IRVING, TX: Responding to a shareholder initiative for information on its asset risk policy due to climate change, ExxonMobil says it has no plans to leave any oil in the ground as it will be needed to meet future global energy demand.
"Our analysis and those of independent agencies confirms our long-standing view that all viable energy sources will be essential to meet increasing demand growth that accompanies expanding economies and rising living standards," said William Colton, ExxonMobil's vice president of corporate strategic planning.
The company's announcement coincides with the latest UN Intergovernmental Panel on Climate Change (IPCC) report that says the effects of climate change are already occurring on all continents and across the oceans. It adds that in many cases, the world "is ill-prepared for risks from a changing climate."
Responding to the idea of oil sequestration in order not to exceed global warming by two degrees Celsius by 2100, ExxonMobil says this "low carbon scenario" would, by 2030, cost the average American household an additional $2,350 per year for energy, or five percent of total before-tax median income.
As a result, ExxonMobil thinks such costs would have an impact that is "beyond those that societies, especially the world's poorest and most vulnerable, would be willing to bear."
The company also cites a 2008 report by the International Energy Agency that says the cost of reducing greenhouse gas emissions to 50 percent below 2005 levels by 2050 would require the annual building of 24-32 one-thousand-megawatt nuclear plants, 30-35 coal plants with carbon capture and sequestration capabilities, and 3,700-17,800 wind turbines of four megawatt capacity - at a total cost of US$45 trillion.
"The risk of climate change is clear and the risk warrants action," said Colton who added: "ExxonMobil is taking action by reducing greenhouse gas emissions in its operations, helping consumers reduce their emissions, supporting research that leads to technology breakthroughs and participating in constructive dialogue on policy options."
Vicente Barros, co-chair of the IPCC Working Group II noted: "We live in an era of man-made climate change. In many cases, we are not prepared for the climate-related risks that we already face. Investments in better preparation can pay dividends both for the present and for the future."
LONDON: Gatwick Airport, formerly part of the BAA and now owned by a group of international investment funds including Global Infrastructure Partners, wants to start construction on a second runway before the end of the next UK parliament in 2020, with the first flights by the end of 2025.
The owners say the new runway would provide the UK with more flights, more connections and handle 11 million more passengers by 2050 than building it at Heathrow, at a fraction of the environmental cost.
Architect planner Sir Terry Farrell commented: "I have no doubt that with a second runway, Gatwick will deliver more balanced, and more widely spread, economic growth for London and the South East. Expansion at Gatwick could do for South London and the wider region what the Olympics did for East London and give a huge boost in terms of jobs, housing and regeneration."
The airport management added that a commitment to start building in the next parliament "does not in any way negate the 1979 agreement. Gatwick remains committed to the legal agreement with West Sussex County Council, which prohibits the airport from constructing a new runway before 2019."
In a related move, the UK Civil Aviation Authority (CAA) has removed price controls on cargo services at London's Stansted airport from April 01, 2014. The CAA says there is not sufficient evidence that the former BAA airport has substantial market power for its cargo services.
Iain Osborne, director for Regulatory Policy at the CAA, said: "The CAA's role in cargo is to look after the interests of the consumers who own airfreight, and they appear to have a lot of choice in the market...This gives Stansted an excellent opportunity to innovate and we expect to see competition drive the delivery of high quality services that meet the needs of both passengers and cargo owners."
LONDON: A report from global law firm Linklaters says global institutional investors have funds of US$1trillion at their disposal to spend on European infrastructure assets over the next 10 years.
Research from Oxford Analytica on the subsequent impact on the EU economy suggests Member Countries could see a further 1.4 percent rise in
their annual GDP between 2014 and 2023. The cumulative GDP impact in the next decade would translate into more
than US$3 trillion with
a multiplier effect spanning supplier industries, such as construction and raw materials, consumer spending and increased tax revenues.
The study identified investors from Canada, China/Hong Kong, the GCC region, Japan and South Korea who have increased their investments in European infrastructure assets by 465 percent in the last three years compared with the previous four.
Linklaters expects an increase in corporate disposals to provide more opportunities as higher valuations encourage companies to sell subsidiaries or stakes in them, often in a bid to reduce debt.
The company warns, however, of an impending price bubble: "There is now too much money chasing too few deals," says Georg Inderst, a consultant who wrote a study on private infrastructure spending for the European Investment Bank in 2013.
Linklaters notes: "Some investors now worry that infrastructure prices are a bubble waiting to burst. This was the terminology used by one senior executive that we interviewed, pointing to the inflated prices paid for airports across Europe. He argues that prices have soared too high, making it a question of when, not if, they will crash."
BRUSSELS: In what is described as an unprecedented degree of cooperation, the world's leading motor manufacturers have agreed a set of standards for suppliers on key responsibility issues including human rights, environment, working conditions and business ethics.
Two leading corporate responsibility business associations, AIAG and CSR Europe said BMW Group, Chrysler Group, Daimler, Fiat, Ford, GM, Honda, Jaguar/Land Rover, PSA Peugeot Citroen, Scania, Toyota, Volkswagen, Volvo Cars and Volvo Group had signed up to principles designed to enhance supply chain sustainability.
AIAG is a not-for-profit organization where OEMs, suppliers, service providers, government entities and academia have worked to remove costs and complexity from the supply chain via harmonized business practices.
CSR Europe is a European business network representing 63 corporate members and 38 national partners to share best practice on corporate social responsibility.
Scot Sharland, executive director at AIAG commented: "Automakers and suppliers of all sizes face heightened compliance & extended responsibility expectations, from materials sourcing, handling, reporting and disposal requirements to improving factory working conditions, so it's imperative that we work together to develop, socialize and deploy industry best practices on a range of issues for our global supply chains."
The guidelines, based on fundamental principles of social and environmental responsibility, were first developed by AIAG in 2009 in collaboration with Ford, GM, Chrysler, Honda and Toyota.
"People and the environment are the automotive industry's most important resources. For this reason, we are working together to attain the highest standard in business integrity and in the social and environmental performance of our supply chain... We expect that suppliers will uphold these standards and cascade them down their supply chain," added Sharland.
SINGAPORE: More and more companies are adopting risk management strategies to maintain their supply chains says The Council for Supply Chain Management Professionals (CSCMP).
Speaking at the latest meeting of the association, Teo Ser Luck, Singapore's minister of state for Trade and Industry, said his government maintains a close working relationship with the logistics industry to establish best practices in supply chain security. "As an island nation, Singapore is heavily dependent on the smooth functioning of our supply chains to ensure the uninterrupted supply of our food, fuel, and other daily necessities of life," he declared.
According to the CSCMP, some of the major risks faced by global supply chains are natural disasters, regulations, and quality breaches. At the same time, says CEO Rick Blasgen (left), manufacturers "want to do the right thing" and protect employees, partners and customers involved in the supply chain.
"Threats to supply chains are too easily ignored until the worst happens. Prevention through the exchange of best practices, ideas, and case studies is not only better than a cure, but always less costly," he explains.
CSCMP members now want to take risk evaluation beyond Tier One suppliers, to engage Tier Two and Tier Three suppliers in the risk management process: "Collaboration is alive and well," declares Blasgen, adding that manufacturers increasingly want logistics companies to be part of their business process: "[They] are moving away from 90-day cycles; companies are looking for a longer engagement period with providers in a bid to mitigate risk and sustain service levels."
With logistics companies the first responders in the opening of new markets, mapping supply chains for exposure to floods, tornadoes, earthquakes and other disasters is growing in importance. This, he suggests, is one reason why manufacturers want closer relationships with their suppliers.
Founded in 1963, the CSCMP has more than 9,000 members in 63 countries representing business, government and academia.
OAKLAND, CA: Following shareholder pressure, ExxonMobil is to publish its first carbon asset risk report describing how it assesses the risk of stranded assets from climate change.
The report, via the company's web site, will provide investors with greater transparency into how America's largest energy corporation plans for a future where market forces and climate regulation makes at least some portion of its carbon reserves unburnable.
The Intergovermental Panel on Climate Change acknowledges that if catastrophic warming over 2°C is to be avoided, no more than one-third of current proven carbon reserves can be burned. These reserves, currently on the balance sheets of the 200 largest coal, oil, and gas companies are valued at $20 trillion.
Yet, a recent "Unburnable Carbon" report calculates that in 2012 alone, the 200 largest publicly traded fossil fuel companies collectively spent an estimated $674 billion on finding and developing new reserves – reserves that cannot be utilized without breaking the world's carbon budget.
Sustainable wealth manager Arjuna Capital and As You Sow, a non-profit promoting corporate responsibility, agreed to withdraw a resolution at the oil major's forthcoming annual meeting in May if ExxonMobil provided information to shareholders on the risks that stranded assets pose to its business model.
Natasha Lamb, director of equity research and shareholder engagement at Arjuna Capital said companies increasingly were including unconventional 'frontier' assets on their balance sheets, such as deep-water and tar sands.
"Investors are the canary in the coalmine and will move their money to avoid material risk," she said. "Forward thinking companies need to re-assess how they allocate shareholder capital and act strategically to shift their business models. If Big Oil can't redirect capital to low carbon energy alternatives, investors will. "
WASHINGTON D.C.: U.S. GDP growth has not yet translated into an increase in freight volume according to the January 2014 CASS freight index.
Report author Rosalyn Wilson says there are additional signs of a sluggish turnaround: The Institute for Supply Management's purchasing index (PMI) fell for a second month from 56.5 in December to 51.3 in January; there was a 13.2 point drop in the new orders index, the largest drop in new orders in 33 years; and China's PMI also declined and now sits at 50.5, just 0.5 points above the 50 point mark indicating growth or contraction.
Wilson adds that new U.S. export orders fell from 49.8 to 49.3 during the month while imports have also slowed – not good news for a freight industry already hit by bad weather during January.
International trade data released this week by the U.S. Department of Commerce show that exports reached $2.3 trillion in 2013, up nearly $700 billion since 2009. The U.S. trade deficit improved $63.1 billion from the past year to $471.5 billion, the lowest since 2009. Merchandise exports to the 20 economies that have trade agreements with the United States reached a record $732.0 billion.
While Wilson acknowledges that many observers think the U.S. economy will gain momentum in 2014, she's not so optimistic: "There are still some strong headwinds to overcome in the freight sector, the most obvious of which being the nearly imperceptible growth in volumes."
Despite Commerce Department statistics, she says the global marketplace remains weak and U.S. exports are lagging expectations. While unemployment level continue to fall to an official 6.7 percent – the lowest since October 2008 - she thinks the level of new jobs created each month is not enough to sustain the economy.
"As the Federal Reserve reduces its bond purchases, interest rates will continue to rise. This will have repercussions in the freight sector. The inventory levels that are now higher than those during 2009, when carrying costs were minimal, will become more burdensome and will probably lead to a drawdown similar to what we saw during the recession."
Wilson says obtaining credit to purchase new vehicles will become more difficult this year, "probably squeezing out smaller and marginal trucking companies that don't have the capital to expand their fleet or ‐ almost as important ‐ modernize their fleets. Continue to expect a bumpy ride."
WASHINGTON, D.C.: FedEx Freight, the LTL subsidiary of FedEx Corp., is to increase rates by an average of 3.9 percent from March 31 this year for shipments within the U.S. and NAFTA countries Canada and Mexico.
According to the latest CASS freight index, the move reflects the reversal of a two-month decline as overall U.S. expenditure increased 6.8 percent in February – the highest for that month in the index's history.
Total spending on U.S. freight movements was up 6.4 percent year-on-year and 15.8 percent higher than the same month two years ago. According to analyst Rosalyn Wilson, author of the monthly index, "things are looking up" although she cautions there are still "many potholes to deal with".
She notes the U.S. Institute for Supply Management's PMI reversed a two-month decline and rose 1.9 points to 53.2 in February – although still close to the index level of 50 indicating a contracting industrial economy. However new orders rose 3.3. points last month as the order backlog grew 4.0 points. Wilson says these figures point to increased production in the next few months and therefore more freight to move.
However the CASS index is not all green lights: U.S. production was down for the third month in a row, this time falling 6.6 points to below the 50 mark and therefore not good for carriers looking for increased volumes. Farther down the supply chain, China's PMI also declined in February and now sits at 50.5. And while U.S. export orders fell from 49.8 to 49.3, imports have slowed considerably - not a positive indcator for the freight industry.
Wilson, who is author of the annual logistics report for the Council of Supply Chain Management Professionals, concludes: "There are still some strong headwinds to overcome in the freight sector - the most obvious being the nearly imperceptible growth in volumes. The global marketplace remains weak, so our exports are lagging expectations. While unemployment continues to fall, the number of new jobs created each month is not enough to sustain the economy... continue to expect a bumpy ride."
WASHINGTON, D.C.: FedEx Freight, the LTL subsidiary of FedEx Corp., is to increase rates by an average of 3.9 percent from March 31 this year for shipments within the U.S. and NAFTA countries Canada and Mexico.
According to the latest CASS freight index, the move reflects the reversal of a two-month decline as overall U.S. expenditure increased 6.8 percent in February – the highest for that month in the index's history.
Total spending on U.S. freight movements was up 6.4 percent year-on-year and 15.8 percent higher than the same month two years ago. According to analyst Rosalyn Wilson, author of the monthly index, "things are looking up" although she cautions there are still "many potholes to deal with".
She notes the U.S. Institute for Supply Management's PMI reversed a two-month decline and rose 1.9 points to 53.2 in February – although still close to the index level of 50 indicating a contracting industrial economy. However new orders rose 3.3. points last month as the order backlog grew 4.0 points. Wilson says these figures point to increased production in the next few months and therefore more freight to move.
However the CASS index is not all green lights: U.S. production was down for the third month in a row, this time falling 6.6 points to below the 50 mark and therefore not good for carriers looking for increased volumes. Farther down the supply chain, China's PMI also declined in February and now sits at 50.5. And while U.S. export orders fell from 49.8 to 49.3, imports have slowed considerably - not a positive for the freight industry.
Wilson, who is author of the annual logistics report for the Council of Supply Chain Management Professionals, concludes: "There are still some strong headwinds to overcome in the freight sector - the most obvious being the nearly imperceptible growth in volumes. The global marketplace remains weak, so our exports are lagging expectations. While unemployment continues to fall, the number of new jobs created each month is not enough to sustain the economy... continue to expect a bumpy ride."
FRANKFURT: Seabury, the global advisory group that includes a cargo and logistics practice, is forecasting a 4.8 percent growth in air cargo traffic from Europe to China in 2014.
The historic northbound bias from China to Europe, expected to increase three percent this year, is now being overshadowed by a strong demand by China's middle class for high-value consumer products.
This is obviously good news for European manufacturers, which is why Lufthansa Cargo thinks the volume of German exports will be enough to provide a modest boost to its load factors – and bottom line – this year.
On February 07 the country's statistical office announced that German exports fell 0.2 percent over 2012 to €1.09 trillion while imports dropped 1.2 percent to €895 billion. The resulting €198.9 billion trade surplus was the highest ever recorded, up from last year's €189.8 billion.
The Seabury forecast data, which suggests an overall 2.9 percent increase in air cargo traffic from Europe to the rest of the world, is echoed by IATA economists who say Eurozone manufacturing in December 2013 rose for the seventh successive month - "largely reflecting momentum in the German economy, where the sector is expanding at a three-year high growth rate."
However this relatively warm trade prospect – after several years of decline – may not last for long.
According to former Fitch analyst Charlene Chu, now working for the London-based research firm Autonomous, China's credit-fueled economic boom is a bubble that could burst at any time – creating fall-out that she says will dwarf the Global Recession that began in 2008.
Media reports suggest Ms. Chu has been warning since 2009 that China's credit expansion, now valued at close to US$15 trillion, is supporting an unprecedented property and infrastructure boom. As a result, she says a financial collapse remains a certainty following government tolerance of a growing "shadow" banking industry now responsible for as many loans in terms of volume as the country's entire mainstream financial system.
Tony Tyler, IATA's CEO and a former senior manager of Hong Kong-based Cathay Pacific, may be understating his view therefore when he says: "We can still expect that 2014 will be a challenging year. World trade continues to expand more rapidly than demand for air cargo. Trade itself is suffering from increasing protectionist measures by governments."
Chu claims many of China's policymakers realize what is happening but with the country and its politicians committed to a seven percent annual rate of growth, apparently there are few attractive options. However when the credit bubble bursts – as Chu thinks it surely will – it won't be just the Chinese economy that implodes.
So whether they arrive by train from Poland, 'plane from Frankfurt or ship from Hamburg, who will be buying those shiny European exports that are helping the Eurozone stagger back from an equally self-made abyss?
