Category Archives: Global Transportation

Optimizing Your Global Supply Strategy

Posted on by
Reply

Emerging economies are increasingly contributing to the ranks of manufacturing and logistics services suppliers that are already well established along the Pacific Rim. This trend not only heightens the ever-shifting economic activity between and within regions, but also the numbers of global trade end-points and transportation management complexity. For global traders, increasing logistics complexity increases levels of risk.

Coordinating global transport is mission-critical for companies contracting off-shore services, especially for high tech, consumer electronics, pharmaceutical, and retail industries, where short product lifecycles and extremely competitive markets mean that missed shipment dates can result in $millions in lost sales. The following five suggestions can bring you both short- and long-term cost savings.

1. Align cross-business-unit communications with a supply chain visibility tool to streamline connections between regional and global locations, meetings, and decision-making; and unify data governance across all reporting location networks.

2. Continually assess demand shifts and consequent optimal strategic and economic alignment of your transportation and distribution network, looking at a multi-layered approach to global, regional, and local sourcing, inventory allocation, and distribution locations.  Consider a trade planning solution to build scenarios of alternative sourcing or distribution locations.

3. Assure day-to-day visibility of shipments enroute as well as field stocking allocations for servicing global customers. Extend shipment visibility to your customers and assign a global team of stakeholders to regularly monitor inventory allocations and global-to-local realignment based on regional forecast updates, as well as monitoring resulting transportation management re-allocation performance.

4. Pre-plan and develop multi-modal contingency plans for key shipments such as new product introductions.

5. Don’t get caught without a fuel contingency plan. Experts are currently suggesting* that the abrupt reversal of the global economy of 2007 will bring about some fundamental changes in supply chain configurations. The biggest trend driving business today and in the future is the escalating costs of oil and energy. Despite the short-term price volatility these costs can only increase and future success depends on taking the necessary measures to reduce these costs now. Transportation is the logical starting point.

Dr. Larry Lapide, Research Affiliate for MIT Center for Transportation & Logistics, (most recently Director of Demand Management at the MIT Center for Transportation & Logistics). He recently launched MIT’s Supply Chain 2020 Project and is responsible for the Strategy Alignment Workshop.

Share

Supply chain strategies to deal with the downturn

Posted on by
Reply

Many companies are trying to figure out in this current economic crisis how to cut costs and do more with less.  Here are some strategies that we are seeing supply chain experts implement to get “leaner” and survive the recession:

1) Eliminate bottlenecks and reduce inventory at the port, at manufacturing sites and warehouses
2) Reduce fines for holding carrier equipment too long (demurrage & detention)
3) Identify opportunities to shift modes, eg. airfreight to seafreight
4) Use postponement strategies to divert inventory at an international gateway
5) Become a self-filer to reduce the broker’s cost to make an entry
6) Use preferential trade agreements to lower (or eliminate) duties and total landed cost
7) Rebalance supply (and fulfillment networks) by determining tax efficient sourcing and distribution strategies

The key enabling technologies to implement these solutions include Supply Chain Visibility and International Trade Compliance.

Share

Change European Shippers Can Count On

Posted on by
Reply

On October 17th all European – based conferences were disbanded. Deregulation of ocean shipping has finally come to pass and we are seeing early signs that beneficial cargo owners (BCOs) and logistics providers alike are scrambling to figure out how to manage transportation costing with a whole new level of rate volatility.

In the cozy world where carriers conferred on vessel capacity and agreed upon pricing levels for surcharges, there was a modicum of price stability. Competition among carriers was focused on relatively simple factors of base ocean freight rates and service levels, which made it easy for BCOs to manage rate agreements, understand their total costs and select a carrier.

That has all changed. In this past month, many are seeing divergences in Bunker, Terminal Handling, Canal and War Risk surcharges among carriers. While BCOs might be able to find generally lower rates, it is significantly harder to calculate a bottom-line cost. The process impacts are real and many are trying to define how:

  • service contracts are negotiated and managed,
  • alternative routes and rates for a shipment are calculated and compared to select a carrier service, and
  • freight invoices are audited.

Clearly these new rate components and volatility will require new processes and information systems.

This rate volatility is hard for a BCO, but significantly more difficult for logistics providers that have more complexity in terms of routes, rates and contract structures. A screw-up when calculating a rate for a quote is potentially much more costly. And beyond margin, the extra effort will certainly affect how fast the sales department can respond to new market opportunities and prepare differentiated proposals.

Many will point to all-in rates as the answer, though a win-win doesn’t seem possible with the volatility in commodity prices. Who really has the stomach for prix fixe nowadays?

The answer is to look to history and the deregulation of ocean shipping in the United States. Leading companies addressed the challenge of confidential services contracts and highly volatile accessorials with TMS systems that can handle this complexity and allow companies to capture the benefit of deConferencing.

Here are some resources to help clarify how a Transportation Management system – focused on the complexities of seafreight – can help logistics providers and beneficial cargo owners.

Share