SEA CHANGE - Global Trade Magazine
  January 15th, 2014 | Written by

SEA CHANGE

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

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