How To Pick a Port - Global Trade Magazine
  January 8th, 2013 | Written by

How To Pick a Port

[shareaholic app="share_buttons" id="13106399"]

Holman Boiler Works’ CEO is Growing Internationally by Making Wise Decisions With Port and Airport Selection

Holman Boiler Works, Inc. president and CEO John Marrinucci is guiding an expansion plan designed to boost overseas sales of the Dallas, Texas-based company’s boilers, tubes and replacement parts. Marrinucci is navigating Holman against some larger competitors and gaining an advantage in the competitive boiler products industry with its well thought-out shipping plan.

Though much of the company’s export expansion comes from stepped-up marketing and contract-bidding efforts, intermodal logistics is the engine that will drive its international sales growth. Holman must depend upon a diversified shipping plan that features the selection of the right freight forwarders, airports and ocean ports. Time, cost, size and weight capacity are some of the determining factors, contends Louis Caporale, the company’s international sales engineer.

Nearly 5 percent of Holman’s annual $60 million in sales are generated from exports into such countries as Russia, United Arab Emirates, Trinidad, Aruba, Mexico, Brazil, Ecuador, Peru, Chile and Puerto Rico. Though international sales have represented a low percentage of the company’s overall business, they have provided an impressive spark in revenue. “Exports are less than 5 percent of our business, but it has sometimes been a significant part of our business,” says Caporale. “We want significance every month.

“We’re bidding on a lot of things and are adjusting our cost basis,” he explains. “Now this is starting to be a continuous process for us. We want re-occurring business. We’re really competing.”

Doubling international sales by the end of the next fiscal year would be a significant increase. And while Holman wants to boost business in its core regions of the world, it is targeting select growth regions. “South America and the Middle East are ‘no brainers,’” Caporale says.

Hoping to attract some new business from the western South American countries, Caporale says he would consider the Port of Long Beach because it offers a shorter route. Additionally, the Port of Long Beach is two years into a 10-year, $4.5 billion program to upgrade its facilities.

Texas’ Port of Houston, the Gulf Coast’s largest container port with 67 percent of that coast’s container traffic, offers more than location as a feature for Holman. “We generally use the Port of Houston because we can negotiate cheaper rates, there’s better access and less waiting for the shipment to move,” explains Caporale.

With an eye toward targeting Asia, Marrinucci realizes his prospective customers do not want a slow boat to China. Quicker shipping is another major feature at the Port of Houston, which now offers a shorter route to China. Earlier this year, shipping company Cosco Container Lines announced a new all-water service connecting Asia and Houston via the Panama Canal.

Cosco’s Tim Marsh, vice president of North American sales, says the company chose the Port of Houston “because of its progressive approach to cargo handling, ideal intermodal connections and geography that easily met shipper requirements. Quay and crane configurations allow us to turn a vessel in minimum time.”

The Port of Houston is attractive, agrees Dan Gardner, president and founder of Trade Facilitators, Inc., a global supply-chain consultant based in Los Angeles. “It is a natural geographic choice, has good rail access and is equally equipped to handle containerized and bulk shipments,” he says.

“Steamship or airport selection is often based upon geographic proximity to the shipper, where it is going and the number of steamship lines that are operating out of that port,” Gardner continues. “Air freight is considerably more costly, as much as 40 to 60 percent more than steam ship shipping. However, not all cargo lends itself to that. It might be sensitive to humidity or salt air.”

While the Port of Houston is Holman’s primary ocean shipping departure point, the company has used the Port of New Orleans, the Port of Jacksonville and the Dallas/Fort Worth International Airport for air cargo. Caporale says it all depends upon the customer, the destination and what is being shipped.

Further enhancing the shipping experience for Marrinucci and other exporters are freight forwarders and shipping services that assist with the paperwork, handle packing, crating and preparing merchandise for loading into containers or flat racks and, finally, move it onto awaiting ocean vessels. When time is an important factor and the freight is light, Caporale may choose air over sea and use a freight services company that packages the cargo and readies it for shipment. Tubing or replacement parts that need to be at the destination within a day or two are trucked a few miles away to the Dallas/Fort Worth airport. It is crucial for the customer to get those parts quickly, and it’s a competitive advantage for Holman if the customer does not have to wait for parts to repair a boiler.

One method does not fit all when you’re exporting boilers, tubes and replacement parts to faraway lands. What works well for shipping merchandise to Russia one week isn’t suitable for delivering parts to St. Croix the next week, and shipping boilers to Brazil certainly requires a different strategy than exporting to Saudi Arabia.

When Holman’s exports are bound for St. Croix, Puerto Rico, the Dominican Republic or Jamaica, the Port of Jacksonville becomes the most convenient port from which to ship. “It’s a week out of Jacksonville and two weeks out of Houston to the islands,” explains Caporale. Tubing that is overdue to Kuwait may be flown out of the Dallas/Fort Worth International Airport. Other merchandise, however, might be put onto a ship.

Despite projected export growth pinned to intelligent shipping decisions, not all port and airport selection strategies remain in Holman’s hands. The mode of transportation for replacement parts to Russia, as an example, may vary depending on the customer’s need and the cost of shipping.

“Some customers make the shipping arrangements themselves,” Caporale notes. “They tell us which shipping company and what port they want to use. They may have made special arrangements with them.”

This was the case in sending merchandise to the West Indies from the Port of Jacksonville, which Holman used partly because it is closer and partly because the customer had pre-arranged the shipping details and negotiated a favorable rate.

“Since they are paying the cost of shipping,” Caporale explains, “we do what they want.”