Trending Now

US Intermodal Gains Momentum Amid Trucking Challenges

New Articles

Section 301 Case Offers Importers a Chance at Refunds as Administration Contemplates Further Tariff Action

section 301
Archives, Global Trade Daily, International Trade

Section 301 Case Offers Importers a Chance at Refunds as Administration Contemplates Further Tariff Action

Leave a comment

After a summer of wrangling, Plaintiffs in the ongoing Court of International Trade (‘CIT’) case challenging List 3 and 4A Section 301 duties on imports from China got a big win: in September the Government conceded that it is not able to administer a repository system that would require each importer to continually submit entry-specific information to preserve its rights to actual 301 duty refunds. The arguably unnecessary and burdensome repository system was the Court’s solution to the fact that the Government refused to stipulate that Plaintiffs would have the right to duty refunds on liquidated entries in the event their claims are ultimately successful. Usually, imports are “liquidated”—think “finalized”—on a rolling basis about a year after entry, so the Government’s position meant that Plaintiffs could potentially lose their rights to duty refunds on more and more entries each day as the CIT litigation continues to play out.

In the end though, after months of intransigence, the Government changed its position and agreed to stipulate that refunds on liquidated entries would be available post-judgment for all Plaintiffs’ entries that were unliquidated as of July 6, 2021. This about-face brings an end to this particular squabble, guarantees Plaintiffs will have access to duty refunds on this set of entries if they win, and allows the case to proceed to the merits. It also suggests that going forward, the Government intends to put forth any possible argument, however tenuous or impractical, to deny refunds to as many importers as possible even if the Plaintiffs prevail on the merits.


While the fact that the Government is vigorously defending its position may not be surprising, it does underscore the benefits of joining the litigation: if List 3 and 4A duties are ultimately declared unlawful, the next debate will center around the extent and form of relief that will be granted to importers who paid these unlawful duties, including which companies will actually get refunds. Actual Plaintiffs in the case will be in the best position to obtain these duty refunds, while the Government will likely make every effort to prevent the ruling from applying more broadly to all importers.

Door Still Open to Join Section 301 Litigation

The CIT case challenging List 3 and 4A duties, which began over a year ago, could very well reach the oral argument stage by early 2022 (barring any further tangential matters brought on by the Government’s efforts to limit potential duty refunds). This would set the stage for a CIT ruling in 2022. Yet the door is still open for other US importers that continue to pay List 3 or 4A duties on China-origin products to join the ongoing litigation and benefit from a potential Plaintiff win once the case and any related appeals are decided.

This opportunity is still available due to multiple arguments that extend the statute of limitations each time duties are assessed on an entry subject to List 3 or 4A. To boot, the burden associated with participating as a new Plaintiff will likely remain quite low in light of the fact that the day-to-day proceedings are led by a Plaintiffs’ Steering Committee that has already been established. So while the extent to which Section 301 duty refunds will be available to Plaintiffs and other importers is still up in the air, importers can still file a complaint to join the CIT litigation and improve their chances of benefiting from a favorable outcome.

More Tariffs May Be Coming

Meanwhile, hopes and predictions that the various unconventional tariff increases implemented under the Trump administration would cease and even be rolled back under President Biden have failed to materialize. So far, the Biden administration has left the additional Section 301 tariffs on many products from China untouched. And now, as a result of its ongoing months-long review of the United States’ policy regarding trade with China, the Biden administration is reportedly contemplating further action under Section 301 aimed at leveling the playing field with China.

Specifically, the Biden administration may launch a fresh Section 301 investigation into government subsidies the Chinese central government provides to the county’s manufacturers, thereby giving its manufacturers an advantage over their American counterparts. Understanding the extent of these subsidies and holding China to account for practices that violate US or World Trade Organization laws has been a longstanding US goal. However, the fact that the Biden administration is contemplating initiating its own investigation under Section 301 to address the concern suggests the use of tariffs as a tool to sway America’s trading partners is no longer considered out of bounds by either Republican or Democratic leaders.

For US companies that import goods from China—and are therefore legally liable for paying all duties owed to US Customs and Border Protection (‘CBP’) on those products— this new normal suggests that existing Section 301 duties will not be revoked by the Biden administration anytime soon. Quite the opposite in fact: it looks like more Section 301 tariffs on more China-origin goods could be on the horizon.

Navigating this new normal in a way that keeps companies’ tariff costs down while ensuring compliance with these ever-changing CBP requirements has prompted business leaders to take a more active approach to Customs law issues including classification and country of origin determinations—both of which have the potential to affect how much duty an importer pays to US Customs.

Other Ways to Mitigate Tariff Liability

Beyond joining the CIT litigation challenging List 3 and 4A Section 301 duties companies can identify opportunities to save on both general tariffs and additional Section 301 duties by reviewing and confirming the accuracy of the information they submit to CBP. One example of this is conducting a product-specific classification analysis to determine the correct Harmonized Tariff Schedule of the United States Code (or HTSUS code) applicable to a given product based on the product’s characteristics and the (often gray) body of rules and guidance governing classification. Each 10-digit HTSUS code has a corresponding general duty rate, so if a review of a product’s classification results in an HTSUS code correction, it could also result in a lower general duty rate for that product.

Similarly, conducting a supply chain-specific country of origin analysis to determine the correct country of origin of a given product based on where each manufacturing step is conducted and the applicable (and often gray) rules and guidance governing country of origin can result in duty savings. If a company can establish and document that its product’s country of origin is a country other than China, then Section 301 duties will no longer apply to that product.

While both classification and country of origin reviews present an opportunity to mitigate tariff costs, they also help ensure companies are not inadvertently providing incorrect information to US Customs and exposing themselves to potential penalties for such violations—another must for US importers in light of the fact that tariff issues remain front and center in the minds of regulators and requirements continue to evolve in response to the ever-changing geopolitical landscape.

 ___________________________________________________________________

Andrew Bisbas is Counsel at Lowenstein Sandler. His practice centers on US Customs and Border Protection import requirements and tariffs. He helps clients navigate CBP requirements including classification and country of origin determinations as well as USMCA and other trade agreement implications. Andrew also assists clients in setting up and maintaining corporate import compliance programs, conducting import audits and supply chain due diligence, preparing and submitting prior disclosures to US Customs, and advising on tariff engineering and supply chain structuring efforts geared towards mitigating tariff costs.

drivers
Archives, Global Logistics, Global Trade Daily, Trucking

Tenstreet Market Index: With Turbulence Ahead, Take Advantage of Seasonal Gains

Leave a comment

2021 has been an especially unpredictable year in an industry that already suffers from major uncertainty. The effects of COVID-19 on the economy and on the driver market are still being felt all across the nation, and carriers have their work cut out for them when it comes to keeping up with the need to fill and run their trucks profitably.

That being said, the past few months have been marked by optimistic data. Despite a challenging start to the year, the hopeful uptick we had begun to observe in our last Tenstreet Market Index has crystallized into an objective positive improvement over the past several months.

We’ve continued to observe several positive industry-wide trends in our data that indicate things are moving up for transportation – which should mean smoother sailing for carriers in the months to come. Let’s review the data to understand what’s happening with drivers and carriers – as well as how to prepare for the next big changes we’re predicting.

Weekly Driver Activity – 2021

We last visited this chart at the end of May, when the trend lines were all starting to move upward after a dip-filled start to the year.

As the chart, which describes weekly driver activity over the course of 2021 so far, details, driver activity has continued to climb. Since the beginning of June,  we’ve seen the number of drivers filling out lead forms and full IntelliApps climbing along with monthly Driver Pulse users, indicating a clear focus from drivers on finding carriers and getting hired. This is commensurate with most year-over-year trends that see stable volumes of applications in the summer months.

The only major dip during this season occurred right before the 4th of July, a common time for drivers to focus more on the holiday before returning to the job hunt. It’s important for carriers to remember how seasonal hiring can be, even on a week-over-week basis, as we enter the end of the year. As family holidays start to dominate the later months of the calendar, carriers need to be prepared for these dips in activity, which often occur in the weeks leading up to a holiday.

Application Activity Index

The Application Activity Index is a measure of Tenstreet clients who have had a consistent IntelliApp volume for the past 31 months. We assigned January 2019 a value of 100 for comparison, which gives us an easy way to see the rate of application activity change over the last two and a half years while removing the impact of growth in the number of carriers using the platform.

As you can see below, carriers as a whole took a huge hit starting in February of 2020 (just as COVID-19 was beginning to emerge in America) and the market slid steadily downward until May of this year. However, we finally seem to be on the rebound. Application numbers have been rising every month since April, finishing the summer off strong. This seems to suggest we’ll see the market move steadily back toward the growth patterns we were expecting before COVID hit – note how many of the lines nearly mirror where the index first started. Expect an increase in applications over the summer and into the fall.

Cost Per Full Application

For most of 2021, carriers were paying more and more each month for full applications (and on average more than they had to pay in 2020), but May marked a turnaround. The cost of a full app began to drop and continued in freefall for the next two months. The rapid cost decline has started to level out, but we’re back to the levels we were seeing at the beginning of 2020, before the start of COVID-19. Take advantage of this trend now to cut your recruiting costs while a wider selection of candidates are in the market.

How To Prepare for the Future

Improved market conditions, like a lower cost for full applications and more driver applications coming in, are obvious positives for carriers that result in saved advertising budgets and faster hiring timelines. Now is the right time to take care of hiring trends and recruit the best drivers you can.

Just as important as paying attention to current data is reflecting on seasonal patterns we’ve seen before. With Thanksgiving and Christmas on the horizon, we’ll likely start to see these positive trends start to turn around again as soon as early November.

At the same time, the industry still faces uncertainty around COVID-19. The delta variant could cause staffing and logistics issues through the coming seasons and into next year, so companies should be prepared for potential turbulence in the months ahead.

If you have seats to fill or are planning to grow your fleet in the coming months, getting that done soon will help you avoid losing money on empty trucks.

Strategies for Increasing Hires

If you’re one of the carriers looking to hire, consider picking up some new marketing tools that can help you improve your personal performance, regardless of industry trends.

Here’s a few marketing services that can jump-start your business as you look for new drivers:

-Tenstreet’s Job Store lets you post all your job openings from one place inside the Tenstreet dashboard. It brings more than 20 popular job boards together to save you considerable time, helping you find the drivers you need quickly at the best cost for your budget.

-Our free Job Store concierge service pairs clients with a specialist who can advise on maximizing the utility of the Job Store, writing better ads, setting hiring geos, choosing the best merchants for you, and managing your recruitment budget – all for no cost or long-term commitment.

-Pulse Match shows your job postings to candidates who meet the qualifications you’ve set for the position, keeping scattershot applicants out of your pool. Only pay a low price-per-application when you get one, and not a thing until then.

supply chain
3pls, Archives, Global Logistics, Global Trade Daily

Infographic: Supply Chain Leaders Weigh in on Ideal Balance of Tech and Human Expertise

Leave a comment

To better understand how shippers and carriers are integrating technology into their operations today, and where they are investing for the future, Coyote Logistics conducted an in-depth research study in 2019.

Following a shift to digital adoption never seen before driven by the pandemic, Coyote revisited the topic in 2021. This two-part infographic series outlines trends in supply chain automation based on feedback from over 850 global supply chain leaders. Below is part one with four of the top trends.

fulfillment
Archives, Global Logistics, Global Trade Daily, Warehousing

Key Considerations for an E-Commerce Fulfillment Model

Leave a comment

More and more people today are choosing to do their shopping online. The first quarter 2021 e-commerce estimate increased 39% from the first quarter of 2020. Whether it is ordering groceries ahead of time for pickup, tapping an ad on Instagram and buying those sunglasses that caught your eye or a monthly subscription for razors that shows up like clockwork, all of these products begin somewhere. In turn, each of these “somewheres” reach their consumers through their own unique fulfillment model.

By 2023, retail e-commerce sales are expected to account for $740 billion in revenue, up approximately 58% from 2017, according to a Statista market study. If you are a consumer, this may not fully interest you. You might say, “So what? I click a button and the things I want arrive when I need them to.” However, if you are someone in the infancy of starting a business, or if you have an established business that you would like to expand via online sales, creating and maintaining an efficient fulfillment model can be a challenge you grapple with every day.

No two fulfillment models are the same, nor should they be. What works for one retailer may not be effective for another. However, regardless of industry, product or business size, many of the considerations involved in designing an operation are similar. This article will explore what those considerations are, why they are important and how any business can transform their customer engagement through a fulfillment model that evaluates options for insourcing or outsourcing operations, considers strategic investments in supply chain technology and leverages supply chain best practices.

INSOURCING VS. OUTSOURCING FULFILLMENT OPERATIONS

Prior to the emergence of widespread retail e-commerce, fulfillment was a relatively straightforward process. Companies manufactured or procured their products, which were then warehoused in a location with viable transportation routes to their points of sale before eventually being shipped wholesale and stocked at brick-and-mortar retail stores for consumers to purchase. So, what changed? In this simplified example, the biggest shift is that now instead of retailers or company-owned stores accounting for the largest share of orders to the warehouse for fulfillment, this volume is coming from the individual consumer. That said, what has enabled this shift to occur? Well, the answer to that question is multi-faceted. Again, keeping things in a simplified view, this change has largely been driven by an overall decrease in shipping-related costs and expanding technological capabilities that increase the speed of the fulfillment process.

The shipping industry has drastically changed in the last 20 years, with outsourced and third-party logistics (3PL) providers significantly contributing to this reduced-cost trend. According to an Acumen report, the global third-party logistics market is expected to grow at a CAGR of around 7.5% from 2021 to 2028 and is expected to reach a market value of around US$ 1,800 billion by 2028.

Shippers continue to report a reduction in logistics costs by utilizing these outsourced services. What is their secret? Primarily, two factors—scale and technology. Scale, in this sense, means that a wide variety of products from various retailers can be stored and shipped from the same location. This increases truck capacity utilization from the 3PL facility (middlemen) to the shipping hubs that handle last-mile delivery to the consumer. The more a truckload can be fully utilized, the lower the shipping cost per individual item.

This principle applies to every retail operation. If you have an emerging business and want to reduce the cost of reaching your customers, partnering with a 3PL service may be a great option. This would allow a company to take advantage of the 3PL’s scale and technology, for a fee, and to tap into a wider consumer market for less than it would cost to internalize their logistics. Similarly, 3PL partners can be advantageous from a time-to-value perspective. By providing a pathway to quickly spin-up and initiate customer engagement via e-commerce distribution, a 3PL partner can provide scale and reach faster than internalizing. However, this time and cost equation changes as sales volume increases. If a company continually achieves a high sales volume, and can afford to implement a lengthier planning horizon, moving to an internalized operating model may be the better option.

This is where understanding and applying the technology utilized by logistics industry leaders, along with adhering to best practices for warehousing and distribution, become critical to a business’s success. On the other hand, if a company does not meet the sales threshold where partnering with a 3PL is advantageous, options certainly exist to improve fulfillment speed, reduce costs and grow an operation by adopting these technologies and best practices on a smaller scale, all while keeping retail operations independent.

TECHNOLOGY

For any operation that desires growth, investing in and improving the technology used to conduct business is a great place to start. This is especially true in a world where anyone who is a maker, creator or inventor can turn ideas into profits by simply creating a website marketplace using common services such as Shopify or Squarespace. Entry into the e-commerce space has never been easier. It is, however, difficult to know what to do next when the sales orders start piling up.

Is too much success a bad thing? Of course not. However, as a retailer, the obligation to customers is to provide them with the products they purchase in a timely manner while reducing defects and incurred costs as much as possible. It sounds simple but gaining brand popularity and maintaining it are two different things. The former is largely based on marketing or innovation while the latter is predominantly due to a high level of organization and business efficiency.

Systems

Let us revisit our scenario mentioned at the end of the “Insourcing vs. Outsourcing” section. In this example, consider a retailer that has introduced an innovative product or brand to the e-commerce market, and sales are taking off. The success is there, but what do you do next to improve organization and efficiency? First and foremost, getting a grasp on inventory and understanding the product movement within the “four walls” of your operation will prove critical to the long-term success of the business. This is where a warehouse management system (WMS) can help. In years past, the acronym WMS has been synonymous with large-scale, highly sophisticated and automated operations. Today, however, this landscape has changed significantly. Gone are the days of high start-up costs and expensive on-site equipment with an army of consulting resources to get a basic WMS up and running. Those kinds of deployments are now predominantly reserved for the most sophisticated large-network fulfillment businesses where subject matter expert resources can provide their highest value.

So why adopt a WMS? A warehouse management system should be thought of, to use a computing analogy, as the “operating system” for your fulfillment business. It can funnel in orders that you receive from your e-commerce web portal and manage workflow—from directed put-away of product to batch picking orders—with the goal of timely fulfillment to consumers. It can track inventory from receipt to storage and replenishment to sale. Furthermore, it will function as the nucleus of your operation where additional systems and technologies can be built out to continue enhancing operational capabilities. These additional systems may eventually include a transportation management system (TMS) for optimized truck-load planning and parcel shipping, a labor-management system (LMS) for improving workforce engagement and order management or distributed order management system (OMS/DOM) for managing various order streams coming from multiple points of sale.

The WMS can even serve as the basis for attaching automation components such as a warehouse controls system (WCS) or warehouse execution system (WES) for use with conveyor, robotics, sorters or storage and retrieval systems. According to a study by APQC, organizations utilizing a WMS spend roughly $3.63 less per $1,000 in revenue across the entire logistics process than those not using a WMS. This may not appear to be much, but as revenue increases, these savings do as well. Likewise, the efficiency gained by implementing a WMS can result in significantly higher-order accuracy rates and reduce the overall number of expedited orders shipped, further lowering overall shipping costs for a seller.

Low-Cost Options

The core function of a WMS is to better manage the flow of goods within an operation by increasing organization, with the thought being that a high level of organization leads to increased efficiency. This is something any operation, big or small, can take advantage of. Vendors today are providing system options for all sizes of fulfillment businesses. On the smaller side, vendors such as Systems Logic’s “Wireless Warehouse in a Box” and Ship Hero’s suite of products provide excellent cloud-hosted and subscription software options for a quick, easy and affordable deployment.

Additionally, these products incorporate direct one-click integrations to many common sales channels for immediate organizational benefits while also providing a foundation for future technological enhancements that may be desired. According to the company FAQs for both vendors, typical setup time for a system of this type is roughly one week but can depend on several factors. These variables can include the size of the product catalog that needs to be loaded in, the number of sales channel APIs you would like to connect and the extent to which you would like to custom configure certain aspects of the product. Notably, purchasing a WMS and utilizing it for fulfillment within one to two weeks should appeal to any seller that views organization and efficiency as primary drivers for the future success of their business.

Mid-Tier Options

On the mid-level side—keeping the cloud-deployed and subscription basis requirements—many players have forayed into this market providing a wide array of capabilities and advantages. Some vendors in this space have begun to incorporate controls systems, labor and order management modules, KPI dashboards and reporting, as well as additional configuration options. Other capabilities of these products include multi-site and multi-tenant deployments, lite-kitting and build-to-order needs, and space-cube and pick-path optimization functions.

Strong vendors in this space include Deposco, Intellitrack, Path Guide, Ship Edge and SKUVault. Further investigating these options may appeal to businesses that are already utilizing a low complexity system but recognize additional capabilities are needed to sustain and expand upon their success. Uplifting systems in this space will likely require coordination with vendor resources as well as possibly employing contract labor that specializes in WMS installations and configuration. Once live, however, these systems give any mid-sized fulfillment operation significant capabilities that they can continue to develop and utilize for years to come.

Top-Tier Options

If you are familiar with the current WMS landscape, then the vendors servicing the top end of the market should not come as a surprise. These offerings service the most technologically complex distribution operations and provide a level of capability that other systems simply cannot match. They are also on the cutting edge of supply chain innovation, often incorporating native control systems, advanced order streaming (opposed to traditional waving) functions, sophisticated put-away and allocation configuration options, as well as enhanced labor and capacity planning tools. Some vendors are even revolutionizing the way their systems are sold and maintained by converting their products to what is known as a “version-less” architecture. This, in simple terms, means that once you purchase a subscription to the product, you will not have to purchase its successor version in the future. It also means that updates and software patches, along with product upgrades, can be pushed out to the customer with minimal intervention or disruption to day-to-day processes at a lower overall cost.

When considering systems of this scale, products offered by Blue Yonder, Infor, Manhattan Associates, Körber-HighJump and SAP come to mind. Other vendors that fall just short of the very top tier include Avectous, Click Reply, Made4Net, Microlistics and Softeon, among others. It is worth noting that these systems will require significant capital investment to purchase, deploy and maintain over their life cycles. The previously mentioned version-less example is a way in which vendors are attempting to address some of these long-term cost concerns. However, the price of adoption is still quite high. That said, if a business requires intelligent and automated decision-making from its systems, along with high visibility and control over distribution operations, these are the best solutions available.

Extended Systems and Other Options

WMS solutions receive significant attention due to the organizational and process capabilities these systems present, but a key feature for sellers may be left out of the vendor-provided solution. This feature is called parcel shipping. Parcel shipping is defined as shipping small and light boxed items, usually weighing less than 100 pounds, that can be moved without equipment assistance. The process of parcel shipping involves packaging the sold items, weighing and measuring the shipping container with its contents inside and addressing the box to the end customer with a printed shipping label. Parcel shipping capabilities can be introduced to the fulfillment process as standalone systems, part of a TMS or within a WMS solution. Many options are available in this technology space so it is pertinent to research the various types of parcel shipping solutions that will best fit your current business’ size and complexity while allowing for future growth and development.

BEST PRACTICES

While incorporating supply chain technologies and automation into a fulfillment model can drive widespread efficiency gains and reduce operating costs, these tools must be utilized effectively to achieve the desired benefits. The parameters that define the successful use of these tools are known to industry specialists as supply chain and warehousing best practices. Now, it should also be stated that these best practices can and should be incorporated to all distribution models regardless of size and complexity. Any distribution operation can reap widespread benefits by implementing these methods to improve organization and streamline processes.

Slotting

The concept of effective slotting can be a major driver of efficiency gains for any size business. Slotting, as a warehousing strategy, is the idea that goods should be stored in areas of an operation that ultimately reduces the overall travel time needed for laborers to complete outgoing orders. A “slot,” so to speak, is where an item lives within the building. This is the primary place you store an item or product to be readily accessible for boxing and shipping. For instance, if workers are consistently traveling back and forth across a building to obtain the most ordered items a business sells, this becomes inefficient. Instead, consider grouping the highest sales volume items together in the most easily accessible zone of an operation to reduce the amount of travel time required to collect and fill orders. It should also be mentioned that these high-volume items will likely change over time and as such, slotting strategies should change as well.

The number of high-volume products grouped together may expand or contract and may also be swapped out with other products as sales figures and forecasts change. It also does not have to stop there. Many businesses organize their entire operations such that the least commonly purchased items are at the farthest end of their building with the most purchased items located closest to pack-out and shipping. Again, the whole idea is to reduce the amount of time and effort it takes to get products out the door and into the hands of customers. This can also be further supplemented with automation such as conveyors, goods-to-person systems and even AI-assisted software algorithms included in some high-end WMS solutions. However, technology and automation are not a requirement to implement this strategy and reap immediate benefits.

Storage Mediums

A question many businesses periodically ask themselves is, “What size building is needed to store and effectively distribute product?” In some cases, the question should instead be framed as, “Is the available space we have being used effectively?” Evaluating and refining the way in which products are stored can be equally as important as determining where they are located and will likewise be a key component of defining how much space a business requires. Like slotting, which functions as a strategy to reduce travel times, determining which storage mediums to use is all about reducing the amount of wasted space, or “air,” that exists in a product location. For instance, if a section of full-size pallet racking is being used to store quarter- or half-size pallets, this space is not being properly utilized. There could be anywhere from 50-75% of unoccupied space in each of these locations. In this example, if these products are consistently stored in pallets of this size, consider reducing the location opening height of the racking bays. Depending on the product weights, it may be possible to add one or two more overall levels of storage to this area and consolidate products without requiring additional square footage.

This is a straightforward example, but now consider how much space is potentially being wasted when you examine a full-size warehouse. What other consolidation opportunities exist? If a business is carrying a large amount, think multiple pallets of certain products at a time, there could be an opportunity to implement a double-deep pallet storage system. This would lead to an increase in the volume that can be stored at one location while minimizing the overall square footage required to do so. Likewise, strategies exist for handling smaller quantities and sizes of products.

Decked shelving systems can provide a way to mix cases of products in smaller locations, further minimizing the amount of wasted space. These mediums can also be quite sturdy, with the ability to stack high, allowing for large volumes of various products to be in one centralized area. Just be sure to keep track of where everything is placed. These strategies can be further expanded upon by incorporating technologies such as automated storage and retrieval systems (ASRS), pallet shuttle systems for very high-density full-pallet storage, as well as both horizontal and vertical carousel systems for small item storage and high throughput rates. Last, but certainly not least, do not underestimate the potential of building a mezzanine. The overall takeaway from this best practice should be before building out, consider what can be accomplished by building up, and strive to effectively use the space available before acquiring more.

Product Handling

When thinking about overall operating efficiency, the goal is to move product from storage to the customer as fast and accurately as possible. A factor that can directly affect this, within the four walls of a fulfillment operation, is the amount of product handling required to complete a sale. Like reducing travel times within the building, minimizing the number of steps required to go from storage to the customer can greatly increase the number of sales that can be completed in a given timeframe. One way to do this is to look for opportunities where processing steps may be redundant. When filling orders, instead of placing items in an intermediary bin to take to a packing area, where they must be transferred from the bin to an outbound shipping carton, consider placing the ordered items directly into the shipping box to eliminate this double-handling.

Expanding upon this idea, another strategy is to fill multiple orders at a time. Think about using a cart or other simple equipment to collect the ordered products from storage directly into their shipping containers and then taking this batch of orders to a pack-out or shipping area. By adopting this strategy of “batching,” further improvements can be made such as grouping similar orders together and minimizing the overall travel distance required. Or alternatively, if volume is high enough, it becomes possible to collect all of the items needed for a group of orders and then sort the products to the right shipping containers at a downstream area, enabling operators to process more volume in a shorter period of time. This is an area that most WMS systems excel in, especially higher-tier systems where more automated decision-making tools are included.

New products and sellers are emerging in the retail market daily. Those enterprises that experience success will continually look for new ways of expanding customer engagement. Whether that means outsourcing operations or taking steps to internally build a robust fulfillment model, the decision to pursue either avenue will be unique to each individual business. Developing an internal distribution operation may seem like a daunting task, especially as success mounts and orders begin to accrue. However, abundant success should not be thought of as a bad thing, but rather a challenge to innovate. The tools required to capitalize on this success and grow towards the future have never been more accessible, though it can be confusing knowing just where to start. Hopefully, the information presented here helps to provide clarity on these topics and outlines a roadmap for improving operations regardless of a business’s size or complexity.

_____________________________________________________________________

Sam Nichols is a Project Consultant for Tompkins Solutions. Tompkins Solutions, a subsidiary of Tompkins International, is a global supply chain services firm dedicated to helping clients achieve supply chain excellence and profitable growth. Founded in 1975, Tompkins has integrated its decades of experience in strategy, commerce, logistics and technology to provide unique supply chain consulting and material handling integration solutions. By combining best-in-breed services and technologies, Tompkins delivers a true end-to-end supply chain solution, enabling clients to improve the customer experience and ensure long-term success. Tompkins is headquartered in Raleigh, North Carolina and has offices throughout North America. For more information, please visit www.tompkinsinc.com.

truckers
Archives, Global Logistics, Global Trade Daily, Trucking

Let’s Hear It for Truckers.

Leave a comment

Given the industry’s shortage of truckers, and the mess that has created along the supply chain, mid-September’s National Truck Driver Appreciation Week took on added meaning this year.

Palmetto, Florida’s Port Manatee treated more than 200 truckers to lunches and jam-packed goody bags on Sept. 17, the final day of the weeklong celebration.

“Port Manatee is truly blessed to be served by these devoted professional drivers,” said Reggie Bellamy, chairman of the Manatee County Port Authority. “Especially in these challenging times, truckers have gone above and beyond in demonstrating their commitment to keeping the supply chain running smoothly.”

A. Duie Pyle, a premier provider of asset and non-asset-based supply chain solutions, on Sept. 13 recognized 25 of its less-than-truckload (LTL) drivers for achieving the Million Mile Safe Driver milestone in 2020. Overall, the West Chester, Pennsylvania-based company has had 171 One Million Mile Drivers, 23 Two Million Mile Drivers, and two Three Million Mile Drivers.

“These drivers are true professionals,” said Pete Dannecker, Pyle’s VP of Risk and Integrated Resources, “and I congratulate them for their dedication to safe driving in the congested Northeastern metropolitan region in which A. Duie Pyle operates.”

Free grub, goody bags and safety recognition are nice, but one thing that is usually better appreciated is cold hard cash. That’s what Mark-it Express, an intermodal trucking and freight brokerage company headquartered in Lemont, Illinois, provided to its Land of Lincoln truckers effective Aug. 2 of this year.

“In appreciation for their loyalty, commitment and value the team,” the company announced Mark-it Express drivers in Illinois are now receiving $27 an hour without the Hazardous Materials endorsement and $30 an hour with the endorsement. Mark-it drivers at the Detroit and Kansas City terminals also got pay bumps. “We have been saying over and over that we appreciate our drivers and see how hard you are working,” said Mark-it President Tony Apa.

“Thank you all again–we wouldn’t be here without you.”

logistics
3pls, Archives, Global Logistics, Global Trade Daily, Trucking

Things To Consider Before Starting a Logistics Business

Leave a comment

Are you thinking of starting your own business? Then a transport and logistics business can be a good option because it’s booming at this moment and its growth is not going to come to a halt as people are now more inclined towards things being brought to them at their doorsteps without having to venture out and spend time in doing so. But there are certain things to consider before you finally get ready to start.

Build a customer base

It is seen that people start their business with little capital and solely rely on the revenue to be generated to cover all the incurring costs. In this way, they taste failure at a very early stage of their endeavor. The first and foremost thing to do would be to build a strong customer base by portraying the business plan as transport contacts don’t happen just from anywhere or at any time.

Consider the capital and the cost

Decide on the source of the capital you are thinking of to start the business. It may be from an investor. A bank loan can also be a good option. Considering investing money from your savings should be the last resort. Once the initial capital arrives, chalk out a budget that will cover expenses like maintenance cost, license cost, staff salaries, toll expenses, operating costs, etc. Marketing your business may be too early to think of but that will also involve a lot of money later. Besides, you will have to arrange for the security deposits for the vehicles (if you intend to take lease) you would be using. Insurance cost is another yearly expense to be kept in mind.

So, accurately managing the capital is the most crucial thing to do at the onset of your business. If you succeed in doing so, then you are sure to gain recognition as a reputed transport and logistics association in no time.

Buy the right vehicles

If you are thinking of buying a fleet of vehicles for the business, you should minutely go through the service plans and the warranty the vehicle company is willing to offer. Purchasing the right vehicles depends on two major factors –

a) The type of goods you would be transferring

b) The volume of the supplies the vehicles would be carrying

c) The area (or the distance) you want to cover initially while transporting the goods

d) The terrains your vehicles would be covering

There are other factors to look for before buying the vehicles, but summed up above are the most important ones. Once you have these things sorted out you can easily figure out how to run the business efficiently.

Get a proper training

As a newcomer in this business, you might lack confidence. So, you can get proper professional training carried out by various transport agencies. They will provide you with a certificate after the training process which will give you the much-needed qualification for the business.

Conclusion

Whether you are intending to start with a small van or a huge fleet of trucks, you might face tough competition from your fellow businessmen. Always look for ways to improve your business status. Keeping your customers satisfied should be your priority, not only in this business but in every business.

intermodal
Archives, Executive Education, Global Trade Daily, News

UPCOMING: Intermodal Association of North America

Leave a comment

Intermodal Association of North America EXPO is the intermodal industry’s platform for products, services, and solutions; a classroom for new skills and know-how; and an exchange for ideas and business.

Join us in Long Beach, California, September 12– 14, 2021 for three days of breakthrough thinking and real connections with intermodal executives from across the world.

From quality exhibitors to more than 700 companies including 3PLs,  global carriers and shippers, and more, the annual event is known as the connecting force behind intermodal freight.

Leaders in the industry can attest to the event, such as South Carolina Ports Authority’s president and CEO, Jim Newsome:

“It’s to have the exposure to the movers and shakers in the intermodal industry,  to learn about trends that are occurring and how one can leverage that to make their business better.”

Visit https://www.IntermodalExpo.com to learn more about the conference, advanced discount pricing and discounted registrations for new IANA members and first-time attendees.

Yantian
Archives, Global Logistics, Global Trade Daily, Ocean Ports

Yantian Port Congestion: How Can Shippers Navigate Another Major Supply Chain Disruption?

Leave a comment

While the global logistics industry has not been a stranger to disruption this past year, the congestion at the Port of Yantian in China is starting to impact the market at an exceptionally high level. At the current pace, it’s going to be even more disruptive than the Suez Canal blockage this spring and the ongoing congestion at the Port of Long Beach/LA over the past year. This is due to the magnitude of the trade lanes and exports the port touches. Unlike the Suez Canal incident or other recent port issues, which have impacted a more limited number of regions and trade lanes, the Port of Yantian is a major export hub for multiple large markets like Europe, North America, Latin America and Oceania.

This disruption also came on top of an already brittle logistics system which is currently grappling with several unprecedented challenges, including equipment shortages and decreased schedule reliability, to name a few. Right now, the reliability that the vessel carrying your goods or expected to pick up your goods will show up on time is roughly 5%. At this time last year, it was around 80%+. And, as ocean carriers introduce more blank sailings or skip ports to start improving the reliability percentage, that means the freight that was skipped is now added to the backlog of containers that will flow into the next vessel.

It’s likely we won’t see a large shift in congestion until the demand levels out.  And while this market does not lend itself to a silver-bullet solution, there are things shippers can do to keep their supply chain afloat:

1. Be open to hyper flexibility

While flexibility is important any time global logistics are involved, the phrase ‘now more than ever’ holds true here. Currently, delays at the Port of Yantian are ranging from 10-15 days, which is a large jump from the 2-7 day delays we experienced just few weeks back.

Switching between ports, modes, and trade lanes has been an active strategy to avoid these delays, but shippers can’t rely on only adjusting once or twice since other shippers are also making these shifts as they compete for limited space. A good example of how this plays out is in the case of congestion at the Port of Oakland. Over the last few months, as the delays at the LA port were mounting, carriers started diverting sailings to Oakland. The result? Oakland is now also severely congested and suffering from the same unpredictability.

Fact remains, ocean carriers are deploying the most capacity on the U.S. west coast (USWC) routing, and as complexities in the interior of the U.S. continue to be exacerbated (i.e. lack of chassis and rail congestions), carriers continue to limit options for containers moving inland. Shippers need to continue to be flexible in enabling containers terminating on the USWC and leveraging transloading and trucking inland options.

When considering flexibility across modes, keep in mind air may be the solution for a few shipments, but it’s not a feasible option to shift all your ocean freight to air. Instead, exploring a mix of modes, like LCL + air, may offer a more realistic opportunity for your company in a more cost-competitive way. Having the right partner with a global suite of service and technology offerings coupled with scale and a strong inland network, is going to make the difference for supply chains in the market.

2. Prepare for ultra-prioritization

Prepare to make tough decisions on what freight is most important to move. This can be especially difficult for companies importing seasonal items, like patio furniture or pools since their selling window is limited.

With today’s demand, most shippers would classify all their freight as a top priority but shipping it all at once may not be realistic. It’s important to sit down and have those conversations now so when the opportunity presents itself for portions of your freight to move, like in an LCL shipment, you’re ready to make the call.

3. Don’t dismiss historical data

I’ve been in the business 20 years and never seen anything like this in a global magnitude, impacting almost all core trades. However, a unique situation does not mean historical data no longer lends itself to helping us find solutions.

The market will improve, and things will get better. However, these issues tend to be cyclical as we look at the data. We need to build resiliency around supply chain and continue to have options to navigate. While some of these events are hard to predict and plan, there are things that you can do, such as diversifying distribution center locations, sourcing, etc.

Final Thoughts

Until the high demand subsides, the above points will be crucial moving forward. C.H. Robinson has always been focused on working alongside our customers to help them succeed – and that’s no less true during times of incomparable volatility. It’s important to keep an open line of communication and to be open to creative solutions. As we work through this together, I encourage you to keep tabs on our data-driven market insights page and reach out to your representative.

carrier
3pls, Archives, Global Logistics, Global Trade Daily

The Top Best Practices for Carrier Management

Leave a comment

Carrier management software in the fuel industry has come a long way. Its primary mission has always been to assign, manage, and review shippers and carriers. One year after the pandemic gripped the world– we are starting to see some trends and best practices emerge that enhance the overall industry.

Prior to the global crisis, many traditional carrier and logistics management systems still relied on manual activities, including paper systems, where shippers and freight carriers lacked access to real-time data, reporting and dashboards. The latency and lack of visibility amounted to higher costs and lack of efficiency. The old, outdated information made decision-making impossible. One of the biggest issues was that carriers could not plan accordingly for fluctuations, or other issues that might arise in an already unstable world of economic unrest, a global pandemic, an oil crisis or other fuel supply chain disruptions.

Many operators recognized the need for real change and to implement digital transformation. Changes to carrier management systems and platforms needed to occur in order to easily keep track of fuel surcharges, contract negotiations, on-time deliveries, fuel inventory and various other critical data. This also included receiving up to the minute access to information about hidden freight damage, driver courtesy, professionalism, and other relevant customer service standards.

Through the implementation of advanced technologies and data systems, shippers and carriers can have significant advantages — opening up new possibilities for collaboration, proactive planning and a potential overhaul to their freight management system. In an industry where every penny matters, there are several best practices for addressing carrier and logistics management – some technology-related, and some not. Let’s take a deep dive into some of them.

1. Invest in software: A good logistics solution can help predict demand and propose what quantities of each type of fuel should be delivered to each station; ensure that tanks don’t run out of fuel; make sure there’s product in each tank, and maintain a balance between products with high and low sales volume. A software platform can help you reduce friction and remove the barriers between operational groups with a single, connected solution. It can also provide one version of the truth by giving retailers, wholesalers, and carriers access to the same system and the same data.

2. Gain real-time visibility: Real-time visibility gives carriers all kinds of advantages such as access to load or freight boards. A load board is an online marketplace where truck owner-operators, shippers, and freight brokers can post and search for loads to keep freight moving. If operators have extra capacity, and somebody has a scheduled load that they need to get picked up, and you’ve got capacity, you can jump on that load board and get a hookup and then haul that load of fuel. Real-time visibility also allows you to know where your fleet and fuel are at any time – making it easier to tag team on other issues that might arise and manage issues such as inventory, forecasting, sourcing, and dispatching.

3. Know the news: What is happening around the world can often significantly impact carrier management. A natural disaster, such as a snowstorm in Houston, could impact the timing that fuel is being delivered when operators can buy or get deliveries, or even what prices fuel is being purchased. Just a few months ago, Texas fuel marketers reported adequate supplies of gasoline but slow distribution as severe winter weather gripped the state. The icy roads and below-freezing conditions led many fuel marketers to keep drivers who were responsible for the last leg of fuel distribution safe.

4. Understand safety: Know the safety requirements that are designed to allow a carrier to haul loads. Operators need an appreciation that there’s a huge legal liability for hauling fuel. The average load of fuel is about 7,000 gallons. That is a lot of fuel, and if safety measures are not followed, this could cause a lot of damage. Carriers that are hauling and delivering fuel need to make sure to put fuel in the tank in the right way, fill out the paperwork correctly, and have general respect and appreciation for how complex and dangerous their job can be. Using tools such as electronic logging devices (ELD) will help manage and monitor driver and fleet compliance, simplify driver workflows, increase safety and provide real-time visibility to streamline operations. This keeps drivers safe, keeps the fleet compliant, and keeps the business efficient. Dashcams also provide safety for drivers — improving driving behavior, guarding against accidents, and providing valuable evidence if an accident occurs. Using built-in artificial intelligence and infrared can detect road hazards and driver distractions too.

5. Communicate often: Have regular meetings to review the data so improvements can be made if necessary. Regular meetings with carriers, not just when things are challenging or if issues arise, can help address issues that might come up, such as frustration over an awkward tank placement at one location or difficult deliveries in a congested, big city like New York. There might be extenuating circumstances at some locations, but with open communication, solutions can be figured out together. About 15 years ago, many organizations owned their own drivers, carriers, and tanks. That has since changed. Now, the majority of fuel delivery services are contracted. Having a close relationship with the third-party delivery service is critical to success.

6. Identify Strengths: Figure out what a carrier does very well such as inventory management for difficult sites (e.g. tight delivery windows, split deliveries, etc.), and celebrate those strengths. Use the experience to inform and coach other carrier relationships. Maybe a carrier has smaller trucks and can fit into those tight urban locations. Through identifying these issues, a transparent relationship can be formed.

7. Update score cards: Create and maintain a carrier scorecard. Carrier scorecards outline how a carrier performed over time. If a carrier missed the delivery window, picked up the wrong product, didn’t get the paperwork in on time, or missed paying the bank, it can all be captured in one place. That way, an operator has all the complex information about that carrier in one location, and it is simple to determine what carriers are working out and which ones need to be replaced. It is critical to know how your carriers are performing because this can impact customer satisfaction, branding and costs. All of these issues can potentially cause substantial lost dollars for an organization. The score card can also help an operator understand what they need to improve to make the delivery and the relationship more successful.

In Conclusion: The relationships with your carriers are critical to the success of your business and can clearly impact your bottom line – especially as the industry continues to move more towards working with third parties. We believe the entire transportation industry should have access to high-quality, data-driven technology to develop carrier excellence. Technology and communications can be the foundation of all of these best practices.

global supply
3pls, Archives, Global Logistics, Global Trade Daily

Global Supply Chain Management: Developing Successful Relationships in Freight and Logistics

Leave a comment

The Covid-19 Pandemic has increased in global supply chains:

-Uncertainty

-Increased Costs

-Delays

-Reduced Capacity

-Limited Negotiation Leverage for Shippers

When freight is managed as a “commodity” there is little opportunity for long-term, more successful and profitable relationships in the purchasing of global transportation services between shippers of cargo, service providers and carriers.

Most shippers with international footprints work directly with carrier options, NVOCC’s, 3PL’s or forwarders/brokers. These relationships, as we enter the second year of the Covid-19 Pandemic are increasingly critical aspects of freight, logistics and overall supply chain management success.

Uncertainty in the freight markets has created a disruption, confusion, and disharmony in the trade lanes of the world, in particular, to and from the USA/China. Air and Ocean Freight Pricing is up in multiples of 3-8x average pricing over the 2017-2019 periods.

There are also delays and a significant lack of carrier capacity, chassis and trucking capabilities. This has impacted both imports and exports as well as certain domestic movements.

While the biggest impact is on international trade lanes, domestic freight is up and has caused capacity and pricing increase, as well.

The most impactful frustration is with inbound air and ocean freight from China to North America. The concerns start with the “demand planning” and the need to substantially increase lead times, say normally at 8-12 weeks to 20-30 weeks out.

Importers need to be prepared for delays in moving the freight as much as 30-60 days. Carriers have now come up with “Premium Pricing” best described as “If you want your freight to move … this is the price you will have to pay”. This is causing ocean freight pricing to rise into the $8-15,000 level per 40’ Container from China to the West Coast USA.

Ocean Freight which has been typically guided by “annual contracts” is now mainly controlled by “spot market pricing”. Another leading indicator of a very tight market condition.

Airfreight pricing could as high as $10.00 per kilo., where normally $2.50 per kilo would be the market rates.

The market volatility is likely to extend into 2022 so we caution all supply chain managers to properly prepare for more difficult times and seek numerous options.

With all the doom and gloom, there are a number of measures we can take to mitigate the impact and

When we have “sustainable relationships” we capitalize on the following:

Better working relationships between shippers, service providers, and carriers

We all want to work in an atmosphere in global trade where we would describe our relationships in the global supply chain as excellent. This allows for less stress and overall better results.

Quality relationships create the ability for better planning and management by more informed and better-anticipated expectations.

Ability to work through Pandemic Disruption.

Carriers and Service Providers are more likely to accommodate existing clients where a favorable working relationship is present. Since there is limited capacity, the industry prioritizes clients over prospects.

Longer tenured relationships

Changing service providers and carriers frequently is disruptive and costly and never a preferred option. Everyone engaged in the supply chain does better in long-term relationships.

Reduction of risk and spend in the global supply chain

When the relationships work well we always see a direct relationship to the reduction of costs and risks as goods move through the supply chain cycle both domestically and internationally

Keep in mind that there are a number of options from freight consolidation, drawbacks, FTZ’s … that these relationships can bring to value in global supply chains.

Consistency in pricing and service agreements

If we always have “spikes” and “steep” changes in our business models, no one will be happy in your company and the difficulty to manage operational issues will be very difficult all the time.

The preference always is to have a smooth gliding more rhythmic path in the business model to follow so changes are not large or small but even out on a more consistent basis.

Less “angst” in “day to day” business dealings

The uncertainty is global shipping has caused much frustration, which has led to high degrees of angst.

Angst causes stress. Stress causes anger. Anger causes bad decisions. Bad decisions usually produce bad results. Eliminate angst and have more success.

Ability to work through problems and bringing quicker resolve to issues at hand

Global supply chain managers face challenges every day. Even in the best-managed supply chains, problems will occur daily. They need to be resolved quickly. Good working relationships “open the door” to quick, swift and comprehensive resolution.

Access to better security and trade compliance initiatives

Every international supply chain requires due diligence, reasonable care and supervision and control to meet various government security and trade compliance regulatory requirements.  Better working relationships foster a more secure and compliant environment to ship freight in.

Better access to and utilization of technology resources

Technology will always enhance business relationships with all the benefits of expediency, efficiency, exactness and information flow.

Technology is becoming one of the most important value-adds in business relationships in the global supply chain:

-Enhance efficiency in information flow

-Enhance correctness in information

-Allows information flow to be the conduit for more informed decision-making

-Creates KPI’s (key performance indicators) that manage accountability between the multiple parties in international transactions

-Becomes a management tool to increase overall performance, lower costs and reduce risk.

Creating a “partnership” approach

We cannot emphasize enough the importance of establishing a “mindset” between all the parties to approach matters on a “partnership” basis.  This is the best course of action that achieves “trust and confidence” between shippers, service providers, and carriers.

Trust and confidence become “hallmarks” and allows all parties to both compromise and benefit from all the actions that impact one another in the day-to-day movement of freight throughout the world.

The following key factors create a path to better relationships and sustainability.

Transparency

Share all the information necessary to get the job done right. Eliminate a “mindset” of clandestine behavior, working through “secret passageways or working in the shadows” mentality.

Put up all the data. Shippers outline clear expectations. Service providers and carriers outline clear capabilities.

A no non-sense, direct, no BS approach works best.

Valuing Favored Incumbents

Always be loyal to companies that have serviced you well. Loyalty is what you expect from your customers, so give it to your vendors and suppliers, when well deserved.

If you need to conduct an RFP (Request for Proposal) and bring in competition always give some advantage to a favored incumbent.

Be Open and Honest, Consistently

The value of being open falls in line with being transparent, but also adds on an element of “frankness, truthfulness and honesty”.  People trust those who are honest period.

When you are more honest, you can get more done as people better respect you and are more open to participate and go the extra yard to get better results.

Be Creative

The challenges of global trade can be daunting. Every approach will require a potentially different and maybe even a new revolutionary approach.

Creativity is a necessary element of being able to compete successfully, as creativity opens the door for problem resolution, progressive options, aggressive tactics and at times advanced/rebellious/extreme/mutinous behaviors.

Risk Management in assuring “Insurance” is Addressed

Claims are inevitable if you ship goods internationally. If you want to see a “relationship, go south quickly” have an unresolved claim.  Liability for loss and damage in global trade is an area of major concern.

All parties in the supply chain shipper, service provider and carrier need to know where their risk begins and ends and if there is a claim, where indemnification will originate.

When this is left unclear, it creates frustration between the parties and eventually a loss of confidence, which leads to a breakdown in any opportunity for sustainability between the parties.

Address insurance concerns proactively, comprehensively and with transparency and you will mitigate future relationship issues.

Summary

Quality relationships drive sustainability, which is always a preferred option in global trade.

The big concern is the impact all of this will have on both industrial and consumer pricing, which has and is likely to increase pricing even more than it has already with inflation raising its ugly head.

Comprehensive planning, making better more informed decisions and developing quality options and relationships create a blueprint for mitigating these supply chain challenges now and down the road.

____________________________________________________________

Thomas A. Cook is a 30 year seasoned veteran of global trade and Managing Director of Blue Tiger International, based in New York, LA and West Palm Beach, Florida.

The author of 19 books on international business, two best business sellers. Graduate of NYS Maritime Academy with an undergraduate and graduate degree in marine transportation and business management.

Tom has a worldwide presence through over 300 agents in every major city along with an array of transportation providers and solutions.

Tom works with a number of Associations providing “value add” to their membership services and enhancing their overall reach into global sourcing and in export sales management.

He can be reached at tomcook@bluetigerintl.com or 516-359-6232.