(Air)Ports

May 7th, 2014 Keri Forsythe-Stephens Leave a comment

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.

Archives, Relocation Guide, Site Selection

Come Shale, Come All

March 13th, 2014 Keri Forsythe-Stephens Leave a comment

PLASTICS AND CHEMICAL COMPANIES GO WHERE THE GAS IS

Mike Shannon, global leader of chemicals and performance technologies at big-four auditor KPMG, says chemical and plastics companies are eying North America for growth. Attracted by the abundance of shale gas in the U.S.—particularly in Texas, Louisiana and Michigan—numerous big-name companies are setting up shop in this region. “Shale gas has completely reinvigorated the U.S. chemical industry,” Shannon says, “providing [companies] with an abundant supply of cheap feedstock.” It’s a matter of money, he explains.

Recent International Energy Agency projections place the U.S. as the world’s top oil producer by 2015—surpassing Saudi Arabia and Russia—and chemical companies are looking to capitalize on this growth. To Shannon, the influx of chemical companies in the U.S. is more than opportunistic; it’s good business. “Companies [must] think two steps ahead and consider what is going to be an advantageous place to do business now and in five to 10 years from now, as other factors impacting the industry begin to play out,” Shannon says. “When considering location, companies should assess the risk around these potential changes in the global chemicals and plastics industry dynamics as they relate to shale and other feedstock dynamics, resources, population changes and political stability.”

Shannon says the “holy grail” for companies is a site with both cheap feedstock and fast-growing demand, but today’s economy renders such a scenario impossible, which means chemical and plastics companies must weigh the pros and cons of different locations. “It’s a trade-off,” he says. Even so, he recommends that companies pay attention to prospective countries’ GDP growth. Shannon acknowledges that this is less important at the commodity end of the plastics industry—“Feedstock cost is the critical success factor here,” he says—since products can be exported from other locales. But he encourages specialty plastics companies to move as close to the product’s end user as possible.

Moving close to customers is nothing new for Prism Plastics, a Port Huron, Mich.-based plastic injection molder. The company currently boasts three U.S. facilities—two in Michigan and one in Texas—with the most recent one built in 2012. Gerry Phillips, the company’s vice president, says it selected Chesterfield, Mich., as the site of its newest expansion because of its proximity to the center of the automotive world—one of Prism’s core customer bases.

“We’re looking at a fourth facility in 2014 or 2015, and a wide combination of factors will dictate where it ends up, led by our customers’ convenience,” Phillips says. “We may put another facility in Michigan or Texas, or it could be in China or Brazil—we’re ready either way.” Phillips says there’s a lot of rationale behind his seemingly lackadaisical approach. “Our facilities are very modular, so we can build anywhere in the world if the situation called for it.”

Prism benefitted from this flexibility in 2005, when it welcomed its second facility in Harlingen, Texas. Since the company ships 80 percent of its parts from Texas to Mexico, Prism officials initially eyed Mexico for its expansion. After all, they reasoned, Mexican labor was considerably cheaper than labor in Texas. But after performing their due diligence, Phillips and his colleagues decided Texas was a better option for the growing company. “Mexico’s lower water quality and unstable power supply meant additional, ongoing costs for water treatment, tool maintenance and power-generation,” Phillips says, “and having stable materials and electricity are crucial because our facilities run 24/7.” Since Prism can’t afford downtime, Phillips explains that officials are willing to invest more during the construction phase if the ongoing savings will compensate for it. He adds that once Prism identifies the best region for a new facility, officials thoroughly evaluate the preferred location—“working to balance the best fit for our customer with the raw materials we need to be successful: power, water, logistics and people.” Prism values these long-term costs much more than one-time government incentives, Phillips maintains.

KMPG’s Shannon argues that such incentives can be rather enticing, however. He encourages plastics and chemical companies to not only seek out locations with easy access to road, rail and port facilities, but also consider regions offering tax or government incentives. Similarly look for places with easy access to environmental and regulatory permits, Shannon advises, as well as available land on existing chemical sites. “Are there pipeline networks, along with steam, gas, water and all the things needed to develop products?” he asks. If the answer is no, he says, chemical and plastics companies should look elsewhere.

On the other hand, Shannon says companies shouldn’t discount fledgling markets. What matters, he says, is that the market—established or not—is experiencing strong economic growth. “It’s important to consider that many countries may look enticing, but ultimately they may not be business-friendly environments, particularly as they relate to investments.” Also of importance, he says, is the overall ease of doing business in a certain region.

For instance, Shannon asks, how enforceable are contracts? Are companies able to trade across borders? What’s the region’s legal, political and regulatory landscape? And can subsidiaries repatriate cash to the parent company in their domestic markets?

Shannon says chemical and plastics companies should be able to answer all of these questions before relocating or expanding to a different region. After all, he explains, financial incentives matter, but thorough planning goes a long way toward ensuring a bright and successful future.

Spotlight On: Connell Brothers

Connell Brothers’ vice president of North Asia, Azita Owlia, says the company has one principle guiding every business move: be near the customers. Connell Brothers, which operates facilities in 17 Asian-Pacific countries, is currently opening eight new offices across China. Asia is a strategic location for the specialty chemicals marketer and distributer since the continent has seen strong growth in this sector.

“We firmly believe that the Asia-Pacific has been and will continue to be a major growth engine for the chemical industry worldwide,” she says. “And it will remain the most dynamic and exciting region with the presence of the No. 2 and No. 3 economies in the world—namely, China and Japan.”

Myanmar is the latest country on Connell Brothers’ radar. Owlia explains that the company recently opened a new office in the Southeast Asian nation to tap into the food, pharmaceutical and home-care markets—and bring these chemical-based products to Myanmarian consumers. “To remain the No. 1 specialty chemicals distribution company in the Asia-Pacific, we have always been guided by customer needs and a commitment to delivering the best service,” Owlia says. “This means we strive to be where the markets and where our customers are so we can serve both of them better.”

3pls, Archives, Global Logistics

HOW TO BE EVERYWHERE

March 3rd, 2014 Keri Forsythe-Stephens 1 Comment

OMNICHANNEL LOGISTICS IS HELPING RETAILERS MEET CONSTANT DEMAND FROM ALL DIRECTIONS

Nail Rock’s failure to meet deadlines for shipping nail polish to Walmart, its biggest U.S. account, led to a lot of hand-wringing. Neil Jerzak, operations manager for Rock Beauty, London—U.K. retailer for the popular beauty product—reveals that Nail Rock hit only 30 percent to 35 percent of Walmart’s order deadlines. That dismal figure resulted in fines and worse: a less-than-stellar reputation among the mega-retailer’s personnel. Something had to change, and fast. That’s when the company decided to partner with SEKO Logistics.

A small distributor in New Jersey had previously handled all of Nail Rock’s U.S. operations. It met expectations in terms of product deliveries, Jerzak says, but failed to focus on customer targets or meeting customers’ needs. “So we looked at our other options—specifically SEKO Logistics, since I was working with them in the U.K. already,” Jerzak says. SEKO Director Dean Townsend suggested that his company could lend a hand, so Jerzak and Townsend trekked to America in mid-September to talk business. Less than a month later, SEKO had completely taken over Nail Rock’s distribution activities in the U.S. Jerzak admits that moving from the previous distribution center to SEKO’s Cranbury, N.J., location was no small task, but he says it’s been highly rewarding.

In the three months since Nail Rock has been working with SEKO, the cosmetic company has met more than 90 percent of Walmart’s deadlines. “Anything over 90 percent is considered good,” Jerzak says, “and Walmart doesn’t fine you.” He reveals that Nail Rock’s rating improved even more in the last three weeks of 2013—surging to 97 percent—which puts the company into the “exceptional” category. “Considering where we’ve been, this is incredible,” Jerzak says. “Walmart has certainly noticed the difference—and commented on it.”

What’s elevated Nail Rock’s performance to the “next level,” he says, is SEKO’s omnichannel logistics model. The retailing strategy, which marries brick-and-mortar and e-commerce, enables Nail Rock to distribute to both wholesalers and online customers. “People can log onto our website and buy products with the omnichannel model,” Jerzak explains, “and SEKO also does wholesale, which means they do the deliveries to Walmart.”

In addition to providing companies with a comprehensive shipping, logistics and distribution solution, SEKO integrates with their customers’ sales-order management systems. “SEKO’s omnichannel model just provides us with that end-to-end service,” Jerzak says. The global logistics provider handles Nail Rock’s shipments from production to distribution—typically from the Far East to U.K. or U.S. distribution centers and major retailers like Walmart. Jerzak explains that handing over the reigns to SEKO provides him and his colleagues with more time to devote to the nitty-gritty details of running Nail Rock. “We’re such a small team that every minute is vital to us,” he says. “[SEKO’s Omnichannel Logistics] division really takes a lot of the strain away from us.”

Jerzak envisions more companies jumping on the omnichannel bandwagon in the years to come. Calling omnichannel retailing the “wave of the future,” he explains that consumers like the option to buy products in stores and online. The latter option is particularly attractive from a manufacturer prospective, he maintains. After all, Jerzak says, companies enjoy higher profits when the public buys their products, rather than when retailers purchase them. “Don’t get me wrong,” Jerzak says, “we want to get as many retailers on board as possible. But, at the same time, there’s a huge margin when online customers purchase products.”

Fortunately for Nail Rock, online shopping appears here to stay. Mike Maris, senior director of Transportation, Distribution and Logistics at Motorola Solutions, believes the trend toward e-commerce points to a major cultural shift: smarter consumers. And omnichannel retailing, he says, takes full advantage of the shrewd consumer. “As the volume of e-commerce sales moves away from traditional shopping, an omnichannel retailing model provides a better ability to keep customers and facilitate greater customer service as they purchase via non-traditional methods,” Maris says.

“Being able to show what inventory is available to the purchaser, as well as choices for when and how to take delivery, all feeds into smarter shoppers’ needs,” he adds. Omnichannel retailing also encourages brand loyalty, Maris says, and enables vendors to upsell.

That’s not to say that employing an omnichannel retailing model is without challenges, he cautions. Key difficulties include maintaining accurate inventory when products can come from a brick-and-mortar store, warehouse or cross-dock; shrinking delivery times when same-day and two-hour deliveries are expected to become much more common; and determining how to handle returns. “Some retailers negotiate a fraction of the original sales price and allow the customer to keep [the merchandise], give it to charity or dispose of it, rather than absorb the cost of managing a return,” Maris explains. Retailers must also build distribution centers closer to their customer base, as well as smaller warehouses containing their most-requested items.

Another challenge, according to Curt Bimschleger, GENCO senior vice president of Retail Logistics, is changing customer service representatives’ mindsets about the consumer experience. Thanks to the advent of e-commerce, customers may come into the store to pick up a product, return an online purchase to a store, or even buy online from a store if the product isn’t immediately available. “In some ways, stores are becoming mini-distribution centers,” Bimschleger says. “If consumers aren’t satisfied, their experience will be impacted.”

Technology can also present problems for omnichannel retailers. Bimschleger cities customer order visibility, as well as being able to view all inventory across all retail stores and distribution centers, as essential elements of a successful omnichannel strategy. Unfortunately, he admits that this can prove a herculean task for retailers with multiple inventory systems driving their business.

Maris agrees that setting up an omnichannel may be a cumbersome process, but he says it reaps tremendous benefits. “It’s very appealing to customers to have the choice to buy online, at a brick-and-mortar store or online within a store using their system or smartphone,” Maris says. Adapting to customer demand, however, requires retailers to develop a new attitude toward commerce. He says vendors must be prepared to manage the changing demands on the product delivery process, as well as learn what can and can’t be purchased through omnichannel distribution models—for instance, pharmaceuticals and alcohol. Retailers need to pay attention to these issues, Maris says, since statistics point to a surge of omnichannel purchases in the future.

Bimschleger concurs, explaining that e-commerce currently represents 8 percent of total retail sales—a figure that is expected to double by 2017. Mobile-commerce, or m-commerce, accounts for roughly 15 percent of these sales, he adds. “It’s not unusual for a pure commerce company today to have 70-plus percent of their sales through their own app,” Bimschleger says. After all, consumers carry their smartphones with them 85 percent of the time, which means that their e-commerce and m-commerce interactions with retailers will only increase in the years to come.

He cautions that vendors failing to provide a “seamless experience” for customers via an omnichannel strategy will likely fall behind the curve. “Retailers need to understand the necessary technology architecture and make sure it provides a consistent, seamless customer experience across any channel,” Bimschleger says. He explains that a consistent omnichannel experience includes distribution, fulfillment, returns processing, disposition and customer service. “The [key elements] usually revolve around one view of all inventory visibility across all distribution centers and stores, fulfillment and customer order visibility,” he adds.

Fortunately, Bimschleger says, many retailers are well-versed in omnichannel strategies and are already providing seamless customer experiences. It’s a good thing, indeed, he says, since it’s a sink-or-swim economy. “Look, omnichannel isn’t just the wave of the future—it’s going on right now.”

Nowhere is this more evident than in the case of Nail Rock. The brand’s Neil Jerzak says Nail Rock’s foray into the world of omnichannel retailing has been nothing but positive—and lucrative. Thanks to the brand’s partnership with SEKO’s Omnichannel Logistics division, Nail Rock has enjoyed higher profit margins due to e-commerce, as well as greater product visibility. “More and more people shop online, so that’s a real focus for us as a business,” Jerzak says. “Omnichannel retailing is just the way people want to go.”

Archives, Uncategorized

The Healing Process- Global Traders

March 3rd, 2014 Keri Forsythe-Stephens Leave a comment

How SIGN Fracture Care Helps Heal Traffic Accident Victims in Developing Countries

While lovers around the world reveled in the romance of Valentine’s Day, SIGN Fracture Care International CEO Jeanne Dillner celebrated the holiday for another reason. The week of Feb. 14 marked a significant achievement for SIGN: More than 125,000 individuals living in developing countries were healed following road-traffic accidents. Dillner and her colleagues don’t take full credit for this feat—lauding the “skilled” surgeons who operated on these individuals—but she acknowledges that they played a key role in the healing process.

“We don’t have a 30-second elevator speech,” she says, “but in a nutshell we help surgeons in developing countries build orthopedic capacity so they can treat patients who are injured from road-traffic accidents.” Without treatment, many of these individuals become disabled—a condition that has devastating financial implications since 80 percent of the injured are their families’ breadwinners. “So to alleviate this problem we provide training to orthopedic surgeons and, more importantly, we provide the orthopedic implant,” Dillner says. SIGN personally designs and manufactures the implant and then gives it to area hospitals, free of charge.

Getting these devices into the hospitals has proven to be no small task, however. “In the early days, U.S. surgeons would [physically] carry the equipment when flying out to provide training,” Dillner says. But rapid growth in 2002 led Dillner and her colleagues to reconsider their approach and seek out partnerships with FedEx, UPS and DHL. “It just depends on which company has the best access to the areas of the world that we’re going,” she explains. Although these carriers don’t provide SIGN with free freight space, Dillner says they give her organization “remarkable” agreements, “which is their way of supporting our humanitarian mission.”

Working with these companies—particularly FedEx and UPS—has boosted SIGN’s operations tremendously, she asserts. “One of our goals is to provide a sustainable and timely supply of the implants,” Dillner says. “And thanks to FedEx and UPS, we can now ship implants as soon as hospitals need it.” Shipments to certain hospitals have even surged to once a month, Dillner says, a rate that has improved the lives of people across the globe.

GREENING THE GLOBE

Eco-friendly chemical company eyes international growth

Staying relevant in today’s economy requires companies to not only observe market trends, but respond to them as well. It’s a truth Joel Ivey, sales director for Charlotte, N.C.-based Ultra-Chem Industries Inc., knows all too well. After watching the textiles industry migrate from the U.S. to the emerging markets—namely China, Turkey, Mexico and Brazil—Ivey and his colleagues at Ultra-Chem realized that they needed to innovate. “We followed the industry [to these nations],” Ivey says, “and partnered with people in China and Turkey.”

Ultra-Chem still manufactured its popular Ultra Biocid technology for textiles, but introduced some new additions to its repertoire of environmentally friendly products. Instead of targeting textile companies only, Ultra-Chem sought growth in the paper and veterinary sectors—developing acid-replacement technology and antimicrobial treatments, respectively. “Again, all of our products are green and offer safe environmental features, which has really been our focus for the last six to seven years,” says Ivey.

Getting the products to market has also been a key focus of the eco-friendly chemical company. Although more than half of Ultra-Chem’s customers handle their own logistics, the company regularly employs three companies when moving goods from their Southeastern U.S. manufacturing facilities to their final destinations. Ivey reveals that U.S. Xpress handles Ultra-Chem’s Mexico-bound freight while Glen Raven Logistics trucking monopolizes the company’s domestic cargo routes. Ultra-Chem relies on Expeditors International when shipping outside of North America, he adds.

The latter company is particularly integral to Ultra-Chem’s operations since growing internationally is a high priority for Ultra-Chem. Ivey reveals that the chemical company is currently working with the South Carolina Department of Commerce to help it market its antimicrobial treatment for dairy cows to an international audience and “get in touch with the right people.” Ultra-Chem is also in talks with the respective consulates of Mexico and India about getting their sanitizing chemicals and antimicrobial hoof treatment into the regions. “We’re currently pushing them in China with our partners, and Turkey as well,” Ivey says. After all, he explains, responding to the changing patterns of commerce requires companies to go where the demand is.

Archives, Global Logistics

SEA CHANGE

January 15th, 2014 Keri Forsythe-Stephens Leave a comment

HOW HILCO MOVED ITS ASIA-BOUND EXPEDITED EYEWEAR EXPORTS FROM THE SKY TO THE SURF

Since 1956, the Hilsinger Co. (Hilco) has prided itself on supplying eyewear and eye-care vendors with functional and stylish products. Getting the products to market, however, has been an ongoing challenge for the Plainville, Mass.-based organization. With the majority of Hilco’s suppliers located in Asia and 80 percent of the company’s business in the U.S., Hilco is often plagued with long lead times and product backlogs. Rush jobs and product launches only add to Hilco’s headaches, admits Brad Johnson, Hilco’s director of Supply Chain Management.

Despite the fact that the company has established lead times, Hilco’s vendors often require expedited services. “In the supply chain, it’s not uncommon for someone to want something tomorrow,” Johnson says. “We say, ‘90 days,’ and the [customer] says, ‘That’s not going to work.’”

Shipping goods by air is always an option, Johnson acknowledges, but its high cost can be a barrier to utilization. “You double the cost of your product, in some cases,” he says. “Airfreight can be exorbitantly expensive.” It’s an especially costly transportation mode for Hilco, which often deals with medium- to high-density freight. “Dense and light isn’t too bad,” Johnson says. “But if it’s very heavy and bulky, the cost can be astronomical. It’s just not feasible.”

Even so, Johnson concedes that desperate times often call for desperate measurements. In the case of rush vendor jobs where sea freight simply won’t suffice, Hilco has been known to ask customers to split the costs of airfreight. After all, Johnson maintains, the company has to do whatever it can to mitigate costs while still netting a profit.

A few years ago, Hilco executives began considering new ways to move products from Asia to their key consumer markets. Prior to pursuing new avenues, Hilco’s standard mode—an economy less-than-container load (LCL) ocean service—typically offered transit times of 30 to 35 days. What Hilco needed, Johnson says, was a faster, more flexible and more reliable solution that didn’t break the bank. A good “middle ground” between sea freight and airfreight topped Hilco’s wish list, Johnson reveals.

Enter: FedEx International Direct Priority Ocean (IDPO) service. Hilco was introduced to the expedited sea-freight service in July 2010 and quickly reaped the benefits of the specialty product. “This option that FedEx has offered, where they float cargo from China to the West Coast and then truck it on in 21 days guaranteed, cuts the ocean time in half and cuts the cost,” Johnson says. “Again, it’s that in-between cost of flying and ocean freight.”

CHEAP IF BY SEA FedEx International Direct Priority Ocean helped Hilco set up its expedited sea-freight service in July 2010. — **CHEAP IF BY SEA** FedEx International Direct Priority Ocean helped Hilco set up its expedited sea-freight service in July 2010.

After organizing a few trial shipments from the Ports of Shanghai, Shenzhen and Hong Kong to the company’s Massachusetts headquarters, Hilco agreed on a fixed sailing schedule for its freight. Johnson says from a cost and customer-service standpoint, IDPO has been invaluable to the eyewear supplier. In addition to enabling Hilco to meet tighter customer deadlines, Johnson says the end-to-end ocean service has also helped the company fulfill vendors’ expectations when problems arise.

“Everything moves so fast with freight,” Johnson says. “You sit down with a customer and, oftentimes, the specifications come trickling in until the last minute. This service allows us to extend our ability to make promises to the customer and shorten the time to market from when we get the order until we produce it and get it [to its final destination].” After all, he says, time is money—and fast service typically equates to satisfied customers. Most clients balk when they’re told that it will be nearly four months before they see their product, Johnson adds.

He reveals that Hilco immediately deploys FedEx’s IDPO service when customers require expedited services, but their freight is too bulky to fly. “When the lead time is compressed by, for example, a demand spike or new program launch, the IDPO service can deliver LCL cargo in three weeks guaranteed, which gives us flexibility and date-certainty at a reasonable cost—less than half the cost of airfreight,” Johnson says.

The numbers speak for themselves. IDPO has saved Hilco an average LCL transit time of 10 to 15 days, as well as thousands of dollars in expedited freight. Although Johnson won’t disclose the exact amount IDPO has contributed to Hilco’s bottom line, he says it has certainly helped the company secure new business deals. “There have been about three or four programs where it’s really helped us seal the deal,” Johnson says. “We said, ‘If we can deliver [the consumer’s products] in 60 days, that will cinch it.’”

Bill Goodgion, managing director of Distribution and Surface Transportation at FedEx Trade Networks, says Hilco’s story echoes that of many customers. Goodgion personally handled the Hilco account, however, and says the eyewear company’s experience with IDPO is a true success story for FedEx. “When Hilco, specifically, converted over to using our IDPO ocean-freight service, it really was about predictability and reliability.” Hilco was accustomed to using FedEx Freight and FedEx Express for airfreight shipments, he says, and expected the “same high level of service” with FedEx Trade Networks.

According to Goodgion, the latter company exceeded Hilco’s expectations. Not only did Hilco benefit from working with a single point of contact at FedEx Trade Networks—rather than a group of individuals—the company enjoyed greater product visibility with the “My Global Trade Data” service. Not all sea-freight carriers offer these advantages, Goodgion asserts. “It can be fairly complex to move freight by ocean since it’s moving over a much longer time period than airfreight,” he says. “I think Hilco was pleasantly surprised to say, ‘We can count on this just as much as we can on airfreight.’”

That’s not to say that Hilco has moved to an all-sea-freight business model. Right now, the company is facing significant product backlogs out of Asia, which means that the majority of its cargo is moving by air. Goodgion is confident that this is only a temporary state, however.

“Once they move through some of the backlogs with their vendors and manufacturers, they’ll go back to using more of the IDPO and standard ocean [services],” he predicts. Goodgion says it’s a situation he’s seen countless times. “When a [customer] has to get their cargo expedited and they have to know when the freight is going to arrive at their facility—and they’re looking for something they can count on—they would turn to us to provide that service.”

Even so, Goodgion acknowledges that it’s a specialized service and certainly not for everyone. But for IDPO’s bread-and-butter clients—companies looking for faster, more reliable sea-freight services without airfreight’s hefty price tag—it’s a very valuable product, he says. These benefits, as well as the service’s end-to-end price structure, are the key differentiators for Hilco and other IDPO customers, Goodgion adds.

Johnson concurs. “FedEx delivers by ocean, but they also get here faster, essentially, like with airfreight,” he says. “So IDPO is a good medium-cost option.” In other words, it’s a win-win situation for both Hilco and their 25,000-plus eyewear and eye-care vendors from around the world.

IDPO LAUNCHES IN INDIA

FedEx Trade Networks has introduced its International Direct Priority Ocean (IDPO) service in India. The end-to-end ocean solution is now available from four Indian cities: Bangalore, Chennai, Delhi and Mumbai.

With FedEx IDPO, cargo is shipped from the origin to North America, with final delivery available throughout the contiguous U.S. This specialized service includes premier ocean freight forwarding, U.S. customs brokerage, online visibility and reliable delivery for both less-than-container-load and full-container-load cargo.

Christian Blain, FedEx Trade Networks’ vice president of Europe, Middle East, India and Africa, believes India is a perfect market for IDPO. “Ocean freight in India showed growth of more than 12 percent last year, and is expected to grow at a [compounded annual growth rate] of 14.9 percent by 2016,” Blain says. “This launch makes us the only company offering this type of service between India and the United States, and is an integral part of our growth strategy to provide customers around the globe access to premier FedEx freight forwarding services.”

–FedEx Trade Networks