Monthly Archives: April 2015

Flower industry in major developed countries – Japan

Flower industry in major developed countries – Japan

 

Since 2000, with the improvements in quality of living and urbanization, the flower business has been on a fast rise in Japan with the awareness among the Japanese people about the role and importance of the “flowers and greenery” that bring quality and comfort in daily living. The flower business that touches people’s emotions is becoming popular among the Japanese as they become more interested in nature.

global flower market

global flower market

In fact, according to one estimate, Japan is the world’s second largest flower market following the Netherlands. Owing to the growth in the domestic flower industry caused by the expansion in explosive demands for flowers in Japan, Japan has become an Asia flower logistics hub as well as a representative flower importing country. This is because, despite the increase in demand for flowers, the volume of flower imports has increased due to the decrease in the flower farming area and productivity. Let’s take a look at the characteristics of the Japanese market which has a great impact on the flower logistics market.

 

1. Decreasing trend in flower production

<Table 1> Flower farming area and total production between 2003 and 2010 in Japan

Year

Farming area (ha)

Total production

(1000 stems)

Increase from previous year

Farming area

Total production

2003

18,650

5,301

- 2%

-2%

2004

18,260

5,102

-2%

-4%

2005

17,910

5,022

-2%

-2%

2006

17,450

4,934

-1%

-2%

2007

17,230

4,829

-1%

-2%

2008

16,840

4,734

-2%

-2%

2009

16,500

4,551

-2%

-4%

2010

16,200

4,351

-2%

-4%

<Source: Japanese Ministry of Agriculture, Forestry and Fisheries, Department of Statistics Intelligence>

The flower farming area and production in Japan has been on the decline since 2003. The farming of chrysanthemums which used to take up the most volume among the Japanese flower breeds produced is decreasing from 5,950ha in 2003, and the round chrysanthemum which used to have the most harvest volume among the chrysanthemums is showing a great degree of decline. The total volume of round chrysanthemums harvested in Japan also decreased by 14% 1,127 million stems in 2003 to 901 million stems in 2010 and spray, another breed, also decreased from 281 million stems in 2003 to 273 million stems in 2010, while the small chrysanthemum also decreased from 531 million stems in 2003 to 484 million stems in 2010.

 

2. Most of production consumed domestically

<Table 2> Flower production volume in Japan from 1990~2002 (Unit: thousand ha, 100 million yen)

Year

1990

1995

1998

1999

2000

2001

2002

Farming area

45.7

48.4

47.1

47.7

48.0

48.3

49.5

Production volume

5,573

6,233

6,346

6,401

6,657

6,510

6,540

Export volume

14

8

10

12

13

14

16

Import volume

278

440

460

434

422

427

469

Volume of domestic consumption

5,275

6,665

6,796

6,823

6,866

6,888

6,898

Flowers produced in Japan are mostly consumed domestically with virtually none exported.

In comparison, the import volume of flower import exceeds 18 billion yen which is significantly higher than exports. The increase in imports continued into 2010, slowed down somewhat during the global economic downturn, and the flower market seems to be once again contracting due to the effects of the Great East Japan Earthquake in early 2010. In particular, the significant characteristic is that most of the incomes from flower imports rely on the imports of cut flowers.

 

3. Increase in imports following reduction in the production of cut flowers

The reason for the increase in the import of cut flowers is the reduction in the farming area and volume of delivery of cut flowers.

As can be seen in the table below, the cut flowers take up a very high percentage in Japan’s flowers farmed than pot flowers. However, the percentage of decrease from previous year shows that the farming area and production volume for cut flowers declined by 2% from the previous year, while the farming area and production for pot flowers increased by 3% and 2% from the previous year. That is to say, the farming production of cut flowers dropped and the farming production of pot flowers increased.

<Table 3> Farming of flowers in Japan in 2002

Category

Farming area

(ha)

Production volume

(Stems)

Change from previous year

(%)

Farming area

Production volume

Cut flowers

19,000

5,413,000

-2

-2

Pot flowers

2,190

319,800

3

2

This was when changes in preferences began to be showing in the Japanese flower industry. Such trends continued and the total farming area for cut flowers in 2010 decreased to 16,200 ha, a 13% drop from 18,650ha in 2003. Owing to this, the cut flower production volume also showed a natural decreasing trend, and the total production volume also decreased by 17% from 5,301ha in 2003 to 4,351ha in 2011.

 

4. Increase in reliance on import of cut flowers from neighboring countries

With the drop in the production of cut flowers, the volume of imports grew gradually. The import volume of cut flowers for each country is as follows. As you can see the amount of imports changes depending on geographic location.

<Table 4> Japan’s imports of cut flowers by exporting countries (Unit: million yen)

Category

Netherlands

Thailand

New Zealand

Korea

Others

Total

1999

3,590

3,717

2,191

1,443

7,016

17,411

2000

3,717

3,038

2,081

2,038

6,983

17,857

2001

3,032

2,939

2,145

2,379

7,910

18,405

2002

2,244

2,914

2,057

2,218

8,646

18,082

<Source: Yoon Jae-Gil, Japan’s flower industry, Jinju Industrial University Horticulture Department, 2005>

We can see that the import volume from the Netherlands decreased significantly, while reliance on imports from Thailand is also gradually decreasing. On the other hand, reliance on such neighboring countries as New Zealand and Korea is increasing. This because the closer the cut flowers are imported, they tend to be fresher and the costs of logistics differs from one country to another.

In the next installment, we will take a closer look at the changes in the Japanese flower market.

It is safe to say it is not coincidence that such as Japan the country has developed logistics and flower scm system as well as container ship management has this developed flower market.

If you would like to know more about logistics system as well as SCM, please contact us by pushing the button below.

CyberLogitec Contact

Fun Facts about container ship navigation

Fun Facts about container ship navigation

 

When we read news articles or other materials about vessels, we often become confused because of the unfamiliar terms used. So today, we will try to learn about a few facts about ships and recent issues. Once you get to know each of them, you will realize that ships are not that difficult to understand.
 

1. How fast do ships travel?

The speed of ships is expressed in knots (kn), and one knot is the speed at which we would be able to travel one nautical mile in one hour. One nautical mile is 1,852 m, a little less than 2 km. Freight ships travel at 18~26 knots, and passenger ships at 21 knots. 10 knots is 18.52 km per hour, which means at 21 knots one can travel 39 km in one hour. Due to the resistance from the water, ships cannot travel as fast as cars do.

The speeds of container ships are sometimes intentionally lowered in order to save on fuel, which is referred to slow steaming. When a ship engages in slow steaming when the fare is low, it results in decrease in the supply of ships, which then raises the fare, and the slow speed helps to save on fuel costs, thereby enhancing the shipping company’s profits. However, if the days of navigation increase due to the low speed, it can also increase the cost of navigation, so one would need to consider pros and cons in terms of profit before slow steaming.

 

2. Which is the bow and which is the stern?

Writings about ships often refer to bow and stern. There are quite many people who confuse one for the other. Usually, the top structure where the pilothouse is located is the front part. The lower part of the top deck is divided length-wise into the bow part, mid-part and stern part, and the top of the top deck is referred to as the top structure.

container ship_bow&stern

container ship_bow&stern

3. How are ships anchored?

Do you know what that structure on either side of the bow part jutting out like eyes is? They are anchors. Anchors are used to anchor to ships. Anchors consist of the pendulum in the form of an arrowhead and the anchor chain.

Usually, when anchoring, either one of the anchors are used. If just one is used, it is called single-anchoring, and when two anchors are used, it is called double-anchoring. However, there is a risk of tangling when two anchors are used, so double anchoring is used only in special situations.

When the anchor becomes lodged onto the seafloor, the ship is pushed in a certain direction. And when certain angle is created between the seafloor and the chain, it creates holding power. This holding power varies depending on the conditions on the seafloor and the chain length, and they say that the inside of a large expanse of land creates the most holding power. The weight of the anchor and the length of the chain vary depending on the size and type of the ship and the area of the ship above the surface of the water.

Container Ship_Anchor

Container Ship_Anchor

 
4. Through what routes do ships travel?

Just like cars travel on roads and airplanes fly on air routes, ships also travel only on the designated routes on the vast ocean. The reason is that it ensures safety in navigation and economy. Then when second class mate reports a navigation route based on various weather conditions, the captain makes the final decision. And when this is entered into the auto-navigation device, the ship navigates automatically. They say that traveling in a semicircle generates the shortest navigation distance. For example, when a ship goes from Japan to the US, it does not travel in a straight line from the east but in a semicircle via Alaska. The reason for this is simple. It’s because the earth is round!

Recently, there has been an active review of the North Pole navigation route that passes through the North Pole in order to secure the shorter and faster seas route. When the North Pole navigation route is secured for the Asia-Europe route, it is expected to be considerably shorter than the current route that goes through the Suez Canal. However, ice-breaking devices are necessary in order to navigate through the ice in the North Pole, which reduces the speed. Therefore, changing the sea route to the North Pole route is not being actively pursued yet.

Route of Ship

 

We have learned several things about sea navigation today. The shipping companies are trying to maximize their profits by adjusting themselves to various conditions including navigation routes, navigation speeds, number of ships, etc. In order to ensure quick and accurate profit analysis and customer support under these complex and diverse conditions, we need to look back and see whether we are using appropriate systems.

 

Please click on the button below if you have any questions about CyberLogitec’s maritime solutions.

 

CyberLogitec Contact

You can have a clear glance of SCM IT industry from interview of Jin Cho head of SCM Business Unit.

You can have a clear glance of SCM IT industry from interview of Jin Cho head of SCM Business Unit.

 

1. Please briefly introduce yourself

I am Jin Cho and am in charge of SCM business unit at CyberLogitec. If I were to divide my career in half, a half of it was about the implementation of IT projects and the other was about IT business management. I began working at Hanjin Information System & Telecommunication in 1991 assigned to an IT team of Hanjin Shipping. That was the beginning of my IT career. I was responsible for the performance of number of IT projects as the Data Warehousing project, and in year 2000, I began working for CyberLogitec responsible for development and management of DW as DW team leader. I worked to stabilize the quality management system at CyberLogitec R & D center and was e-service business team leader and worked as U.S branch manager from 2005 through 2009. I came back to headquarters in Korea to work as E-Service business chief and have been responsible for SCM business department for 3 years.

 

2. Do you have any memorable projects or experiences?

I have many memorable projects. Among those, I particularly remember Hanjin Shipping NIS project and DW project.

The reason I remember NIS (New information System) is that the project was about changing the large-scale system frame completely that have been in use at Hanjin Shipping. Hanjin Shipping had been using a text based system when I first got there.

I gained a lot of experience and also felt rewarding at the same time when it changed to a window based system what is called GUI (Graphic User Interface) through the NIS project. The Hanjin’ DW project which began in early 2000 was a leading project at the time and it was an opportunity to participate in the project and learn several systems for the successful IT projects.

DW which stands for Data Warehousing was a system trend back then; it is a system that supports management decision-making by process and analyzing significant data present in backbone & operation systems. We conducted DW projects together with consulting companies and it was very valuable opportunities to learn management methodologies as project management procedure, deliverables and know-how through systemic program process.

SCM industry and project management

SCM industry and project management

I clearly remember the time that I was making Data Center when I was U.S branch manager. We were operating IT infrastructure in the server room at that time, the facility was quite old.

We had frequent electrical shortages from fallen electrical poles when weather is windy and raining. Electrical shorts cut off the connection to infrastructure and cause the service shutdown. There have been serious damages to servers and network due to 1 or 2 sudden electric power outages a year. We have had very hard time for the service delays to customers which took us about a week to replace failed parts that needed to be procured from all throughout the states such as a far-way state as Virginia.

To resolve these situations, we installed a data center that covers the entire U.S and installed a generator to build a reliable infrastructure. I remember overcoming many hurdles required by a town to satisfy the stringent regulations which eventually took us a year and a half to get the permit to build the data center.

 

3. What does SCM Business Unit do?

SCM industry and project management

SCM industry and project management

SCM refers to Supply Chain Management.

We have business teams as 3PL, EDI, D-Cube solution. 3PL business is a solution to support business. EDI interfaces with various logistics partners with data, it is logistics, it is like blood vessel in human. 

D-Cube solution recognizes various documents related to logistics as B/L and automatically store, maintain and manage in the system. The department’s goal is to become Global Top 30 3PL Solution Provider in 2018 through continuous expansion and upgrades of IT service that are essential in the logistics business.

 

4. What are the market status and issues of late and what do you expect in the future?

SCM industry and project management

SCM industry and project management

The area of SCM is immense. Our department provides solutions to 3PL firms even from within SCM. 3PL companies secure a logistics hub in many locations around the world and provide services, each logistics hub is frequently managed using individual systems customized to country & region. In this case, from a company-wide perspective, the efficiency of business performance degrades for the difficulties of data double input and in the collection of business performance. Global logistics companies have a great interest in integrating and operating branches around the world and therefore I think that the demand for a logistics system that provides an integrated management function from a company-wide perspective will continuously grow.

 

5. How do you respond to the SCM market issue?

SCM industry and project management

SCM industry and project management

To respond to the demand for an integrated logistics solution, we plan to offer customers a logistics system that integrated various 3PL solutions as Forwarding, OMS (Order Management System), WMS(Warehouse Management System), TMS(Trucking Management System), Visibility and EDI. Visibility that is used for freight tracking and inventory management is particularly important to a logistics company, we are going to offer a global logistics system that shows the same view in anywhere, not just a country or branch.

I think that online sales operators with platform as Alibaba and Aamzon will integrate logistics vendors or participate in the offline logistics through partnership with shipping company. In addition, conversely, I think offline logistics operators will actively make entries into the online market as well.

I am going to analyze the impact this ambiguous situation with on & off line boundaries have on 3PL vendors and I plan to offer customers on the counter measures in terms of system. 

And we are also carrying out researches on the measures to apply the mobile related technology which has become a recent topic to the 3PL solution.

 

6. What is the SCM department going to do in the future?

SCM industry and project management

SCM industry and project management

Ability of human is the most important element for success in knowledge industry. Therefore, we are paying our most attention to the enhancement of employee’s ability.

The reason we are getting accolades in the logistics solution market is not because we are simply selling IT systems, but because we are carrying out the role of a business consultant that offers the business know-how at the same time.

In order to sustain our core competency to offer customers an IT-based business solution, we always emphasize to our employees that understanding the business more than our customers themselves is important. It’s because if we don’t understand the logistics business, we cannot propose alternatives to customer. We are concentrating a lot of effort for our employees to experience and learn know-how on customer sites and to get a professional education in addition to the IT technology.

I also go out to the site as much as I can and try to understand customer and market. The 3PL market is continuously growing. According to market research institutions as Armstrong, it will grow by about 7~8% a year. There are a variety of companies from a small localized logistics company to a global 3PL company with annual sales of more than few billion dollars.

We are developing a business centered on the U.S which now is the largest logistics market. We have a strategy to expand to the global market with success in the U.S.

In medium & long term, our department’s goal is to become the best business solution partner for global 3PL companies.

 

Flower industries in major developed economies – The Netherlands

Flower industries in major developed economies – The Netherlands

 

Alsmeer Flower Auction in Netherlands

Aalsmeer Flower Auction in Netherlands

 

With the gradual economic recovery in the wake of the World War II, the flower industries in various countries of the world have been developing one after another. The world’s flower industry promoted increase in international trade as the WTO system became established, which led to the globalization of competition and intensified trade wars. And as the globalization and scale of the economy expanded at a fast pace, the production and consumption of flowers in developed and developing economies increased owing to the increase in the population with higher purchasing power, while the volume of trade between nations also showed dramatic increase. The flower industry development strategy in developed countries is changing from new breed development, which requires high technology and quality, and producer centered to consumer-centered demand strategy.

 

1. The Netherlands – World’s No. 1 Exporter of Flowers

Alsmeer Flower Auction in Netherlands

Aalsmeer Flower Auction in Netherlands

As we learned in the last installment called “The Netherlands’ Tulip Bubble”, the Netherlands is the world’s biggest exporter of flowers. The Netherlands also invests a great deal of time and efforts into breeding based on high-tech facility and technology such as the automated greenhouses. So it is also famous for improving the breeds of flowers imported from all over the world and reselling them at a higher price. Normally, it takes about 1.5 million dollars and at least 10 years to improve one breed. However, the flower that has been improved can be protected as intellectual property internationally and can fetch license fees whenever they are sold. The Netherlands is well developed not only in breed improvement, but also in other aspects related to flowers such as transport, auction and sales. Aalsmeer Flower Auction place near Amsterdam is the world’s largest with a width sufficient to fit 200 soccer fields. It is said that 20 million stems of flowers, which account for 80% of the world’s daily flower trade, and 2 million pots of flower pots are traded here.

 

2. Background to the Netherlands’ flower logistics development

Flower logistics in the Netherlands

Flower logistics in the Netherlands

The Netherlands is in the middle of a high-consumption region and since it shares borders connected with other developed nations by land, it can save on the costs of logistics and time. Therefore, the flowers produced in the Netherlands are exported to various countries around the world and make up a major element in major events in each country. So the Netherlands’ flower business grew even more. The flowers produced in the Netherlands accounts for a large part of the Netherlands’ source of income.

The reason that the Netherlands was able to take at least 50% of the world’s flower market was not so much that all of the conditions for flower production and exporting such as the geography, climate and socioeconomic factors were favorable, but rather being able to take advantage of its own unique natural economic conditions, securing genetics and breeding technology through selection of superior crops and accumulation of experience.

The Netherlands’ flower industry is well equipped with natural growing conditions, proximity to well-populated areas as well as infrastructure such as transport and storage. Also, it was supported by the high knowledge level of the producers, ceaseless academic information exchange in the academic research and development and efficient agricultural instructions from the government.

 

3. The Netherlands’ developed flower system

Flower market in the Netherlands

Flower market in the Netherlands

The flower production in the Netherlands is mainly concentrated in the western region which is endowed with an ideal flower growing conditions. Also, the sales windows are also most closely located. The industrial basis over many years have allowed today’s high profit rates, and producers are located very close to the production sites with everything needed for the operation of greenhouses. Also, another reason that the Netherlands has such strong flower industry is its know-how for keeping the flowers fresh. In the Netherlands’ flower markets, the cut flower stems are distributed around the world using water bucket method.

In the Netherlands, managing methods differs for each flower and prior processing is an obligation of each producer. In addition, in the Netherlands, temperature and humidity are controlled; only the Netherlands’ air carriers provide temperature control in their freight air crafts for international routes. In addition to such transport equipment, with the development of post-harvest quality management, the transportable distance became longer which became the basis for forming a commercial base beyond the Netherlands.

The Netherlands’ flower distribution system is comprised of the auction market, wholesale companies and retail stores. Among them, the auction market is the center of the distribution system. The “Aalsmeer Flower Market” is the Netherlands’ most famous auction market with a total area of 630,000 square meters. The volume of flower production in the Netherlands account for 50% of the entire world’s production, and the flowers are mainly grown in the western region, including Hague and Rotterdam. Also at least 80% of the flowers produced in this region is exported overseas, and it also acts as a hub where not only home-grown flowers but flowers imported from other countries are re-exported after undergoing an auction. 85% of flowers auctioned are exported to Eastern Europe through land transport, while 10% is destined for the US.

 

4. The Netherlands’ flower export and production

The Netherlands’ flower export grew from 690 million euros in 1990 to 2.95 billion euros in 2001 and to 3.05 billion euros in 2004, experiencing continuous increase in export volume. The country’s export of flower pots grew from 190 million euros in 1990 to 1.27 billion euros in 2001 and 1.60 billion euros in 2004.

The Netherlands’ flower export volume by item (Unit: Million euros)

Year

1990

2001

2003

2004

Flowers

690

2950

3008.2

3051.6

Flower pots

190

1270

1547.3

1610.4

 

 

The Netherlands’ flower exports by countries

 

2007.10~

2008.10 Exports (Million €)

Year change (%)

2008.10 Exports

(Million €)

Percent change from same time previous year (%)

2011 exports

(Million €)

2012 exports

(Million €)

Germany

1311.4

-3%

106.4

-13%

1573

1644

England

658.8

-17%

53

-26%

744

791

France

563.2

-2%

50.2

-15%

682

654

Italy

295.7

1%

39

-7%

322

299

Belgium

196.7

5%

17.6

-8%

227

222

Russia

154.8

21%

14.9

14%

199

252

Poland

126.8

31%

12.6

13%

137

129

Denmark

126.4

-1%

14

-6%

116

118

Switzerland

119.9

-1%

9.8

-16%

154

165

Austria

117.1

-4%

9.1

-21%

146

148

Others

850.1

4%

85

-11%

944

970

Total

4520.9

2%

411.6

-13%

5244

5392

 

According to the an annual report by the Netherlands’ agricultural wholesale committee’s flower growing subcommittee, the flower exports in 2008 showed a great change from 2007 due to the impact of the global financial crisis. England’s flower consumption in 2008 dropped by 17% from 2007. In addition to England, most of the countries in Europe with the exception of Russia, Poland, and other Eastern European countries, showed a drop in flower import. Although the exports showed a 2% growth until October 2008, took a nose-dive to -13% as compared to the previous year since October 2008. Fortunately, these export trends reverted to recovery and based on reverse calculation for exports in 2011 and 2012, exports grew by 4.8% each year from 2009 to 2012. It could be deduced from this that the global economic conditions improved after 2009.

The Netherlands’ total horticulture output as of 2011 was 8.6 billion euros comprising 39% of the Netherlands’ agricultural output. The Netherlands’ total horticulture export make up 4% of the total exports and 34% of agricultural exports. As discussed earlier, the Netherlands’ is a global horticultural powerhouse comprising 50% of the world’s flower trade and 24% of horticultural products. As examined in the Tulip Bubble posting earlier, its market share for tulips is as much as 80%.

Such flower logistics require a very sensitive container transport in order to maintain the freshness of flowers. This is the reason why the container ship owners place great emphasis on a system for controlling various conditions such as the humidity, temperature, and balanced points inside containers.

 

If you are more interested in such systemic management for container shipping and terminal management of Horticultural and agricultural logistics, you are more than welcome to ask any questions by contacting us.

 

CyberLogitec Contact

Easter Special: The World’s cacao Logistics and Trade

Easter Special: The World’s cacao Logistics and Trade

 

The English word “Easter” and German word “Ostern” derive from the name of the goddess of spring worshipped by the Teutons. One item that is consumed the most on this holiday is none other than chocolate. They are consumed in the form of Easters Eggs or Easter bunnies, and it is said that 2/3 of annual chocolate production is consumed during Christmas, the New Year’s Day and Easter. That makes this time of the year is the golden hour for the chocolate manufacturers.

easter egg chocolate

Easter egg chocolate

Today, we will examine the logistics and export status of cacao, which is the raw ingredient in the manufacture of chocolate.

easter bunny chocolate

Easter bunny chocolate

1. The manufacture of cacao, the raw ingredient for chocolate

Cacao is a plant which becomes ripe for harvest five years after planting it. It can be harvested until the tree becomes 40 to 50 years old. The cacao trees in West Africa, which comprise 70% of the cacao production are mostly 40 to 50 years old. This means that the amount of cacao harvest will drop soon. So now it is time to plant new young trees. But these young trees are reportedly being planted in places other than Wes Africa. Why would they try to produce cacao in countries other than those in West Africa which are traditional growers of cacao, notwithstanding the risk factor of fluctuation in cacao price?

cacao farm in africa

Cacao farm in Africa

2. Decline in production due to changes in cacao harvest regions

The current world’s biggest producer of cacao is Ivory Coast located in West Africa. Although it produces about 70% of the world’s cacao production, cacao plants (farms where cacao are harvested large scale) are being built in other areas. In fact, large companies like Cargil are steadily relocating their plants from West Africa to Southeast Asia and other places.

One that should be noted here is the production yield. I will take a simple example. When cacao trees are planted in an area of one hectare in Malaysia, which is located in Southeast Asia, approximately 1,500kg of cacao can be produced. This means 1 hectare = 1.5 tons of cacao. But if this tree was planted in Africa, about 350,000~400,000 kg of cacao may be produced per one hectares. This means one hectare = 350 tons ~ 400 tons. The argument would be, why not eliminate the old trees in West Africa and plant new ones than relocate plants to places where the production yield would be lower?

world cocoa production

World cocoa production

 
3. Factor 1 contributing to changes in cacao harvest regions: political instability in West Africa

As I said, the world’s largest producer of cacao is the Ivory Coast. As we all know, the Ivory Coast is experiencing tremendous tribulations due to civil wars, etc. Since the civil war that broke out in 2002, investments in the cacao industry diminished, replanting declined and due to the high taxes imposed on the cacao farms to fund the civil war, the production is gradually falling. Because of this, large global food trading companies are therefore relocating to countries that are more stable than the Ivory Coast.

 
4. Factor 2 contributing to changes in cacao harvest regions: Climate change

In addition, climate in the southern region in the Sahara desert has experienced drastic changes for a long time and it is becoming impossible to harvest cacao, recording the lowest amount of rainfall in the 21st century. With the political instability from the aforementioned civil war on top of this, the cacao plants are moving to Southeast Asia.

 
5. Factor of instability in cacao supply: price restriction by large corporations

Cote d'Ivoire

Cote d’Ivoire

As mentioned already, the world’s largest producer of cacao is a West African country by the name of Ivory Coast marked in green in the map above. We need to pay attention to the fact that the national situation in the Ivory Coast is a mess. The people of the Ivory Coast have been consistently involved in disputes and small scale wars over the ownership of the cacao producing territories. The main production activity in this area is cacao harvesting for the global market, but when the hard earned cacao proceeds are spent on rice and cooking oil, there is not much left for the people. What is even more interesting is that, as presented in one documentary, the farmers in the Ivory Coast who harvest and sell cacao are oblivious of the fact that cacao is used to make chocolate or the taste of chocolate. The cacao farmers in the Ivory Coast find it hard to believe what a one dollar chocolate bar costs. Why? It’s because that kind of money in the Ivory Coast can buy a large chicken or a bag of rice easily. Also, it is more than what a child would earn for three days’ manual labor.

easter bunny chocolate

Easter bunny chocolate

It is said that the reason for this is the price restriction by large food companies like Cargill, Archer Daniels Midland, Nestle and Barry Callebaut. In fact, at the end of the 20th century, despite producing almost half of the world’s cacao supply worth many billions of dollars the Ivory Coast became one of the most debt-ridden countries in the world. One thing led to another, and on July 14th, 2005, IFRF sued Cargill, Archer Daniels Midland and Nestle which all are headquartered in the US in a California federal court for alleged human trafficking, abuse and forced labor of children for harvesting cacao beans in Africa.

I think this should suffice by way of explanation about the supply side.
 

6. Cacao’s demand side

So then should we now turn to the demand side?

Europe and the US make up at least 50% of the world’s chocolate demand. One trait about chocolate demand is that while it is not affected by economic downturns, it is highly affected by seasons, for instance Christmas, Easter and Valentine’s Day. What’s interesting is that cacao chocolates are again affected during good economy. In 2013 when the European economy was rather on the rise, the amount of cacao consumption also increased.

world cocoa logistics&trade

World cocoa logistics&trade

Source: ICCO

 

So overall, we can see that this commodity called cacao is a product whose production is not very flexible. Although there are fluctuations in demand for cacao, i.e., chocolate, depending on seasons, it is steadily maintained centered around Europe. However, the fluctuations in the amount of supply of cacao are large regardless of the demand. One easy way to look at the inflexibility of production is that when cacao production ceases or export is prevented due to special circumstances in West Africa, the price of cacao spikes. To the contrary when there are too much production of cacao or if there’s an oversupply in the market, the price of cacao plummets.

Jim Rogers, who is a renowned raw material investor, once said in his book, “as soon as you take an interest in raw materials, you will see your world differently.” He also said, “If raw materials interests you, then study everything about the largest producer countries and largest consuming countries of the raw material, method of production and the climate.” These are the reasons we need to examine the supply and demand of cacao in order to understand the chocolate logistics.

 

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Yard operating system for data management : Case in Bangkok ICD of Eusu Logistics

Yard operating system for data management : Case in Bangkok ICD of Eusu Logistics

Eusu Logistics (formerly Hanjin Logistics Korea) specializes in logistics and owns its branches and partners in major global logistics hubs in Asia, the Americas, and Europe. The company provides an efficient global SCM for customers. The company was operating an outdated system with excessive manual handling of too much data and too many documents, with a great quantity of shipment documents individually saved as e-mail or shipment data being manually entered.

OPUS Yard at Bangkok ICD for Hanjin Logistics

Services of Eusu Logistics

To improve those issues, the company decided to renew the UI and framework by adopting new systematic management procedure OPUS Yard of CyberLogitec, which will provide yard management system that could actively respond to EDI linkage and automated input for import & export operation and the management of the complex and diversified Bangkok ICD(Inland Container Depot). OPUS Yard is a yard operating solution that enables collaboration through data sharing among yard operators like Eusu Logistics, carriers, terminal, 3PL, and customs that use the yard, and other various interested parties in logistics. OPUS Yard is composed of Gate, Yard, CFS, Customs, and Trucking Operation.

[OPUS Yard Configuration for Bangkok ICD of Eusu Logistics]

Import & export management

Container management

EDI management

Calculation management

Reference information

System management

 

If you are more interested in the system, please do not hesitate to contact us.

CyberLogitec Contact

 

How to reinforce communication between forwarders and partners (Case Study)

How to reinforce communication between forwarders and partners (Case Study)

SmartLink_Customs

SmartLink_Customs

Hyundai Glovis has its own shipping company operating system designed for sea transport of automobiles, raw materials for steel production, and steel products. It has decided to establish linkage with SmartLink, the customs network service of CyberLogitec, to enable through the customer company’s shipping company operating system the EDI declaration of Exit Summary Declaration (EXS) for Europe-bound transport vessels to be checked into the customs authority at specific export destinations in Europe, and to ensure a system connection with any logistics partner.

 

[The logistics services of Hyundai Glovis]

Sea / air

Land transport of automobiles

Land transport of auto parts

Land transport of steel products

Transport management system

Land

Check in/out inventory management

Supply chain rationalization

JIT/JIS timeliness of delivery

Warehouse management system

Logistics center

Forwarding various import & export cargoes

Import & export logistics system

Logistics information

Ordering, purchasing, packaging, forwarding, and shipment

CKD system

Control center

Sea transport of automobiles

Sea transport of raw materials for steel production and steel products

Chartering or hiring of vessels

Shipping company operating system

SmartLink has set up its connection with the customs in nine EU countries of the UK, Germany, France, Belgium, the Netherlands, Greece, Spain, Italy, and Portugal, and completed the work of setting up its interface with customer’s newly developed shipping company operating system. Thus, it is possible now to file an EDI document created in a customer’s system with customs in Europe.