Global Logistics—April 2006

Chinese Embrace Logistics Training

For years, the global logistics industry has flocked to China to take advantage of its abundant cheap labor and inexpensive warehouse and manufacturing sites. China, however, has just begun to embrace the importance of logistics in its own business community."The Chinese realize they are far behind the industrialized world in terms of logistics. They also know if they want to become a global economic giant, they must solve internal logistics issues," says Dr. Donald N. Burton, founder and president of the International Import-Export Institute (IIEI), a Phoenix-based university that provides international trade certification to individuals in more than 90 countries.As a first step toward increasing the country’s logistics skills, China’s government recently entered a multi-year deal with IIEI to enroll Chinese logisticians in the school’s Certified International Trade Logistics Specialist (CITLS) program.Though the program is starting off with only 50 students, nearly 1,500 colleges and universities throughout China will eventually participate. By the program’s third year, China expects to enroll 50,000 students; central planners estimate a total of 17 million people need to be certified, according to Burton. Inbound Logistics spoke with Dr. Burton upon his return from Beijing, where he and Qian Zheng, director general of the Training Center of State Administration of Foreign Experts Affairs of the People’s Republic of China, formally launched the program.

IL: Why is it so important for China to train its businesspeople on logistics and supply chain management issues?

Burton: The Chinese government envisions being able to manufacture quality goods in towns and cities throughout China, and, using modern logistics, move those goods seamlessly out to the ports and on to foreign customers. To do this, they must educate the workforce on the topic of logistics, and have workers use what they learn to modernize numerous supply chain elements. Every individual involved in moving goods through the country must have up-to-date knowledge of their logistics role. The Chinese understand the value of industry certification and are leveraging it to quickly improve their workforce’s competitiveness.

IL: What makes the CITLS program a good fit for China’s goals?

Burton: The Chinese chose CITLS as a first step because the certification and training provides workers with a valuable baseline of knowledge that they can expand as needed with other in-depth logistics training courses. The CITLS certification ensures that workers understand international trade terminology and the basic logistics concepts and processes needed to be globally competitive.

IL: How does China’s focus on logistics compare with other emerging global hotspots such as India and Latin America?

Burton: You cannot separate logistics from international trade when you speak about China. China views the two as an integrated solution to expand its market opportunities. It is a wise strategy. Because its initiatives are centrally planned, China’s logistics potential is greater than other hotspots. Remember, China is lining up logistics and distribution elements before it begins to produce huge waves of Chinese products aimed at the global consumer. India has developed logistics competency capitalistically—company by company—over decades as an independent industry sector. As a result, it is difficult for India to integrate its supply chain into national marketing efforts.The region’s systems are not integrated or standardized between various countries. We are working with the Venezuelan Chamber of Commerce to bring certification to Latin America, to help the area overcome its lack of standardization in international trade terminology and logistics.It has been difficult for Latin American countries to invest in logistics automation, and without these investments, Latin America’s supply chain will not flow smoothly into the global marketplace in the future.

IL: American businesses have already lost out to China and others on manufacturing, and foreign countries are quickly replacing U.S. services expertise as well. Does educating the Chinese in logistics and transportation best practices put American business at a disadvantage?

Burton: The world needs the inexpensive goods that China can produce using its vast labor pool and raw resources. We could withhold the knowledge China needs to help bring these goods to market simply because we fear it as a competitor, or we can share the knowledge and benefit from the new stream of goods.The efficiencies of the global supply chain will benefit everyone, including American business. Having all players, including China, conversant in modern logistics enables all companies to do business seamlessly, reduce costs, and increase profitability.

IL: What’s next for China?

Burton: China believes it will build a competitive advantage by investing in its supply chain. It also knows the impact of this effort will not be felt immediately. The Chinese government imagines an educated supply chain that will enable the country to meet the needs of the global marketplace without hindrance.

Pakistan Joins CSI

The Islamic Republic of Pakistan recently agreed to join the U.S. Customs and Border Protection’s Container Security Initiative (CSI). Once operational, the CSI program will enable all maritime cargo destined for the United States through Pakistan’s Port of Qasim to be pre-screened for terrorists and terrorist weapons.The Port of Qasim will use remote targeting with real-time remote imaging in the container examination process, and will incorporate a live video transmission feed to monitor the inspection process. It will use non-intrusive inspection and radiation detection technology to screen high-risk containers before they are shipped to U.S. ports.

European EcoDev Update

Logistics-related economic development in Europe is going strong. While Central and Eastern Europe have seen a lot of activity from companies looking to capitalize on cheap land prices and a strong, low-cost workforce, Western Europe doesn’t seem to be hurting from the competition.Several new projects are in the works in Italy, Germany, and the Netherlands, among other areas. Here are some highlights.

• Eurinpro, a developer of logistics warehousing solutions, is expanding an existing logistics center in Anagni, Italy, for Italian 3PL Silvano Chiapparoli Logistica SpA, which specializes in logistics services for pharmaceutical and cosmetics companies.Chiapparoli and Eurinpro first teamed up last October to construct a 119,000-square-foot warehouse in Anagni. The 3PL is now doubling its space with a second facility there, on a 1.1-million- square-foot parcel of land. The site is strategically located in close proximity to Rome, three miles from the main artery linking Milan and Naples, and not far from two major Italian airports. To properly store pharmaceutical products, the facility will be temperature-controlled and provide high-quality insulation.
• 2005 was a banner year for economic development in The Netherlands; the country attracted its highest number of new investment projects ever, according to the Netherlands Foreign Investment Agency. With total planned capital investment of more than $608 million, the 112 new projects represent the creation of 3,121 new jobs.Though new European headquarters facilities provided more than 25 percent (820) of the total number of new projects, logistics and distribution facilities were also popular. Prominent North American companies—including UPS, Boston Scientific, and Zebra Technologies—put distribution center projects in motion in the Netherlands last year.
• Denver-based ProLogis, a global provider of distribution facilities and services, is investing $100 million to build a new industrial park next to Charles de Gaulle airport outside Paris. The logistics site will be the first in France focused on the environment and sustainable development. The new park will have five distribution centers and more than 1.9 million square feet of industrial space. Its location takes advantage of France’s central European location, skilled workforce, and reasonable real estate prices. Construction will begin in the first half of 2007.
• Due to strong growth in the region, Amazon.de, the German unit of online retailer Amazon.com., is developing a 755,000-square-foot warehouse in the eastern German city of Leipzig. Since moving into product categories featuring large-sized, bulky items such as electronics, and kitchen and home furnishings, Amazon.de needs additional capacity. The new center will create up to 400 jobs within the next three years.