APL Logistics chief sees strength through peak season

The president of APL Logistics, countering growing concerns over a possible second-half economic slowdown, said order flows from overseas markets into the United States are strengthening as the year progresses. The 3PL executive added that large U.S. retailers see no slack in end demand through the October-November period, when traffic normally drops off leading into the holidays.

Separately, Jim McAdam told **{DC Velocity} that shipping giant APL, APL Logistics' parent, is developing a program to utilize 53-foot ocean containers for intermodal movements in the United States once the containers arrive from Asia and are unloaded at their U.S. ports of entry. APL said the program would give shippers access to more domestic capacity and provide the company with revenue freight on return trips, rather than hauling the boxes back empty.

In November 2007, APL took delivery of the industry's first 53-foot seagoing container, enabling shippers and importers to move more cargo than they had in the 40-foot boxes that had historically been used for ocean voyages from Asia to the United States.

McAdam said APL Logistics is seeing a 25-percent increase in import volumes from major U.S. retailers compared to 2009 levels. "What our customers are telling us is they don't see much of a slowdown" heading into the holiday period, McAdam said.

If anything, the surge in demand is putting pressure on APL Logistics to secure adequate ocean liner capacity for customers, according to McAdam. "Capacity is tight for everyone, and in every market," said McAdam, whose company uses ocean carriage to move most of its customers' freight. APL Logistics relies on its parent for about half of its ocean capacity needs.

"The discourse has changed" from 2009, McAdam said in an interview from the company's Singapore headquarters. "Last year, it was all about cost reductions. Now, it's about finding more space, more capacity." McAdam said APL Logistics' own capacity needs are most acute for its services that promise day-definite deliveries for shipments from Asia to North America through sea-land partnerships with truckers.

The service for less-than-containerload (LCL) freight, performed in conjunction with Con-way Inc. and which serves the United States, Canada, and Mexico, has seen a doubling in demand over the past year, McAdam said. Demand for the full-containerload-service, which was launched subsequent to the LCL service and which today just serves the United States with various trucking partners, has grown fivefold year over year, McAdam said.

"We can't put enough capacity" in the markets where the company operates the services, McAdam said.

About 60 percent of APL Logistics' revenue comes from North America, McAdam said. For the first quarter, revenue hit $296 million, a 23-percent increase over the same period in 2009.