Friday, May 30, 2008

S. Korea could become debtor nation by July: think tank

S. Korea could become debtor nation by July: think tank

SEOUL, May 30 (Yonhap) -- South Korea could become a net debtor nation by July if it does not turn a trade surplus and attract more foreign investment, a state-run think tank said Friday.

The Korea Institute for International Economic Policy (KIEP) based its predictions on the country's ballooning short-term debt, which hit US$158.7 billion as of late last year from $65.9 billion at the end of 2005. It said debt levels have been rising steadily coming into this year as well, and could jeopardize South Korea's current net creditor status in one or two months.

The KIEP said the rise in short-term debt is mainly due to insurance-motivated forward exchange demands, as exporters try to prevent losses caused by sudden foreign exchange fluctuations. Such hedging practices can minimize losses if the value of the Korean won falls against the U.S. dollar, but contribute to a rise in short-term debt.

It is imperative to attract more foreign direct investment (FDI) and fuel export growth to prevent the country from becoming a debtor in the next few months, the research institute said.

"Since there is no effective way to control the rise in short-term debt, the best course is to push for wide-ranging corporate deregulation so more FDI can arrive and help companies ship more products abroad," the report said.

It pointed out that while overall global economic conditions are not favorable at present, there are some bright spots, including the rise in FDI and solid export growth.

Inbound FDI totaled $2.7 billion won in the first quarter, up from just under $1.6 billion in the same three-month period in 2007.

Exports have also done well, reaching a record $38.02 billion in April for an annual gain of 27 percent. Despite export growth, the country's trade balance was in the red from December to April, and may suffer an annual deficit for the first time in a decade this year.

The deficit is due to this year's skyrocketing crude oil prices. Dubai crude, South Korea's benchmark that makes up the bulk of the country's oil imports, reached an average price of $99.21 per barrel this year, up from $68.43 in 2007.

S. Korea to Expand Country-of-Origin Labelling for Beef in June

S. Korea to Expand Country-of-Origin Labelling for Beef in June
(Yonhap News Agency)

South Korea will expand and strengthen the country-of-origin labelling rules for beef sold by restaurants and catering services in June to enhance the right of consumers to choose the food they eat, the government said Wednesday. The Ministry for Food, Agriculture, Forestry and Fisheries said the tightened rules should go into effect around June 18 after the three-week period for preannouncement of legislation.

The new rules call for all eateries, fast food chains, catering firms and other food service providers, regardless of size, to clarify the type of beef they are using. Currently, only restaurants that have a floor space of 300 square meters are required to notify customers of the beef's country of origin.

Under the new standards, a restaurant must specify the country of origin of each cut being served, and in the case of Korean beef, it also has to specify if the meat is from premium "hanwoo" cows, regular meat cattle or those used to make milk.

"If a stew uses beef from two or more countries, this must be explained in detail to customers under the new disclosure standards," a ministry official said. This action reflects demands by local cattle farmers that have asked for transparency at the retail level so their products can be distinguished from lower-quality meat.

He said the move is mainly aimed at preventing businesses from making unfair profits by disguising the origin of beef being used. Imported beef is much cheaper than meat from Korean hanwoo cows so if a restaurant says it is using local cuts, it can usually charge more.

The official, however, said that the steps could alleviate public concerns about the safety of U.S. beef. Despite efforts by the government to explain that U.S. beef is safe to eat, public concerns have not been fully dispelled with protestors taking to the streets almost every night to demand a renegotiation of the sanitary and phytosanitary (SPS) pact.

Under the SPS deal signed April 18, South Korea greed to open its market to most beef cuts regardless of the age of the cattle as long as specified risk materials (SRMs) are removed. SRMs are banned because they pose the greatest risk of transmitting mad cow disease to humans.

Seoul is expected to implement the new import rules within this week, with U.S. beef expected to hit the market next week at the earliest.

The ministry also said that rice will come under the same guidelines starting on June 22, with strict labelling rules to be enforced for pork, chicken and kimchi as of Dec. 22.

Over 1,000 monitors are to be sent to ferret out violations, and citizens will be offered rewards of up to 2 million won (US$1,927) for reporting illegal labelling practices.

A business caught mislabeling the country of origin could be fined 30 million won with the owner facing jail time of less than three years. For those that do not label their meat, the fines could reach 5 million won and the authorities could be permitted to order the temporary closing of restaurants.

High Oil Prices Curb April Air Traffic Growth

High Oil Prices Curb April Air Traffic Growth
(Reuters – IATA)

High oil prices and economic worries damped demand for international air traffic last month, and cross-border cargo shipment growth was sluggish, the airline industry body IATA said on Thursday.

In its monthly traffic report, the International Air Transport Association said air passenger demand rose just 3% in April on a year-on-year basis, while freight demand growth was 3.7% up on the same month in 2007.

"The impact of skyrocketing oil prices and weaker economies has made its way to traffic growth," IATA President Giovanni Bisignani said in a statement. "Combine slowing growth with skyrocketing oil prices, and the industry outlook is grim at best," Bisignani said.

Cross-border air shipments, which IATA measures in freight tonne kilometres, are considered a prime indicator of the health of world trade.

In the first four months of 2008, demand for such cargo shipments was up 3.4% compared with the same period of 2007, a much slower growth rate than in past years. "There has been a step change downwards," Bisignani said.

IATA represents 240 airlines operating 94% of all international passenger and cargo flights. Domestic flights are excluded from its data.

The IATA Report is at

Indonesia Says It Is Pulling Out of OPEC

Indonesia Says It Is Pulling Out of OPEC
(The Canadian Press)

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Wednesday it no longer makes sense for his country to be a member of the 13-nation Organization of Petroleum Exporting Countries.

He says Indonesia is `pulling out of OPEC' after its membership expires in 2008 because it consumes more oil than it exports.

Indonesia is Southeast Asia's only member of the grouping.

But it has had to import oil because of decades of declining investment in exploration and extraction due to corruption and a weak legal system, which make oil companies wary of doing business in the country.

How Much Are the Intangible Assets of Korean Firms?

How Much Are the Intangible Assets of Korean Firms?
KIM Jong-Nyun

Rosewood Case Study: Direct Negotiation of Less Complex Shipping Services

Rosewood Case Study: Direct Negotiation of Less Complex Shipping Services

Negotiating less complex shipping services directly would be problematic unless Rosewood has at least one competent trained and experienced trade professional to do the essential cost/benefits anaylsis to determine the overall comparative savings to full serviced freight forwarder services of its shipments. This would require selection of not only suitable transportation agencies but also in negotiating pricing, contracts, and insuring their services to avoid unforseen losses, damages and/or delays. While savings might be found in deducting the cost of commissioning regular freight forwarding services these may not account for unforseen fluctuations in costs and savings incurred by competitors working with freight forwarders.

For example, it may be quite expensive to source export packaging materials in compliance with federal or international state regulations outside of the freight forwarding community of suppliers which might provide insider rates. Banking and insurance fees not including known freight forwarders may be levied at a premium, the numbers of overseas trips to secure contracts locally or internationally may be cost prohibitive. The rate and frequency of necessary international telephone, fax, internet, email and other courier service requirements may exceed cost benefit at ports of destination, additional training in the handling of required documentation, processes, shipment handling and multi-modal requirements in receiving destination may eat into the cost benefit of working independently. Current staff may be over-extended in staffing certain shipping services and might require additional employees around the clock which will drive up costs and reduce efficiency.

Above all, more care will be required in the continued research of the shipping market for the less complex process in question, attorneys fees for contracts in and out of Canadian trade ports as well as target markets will be expensive, as well any consolidations or discounted agency rates may have freight forwarding fullfillment priorities on limited transport services such as trucks, planes or trains where Rosewood might find its products left sitting on the dock as the competitors roar away with their profits and former freight forwarders contracts. For example, without the proper connections Rosewood might find itself standing around freight cargo terminals without the required LD2 or LD4 or missing the odd twenty or forty foot container unless they have greased the appropriate wheels of capitalism with a percentage of their freight forwarding business.

Rosewood Case Study: Winning Freight Forwarder Arguments

Rosewood Case Study: Winning Freight Forwarder Arguments

As a full-service freight forwarder Global Logistics International has provided clients with services which meet or exceed their expectations often taking over where other forwarders have failed to provide delay-free services. We know fully that we represent Rosewood's reputation internationally wherever we deliver their goods and provide a full-list of winning arguments to ensure superior quality service.

First: We are the closest.

Our nearest office is within a short distance of Rosewood's office we are just around the corner. We know the benefit of being nearby is that last minute documents, forms or merchandise are often rushed to our offices. It is nice to know this will not cost Rosewood much in the way travel time, or money spent on delivery services. We'' even have time to share a cup of tea or coffee. Service with a satisfying ritual: sealed with a slurp.

Second: We are well positioned all over Rosewood's import and export markets.

Our company also has several branch offices throughout Canada, the USA, Mexico and South America. In this way we are able to provide the lowest possible costs in terms of freight rates and easily tracked and traced delivery schedules which allows us to expedite Rosewood shipments through speed of technological transfer of information. This also minimizes any chance of lost merchandise in the shipping process.

Third: Our Full Services Leave Nothing to Chance.

We will keep Rosewood's costs down through the flexibility of our full-services in ocean freight, air freight, consolidation, banking and importing growth pontential even in Rosewood's Brazil sourcing plans. We will provide fully flexible permanent terms and maintain regular office hours and overnight staff for air freight cargo flights.

Fourth: We Never Leave a Customer Unsatisfied.

Finally we can provide a full list of satisfied customers should Rosewood seek confirmation that we are a quality service operator in an environment such as Mexico or South America where service can often be slowed through systemic delays. We handle emergency as well as non-routine shipments and our customers continue to benefit from premium service at a bargain basement cost for quality.

Fifth: We Are Professionals.

As members of CIFFA we meet national and international standards of service and push for continuous improvements to those standards. Our list of bank clients and contacts is increasing as quickly as our global reach. We have established membership in virtually every chamber of commerce through which we have expeditied our shipments, we are members in good standing of world trade associations, world trade centres, and provincial/state trade offices from the Arctic Circle to Tierra Del Fuego. Mention the name, "Global Logistics International" and you will be hard pressed to find any supplier or exporter in North or South America who has not dealt happily with us.

Saturday, May 24, 2008

Rosewood Case Study: Strategic Transportation Planning

Rosewood Case Study: Strategic Transportation Planning

Rosewood has marine, rail, road and air transport options for import and export activities.

Import Markets

Marine transport advantages/inconveniences: The lowest cost for volume ratio transport available with the slowest service delivery speed which impacts speedy customer service ability and implies that Rosewood must maintain an ample inventory of stocked veneers at point of manufacture which increases handling and overall costs through warehousing in Canada. Also a report from Grupo Brasil in 2004 describes inconveniences at Brazilian ports as follows:

a. Poor infrastructure in and around most Brazilian ports

b. Current bottlenecks in most ports,
both in the delivery of goods (by trucks) as in the
access ways for ships entering and exiting ports

c. Lack of containers to ship goods

d. Lack of easy solution and also lack of
political resolve to resolve above mentioned

Marine transport costs/benefits: The costs are minimized based on bulk shipments however Rosewood's volume of veneer demand may not satisfy an exclusive selection of this transport mode. The benefits are that Canada's marine transport systems at Montreal and Halifax for example can allow for speedy processing of shipments to inland intermodal systems in Canada.

Rail transport advantages/inconveniences: Brazil's rail network has been expanding due to intermodal linkages through the Port of Santos which is beginning to unseat the leading export Port of Paranagua both primarily handling soya based products destined for fuel consumption and reducing overall rail freight charges for products sourced in the States of Mato Grosso and Mato Grosso do Sul. These might prove ideal systems for "piggy backing" bulk deliveries if Rosewood chooses to stock up inventories and warehoused materials handling at destination in Canada much like valuable Korea Tobacco and Ginseng Company exports which are squeezed into available space around Korean car export carrier transports.

Rail transport costs/benefits: Much more efficient, perhaps speedier and more reliable than Brazilian road networks however the lowered cost and better service available for rail transport as compared to road freight in Brazil might encourage Rosewood to source a supplier already located along a serviced rail hub or spur to avoid truck traffic entirely. According to extremely old Brazilian Government data from 2001 the rail network represents Brazil's best efforts in deregulation and privatisation of transport systems and may imply future road improvement systems along similar strategic transportation planning reforms.

Road transport advantages/inconveniences: The road freight delivery system in Brazil is described as difficult to measure without solid statistical data available but continued growth is expected to hover around 6.6% up to 2012 due to a lack of rapid improvement of the road network as compared to rail and sea freight options. However highway and road link systems in Santos and Paranagua are described as heavily congested and similar in scale to the problems experienced in Sao Paulo's urban sprawl which will slow and or delay any wood veneers deliveries through this method. Thus few advantages may be observed in Brazil's road transport options.

Road transport costs/benefits: The costs for ineffective and inefficient road service in Brazil are tangible and knock nearly 2% off predicted service growth which is required to improve economies of scale for trucking companies to expand their services and deliver products more quickly for reduced costs. Fuel costs in Brazil mostly serviced by soya-based biofuels however are perhaps lower than North American road freight fuel charges.

Air transport costs/benefits: While the cost of importing raw materials from Brazil might prove prohibitively expensive, depending upon the finishing specifications of the goods as wood veneers their cost to value ratio may prove high enough to allow air freight to be an option. The faster this product may be delivered to the factory the more effectively customer service may be performed in terms of speed of production cycles and exworks inventory.

Air transport advantages/inconveniences: The first advantage would be speed of delivery which would allow Rosewood to maintain a JIT production and order schedule in Canada or any other local production facility which was competitive particularly in custom ordering services or unique design options. The current inconvenience would prove to be Brazil's air services capability which are described as, "experiencing a crisis of unrestrained and unplanned growth" while at the same time predicted to, " benefit from even faster demand growth for high-value/low-bulk cargoes." (Business Monitor, Brazil Freight Transport Report Q1 2008)

Export Markets

Marine transport advantages/inconveniences: By contrast Canada's ports abilities options appear superior particularly in servicing customers in the inland waterway networks surrounding the Great Lakes with continuous upgrading of services, competitiveness, infrastructure, sustainable development and legislative reforms as described by the Association of Canadian Port Authorities. This will be extremely useful for marine exports to the USA and Mexico. However the Port of Montréal is subject to delays due to union protestors on occasion as evidenced in 2003 concerning Bill 31. In addition a Transport Canada Survey in 2005 discovered that frequent delays at this port are due to:

a. Minimal use of EDI communciations systems

b. Inaccuracy of documents and paperwork presented by intermodal link drivers

c. Containers not being released either by Revenue Canada and/or the shipping lines

d. Container releases not being communicated to the terminal

e. Delays in containers not being off-loaded from the vessel

Marine cargo shipping might prove the most suitable export mode to both the US and Mexcian markets but further challenges in receiving those orders could be mixed. US marine transport challenges are described in an amazing slideshow presented by Captain David B. MacFarland at The National Marine Sanctuary Foundation.

Marine transport costs/benefits: Export innovations continue to develop in Canada including Short Sea Shipping. While reducing costs in terms of increasing competitiveness are being considered - even the St. Lawrence Seaway is described as operating at half of its estimated capacity by an undated City of Hamilton Chamber of Commerce policy paper.

Rail transport advantages/inconveniences: Moderate cost compared to road and sea shipping options however Short Line Systems in Canada are to be potentially regulated by a forced or competitive access system described by The Railway Association of Canada as, "reducing critical investment, undermining productivity growth, reducing efficiency by fragmenting traffic, reducing safety and providing an unfair advantage to U.S. railroads."

The US Chamber of Commerce seeks to boost competitiveness as, "railroads are proposing investment tax credits to encourage additional private sector investment in rail and related intermodal facilities" and that, "freight rail tonnage is expected to increase at least 50% by 2020." Since 1989 Mexico has seen free entry and market-based price setting to make its services more competitive. Reliable trucking is becoming more common and logistics practices are improving according to the World Bank.

Rail transport costs/benefits: Costs are lower than road freight however slower as well. This means the customer will have to wait longer for delivery. Suitable for shipments to the US however currently unsuitable for Mexican deliveries with the possibility of better intermodal options (supporting increases in delivery volumes exceeding 50%) linking all three transport service sectors by 2020.

Road transport advantages/inconveniences: An increasingly accessible delivery mode, Canadian road freight between 1990 and 2004 "grew nearly three times faster than all other modes combined" according to Statscan. This indicates continously reduced costs due to increased volumes of traffic. The US Chamber of Commerce describes a need for "investments in truck freight corridors, including exclusive truck lanes" and " increases in truck size and weight to improve productivity." While the future has yet to deliver a dramatically more fuel efficient cargo truck the idea has always been out there:

A proposed NAFTA Superhighway will make Mexico an attractive long haul trucking destination for Rosewood.

Road transport costs/benefits: The costs for road freight are decreasing in Mexico as the government develops faster survey methods allocating resource improvements. However it is being developed primarily as an export source corridor and may prove unsuitable to market finished goods deliveries from Canada at present.

Air transport costs/benefits: The most costly shipping method however most likely to support JIT customer service cycles.

Air transport advantages/inconveniences: At present Canada, the US and Mexico are all increasing load and facing challenges due to slow expansion of air freight services. This will effect Rosewood as the basis of advantage would be the cost savings related to time of delivery and with potential for delays air freight would become a less attractive transport option for export markets in the US and Mexico.

Thursday, May 22, 2008

Net Foreign Direct Investment Falls for First Time in One and a Half Years

Net Foreign Direct Investment Falls for First Time in One and a Half Years

By Kim Jae-kyoung
Staff Reporter

Despite all the slogans and gestures by the government to attract foreign investment, foreigners have turned their backs on Korea as the world's 13th largest economy has become increasingly less friendly to foreign investment.

The view, which has long been denied by ranking government officials, has been backed by the latest report on foreign direct investment (FDI) into Korea.

The volume of net FDI ― FDI inflow minus outflow ― in the first quarter fell to minus $670 million for the first time since the third quarter of 2006, according to the Bank of Korea.

This figure compares with net FDI of $1.58 billion in 2007 and $3.59 billion in 2006.

Despite the government's denial, the view that Korea has become less attractive to foreign investment has been widely shared among global investors.

``Korea has become less friendly to foreign investment in the past five years as it recovered from the financial crisis,'' Andy Xie, an analyst of the Shenzen Development Bank (SDB) in China, who is the former Morgan Stanley chief economist overseeing the Korean economy and financial markets, told The Korea Times.

``Koreans may disagree but this view is widely shared in the international community,'' he added.

``Korea's development model is based on developing indigenous firms to conquer foreign markets, very similar to the Japanese model,'' he added. ``The opening to FDI during and after the crisis was out of necessity. Korea was down and needed the money. When Korea recovered, it reverted.''

Inbound investment had increased sharply since 1998 when the currency crisis hit the nation, with net FDI soaring to $9.33 billion in 1999 and $9.28 billion in 2000 from $5.41 billion in 1998.

However, after recording $9.25 billion in 2004, the net FDI steadily decreased to $6.31 billion in 2005, $3.59 billion in 2006 and $1.58 billion in 2007, turning negative in the first quarter of this year.

The nation's inconsistent and heavy-handed rules have become a major bottleneck, scaring away foreign capital and businesses, according to an analysis by the central bank.

``Excess regulations and complex administrative procedures here have deterred investment inflow over the past few years,'' BOK senior economist Lee Weon-joon said.

``In particular, the entry barrier for foreign businesses is set too high,'' he added. ``The government has introduced a number of projects to attract foreign investment, including `Invest Korea' in 2003, but most of them have turned out to be no more than slogan-oriented projects.''

In the category of startup administrative procedures, Korea ranked 95th out of 131 countries surveyed, according to the 2007-2008 global competitiveness report by the World Economic Forum (WEF).

The nation is also lagging far behind in such categories as control over foreign business ownership and protection of investors, ranking 61st and 53rd, respectively.

``The government always says that it is trying its best to deregulate the market, but they only make a few changes in the micro sectors and leave the big picture unchanged,'' Lee said.

The central bank also cited lack of foreign capital inducements, sluggish domestic investment, an unfavorable business climate and withdrawals of existing investment for the sluggish FDI.

Excess regulations and anti-business sentiment have made the nation one of the least attractive investment destinations among rich countries, far behind its Asian rivals such as Singapore and Hong Kong, as well as developed countries.

The nation ranked 25th out of 82 countries in a survey on business environment conditions conducted by the Economist Intelligence Unit (EIU), far behind Singapore (3rd), Hong Kong (6th), the U.S. (7th) and Taiwan (19th).

The EIU expects chances to be slim that Korea will improve its business environment in the short term.

``I don't think Korea can change in the near future to reverse the poor FDI trend,'' Xie said.

``Korea may be unwilling to make the changes to attract FDI,'' he added. ``Korea may never become a truly open economy. The mere fact that people always talk about foreign versus local means that the economy cannot be truly open.''

The central bank said that for investment promotion, the government needs to relax more regulations.

``Reforming regulations is the most urgent task for Korea to attract more foreign investment,'' Lee said

``If Korea is to become a major FDI destination, it should create a more foreign-friendly business environment by removing red tape and tackling its key competitive disadvantages, such as labor market rigidity,'' he added.

Has Performance-based Human Resource Management System in Korea Really Worked or Not?

Has Performance-based Human Resource Management System in Korea Really Worked or Not? KHO Hyun-Cheol, May 21, 2008

Daejeon Animal Shelter to Hold Fundraiser in Seoul

Daejeon Animal Shelter to Hold Fundraiser in Seoul

By John Redmond
Contributing Writer

Musicians are gathering in Seoul to put on a fundraiser concert for Daejeon-based Animal Rescue Korea at 8 p.m. Friday at Rocky Mountain Tavern in Itaewon, Seoul.

Tim Vasudeva who has been working with a group called Animal Rescue Korea, with other volunteers, has been assisting an old lady in Daejeon who runs a private dog shelter that is being closed by the local council.

Tim said, `` When Animal Rescue Korea first started providing assistance to Mrs. Jung and her shelter, there were around 210 dogs living in her greenhouse.

``Since that time, we estimate a further 10 additional dogs have been dumped there and approximately 20 pups have been born to the dogs that hadn't been spayed when they arrived. We did a headcount on the weekend and there are now 89 dogs at the shelter, which means around 150 dogs have been either adopted or fostered by kind people who have taken the time to come down to Daejeon and save a life,'' he said.

This will be the second fundraiser volunteers of the animal welfare group have organized.

The last event was a great success, but the funds raised have since been spent on food and veterinary care for the shelter dogs and they find themselves again in need of financial assistance to feed and care for the dogs while they wait to find permanent homes.

Tim said, ``We would greatly appreciate your support. Even if you can only attend for a short time, it will help us save these dogs.

``Alternatively if you can't make it to the fundraiser but would like to donate to the dogs' care, please contact me and we can provide the account details for our vet in Daejeon who provides the dogs' veterinary care, so you can be sure the funds are going directly to the care of the dogs," Tim said.

``You can also donate directly, using the Paypal button on the home page of our web site," Tim added.

They currently only have until the end of June to find homes for the remaining dogs.

Tim stressed, ``If you or anyone you know is considering adopting or fostering a dog please do come down to the shelter on one of our weekly trips to Daejeon from Seoul every Saturday with our volunteers, adopters and fosterers.

``If you need any further information on the shelter, please refer to the below thread from the Animal Rescue Korea forum. We regularly post pictures from the weekly Saturday shelter visits, of dogs that have been adopted or fostered, videos from when we first visited the shelter and more recent videos.''

Anyone who would like more information about the shelter or adoptable dogs and cats, please contact Tim Vasudeva on

The fundraiser will feature bands such as The Forty Days, UR Seoul, Seth Martin, Zee and Dave Gwyther. The entrance fee is 10,000 won of which 100 percent goes back to the dog shelter. Raffle prizes include an iPod Nano.

To get to Rocky Mountain Tavern, leave Itaewon station, line 6, through exit 3 and walk toward the Itaewon fire station. Rocky Mountain Tavern is located at the top of the main street.

Tuesday, May 20, 2008

BRIC Club to Boost Ties, Seek to Fight Food Crisis

BRIC Club to Boost Ties, Seek to Fight Food Crisis
(Reuters – Conor Sweeney)

The world's biggest emerging market economies – Brazil, Russia, India and China – agreed on Friday to formalise their "BRIC" club for the first time to affirm their global economic clout.

The four BRIC countries, which account for more than one tenth of the world's gross domestic product, said they would boost cooperation on a range of fronts and work on ways to ease the burden of soaring global food prices.

"Building a more democratic international system founded on the rule of law and multilateral diplomacy is an imperative of our time," foreign ministers from the BRIC countries said in a joint communique after talks in the Urals city of Yekaterinburg.

They "confirmed the aspirations of the BRIC countries to work together with each other and other states in the interests of strengthening international security and stability."

The term BRIC was coined by Wall Street bank Goldman Sachs to describe how the four swiftly growing economies of Brazil, Russia, India and China are likely to rival and then overtake many of the West's leading economies in the next half century.

The Yekaterinburg meeting was the first stand-alone meeting of BRIC foreign ministers.

Indian Foreign Minister Pranab Mukherjee said the BRIC countries had cushioned the developed world from a bigger economic slowdown over recent years. "They (large developing countries) have prevented the world from facing a worsening situation. This is a different situation from the past, when there was a global slowdown," said Mukherjee. "In this area, it is clear BRIC can increasingly play a key role," he said.

Food Crisis

The four countries, which account for 40% of the world's population, discussed soaring food prices and criticised developing countries for subsidising their farmers.

Mukherjee criticised "inefficient producers" in developed countries for subsidising their farmers, which he said was stifling attempts by developing states to feed their populations, hit hardest by rising global food prices.

"The main problem with the food crisis is overproduction in developing countries," said Brazilian Foreign Minister Celso Amorim, adding that BRIC finance ministers would meet later in the year in Brazil to tighten links.

China called for more cooperation between energy producers and consumers to reduce volatility on world oil markets. Russia is the world's second biggest oil exporter while China is the world's second biggest oil importer.

"Speculation in world markets has led to soaring world oil prices. The international community should step up energy efficiency and enhance dialogue between oil producers and oil consumers," said Chinese Foreign Minister Yang Jiechi.

Analysts say that while BRIC countries have swift growth and geopolitical ambitions their cooperation is hampered by mutual distrust.

"Russia is groping for a new place in the world. Russia has learned how to be a difficult partner for the West, but hasn't learned how to turn it towards its own benefit," Heritage Centre political analyst Masha Lippman said of the BRIC meeting. "Russia is looking for ways, if not to form an alliance then at least to diversify its foreign policy. It's far from clear if anything can come out of it," she said.

Asian Economies Still Strong

Asian Economies Still Strong
(Industry Week – Agence France-Presse)

Asia's strong economic growth will persist despite an ailing U.S. economy as the region diversifies its export markets, according to Merrilly Lynch. Inflation is a bigger risk to the region than a slowdown induced by a recession in the U.S., the world's biggest economy, according to Timothy Bond, Merrill Lynch's chief Asia economist.

Despite a global credit crunch resulting from a crisis in the U.S. housing market, Asian economies expanded 9.5% and China grew 11.5% in the second half of last year, explained Timothy Bond, Merrill Lynch's chief Asia economist at a conference in Singapore.

In the first quarter of this year, the region is expected to grow a slower but still robust 9%, and China 10.5%, he said.

Bond noted that while Asian exports to the U.S. were flat last year, shipments of made-in-Asia goods to the rest of the world expanded 19%. Exports to Europe have been growing 25-28% annually due mainly to the stronger euro currency which makes Asian goods cheaper, Bond said, adding that intra-Asian trade has also increased. "Europe has been the number one driver of Asian exports over the past few years, not the U.S.," he added.

Any slowdown in exports should be offset by an acceleration in consumption, powered by the emergence of younger and wealthier Asians who, unlike their parents, would like to spend their money, Merrill Lynch experts said. Jyoti Jaipuria, Merrill Lynch's head of equity research in India, said 50% of India's more than one billion population are below the age of 30 and many of them are becoming richer and are more likely to spend. In India "the consumer is learning to blow up money just like in the U.S.," he said. "In the last five years, you have seen people become wealthier in this region... There's many more millionaires in Asia now than there were five years ago," said Mark Matthews, chief Asia equities strategist at Merrill Lynch.

The Difference Between Hard and Soft Expertise in Global Sourcing Consultants

The Difference Between Hard and Soft Expertise in Global Sourcing Consultants
(Supply Chain Digest)

Many Companies Looking for Outside Help as Global Sourcing Volumes Grow, but Skill Sets Vary Widely; One Executive’s Check List

The explosion in globalization has, in general, exceeded the ability of most companies to keep pace with the people and the skills required to execute global sourcing strategies. As a result, there is robust interest in outside help from consultants in both the design and execution of global sourcing strategies.

However, one supply chain executive recently told SCDigest that there is a wide range of consulting talent available – and it’s important to find the right match for your needs.

More specifically, the executive (who asked that he not be named for this article) said if you are fairly well down the path, you are more likely to need and want “hard” consulting – real expertise – than “soft” consulting that deals more in general practices. “What I don't want right now are people with process maps, "best practices", sermons on collaboration, book checklists, etc.,” he said, referring to the softer variety of consulting skills in global sourcing.

So, what constitutes hard consulting? According to this executive, that would include the following types of capabilities:

• Knowledge of how to identify, qualify suppliers
• Commodity prices and trends, worldwide and different geographies
• Contracting globally (and best practices in contracts)
• How to assess risks and mitigation strategies
• Upside/downside management for global sourcing initiatives
• Government regulations and laws in different geographies
• Local content and "green" laws and compliance
• Various compliance regulations
• Knowledge of specific countries in question and their infrastructure issues, and these in comparison with others
• A really good ability to evaluate the true total landed cost of different sourcing alternatives
• Advantages and disadvantages of different geographies
• Industry sourcing trends (capacity investment, who is sourcing where, etc.)
• INCOTERMS – best for different supply sources
• Physical network designs – for cost, risk and market speed

“Now, granted, one person will not have all of this,” the exec added. “But a good consulting practices leader would know what to get and then build the group around this.”

Africa's Economy to Grow by 6% this Year

Africa's Economy to Grow by 6% this Year
(Industry Week – Agence France-Presse)

An acceleration from 2007, owing to high oil prices and demand for commodities, Africa's economy will grow by 6% this year and next, research from the African Development Bank (AfDB) showed May 12.

The joint research by the AfDB, the Organization for Economic Cooperation and Development and the UN Economic Commission for Africa was released ahead of the AfDB's annual meeting, which starts here on May 14.

"Africa has continued to experience high economic growth. In 2007, real GDP (gross domestic product) growth of 5.7% was well above long-term trend for the fifth consecutive year," it said. "The rate of GDP growth is expected to strengthen to about 6% in 2008 and be maintained at that level in 2009.

"Africa's recent growth performance has been supported by strong external demand for oil and non-oil minerals, increased investment in these sectors and good weather conditions for agriculture," the report said.

Despite the positive outlook for the economy, a separate report titled Africa Economic Outlook, released on May 11 by the AfDB, warned that a near doubling of prices of some staple food crops in recent months had serious implications.

Universities Broaden Training for Transportation, Logistics

Universities Broaden Training for Transportation, Logistics
(Canadian Transportation & Logistics – Jan Westell)

About 86,000 people will be needed annually to fill the void left by retiring workers, and surging demand in areas such as the railway industry and others, according to organizations that track the sector – such as the Van Horne Institute at the University of Calgary, according to CanWest news service.

After trying to launch a transportation and logistics program a few years ago at the U of C that focused on social sciences, Peter Wallis, president of the Van Horne Institute, is now working with the Haskayne School of Business at the same university, to develop a bachelor of commerce degree with a transportation specialization.

Wallis believes the general public has a narrow view of what types of skills are needed in the transportation and logistics field, typically thinking of warehouse workers or truck drivers, without recognizing the vast spectrum of other occupations within the field.

"We're now in the process of designing it and working with industry, so people have a broader understanding of supply chain and operations management," he said.

Since Alberta's economy remains strong and is geographically situated as an inland transportation hub, Wallis considers it a perfect location to develop this type of program. …

Read the complete article at

Global Competition Fosters Supply Chain Education Partnerships

Global Competition Fosters Supply Chain Education Partnerships
(Industry Week – Dr. Matthew B. Myers, Director of Global Business, University of Tennessee)

Most business schools simply have not provided a meaningful emphasis on advanced supply chain strategies whereas the need for managers who are savvy in this area has increased exponentially.

The trend in modern supply chain management, and supply chain education, is to seek educational partnerships to improve both the company's and the university's competitive position. Intuitively, we would assume that such educational partnerships could help improve a firm's efficiency, assist in learning innovative processes, and remain current relative to front-line supply chain thinking. For universities, the benefits of such partnerships range from an institution's ability to use partner firms as 'living laboratories' and provide a platform for leading-edge research. Not to mention a gateway for the hiring of its graduates.

While educational partnerships between businesses and business schools have a long history, supply chain partnerships are rather new to the scene, this due to the fact that multiple firms are often involved and supply chain thought is still in a relatively early stage of development. There are several reasons, however, why this growing trend is critical to both businesses and business schools, and increasingly the most competitive members of both have strong collaborative relationships relative to supply chain education, As we will see, the trend is due to changes in the competitive landscape for companies and educational institutions, and can only be expected to continue for the long term. …

Read the complete article at

China Trade Surplus Higher Than Expected

China Trade Surplus Higher Than Expected
(International Herald Tribune – Reuters)

China recorded a trade surplus in April of $16.68 billion, compared with $13.4 billion in March and $16.9 billion a year earlier, the customs administration said Monday. Exports in April rose 21.8% from a year earlier to $118.7 billion, while imports rose 26.3% to $102.0 billion, the agency said.

The figures were broadly in line with calculations based on trade figures for machinery and electrical products released Friday. These pointed to an overall surplus in April of about $16.65 billion. Economists polled by Reuters had expected a surplus of $14.8 billion based on export growth of 20% and import growth of 27%.

Imports have grown faster than exports for every month since October, apart from March.

April's reading lowered China's rolling 12-month trade surplus slightly to $256.9 billion from $257.1 billion in March, providing further evidence that the surplus is cresting. It was $262.2 billion in 2007.

U.S. Exporters Face Cargo Container Shortage at Ports

U.S. Exporters Face Cargo Container Shortage at Ports
(Los Angeles Times – Ronald D. White)

The weak dollar has increased demand for American goods overseas, but a decline in imports means fewer ships are coming from Asia

At a time when the struggling U.S. economy needs the biggest boost it can get from booming exports, companies and agricultural producers with American goods bound for overseas can't find enough empty cargo containers and have to wait weeks to get space on ships headed to Asia.

Only a few years ago, the trade bottleneck was the reverse. At U.S. harbors – particularly the nation's biggest container complex at the twin ports of Los Angeles and Long Beach – there were too few dockworkers to handle surging imports. Inland rail capacity to the rest of the U.S. was similarly strained.

Now, because of the container problem, U.S. exporters find themselves unable to take full advantage of the competitive edge of a weak U.S. dollar.

"We could export a good 20% more in agricultural products from this country if there was the capacity to handle it," said Peter Friedmann, general counsel for the Washington-based Agriculture Transportation Coalition, a lobbying group formed to help growers become more competitive internationally. "People talk about how important it is to reduce the trade deficit. Well, here is one way to do it, and the opportunity is slipping away."

The container problem is being most acutely felt in the Midwest, said Friedmann and other experts. Southern California isn't suffering as much because of its ports' role as a key gateway to Asia.

Los Angeles and Long Beach moved 15.7 million containers in 2007, nearly three times as much as the No. 3 port, New York/New Jersey, and attracted many more empty containers for shipping back to Asia than any other port complex.

This year, imports through March were down 7% at Los Angeles and 11% at Long Beach, while exports were up 21% and 26%, respectively – and the numbers of empty containers were down 28% and 25%.

"Last year, I could have called for a ship and had it by next week. Now it takes up to six weeks to book one. There just isn't enough room on the ships," said Howard Wallace, president of the Los Angeles Harbor grain terminal, where exports are up 150% this year.

Friedmann said he knew of a California dairy that could have sold 600 more containers of goods overseas, if it had been able to find cargo boxes. A beef and poultry producer in the Midwest, Friedmann said, missed out on at least $10 million in sales overseas for the same reason.

There are several reasons for the bottleneck of exports bound for Asia through the West Coast ports. The weak U.S. dollar has combined with growing Asian economies to increase the demand for U.S. goods, raising the need for containers.

But when the U.S. economy cooled and American consumers began tightening their belts, oceangoing shipping lines pulled as many as 30% of their vessels, and a commensurate number of containers, out of the routes from Asia to the West Coast. They moved them to Asia-to-Europe routes and to routes between Asian countries where the economies were more robust, said Paul Bingham, an economist for Global Insight.

Another problem was pure physics, said Asar Ashaf, head of the Washington office of the University of New Orleans' National Ports and Waterways Institute. A ship that can carry 8,000 containers of finished goods such as electronics, toys and apparel from Asia to the U.S. can't carry 8,000 containers of exports from the U.S. back to Asia.

"The exports are heavier – grains, paper, scrap metals. The ship reaches its tonnage limit much faster, so maybe it is carrying only two-thirds as many containers of exports back to Asia," Ashaf said. …

Read the complete article at,0,3407915.story

Friday, May 16, 2008

Club FF Map

Monday, May 12, 2008

Prentice tells U.S. group the border is a 'two headed monster'

Prentice tells U.S. group the border is a 'two headed monster' (US-Prentice)
(The Canadian Press)

Mounting delays at the Canada-U.S. border have created a ``two-headed monster''' that's not properly serving security or prosperity, Industry Minister Jim Prentice told top business leaders Wednesday.

It's time for significant progress on practical measures to cut costs and reduce barriers to trade and travel, said Prentice, who spoke to the Council of the Americas before President George W. Bush took the podium.

``Not only do we hamper the legitimate trade and travel that provide the foundation for North America's prosperity but we are also clearly misallocating resources,'' Prentice told the crowd gathered in a State Department ballroom.

``The dollars, hours and resources spent investigating legitimate travel and trade are dollars, hours and resources that would be better spent targeting the areas of highest risk.''

Businesses in both countries are bearing the burden of longer delays, higher inspection rates, additional fees and more layers of security, he said.
Canada's complaints about the border have grown louder since last summer, when delays were hitting up to three hours at some crossings _ the longest since the 2001 terrorist attacks.

Putting off new U.S. passport rules for land and sea travellers until June 2009 was considered a good step but there are still broad concerns.

U.S. House of Representatives Speaker Nancy Pelosi recently endorsed a study this summer on border tieups so Congress can be ready with a plan for the next administration.

``Anything that happens on the U.S. side of the border to address those issues is something we certainly welcome,'' Prentice said before his speech.

``A new administration always affords opportunities to examine the way forward. That's very much our focus in dealing with this.''

``We're interested in our competitiveness as North Americans.''

In his address, Prentice highlighted the need for investing in critical infrastructure, particularly a replacement for the Ambassador Bridge that joins Windsor, Ont., to Detroit and carries about 40 per cent of the commerce.
Last week, Canada announced construction on a $1.6-billion road would start next year to link a major highway with a new bridge that's supposed to be operational in 2013.

Prentice also told the group Canada will do more to make the Alberta oilsands environmentally friendly and called for cross-border collaboration on technology and scientific research.

Canada is facing increased criticism from U.S. groups that want the project slowed down and cleaned up.

Several groups sent a letter Wednesday to the Senate armed services committee, asking it not to repeal a measure that would restrict the U.S. government from buying oil from the oilsands.

A U.S. major energy bill passed last year classifies the resource as ``alternative'' fuel that produces more greenhouse gas emissions over the life of a project than other sources.

Canada has been working to have the restriction lifted and there are measures to do that before both levels of Congress. As well, a U.S. inter-agency group is expected to change the classification in the coming months.

The project had a lot of bad publicity in April when hundreds of ducks died after landing in an oilsands tailings pond, something Prentice raised in his speech.

``I'm an avid fly fisherman. I would call myself a conservationist,'' he said.

``And I share the concern of the people who are deeply disturbed by the images that have come out of northern Alberta. What happned was unacceptable.''

``Those responsible will face full scrutiny under Canadian law.''

The Council of the Americas is committed to free trade and democracy in the Western Hemisphere.

Other speakers at the one-day annual conference included U.S. Treasury Secretary Henry Paulson and Secretary of State Condoleezza Rice.

Finding Canada's 'Missing' Trade With Asia

Finding Canada's 'Missing' Trade With Asia

Canada's trade numbers, cited regularly by politicians and in the media, are out of step with global realities—especially when it comes to trade with Asia.

The Apple iPod illustrates how the trade numbers that the media, politicians, and analysts cite may artificially inflate the value of imports from China. The iPod appears in trade statistics to be yet another import from China, but when U.S. researchers took one apart, they found that only $3 of its components are produced in China—a mere one per cent of a product valued at $300. More than half the value of the iPod is produced or created in the United States, and the remainder comes from elsewhere in Asia.

Similarly, official statistics record a DVD player as an import from China into North America. But Europeans, Americans, Japanese and Koreans create a DVD player's core technologies and design, Americans, Taiwanese and other Asians manufacture the chips, and Chinese workers only assemble the final product.

These are but two examples of how our official measures are out of touch with the way businesses operate globally today.

The recent Conference Board report "Canada's 'Missing' Trade with Asia" estimates the amount of trade with Asia that is overlooked in the outdated numbers. This measure covers a broader range of business transactions, including sales of foreign affiliates and undercounted services.

The findings of the report are not intended to criticize Statistics Canada, which is doing a good job of measuring traditional trade: cross-border trade in goods that go from one country to another and stop there. Rather, it is a call to rethink the relevance of the measures that form the basis of our trade policy decision-making, both in Canada and globally.

In the modern global economy, most trade takes place between multiple partners, at different stages of an overall process. Instead of determining the best place to create an entire product or service, companies look for the best place—be it within a region or anywhere in the world—to locate specific activities, such as design, engineering, manufacturing, and marketing.

Canadian companies also trade increasingly in non-traditional ways, especially with geographically distant partners. For example, instead of trading in a traditional sense by sending goods across borders, Canadian insurance companies sell through branches they set up in Asia, while still conducting their risk analysis through computing systems in Canada. And thanks to the Internet, services such as design, and engineering, and products such as music downloads can be sold globally.

Although the U.S. market still dominates Canada's trade—79 per cent of goods exports in 2007—Canadian policy-makers and business cannot afford to ignore opportunities in flourishing regions such as Asia. Another Conference Board report, "Stuck in Neutral: Canada's Engagement in Regional and Global Supply Chains", shows that Canadian companies are becoming more integrated into Asian supply chains and vice versa. These activities are still modest, however, and not nearly enough to offset stagnating Canada-U.S. supply chain integration. While Canadian companies are taking greater advantage of Asian inputs to make their own supply chains more globally competitive, they are not doing nearly as well in identifying opportunities to contribute inputs into Asian supply chains—leaving considerable untapped potential for Canadian companies.

These overall results tend to run counter to conventional wisdom. Despite the almost exclusive fixation on goods trade by policy-makers, statisticians, and academics, by these broader measures, Asia sold more services to Canada than Canada sold goods to Asia between 2000 and 2005. In addition, current Canada-Asia trade numbers are far too low. By our conservative count, sales and purchases to and from Asia were at least double official exports and imports in 2005, at $58 billion and $156 billion.

The bad news is that, based on these enhanced trade measures, Canada's performance is far weaker than official numbers indicate. Services sales to Asia actually fell between 2000 and 2005, at a time when the opportunities in the region were growing.

This information-reality gap is not just an academic exercise. Leaders are forced to make policy and business decisions based on outdated information, which undermines the development of sound policies to enhance Canadian living standards.

A number of steps need to be taken to close this information gap and take advantage of opportunities for greater trade with Asia:

Governments, businesses, academics and media should promote the use of relevant metrics for international trade.

Business and government leaders should draw attention to Canada's underperformance in services trade and in overall trade with Asia.

Policymakers need to redirect their historical focus on goods trade toward policies to enhance services competition and trade.

Government should eliminate barriers to foreign direct investment and trade in Canada and elsewhere through negotiations and acting as an information broker, particularly for smaller businesses.

Businesses need to do a better job at identifying their global competitive strengths and identifying opportunities to improve their own competitive positions by using global inputs.

Federal and provincial trade promotion mandates should explicitly encourage outward investment. The federal government has recently taken some steps along these lines, which should be supported.

Reorienting the historical focus on goods trade toward services trade instead would shift the attention of governments. For example, current regulations actually require importers of woven fibres to declare in which of more than 100 statistical categories their fibres fall. Officials might better spend their time removing barriers to services competition and trade within Canada and elsewhere.

Both government and business leaders need to move away from narrow measures of trade to a language more aligned with the growth of global and regional supply chains, the sale of goods and services through Canadian affiliates abroad, and the growing role of services trade.

With our broader trade measures indicating Canada's underperformance in Asia is even worse than we thought—at a time when opportunities in that region are multiplying—future Canadian living standards are at stake.

Canada Seen Slipping in Global Supply Chains

Canada Seen Slipping in Global Supply Chains

This article is excerpted from the 6 May 2008 edition of “”. The Conference Board report to which this article refers is available on their web site, at

Canadian businesses are falling behind on participation in the global supply chains that are becoming key drivers of international trade and national economies, a new report from the Conference Board of Canada says.

The Conference Board study found Canadian businesses did a generally good job of integrating into the continental economy in the 1990s under the North American free-trade agreement, but supply chain participation has stagnated since. The performance is even worse with the rest of the world, the 20-page report "Stuck in Neutral" says, finding that Canada has mostly failed to take advantage of the quickly expanding economies in Asia and South America.

Although volumes of commodity exports to Asia have accelerated in recent years, Canada's share in the faster-growing "parts and final goods" segments of the production chain to the region have fallen back since 2000….

The Conference Board concludes that Canada is falling behind in integrating into global chains, particularly the fastest-growing chains in Asia, and that the failure will have implications on the country's future prosperity….

Thursday, May 01, 2008

U R Seoul