Refugee crisis increases the cost of logistics
The recently introduced closures and controls at some European boarders do not only affect the refugees who are on their way through the countries, but they also have an impact on logistics. According to Sebastian Scholte, CEO of Jan de Rijk Logistics, the refugee crisis causes an increase of costs for logistics, due to waiting times, empty positioning and reduced bookings. Not only are the checks at the boarders costly for the carriers, but they will also make Europe less competitive. In June and July, ferry workers in Calais were striking, and at the same time, many refugees there wanted to get to the UK. This resulted in delays and disruptions for logistics companies.
Another carrier, Priority Freight, transports most of its goods through air charters to avoid supply chain disruptions. Ed Bembridge, operations manager at the company, says that the extra costs for customers cannot yet be predicted, but he underlines that Priority Freight tried to keep them as low as possible for their clients and to transport the goods rapidly. Although the situation at Calais calmed down, the increased security and occasional incidents can still cause delays at the tunnel. Mr. Scholte states that the governments need to find a solution for the current situation – from the humanitarian aspect, as well as from the aspect of logistic costs.
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Pope Francis’ visit causes creates several logistics challenges
In advance of Pope Francis’ visit to New York, Washington and Philadelphia this week, a lot of preparation had to be done. Hundreds of planners, anti-terrorism experts, tree pruners, musicians and chefs have been employed to prepare for the Pope’s visit. Although he prefers simplicity, the preparation for his visit resembles a combination of a military operation, a diplomatic mission and a huge music event. Transformations, e.g. from box offices to confession booths, have to be made, roads have to be closed and lights have to be put up.
In New York, 5,000 police officers are needed for the Pope’s visit to the UN General Assembly, where he also meets president Obama. He will be surrounded by a team of 30 people and 7,000 media representatives during his stay. In Washington, he carries out the first canonization in the US. In Philadelphia, the Pope will give a speech at the Independence Hall, using the original Lincoln Lectern. As the original is very fragile, a metal brace and a copy were made for it. As further preparation to the visit, 2,000 trees were planted, Billy Joel postponed a concert at Madison Square Garden and the children of a Catholic school in East Harlem are practicing to sing for him, so everything should run smoothly while the Pope is in town.
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Retailers often ignore costs and complications when it comes to product innovations
A report published by Terra Technology came to the conclusion that the cost and complexity of innovation do not have the desired effect on sales. According to the report, the number of new products has increased by 32% in the last 5 years, whereas sales have risen by only 4%. The data of 14 big multinational companies producing consumer-goods has been analyzed and the report reaches the conclusion that half of the products that are made only contribute to sales by 1%. Although the number of products on the shelves increases steadily, their life cycles remain short.
Many companies opt for “growth through innovation”, however, they often neglect that innovations cause complications and costs due to new processes, materials and uncertain demand. Mr. Byrne from Terra Technology underlines that companies need to consider the costs of innovations and keep in mind that half of the goods only contribute to 1% of sales.
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Have a nice weekend!