Port-Wise: Five Things Shippers Should Know About Their Ports and Airports
Moving a product from point A to point B may seem like a relatively painless process, but it is often anything but. Logistics experts say this is especially true when the shipment must cross international borders. Aside from the obvious issues—namely, the lead time of the shipment—a number of other questions arise. For instance, does the shipment contain any perishable commodities and/or potentially hazardous materials? Which mode of transportation should be utilized? And, finally, once the seafreight-vs.-airfreight decision has been made: Which port or airport should the goods travel to?
The latter question is particularly important, experts say, since all ports and airports are not created equal. Shrewd supply-chain managers must carefully consider where their cargo is heading before selecting the recipient of their goods. Asking the following five questions will also shed light on the best port or airport for one’s particular logistics needs:
1. “WHO EXACTLY WILL BE HANDLING MY GOODS?”
Your cargo is important to you, which is why the individuals handling it must be consummate professionals. Take Hong Kong International Airport, for example. HKIA, which eclipsed Memphis International Airport as the No.1 freight airport in 2011, has been buoyed by its relationship with cargo-handler Hong Kong Air Cargo Terminals Ltd. Some even credit Hactl—considered one of the top airfreight terminals in the world—with attracting carriers to the Asian-Pacific airport.
Silvano Solis, CEO of Interpuerto Monterrey, Mexico’s largest inland port, believes Hactl’s success isn’t an isolated phenomenon. Before shipping goods to a location, Solis says, it’s important to consider who will be on the receiving line. “Find a reliable business partner,” he advises—“professionals in their field who are able to support your operation.” He says it’s something Interpuerto Monterrey does well. Solis reveals that Interpuerto Monterrey is currently developing an infrastructure that will enable it to support and customize customers’ needs, which adds value to their investments. “Information and performance of the elements in the system will be the key to our success,” Solis says. Key to shippers’ success, however, is finding a port or airport that is adept at handling their specific type of cargo.
2. “WHICH CARRIERS OPERATE AT THE PORT OR AIRPORT?”
Before selecting a port or airport, consider the strength of its carrier network. Rick Ferrin, former CEO of the Jacksonville Port Authority and current vice president of TranSystems, says this may seem commonsense, but it should weigh heavily on a company’s decision to ship to a certain facility. For starters, Ferrin encourages shippers to find a carrier with a demonstrated service frequency that enables it to avoid cargo backlog at the point of origin and preclude shortages at the final destination.
Ferrin also has pointed advice for shippers moving their goods by sea: “Select a carrier that services a port in proximity to the origin of the cargo to reduce the time and number of handlings the cargo will need to start the ocean voyage.” Equally important, Ferrin says, is that the shipper selects a carrier with an “established and efficient” operation at the particular port or airport. For instance, he asks, does the carrier perform value-added services such as surface transportation, freight storage and distribution? These may seem like perks, he says, but they’re integral to a successful shipping process.
3. “WHAT ARE THE CUSTOMS REGULATIONS OF THE AIRPORT OR PORT I’M CONSIDERING?”
In a perfect world, every country would adhere to the same Customs regulations. Unfortunately, inconsistencies abound when it comes to Customs requirements, which is why it’s essential that shippers educate themselves about the law of the land before moving goods into a region.
“I always tell customers that they need to be savvy enough to understand where they’re sending their shipments to because they may be able to send a parcel and then they’ll have a Customs issue,” says Michael Taylor, DHL Express’ global senior manager of U.S. government operations. “That’s [the thing] with Customs regulations—they vary.”
He says U.S.-based companies are particularly vulnerable to Customs issues. “Our interpretation of what’s customary in the U.S. is not always the case in other countries,” Taylor says. “You may think, ‘Oh, it’s okay to send that,’ but it’s not permitted according to the country [on the receiving end.]”
Avoiding potentially expensive—and embarrassing—problems at a port or airport requires shippers to do their homework. Taylor encourages companies to reach out to international specialists, such as DHL, or consult their national chamber of commerce before shipping goods to a new port or airport.
4. “WHAT ARE THE COSTS AT BOTH THE POINT OF ORIGIN AND FINAL DESTINATION?”
Since hidden costs are common in the transportation sector, Rick Ferrin advises shippers to educate themselves about the total billing process. After all, he says, shippers can dictate a carrier’s port selection based upon a number of cost variables. “And knowing these variables is critical to minimizing total transportation costs,” he asserts. For ports, in particular, Ferrin says, costs vary according to the facility’s operating plan (i.e., landlord or operator), whether it utilizes unionized or non-unionized labor, tariff rates, volume incentives, land-lease costs, congestion and the efficiency of port equipment and stevedoring services.
Shippers should also perform a detailed system analysis to avoid purchasing different parts of the supply-chain process individually. “That, on paper, would seem to be less expensive,” Silvano Solis says. “But in real terms, you might end up paying for the inefficiencies of a cheaper system.” The byproducts of such inefficiencies include over-paperwork, storage surcharges and time delays. “Certainly this will be more expensive at the end of the day,” Solis says.
5. “DOES THE REGION I’M SHIPPING TO HAVE A FAVORABLE INFRASTRUCTURE FOR CARGO?”
Even the most efficient port or airport will struggle if it’s located in an unfavorable region for commerce. Ferrin advises shippers to consider the region’s political climate. “Is it favorable as a friendly global gateway?” he asks. “Are state funds available?” If you’re floating goods, can the port handle a fully laden Panamax ship—through the Panama Canal—to reach markets in Asia and beyond? “A port’s rate structure, labor and loading-unloading capability are immaterial if you can’t move cargo to and from the port very efficiently with a minimum of mode changes and ‘cargo touches,’” Ferrin says.
Solis concurs. Judicious companies don’t just look at the seaport or airport, he says; they scrutinize the nearby rail connections, truck lines and highways to ensure the inland supply chain performs seamlessly. And a seamless transportation process, Solis says, is key to ensuring that companies keep returning to the port or airport in question.