consumer sentiment dampens. This is in stark contrast to the fashion industry’s performance over the previous decade, which saw the industry grow at 5.5 percent annually according to the McKinsey Global Fashion Index, outpacing overall GDP growth.3

It is important to note that industry performance in 2016 has not been even across all market segments and categories. This year was particularly difficult for the luxury and mid-market players, who were hit by the slowdown in China and the US and are expected to grow at rates below the industry average at 0.5-1% and 2-2.5%, respectively. One category that is experiencing significant deceleration is watches and jewellery. While it was the fastest growing category between 2005 and 2015 – having enjoyed a compounded growth rate of 11% according to the MGFI –watches and jewellery is expected to grow just 1.5-2% this year. The luxury end of the category suffered an especially hard blow.

But in spite of these and other challenging circumstances, fashion remains one of the key value-creating industries for the world economy. If it were ranked alongside individual countries’ GDP the global fashion industry would represent the seventh-largest economy in the world.4

Moreover, 2016 also saw many exciting changes: the advance of digital, the launch of “see-now, buy-now”, and a thorough creative shake-up at fashion houses.

Outlook for 2017: Glimmers of recovery

In 2017 we expect the global fashion industry to see the glimmers of a rebound.

This recovery has several foundations. First macroeconomic indicators, including GDP growth forecasts, are projected at 3.4 percent compared with 3.1 for 2016, however these have not been adjusted to reflect the ongoing impact of important political shifts in the United States and the United Kingdom.

Second, the investment community and the fashion brands themselves forecast improvement across the industry next year. Some 40 percent of executives we interviewed for this report expect conditions for the fashion industry to improve in 2017, compared with the 19 percent who reported

improving conditions in 2016. This is particularly true for the major players within each of the market segments and product categories. Many of them have already undertaken significant cost-cutting and restructuring exercises, and are now primed to capture the benefits. All things considered, we fashion industry growth could increase from 2–2.5 percent in 2016 to 2.5–3.5 percent in 2017, although the days when the industry outpaced GDP growth by more than 1–2 percentage points, as it has done over the past decade, seem to be over.

Performance will vary according to the individual dynamics of specific market segments and categories. Value and affordable luxury are likely to be the big winners, both outpacing the industry average at a projected 3.0-4.0 percent and 3.5–4.5 percent growth, respectively; however, all of the market segments—except for the discount market—should see a slight sales growth improvement of 0.5–1.5 percentage points.

Product categories are expected to grow in line with the overall industry average, but the biggest winners will be those companies with coherent channel strategies and clear value propositions. Athletic wear is positioned to be the absolute category winner, maintaining 6.5–7.5 percent sales growth, albeit no longer growing at a double-digit rate overall. The affordable luxury segment seems likely to continue benefitting from consumers “trading down” from luxury, while signs point to the continued growth of the value segment in line with the international expansion of large global players.

In short, the industry now has the opportunity to stabilise and reset. Next year’s success stories are most likely to come from those that are already planning for the year ahead. They should do this in the context of the following trends that we believe will shape the fashion industry in 2017.

DOWNLOAD THE FULL REPORT HERE

10 TRENDS THAT WILL DEFINE THE FASHION AGENDA IN 2017

INTENSIFYING VOLATILITY

Volatility is the new normal. Geopolitical instability, terrorism, Brexit, and stalled trade deals will all increase a pervasive sense of uncertainty in the global economy.

CHINA’S COMEBACK?

China’s fundamentals, including growth of the middle and upper classes, remain strong and the government’s new fiscal policies are expected to improve conditions in 2017, but uncertainty remains.

URBAN ENGINES

City-based strategies trump country-based strategies: a new class of rapidly growing wealthy cities in newly influential markets are becoming central to the evolution of fashion.

SHREWDER SHOPPERS

Working harder to keep up with smarter shoppers: “always-on” consumers are becoming ever more sophisticated, more technology-driven, and harder to predict.

GENERATION CORRELATION

Opportunities to serve the young and the old better: fashion companies should consider how to fine-tune and diversify the way they approach both retired and millennials consumers.

THE WELLNESS DIVIDEND

Feeling good is the new looking good: more fashion players can start profiting from the wellness movement rather than competing with it.

CHANGING THE RHYTHM

Disruptions to the fashion cycle: expectations set by the faster pace of fashion and consumer desire for instant gratification must be addressed to deliver fashion immediacy.

ORGANIC GROWTH

Investing more to nurture local clientele: 2017 has the potential to be the year of organic growth based on deeper relationships with existing clients rather than geographic, channel,and store network expansion.

UPSTREAM TECHNOLOGY

Digital innovation goes behind the scenes: digitisation is a key to supply-chain efficiency, lower procurement costs, and enhanced sourcing opportunities.

OWNERSHIP SHAKE-UP

Emotionless reappraisal of brand portfolios: fashion conglomerates can be expected to further intensify their focus on big brands, creating space for other brands and industry outsiders such as private equity and family owners to acquire targets.

The Business of Fashion and McKinsey & Company © 2016

DOWNLOAD THE FULL REPORT HERE

Source: McKinsey

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AMSA to commence SOLAS compliance activity in earnest

Wondering what has been happening since the implementation of the SOLAS provisions on 1 July this year?

We understand that the Australian Maritime Safety Authority (AMSA) has not yet conducted major SOLAS compliance activity, consistent with MSC.1./Circ 1548.

Well, all that’s about to change.

AMSA has recently advised that compliance activity would immediately escalate with a Concentrated Inspection Campaign (CIC), looking at Verified Gross Mass (VGM) declarations and identifying indicators of falsehoods and other inaccuracies. Consistently rounded numbers is a bit of a giveaway!

We also understand that AMSA is considering its options regarding check weighing, sample weighing and upstream auditing.

The key take-out would be that any grace period AMSA has granted has come to an inevitable end.

For more information visit the AMSA website or download our guide here.

Magellan Logistics has your back on this and any other customs or freight forwarding topic.  If you would like to discuss SOLAS compliance with me further please get in touch on 1300 651 888 or via steve@maglog.com.au.

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Magellan Expands Again – this time it’s Brisbane

Magellan has recognised the opportunity that exists in the Brisbane market to both broaden services to our existing clients who already ship direct to Brisbane, as well as to offer the same high service standards to Brisbane based businesses. With the recent opening of direct international flights into Gold Coast Airport, Magellan envisions replicating the great success and growth experienced around Australia in this important and growing marketplace.

With the opening of our new office at Banyo, Magellan Logistics is pleased to announce its expansion into Queensland which will be led by Business Development Manager, Tania Nicolson.

Starting out as a travel consultant fresh out of high school Tania quickly learned there was a similar need for her keen attention to detail and ability to tailor travel itineraries in the freight sector and after jumping ship (so to speak) she has not looked back.

Sixteen years on, Tania has accrued considerable experience in the freight and logistics industry both in Brisbane and internationally in roles spanning operations, customs, transport and more recently business development.  With exposure across most industries, Tania has enjoyed immense success working with clients in the textiles, footwear and clothing sector, across both imports and exports.

Her wealth of experience has given Tania the appreciation that freight forwarders do more than simply move freight – they are business partners who provide a service which directly impacts a client’s business success in terms of response and delivery time. For Tania, understanding each client’s unique requirements has been the single most important factor in providing excellence in service and building enduring relationships.

Describing her role to industry outsiders as like being a ‘travel consultant for your freight’, Tania was instantly struck by ‘Magellan’s lateral approach to logistical solutions and customer centric focus’ saying ‘I can see from the way Magellan prioritises their customers’ needs that we will make a great fit, that and the opportunity to work with a fabulous team of people!’.

We are delighted to welcome Tania to the Magellan team and the positive and responsive approach she brings.

Our Brisbane office contact details:

Unit 16, 14 Ashtan Place, Banyo QLD 4014

We extend a warm invitation for Brisbane specific enquiries. Please contact Tania directly at tania@maglog.com.au or on the phone via on 1300 651 888 or 0431 575 220

Alternatively, you can reach our customer service team in our Melbourne head office on info@maglog.com.au or 1300 651 888.

We look forward to assisting our existing and future Queensland clients with their freight forwarding, customs clearance and 3PL needs into and out of Brisbane and Gold Coast.

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Triangles, Handovers and 3rd party shipments: What are they and why you need one?

It’s not hard to think of a product made up of components sourced from multiple locations, assembled offshore and sold in a local Australian shop.  An elegant suit made in Hong Kong from Italian wool cloth, and sold in Collins Street?  A sofa manufactured in Indonesia to a Sydney customer’s precise specification covered in fabric milled in China’s Shandong province, perhaps? You’ve probably got a house full of items just like these.

But did you ever consider the logistical procedures that make it happen?

Time from order to delivery into store, handling costs, import duties and the protection of the manufacturer’s and consignee’s intellectual property are some of the main factors that need to be considered when arranging for the importation and delivery of goods with complex supply chains.  There are countless others, but that’s for another day.

Triangle shipments - traditional method

Traditional method:

Using the Italian wool suit as an example, the consignee imports fabric from Italy and arranges for it to be delivered to their warehouse in Melbourne.  From there it is shipped to the factory (3rd party) in Hong Kong to be manufactured into a suit.  While this is great way to protect the consignee’s intellectual property and ensure the details of the supplier of fine Italian wool fabric remains a trade secret, it also effectively means the goods are double handled, there is additional duty to be paid and considerably more time and cost is added in the supply chain.

The alternative is to use Triangle Shipments (sometimes known as handovers or third party shipments).

 

Triangle2.png

Triangle Shipments:

Using the same example, the consignee would order the fabric from the supplier in Italy and arrange for it to be shipped directly to the 3rd party – factory in Hong Kong.  On the face of it is clear that this will reduce handling, time and costs, but the question of protecting the consignee’s trade secrets still remains.

The answer to this lies in the concept of the Switch Bill.  In traditional forwarding, a Bill of Lading is produced by the carrier and notes the goods, the consignee and the destination (among other things) and is effectively the contract for the transportation of the goods.

In a Triangle Shipment, 2 Bills of Lading are produced – the first one details the original consignee and true supplier of the goods.  The second BoL is prepared to travel with the goods from origin (supplier) to the 3rd party that shows the original consignee as the supplier of the goods and the 3rd party as the consignee.  The effect of this is to render the supplier of the goods (Italian wool fabric) anonymous, thus protecting the IP of the original consignee.

Sound complicated?

Triangle Shipments are a specialist freight forwarding service.  While the concept is pretty well known and most forwarders do it, it is a boutique offering.  Critical to a forwarder’s success with Triangles are strong relationships with both clients and overseas agents alike.

To ensure the triangles go to plan, a forwarder will have a thorough understanding of their client’s requirements developed as up to date and clear SOPs, combined with regular communication with shipping agents.  Instructions may include the stripping of documentation, repackaging of goods and in some instances, the removal of labels and tags.  Getting this right, every time, is the only way to ensure that clients’ relationships are protected.

Magellan has a solid track record with Triangle Shipments – some of our customer service team members estimate that up to 80% of their work involves Triangles.

If you think a Triangle Shipment is the perfect solution to your freight forwarding needs, then don’t hesitate to get in touch with us on 1300 651 888, or visit www.magellanlogistics.com.au.

Resources:
http://shippingandfreightresource.com/about/shipping-and-freight-resource/
http://www.austrade.gov.au/australian/how-austrade-can-help

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G20 Shanghai – why is China’s presidency so significant?

In 2016 the Group of Twenty (G20)*, finance leaders and government heads from the twenty major economic countries of the world, will meet in the ancient Chinese city of Hangzhou in the Eastern region of the People’s Republic of China (PRC). With world leaders like U.S. President Barack Obama and other Western dignitaries in attendance the eyes of the world will fall on this vast region of high tech and textile manufacturing near the Eastern coast. While the G20 is principally an economic forum the relationship between economics and climate change will be on show.

Textile Industry Closure

The Chinese government is considering temporarily closing the nearby Province of Zhejiang’s textile manufacturing to reduce air contamination during the G20 summit. This action could possibly idle over half of the textile dyeing industry in China.

While it is too early to say for sure whether the Government will order the shutdown, it has been rumoured that the closure could be three months in length, just before the beginning of the summit. Local government sources quickly stated that it would be impossible for a closure of that length to be achievable given the massive amount of goods that the region produces. Yet experts note that the situation would be quite an opportunity to show how much air pollution could be reduced within the province. This may prove a game changer for the entire region as Beijing had also made agreements during international climate talks in December 2015’s Paris Climate discussions.

China is still somewhat of a closed society for gauging public and international reaction, particularly when large scale events like closing down entire manufacturing regions are concerned. But, one can imagine that complete closure, even for a short period of time, will cause market and industrial disturbances on a significant scale. And it isn’t difficult to imaging the flow-on impact of these on the Australian TCF and retail industries.

China’s G20 Presidency

China’s G-20 presidency in 2016 is themed to help lay the groundwork for a world economy that is more “innovative, invigorated, interconnected, and inclusive.” and that office, China is set to become even more of a major player on the world’s financial and environmental stage.

China’s recent willingness to pursue trade agreements and the imminent inclusion of the reminbi in the group of currencies that determine the value of the IMF’s reserve asset, Special Drawing Rights, China’s capacity to help the world (especially emerging-market economies) cope with market volatility will be greatly enhanced.

This bodes well for China’s capacity to help counter the global slowdown in growth, trade, and investment. And not a moment too soon: The ongoing slowdown is among the greatest risks the world currently faces, because it could compound instability in already-fragile countries, while compelling more robust economies to turn inward, rather than address growing crises.

With a binding greenhouse gas agreement in the works at the United Nations, it behoves China to work within the framework of its own country to solve the issues that industrialisation has brought to the country. If closure of Zhejiang’s textile industry can demonstrate measurable environmental results and throw a spotlight on the problem, then it is possible, with help from other G-20 partners and technological advancement, that the PRC as a whole can work towards improving its air quality, as well as find new ways to grow their industrial might.

With the right mix of realism and power sharing, China’s G-20 presidency has the potential to catalyse important progress to strengthen the foundation of a new global economic structure for the twenty-first century … and to further underscore the importance of environmental commitments in the attainment of this.

*Collectively, the G-20 economies account for approximately 80% of the gross world product (GWP), 80 percent of world trade (including EU intra-trade), and two-thirds of the world population. They furthermore accounted for 84% of the world’s economic growth by nominal GDP from the years 2010 to 2016, according to the International Monetary Fund (IMF).

Sources and more information:
http://schema-root.org/region/international/government/g20/
http://news.xinhuanet.com/english/2015-11/16/c_134822759.htm
http://www.thechinamoneyreport.com/2016/01/02/china-in-2016-fewer-jobs-lower-consumer-confidence/
http://www.weforum.org/agenda/2015/12/how-will-china-use-its-g20-presidency/
http://www.chinatexnet.com/textile-news/2016-02-03/554832.html

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VERIFIED GROSS MASS INDUSTRY FAQS (SOLAS / VGM)

A SOLAS / VGM FAQs document has been compiled by TT Club in collaboration with World Shipping Council, Global Shippers’ Forum and ICHCA International in response to the many questions that have been raised by the industry in relation to the revised SOLAS / VGM regulation.   The amendments to this regulation have substantial impact on practices of parties in the international supply chain involved in the movement of containers by sea.

While the SOLAS / VGM convention relates to the safety of ships at sea, it is also concerned with shore based activities relating to the presentation of cargo that are fundamental to safe outcomes at sea.

These FAQs relate to new rules, effective from 1 July 2016, and provide considerable detail concerning the requirement for shippers to verify the gross mass of a container carrying cargo. The rules prescribe two methods by which the shipper may obtain the verified gross mass of a packed container:

Download a copy of the SOLAS / VGM FAQs document from our site.

Or get in touch with the Magellan Customer Service team on 1300 651 888 or via www.magellanlogistics.com.au of you have specific question in relation to this.

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