THE LAND OF RISING REGULATION

November 1st, 2013 Julie Ritzer Ross Leave a comment

WHAT YOU NEED TO KNOW ABOUT JAPAN’S NEW 24-HOUR RULE

While the expansion of the G6 Alliance should bode well for trade with Asia, another development may soon pose challenges to U.S. manufacturers shipping cargo to Japan. Under Japan’s 24-Hour Rule (JP24)—which goes into effect on March 1, 2014; its primary objective to interdict international terrorism—notice of all containerized freight bound for that nation must be transmitted to the Nippon Automated Cargo and Port Consolidated System (NACCS) at least 24 hours before cargo is loaded onto vessels.

Information to be filed with NACCS, the Japanese government agency responsible for the country’s import/export and customs clearance services, will encompass the type of cargo, names of trading parties, route, schedule and identification of the vessel and container. Obtaining this information in advance of vessel loading will afford NACCS time to determine whether the cargo should be allowed to enter Japan, explains Bryn Heimbeck, CEO of Trade Tech, a Bellevue, Wash.-based provider of software solutions for the international logistics industry.

Shippers and other entities that fail to comply with JP24 will face stiff penalties, including a fine of approximately $5,000 that must be remitted before cargo reaches Japanese ports. Offloading of cargo may be prohibited if the vessel on which it was shipped arrives in Japan prior to NACCS’ receipt of payment. Other penalties for noncompliance may also be imposed, including up to one year of jail time with hard labor.

Among other challenges to be posed by JP24, Heimbeck says, is the need for data to reach NVOCCs (non-vessel operating common carriers); in the case of companies that don’t use NVOCCs, data will have to be in the hands of carriers earlier than was required prior to JP24’s enactment. Exporters shipping from coastal points will experience more of a time crunch than those shipping from points inland, as the 24-hour cutoff will apply to the vessel sailing date rather than the intermodal cargo departure date.

“In essence, though, document generation will be advanced by several days,” Heimbeck notes. “Typically, bill of lading instructions are received, and bills of lading subsequently created, after vessels sail. However, JP24 will force this to happen before they hit the water.”

Moreover, the onus will be on shippers that use NVOCCs to ensure that these companies are transmitting information to NACCS within the required time frame. “If an NVOCC is not compliant in this regard, the cargo won’t move—pure and simple,” Heimbeck says.

Archives, Global Logistics, Ocean Carriers

ORIENT EXPRESS

November 1st, 2013 Julie Ritzer Ross Leave a comment

HOW THE G6 ALLIANCE OF OCEAN CARRIERS IS SAVING SHIPPERS TIME AND MONEY

Shipping to Asia is getting faster and easier thanks to the formation of the G6 Alliance, a cooperation of two existing partnerships of ocean liners—the Grand Alliance (Hapag Lloyd, NYK Line, Orient Overseas Container Line) and the New World Alliance (APL, Hyundai Merchant Marine and Mitsui O.S.K. Lines, better known as MOL). With their coordination, a cargo vessel departing Savannah, for instance, can reach Thailand a full three days earlier than in previous years; a U.S. shipper exporting its goods to Hong Kong now has the option to leverage transport through the Suez Canal from multiple domestic ports at a slightly lower cost than in the past.

The G6 was established in December 2011 and commenced operations in March 2012, creating one of the largest vessel networks in the Asia-to-Europe trade lane. Under the expansion umbrella, the Alliance operates six Asia-to-North America East Coast service loops, one of which is new and the others a result of a merger and revision of services originally offered by the Grand Alliance (GA) and New World Alliance (NWA). Operation of the loops involves the deployment of more than 50 vessels with capacities ranging from 4,500 to 8,000 20-foot-equivalent units (TEUs) to connect some 30 ports in Asia, the U.S. and Canada, Central America, the Caribbean, the Indian subcontinent, the Mediterranean and the Middle East. Three of the services transit the Suez Canal and three others transit the Panama Canal.

“The move into this trade was a necessary one given the growth of the Southeast Asian market and the added capacity necessary to serve the Pacific Rim,” says Lamont Petersen, vice president, Marketing, Hyundai Merchant Marine.

Petersen and representatives of other G6 members say exporters and importers have begun to enjoy broader port coverage and increased sailing frequencies as a result of the Alliance’s inception and recent expansion. The advent of the G6 has boosted the number of port pairs served—calculated based on counting each individual origin/destination set once, regardless of how many times per week ships call them—according to Tim Walsh, vice president of Marketing for NYK Line (North America). Specifically, Walsh says, G6 serves 38 percent and 26 percent more port pairs than the GA and NWA, respectively. It also dramatically increases the number of port pair connections offered—calculated by counting the total number of times per week ships call each set of origins and destinations—compared to GA (up 65 percent) and NWA (up 26 percent). Market coverage of Asia and beyond has expanded too, with NWA adding Halifax, Cagliari, Laem Chabang, Qingdao and Shekou, and GA adding Jacksonville, Algeciras, Damietta and Jebel Ali (U.S. outbound).

“Many of the critical Asian ports have multiple calls per week now with G6, such as those in Central and South China and key ports used extensively for transshipment,” like Busan and Singapore, Walsh explains. “Singapore, in particular, has three weekly calls to ensure smooth connections to the extensive feeder networks running to/from the trunk vessel strings.”

COMPETITIVE TRANSIT TIMES

The expansion in service has also wrought more competitive transit times for shipments to ports throughout Asia, Alliance members claim. For example, according to information provided to Global Trade by Hapag-Lloyd, cargo bound for Vietnam from Savannah now reaches its destination in 34 days, versus 39 days prior to the introduction of the new service.

“The transit times are highly competitive, as this feature is one of the primary objectives of the G6 Alliance,” says Timothy A. Pajak, corporate communications specialist for MOL. “The vast majority of shippers care primarily about reliability rather than simply transit times.”

Transit time from Savannah to Thailand has been shortened from 39 days to 36 days. The carrier cites similar improvements on transit times for import cargo. Notably, in the case of Savannah, cargo shipped from Xiamen arrives in 31 days as opposed to 39 days; cargo shipped from Hong Kong takes just 28 days versus 34 days; cargo shipped from Shanghai arrives in 28 days versus 30 days; and cargo shipped from Ningbo saves four days, reduced to 28 days from 32.

“While much of the service rotations have gone through significant changes, the G6 transit times will continue to be very competitive, as they were with the GA and NWA,” Walsh says. “Preserving some of the ‘best of both’ was an important consideration.”

However, Walsh adds that the Alliance, in configuring the new service, placed considerable emphasis on reliability. Accordingly, “adequate time” has been built into service schedules to allow for realistic transit times and a higher on-time percentage.

“Overall, we believe many of those on-time benefits found in the Asia-Europe G6 launch will be found in this iteration as well,” Walsh states.

MOL’s Pajak agrees reliability is the Alliance’s chief concern. “While we also take into consideration cost effectiveness, reliability, safety and our contribution to protect and promote the environment,” he says, “the most important feature of our services is reliability.”

That promise of increased cost efficiencies is coupled with more efficient container ships. The majority of the total G6 TEU capacity (approximately 61 percent) transits the Suez Canal rather than the Panama Canal (39 percent). “The closer proximity of the Suez Canal makes the cost of transit through it a less expensive proposition than the cost of transit through the Panama Canal,” Petersen says.

By contrast, division of transit between the Suez Canal and the Panama Canal under the GA and NWA umbrellas was more even, at roughly 50 percent apiece for the two consortia combined. The G6 split allows for the use of larger vessels, thereby creating economies of scale.

“By using the Suez, G6 was able to deploy post-Panamax ships into the U.S. East Coast trade earlier than the soon-to-be-completed Panama Canal expansion project,” Walsh says. “We are able to deploy up to 8,000 TEU vessels on some strings. Overall, there are fewer vessels, but still with a minor gain in capacity.”

Shippers’ reaction to the service has been very positive to date, with few complaints. The only challenge so far, Petersen reports, has been a computer glitch at Maher Terminals in New York City. Maher’s installation of a new computer system, and subsequent problems with it, led to minor shipping delays from New York and other domestic ports.

“It really was not a major deal at all, and the advantages here should far outweigh any little inconveniences going forward,” Petersen concludes.

Archives, Global Logistics, Warehousing

Top-Shelf Warehouse Technology

May 29th, 2013 Julie Ritzer Ross Leave a comment

The programs and equipment shippers are using to process more with less manpower

Goya Foods, America’s largest Hispanic-owned food company, manufactures and distributes more than 2,000 products around the world from a base of 12 U.S. warehouses.

Not long ago, the Secaucus, New Jersey-based leader in Latin American food implemented a warehouse management system (WMS) from Manhattan Associates, along with a 2D barcode-scanning solution built around Motorola Solutions DS3500-ER extended-range scanners and the Speakeasy voice-activated picking solution from Wavelink. The technology can now be found in Goya facilities in Secaucus and Pedricktown, New Jersey; Prince George, Virginia; and Bolingbrook, Illinois. Company manager Luis Ramos says plans call for a rollout to the eight remaining warehouses, likely within the year—from the smallest facility where 5,000 cases of product are processed for shipment each day to the larger warehouses capable of “up to 10 times that.”

While some players have yet to scratch the surface in terms of warehouse technology deployment, Goya’s adoption of this technology “bundle” underscores a growing trend among global shippers to implement a variety of state-of-the-art solutions and equipment in a move to improve productivity and efficiencies, control costs and improve the caliber of customer service. “I think a lot of manufacturers realize they can’t expect to grow if they just stay with the basics,” Ramos says.

At Goya warehouses, labels bearing the 2D barcode symbology are found on racks, in floor storage areas and on the “license plates” of palettes. Drivers scan the labels when placing products into storage, when picking orders and as palettes leave the facilities. “There are several advantages of using the 2D labels,” Ramos explains. “They have a very small footprint—much smaller than traditional linear bar codes—but we can put more information on them, including expiration dates. The labels on the racks can be read from 10 feet away and the ones on the palettes from 20 feet away, which helps put-away and picking go faster. There is more accuracy because unlike linear bar codes, there is a redundancy” that prevents misreads. All information collected goes into the WMS, which allows Goya to track and control the movement of product from the time it arrives until the time it leaves again. The company can find product quickly to keep up with orders and locate empty slots that can accommodate products needing to be put away. “Everything is faster,” Ramos observes.

A Louder Voice

Individuals working in Goya warehouses that have implemented a voice-activated picking system are equipped with Motorola WT4090 hand-held mobile devices and headsets with microphones. Unlike traditional picking methods, wherein warehouse personnel utilize radio frequency (RF) scanners, pick-to-light systems and paper-based processes that entail reading, scanning or punching keys to execute picks, operators receive, through their headsets, picking instructions generated in text form by the WMS system and “translated” to voice by voice recognition software. The instructions, Ramos says, comprise easy-to-understand voice prompts with specific information as to “where to go” for what product, the quantity to be picked and the location at which the product should be placed as part of the order.

“In addition to faster picking from the 2D barcode scanning and the voice picking—about 3 percent to 7 percent faster than before—we see a level of order accuracy with voice-activated picking that I don’t think would be possible with paper-based processes,” Ramos says. “We used to have 40 to 60 mis-picks per night. But with voice, we aren’t doing two things at the same time—looking at paper and trying to figure out where we are going. We can confirm with the WMS that we have the right product and the right amount of product. There’s a labor savings, too, since there is little or no need to return inventory to storage because we picked too much or didn’t pick what we were supposed to.”

Another shipper in an unrelated industry saw a substantial productivity hike after implementing voice-activated picking software from Voxware at one of its U.S. warehouses, according to the solutions provider. Order accuracy rose to 99.72 percent, while training time was reduced from two days to four hours. ROI was achieved in nine months.

Some experts say an increased number of shippers will soon experience similar gains from voice-activated picking as cloud-based iterations of the technology hit the market. This past January, Voxware and LogFire, a cloud-based supply-chain execution and WMS vendor, launched what is said to be the first cloud-based, voice-activated solution. The cloud, says John Casagrande, vice president, client services at Voxware, puts voice-activated picking within reach of end-users that would otherwise be unable or unwilling to shoulder the requisite infrastructure investments for traditional technology.

Getting Smart

Shippers are also benefiting from moving beyond basic WMS to those that support a wider variety of functions, such as cross-docking and workforce management. The latter help warehouse managers assign the right employees with the appropriate skills to the right job at the right time. “There has definitely been some [movement] around planning and forecasting for warehouse labor,” notes Robert Hood, a senior manager at IT consulting firm Capgemini.

Adam Kline, product management director at solutions provider Manhattan Associates, says manufacturers that harness the workforce management functionality of a WMS typically see a 5 percent lift in productivity. Those entities that apply employee productivity data collected by the workforce component in creating and implementing performance standards achieve an additional 10 to 15 percent lift in warehouse productivity, Kline notes.

Some players are also becoming more nimble as a result of adopting WMS that integrate with shipment planning, inventory management and inventory optimization applications. Such integration increases order accuracy, improves order fulfillment and reduces order cycle time by eliminating manual processes—for instance, creating and revising picking, packing and shipping schedules based on inventory availability. Kline reports that one Manhattan Associates customer, a manufacturer of paper products, attained a 99 percent order accuracy rate as a result of using an integrated WMS system.

Automated Retrieval Gains Ground

The use of equipment such as automated storage and retrieval systems (ASRS) to enhance warehouse efficiencies is increasing. Bosch Rexroth, a global manufacturer of pneumatic products, recently deployed Dematic Multishuttle technology from Dematic to expedite order picking and goods flow within its warehouse in Laatzen, Germany. The facility covers an area of approximately 91,000 square feet and serves as a consolidation point for about 30,000 pneumatic products comprising roughly 1 million individual items for shipping to customers worldwide. A high bay racking system houses 3,000 pallets, and an ASRS dedicated to small parts provides space for 50,000 container locations.

Prior to the installation, the small parts ASRS, conveyors and picking stations had a peak output of around 500 items per hour, explains Joachim Ross, head of the facility. Management, however, had determined that achieving a minimum pick rate of 750 items per hour was imperative to meet future targets. To attain this goal, the company needed to eliminate bottlenecks to the warehouse’s 12 picking stations.

Unlike most conventional ASRS options, multi-shuttle systems need not be fitted directly onto warehouse/distribution center floors; rather, a modular design enables them to be adapted to fit available space within buildings. Accordingly, a second level was integrated into the Laatzen facility by constructing a platform 11 feet above the picking stations. The multi-shuttle system, which comprises two 131-foot-long aisles (five levels per aisle) and 10 self-propelled carts, was installed above the platform.

Before moving to the facility’s sequencers, and subsequently to the picking stations, stock accessed by the ASRS is captured by the system—which functions as a buffer zone between the ASRS and the picking station—and automatically placed in the carts. Those containers that will be required multiple times in the compilation of a given batch, especially fast-turnaround items, are no longer returned to the small parts ASRS every time they are used. Rather, they remain within the buffer zone. The same applies to frequently requested items and pre-picked order containers. At any one juncture, the system provides space for 1,200 containers and achieves 1,000 double movements per hour, turning over its entire contents approximately every hour.

Ross says the technology has sparked a 50 percent boost in productivity and capacity at the plant. These improvements, he says, stem in part from that stock arriving at the picking stations in the correct sequence for order assembly. Items are not transported to the stations until needed, heightening efficiencies there while keeping the conveyors free of bottlenecks.

“With [the system] eliminating the supply bottleneck to the picking stations,” Ross says, “the required performance of 750 container movements per hour is not a problem. We can even process up to 900 per hour.”

A footwear manufacturer in the western U.S. is also leveraging two ASRS systems from Wynright to heighten efficiencies at a new 1.8 million-square-foot distribution center that replaces five smaller facilities and handles 70,000 product SKUs. One ASRS is a 12-aisle mini-load system with 58,000 square feet of storage space and nearly 106,000 storage positions; the second, a 44-aisle mini-load ASRS system with 150,000 square feet of space and more than 257,000 storage positions. With the system in place, product is retrieved and de-cased only when needed. Overflow stock is automatically rerouted to storage, with overflow cartons retrieved in priority sequence.

The number of times a product is touched between receiving and shipping has been reduced by at least 50 percent. Moreover, while the manufacturer previously required 1,200 associates to accommodate receiving and shipping needs during peak periods, about 300 employees can handle average volumes and only an estimated 500 are needed during peak periods, enabling the company to provide better service to its customers at a lower cost.

While warehouse technology and WMS may not have changed dramatically in recent years, the tide clearly is turning, with more functional improvements, technology flavors and benefits likely to come.