Industry Update

Volume 8 Issue 5

Inside this Issue: 1. KWE Receives TI Award 2. FTA Boosts Korean Investments 3. Spotlight on KWE Russia 4. WTSA Suggests Rate Increase 5. Diesel Prices Steadily Drop 6. U.S. and Colombia’s FTA 7. Canadian GRI Updates 8. Updated BAF/IFC

Kintetsu World Express (KWE) was one of 15 from a pool of 12,000 suppliers worldwide to be awarded the “Supplier Excellence Award (SEA)” by Texas Instruments Incorporated, a major semiconductor manufacturer. This award is given to suppliers who provide continual exemplary service. The press conference was held at KWE’s headquarter office in Japan on April 23, 2012. Notable attendees included KWE’s President and CEO Satoshi Ishizaki, KWE China’s President Mr. Toshimishi Inamura, Vice President of Worldwide Procurement & Logistics from TI Mr. Rob Simpson and TI’s Global Product Distribution Manager Mr. Pieter Marseille.

Pictured from left to right: Toshimishi Inamura, Satoshi Ishizaki, Rob Simpson and Pieter Marseille.

photo credit: United Forces Eyewear

Page 2

From project approval through to launch of operations, KWE executed a successful implementation and demonstrated efficient project management as well as prompt support for operations expansion. KWE’s partnership with TI began in 1968 with international air freight business in Japan when TI opened a Japanese subsidiary. Since then, KWE has operated distribution warehouses and provided both air and ocean transport services to TI’s locations around the world.

This is the second Supplier Excellence Award KWE has received . “KWE was recognized for its consistent endeavors as a global distribution partner in a project to start up an integrated distribution warehouse for logistics at TI’s first plant in China and logistics systems of parts, components and finished goods (KWE).”

"We set high expectations for our supply chain partners in order to ensure our 90,000 customers get to market fast with innovative products," said Rob Simpson, vice president of TI's Worldwide Procurement and Logistics. "The past 12 months have been uniquely challenging for the semiconductor industry in terms of the unexpected occurrence of natural disasters, threatening impact to supply. We greatly value the suppliers that, much like TI, go above and beyond to maintain continuity of supply even in the midst of crisis.“ TI established the SEA in 1984 to award its suppliers that have demonstrated excellence in the quality of services provided. The criterion for the award is evaluated on six different categories: cost, environmentally responsible procurement, technology, responsiveness, assurance of supply and quality.

With the initiation of the U.S.-Korea Free Trade Agreement (U.S.-Korea FTA) in March, South Korea has become a target for foreign investments. The FTA removes tariffs for many verticals and investors are moving to establish operations in Korea to access U.S. markets. Korea’s Ministry of Knowledge Economy said the FDI boosted to $2.34 billion only in the first quarter of this year, up 17% from 2011 and generated the most this quarter since 2008. Last year, FDI grew at a slow pace of 4.6% year-to-year.

The FDI from Japan, supported by the strong yen, increased over 150% to $919 million, while Chinese and EU investments increased by 47% and 35% respectively.

Page 3

KWE Russia is pleased to announce the newly implemented customs clearance service at the excise custom post in Kaluga, Russia. The excise custom post is for vehicles and scooters with 150 horsepower engines . KWE is currently providing services for different companies and KWE is currently providing services for a major automobile manufacturer.

Air Bridge Cargo Russia (ABC RU), a Russian cargo freight company, increased flights from Narita, Japan to Moscow, Russia (NRT to MOW) to three times per week beginning April 12 due to increasing freight volumes. Due to the close working relationship with ABC, KWE is able to benefit from the additional capacity and provide our customers the needed allocations and exemplary service for this lane.

photo credit: MerchantCircle

The KWE Italia office has relocated. Their new address and contact numbers are:

Kintetsu World Express (Italia) Srl

Via di Gonfienti, Edificio A Interporto della Toscana Centrale

5900 Prato- Italy Tel: + 39-0574-580937 Fax + 39-0574-560964

photo credit: Antonov-an124’s Photobucket

Page 4

Page 4

For the third week in a row, diesel cost in the U.S. has been dropping 1.2 cents as oil prices tipped the $4 per barrel mark (Journal of Commerce). Compared to the beginning of the year, diesel prices are still up 29 cents. According to the U.S. Energy Information Administration, the current average cost is $4.073, 5.1 cents cheaper than the same period of time a year ago. Most U.S. regions witnessed the decrease in price except for California where prices increased 1.2 cents, making the average cost $4.396.

The West Coast states, excluding California saw the sharpest plunge with prices dropping nearly 4.7 cents to $4.252. On the New York Mercantile Exchange, crude oil for June delivery fell $72 to $104.21 a barrel.

photo credit: truckingport

The Westbound Transpacific Stabilization Agreement (WTSA) suggests increasing rates for both dry and reefer cargoes which can go into effect as early as May 15th. According to WTSA, a $50 per 40-foot container rate boost is recommended from the Pacific Southwest ports in California including: Los Angeles, Oakland and Long Beach. From the East and Gulf Coast ports, inland points and for all water services from Pacific Northwest ports, the WTSA proposes a $100 per FEU increase. This will be another set of rate hikes since the rate increase for dry cargo by the WTSA on April 1. WTSA’s Executive Administrator, Brian M. Conrad, states, “The successive rate adjustments were designed to restore rates to compensatory levels after a period of erosion. The diverse and often seasonal nature of westbound traffic made it necessary to adopt multiple increases for cargo moving under contract throughout the year.” WTSA members include APL, Cosco, Evergreen, Hanjin, Hapag-Lloyd, Hyundai Merchant Marine, “K” Line, NYK, Orient Overseas, Container Line and Yang Ming.

Page 5

TRANSPACIFIC OCEAN (from Asian origins to Canada)

April 15, 2012 through June 30, 2012

per 20’ per 40’ per 40HC per 45’

BAF 320 400 450 505

photo credit: muracadom

The U.S.- Colombia Free Trade Agreement (US-Colombia FTA) will take effect May 15, 2012 and is an excellent opportunity to promote bilateral trade and for U.S. exporters and importers to tap into Colombia’s growing economy. The trade agreement was originally created under President George W. Bush’s administration and will remove more than 80% of duties on U.S. industrial and commercial exports and about 50% of the duties on agricultural exports. U.S. imports from Colombia are already duty-free.

According to the U.S. Chamber of Commerce, U.S. exports to Colombia have nearly quadrupled in the past decade and hit $14 billion in 2011. Bilateral trade hit $30 billion and the U.S. bought an approximate 38% of all Colombian exports, making the U.S. Colombia’s largest market. Thomas Donohue, President and CEO of the U.S. Chamber of Commerce stated, “This landmark agreement opens the door to new business opportunities, economic growth, and job creation in the U.S. and Colombia. Rather than rest on our laurels, we must continue to push forward with a bold job-creating trade agenda.”

U.S. President Barack Obama announced the initiation date of the pact after his administration confirmed that Colombia took the necessary steps toward labor condition improvements.

Page 6

WESTBOUND (from USA to Asian destinations)

April 1, 2012 through June 30, 2012

20’ dry 40’-45’ dry 20’ reefer other reefer

BAF – West Coast 614 768 868 1085

BAF – East Coast 1178 1473 1573 1966

IFC – Pure truck 102 102 102 102

IFC – Truck/Rail 353 353 353 353

EASTBOUND (from Asian origins to USA)

April 1, 2012 through June 30, 2012

per 20’ per 40’ per 40HQ per 45’

BAF – West Coast 453 566 637 717

BAF – East Coast 871 1089 1225 1379

IFC-Truck 102 102 102 102

IFC-RIPI 177 177 177 177

IFC-IPI 353 353 353 353

21 Victoria Day KWE Canada Closed 28 Buddha Day KWE Korea Closed 28 Memorial Day KWE USA Closed (with exceptions)

May Holiday Schedule