Page 199 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes any facilities.’ To some extent, Deutsche Post is creating a consolidation trend more than
following one. More than just reacting to competition, the largest transport firms want to
position themselves as premium providers of global logistics services to multinational
clients. Deutsche Post and Lufthansa have merged their respective 25 percent voting stakes
in DHL International into a joint venture called Aerologic, which will seek out areas of
cooperation for the three partners.
Deutsche Post will take management control over Aerologic because DHL sits closer to
the German post office’s core interest-pickup and delivery. DHL is a key part of Deutsche
Post’s international expansion plans. DHL offers a world mail delivery product of which
Deutsche Post is a heavy supporter. Deutsche Post’s Global Mail division has been
expanding aggressively, particularly in South America. DHL provides cross-border express
transport services, but also offers Deutsche Post a valuable global pickup and delivery
network. “All of the global shippers-and also more and more of the local and smaller
ones-are demanding transparency,” said Jean-Peter Jansen, the new chairman of Lufthansa
Cargo. “They want to have a continuous flow of information and a continuous flow of the
goods themselves.” Lufthansa’s core deliverable product will always be international air
freight capacity.

Lufthansa wants to strengthen its leading position through alliances with other freight
carriers. Lufthansa describes its alliance strategy geometrically. It will partner with airlines
in horizontal alliances and with forwarders in vertical industry partnerships. ‘Through its
deal with Deutsche Post, the airline added a diagonal line to its chart, representing new
initiatives in electronic commerce. Deutsche Post and Lufthansa have formed a joint venture
called e-logic to pursue mutual interests in e-commerce logistics. The new company will
make investments in new technology and startup ventures and also work to develop joint
fulfillment solutions for e-commerce shippers. Jansen states, “We believe that putting us
more closely together, not in a way that we integrate, but in a way that we support each
other, will make a lot of difference for the future. What we are looking for really is growth
and stabilization of our market position.”
Question
Analyse the case and write down the case facts.
Source: Gordan Forsyth, ‘The New Integrators,” American Shipper, July 2000, pp. 284–5

8.8 Summary

 Transportation infrastructure can broadly be classified as hardware and software.

 The five basic transportation modes are rail, highway, water, pipeline, and air.
 Although product storage in transportation vehicles can be costly, it may be justified from
a total-cost or performance perspective when loading or unloading costs, capacity
constraints, or the ability to extend lead times are considered.
 Transportation economy of distance is also referred to as the tapering principle since rates
or charges taper with distance.
 Transport transactions are often influenced by five parties: the shipper (the original party),
the consignee (destination party or receiver), the carrier, the government, and the public.

 Government transportation regulation can be grouped into two categories: economic
regulation and safety and social regulation.

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