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Germany’s Polyamide Exports to Set New Record This Year

Polyamide
Archives, Global Trade Daily, News

Germany’s Polyamide Exports to Set New Record This Year

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IndexBox has just published a new report: ‘Germany – Polyamides (In Primary Forms) – Market Analysis, Forecast, Size, Trends and Insights‘. Here is a summary of the report’s key findings.

German polyamide exports may reach a new record in 2021, rebounding after two years of decline. In the first half of this year, Germany exported 424K tonnes of polyamides worth $1.55B against 348K or $1.12B in the same period in 2020. Germany remains the world’s largest polyamide supplier, accounting for 19% of global exports. Italy, Belgium and France are the key importers of polyamides from Germany. Turkey recorded the highest spike in imports from Germany. In 2020, the average polyamide export price amounted to $3,205 per tonne, down by -7.7% y-o-y. 


Germany’s Polyamide Exports by Country 

In the first half of 2021, Germany exported 424K tonnes of polyamides worth $1.55B, which was 22% more in physical terms and 38% more in value terms than the figures of the same period of 2020. Germany leads in global polyamide exports, supplying 19% of the total volume.

In 2020, approx. 713K tonnes of polyamides in primary forms were exported from Germany; declining by -9.3% on the year before. In value terms, polyamide exports contracted dramatically to $2.3B (IndexBox estimates) in 2020. German exports peaked in 2018, reaching $2.98B.

Italy (100K tonnes), Belgium (72K tonnes) and France (45K tonnes) were the main destinations of polyamide exports from Germany, with a combined 30% share of total exports. Poland, Turkey, the Czech Republic, Austria, the U.S., China, Spain, South Korea, Hungary and the UK lagged somewhat behind, together accounting for a further 42%.

In value terms, the largest markets for polyamide exported from Germany were Italy ($243M), Belgium ($224M) and Poland ($148M), with a combined 27% share of total exports. France, the Czech Republic, China, the U.S., Austria, Turkey, Spain, Hungary, the UK and South Korea lagged somewhat behind, together accounting for a further 44%.

Among the main countries of destination, Turkey recorded the highest growth rate of the value of exports, over the period under review, while shipments for the other leaders experienced a decline.

In 2020, the average polyamide export price amounted to $3,205 per tonne, with a decrease of -7.7% against the previous year. Prices varied noticeably by the country of destination; the country with the highest price was China, while the average price for exports to South Korea was amongst the lowest.

Source: IndexBox Platform

supply chain disruption nearshoring
Archives, Global Logistics, Global Shippers 101, Global Trade Daily, Imports/Exports

The True Issues Facing Shippers and Importers in this Supply Chain Nightmare – and How We Face Them with Resilience

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It shouldn’t come as a surprise to anyone in the industry that trade will remain incredibly tight for the remainder of 2021 and through 2022, with constraints resulting mainly from port infrastructure challenges, demand variability, COVID-19 resurgences, and carrier capacity.

“Global supply chain bottlenecks are feeding on one another, with shortages of components and surging prices of critical raw materials squeezing manufacturers around the world,” wrote reporters for the Wall Street Journal in an Oct. 8 story. 

I recommend to any executive seeking guidance that all aspects of their business ought to focus now on resilience. Engage your partners and stakeholders with transparency about the challenges; don’t try to shield them from reality. Leaders need to concentrate on business continuity and supply chain agility, whilst scenario planning throughout the value chain of inputs and flows. 

Even when it looks like conditions are approaching catastrophe, there is always something an organization can do. After the 2014 flooding in Somerset, Prince Charles visited the area to learn about relief efforts and remarked, “There’s nothing like a jolly good disaster to get people to start doing something.”

Now is a good time to remind managers that they need not wait for a jolly good disaster to create a plan of action. Rather, multiple “scenario plans” are crucial to providing guidance in the case of any disruption one can think of — and they must include mechanisms for coordinated communication and implementation across the value chain. Making sure these scenario plans result in opportunities for reserving capacity within manufacturing and transport divisions will allow your company to switch gears when needed. 

Any company that relies on a global supply chain is suffering to a degree right now. Obstacles have descended like a game of whack-a-mole; if capacity is secured, an issue like port congestion is ready to pop up and take its place as the bottleneck. That’s why I’ve been reminding my teams and customers that rather than keep strict, minute-by-minute tabs on external conditions, our time is better spent referring to (or developing, if none are found to be applicable) our scenario plans to discern what levers to pull, as well as the potential customer impacts. 

The best path toward actually implementing these chosen plans of action is consistent collaboration, transparency of information, and gaming with peer options/scenarios. It is also worthwhile considering that options are changing rapidly as providers, countries and infrastructures adapt — e.g. options you thought open today, may not exist tomorrow — so being present (understanding the landscape) is as important as planning scenarios in advance. 

The fundamental concept of trade, as outlined by Adam Smith in The Wealth of Nations (1776) is based on the concept of comparative advantages and division of labor offset against the cost of home manufacture and transport. If you ask modern-day economists, global trade conditions are a direct consequence; they echo the very same sentiments as Smith expressed in 1776. They produce daily figures such as PMI, GDP growth, wage inflation, etc., which do provide insight into trends that will directly impact the demand for global trade — outside of trade disputes, pandemics and government interventions, that is!

For more informed predictions, however, one must pair economists’ numbers with trade capacity data. We are trying to return to a normal state of demand and supply right now — with one challenge being that speed of recovery and capacity constraints are creating the real impacts, and this is only solved by normalization of demand, which is impacted by both inflation and opening of service sectors (or fundamental societal changes — don’t underestimate the potential for change from COP26); and/or increased capacity to service demand, which would require new vessels and terminal infrastructure that would be several years out from use.

The last two years have highlighted the fragility of global supply chains, as well as the interconnectedness of our world in general. We’re still feeling the effects of the initial COVID-related factory shutdowns in Wuhan, which immediately generated a global impact on supply chains. COVID has shown how shocks in long global supply chains can become impossible to repair, destroying businesses and wiping out hard-fought GDP growth. 

Among the most likely outcomes: companies will re-evaluate risk in sourcing internationally, consider more diverse sourcing strategies, and build segmented supply chains to manage risk. 

We must be mindful, however, that while the majority of the news over the last two years has been about COVID, major geopolitical changes have also been playing out: heightened tensions between the US and China, increased risk of conflict in the Asia Pacific region, and trade tensions between the UK / EU through Brexit. So when companies look at long-term strategy, these influences on trade policy may force more questions over resiliency, risk management, and diversity than the pandemic’s impact.

Also among the headlines is ongoing discourse about the US’s over-dependence on foreign supply, both in terms of resilience and sustainability agendas. 

In the short run, keep in mind that big problems very often don’t have simple solutions. We can manage the diversity of sourcing both nationally and internationally, remembering that even domestic supply chains are not 100% safe from natural disasters and environmental impacts. We can segment our supply, understand the sourcing of inbound products, and take steps to secure strategic inputs that the company depends on — all while utilizing a diversity strategy that blends domestic, near-sourced, and internationally sourced inputs from diverse supplier bases. 

Apart from the above actions, it’s good old effective planning, careful inventory adjustments, and sales management that remain the keys to supply chain resiliency, whether near- or far-sourced.

_______________________________________________________________________

Neil Wheeldon is Chief Strategy & Innovation Officer, BDP International. He is an experienced supply chain management practitioner having worked across numerous industries supporting customers in supply chain and digital transformation initiatives to drive growth. He can be reached at neil.wheeldon@bdpint.com.

sulphur
Archives, Global Trade Daily, News

China’s Sulphur Imports Rebound After Last Year’s Deep Drop

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IndexBox has just published a new report: ‘China – Sulphur – Market Analysis, Forecast, Size, Trends and Insights‘. Here is a summary of the report’s key findings.

China leads in global sulphur imports, with a 28%-share of the total supplies. This year, Chinese sulphur purchases from abroad have shown a sign of recovery after a deep drop last year. In the first four months of 2021, Chinese imports accounted for $455M against $164M in the same period of 2020. Chinese sulphur purchases fell from $1.3B in 2019 to $0.6B in 2020. The United Arab Emirates, Saudi Arabia and Iran constitute the largest suppliers to China, with a 49%-share of total import value.

Chinese Sulphur Imports 

China remains the largest sulphur importer worldwide, accounting for 28% of the total supplies. Over the first four months of 2021, Chinese sulphur imports totaled $455M against $164M of the same period of 2019.

In 2020, imports of sulphur into China shrank rapidly to 8.5M tonnes, dropping by -27.2% compared with the year before. In value terms, sulphur imports reduced sharply to $604M (IndexBox estimates) in 2020.

The United Arab Emirates (2M tonnes), South Korea (1.1M tonnes) and Saudi Arabia (962K tonnes) were the main suppliers of sulphur to China in 2020, with a combined 47% share of total imports. Iran, Japan, India, Qatar and Russia lagged somewhat behind, together accounting for a further 38%.

In value terms, the United Arab Emirates ($156M) constituted the largest supplier of sulphur to China, comprising 26% of total imports. The second position in the ranking was occupied by Saudi Arabia ($75M), with a 12% share of total imports. It was followed by Iran, with an 11% share.

In 2020, the average annual growth rate of value from the United Arab Emirates amounted to -33.7%. Supplies from Saudi Arabia (-61.1% per year) and Iran (-51.0% per year) also fell tangibly.

In 2020, the average sulphur import price amounted to $71 per tonne, declining by -36.7% against the previous year. Prices varied noticeably by the country of origin; the country with the highest price was Qatar ($82 per tonne), while the price by South Korea ($50 per tonne) was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by the United Arab Emirates, while the prices for the other major suppliers experienced a decline.

Source: IndexBox Platform

waffle
Archives, Global Trade Daily, Imports/Exports, News

Americans are Eating More Waffles: Imports Peak Near Over $600M

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IndexBox has just published a new report: ‘U.S. – Waffles And Wafers Without Chocolate – Market Analysis, Forecast, Size, Trends, And Insights’. Here is a summary of the report’s key findings.

American waffle and wafer imports reached $598M, the highest level ever. In physical terms, imports rose by +5.9% y-o-y to 123K tonnes in 2020. Canada remains the largest supplier of waffles and wafers to the U.S., comprising 55% of American import volume. Italy, Belgium, Turkey, Costa Rica, Austria and Mexico have boosted their exports to the U.S. In 2020, the average waffle and wafer import price amounted to $4,879 per tonne, which was 4.5% down the figures of 2019.


American Imports of Waffles and Wafers

Waffle and wafer imports into the U.S. amounted to 123K tonnes in 2020, increasing by +5.9% on the year before. In value terms, waffle and wafer imports rose by +1.2% y-o-y to $598M (IndexBox estimates) in 2020.

In 2020, Canada (67K tonnes) constituted the largest waffle and wafer supplier to the U.S., with a 55% share of total imports. Moreover, waffle and wafer imports from Canada exceeded the figures recorded by the second-largest supplier, Italy (8.1K tonnes), eightfold. The third position in this ranking was occupied by Mexico (6.9K tonnes), with a 5.6% share.

In value terms, Canada ($346M) constituted the largest supplier of waffles and wafers to the U.S., comprising 58% of total imports. The second position in the ranking was occupied by Italy ($59M), with a 9.8% share of total imports. It was followed by Belgium, with a 5.1% share.

In 2020, the average annual rate of growth in terms of value from Canada amounted to -5.1%. The remaining supplying countries recorded the following average annual rates of imports growth: Italy (+26.2% per year) and Belgium (+21.4% per year). Among other suppliers, Turkey, Costa Rica, Austria and Mexico have also increased their exports to the U.S. significantly.

In 2020, the average waffle and wafer import price amounted to $4,879 per tonne, shrinking by -4.5% against the previous year. There were significant differences in the average prices amongst the major supplying countries. In 2020, the country with the highest price was Germany, while the price for Colombia was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by Turkey, while the prices for the other major suppliers experienced more modest paces of growth.

Source: IndexBox Platform Recommended

HFCs
Archives, Global Trade Daily, News

EPA Issues Final Rule to Phase Down HFCs as White House Announces Measures to Prevent Illegal Imports

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The United States Environmental Protection Agency (EPA) has finalized a rule intending to reduce the production and consumption of hydrofluorocarbons (HFCs) in the United States by enforcing a cap and phasedown program under the American Innovation and Manufacturing (AIM) Act. According to the EPA, the final rule will phase down U.S. production and consumption of HFCs by eighty-five percent over the next fifteen years. Beginning January 1, 2022, allowances will be required to produce or import HFCs. The first of such allocations are to be announced by the EPA by October 1, 2021. The AIM Act instructs the EPA to issue a fixed quantity of transferrable production and consumption allowances, which producers and importers must hold in quantities equal to the amount of HFCs they produce or import. Alongside the EPA’s final rule, the EPA and other federal agencies under the Biden Administration announced additional actions intended to reduce consumption of HFCs, with a focus on curtailing and controlling illegal imports.

The final rule establishes HFC production and consumption baselines, a statutory phasedown schedule of allowed production and consumption, and the EPA’s approach to allocating and allowing transfer of allowances. According to the EPA, a global HFC phasedown is expected in order to avoid the most severe consequences of climate change. Producers and importers of HFCs should begin to consider how to adapt their businesses to the phasedown and how to take advantage of potential HFC alternatives. According to the phasedown schedule, steep reductions in allowances are planned for 2024 and 2029 to bring HFC production and consumption down to thirty percent against the baseline.

The EPA will set the initial allocation for each producer and/or importer based upon the individual entity’s production and/or import for the highest three-year period during the 2011-2019 period. The AIM Act had originally established the baseline to be the three-year period of 2011-2013, but the proposed rule published by the EPA in May 2021 had modified that to 2017 to 2019. Now with the final rule, the EPA has determined that using the average of the highest three years in the 2011 to 2019 window would ensure an equitable phasedown consistent with prior phasedowns.

The Administration announced the formation of an interagency task force consisting of the EPA and the Department of Homeland Security (DHS) to prevent and disrupt illegal importation of HFCs into the United States. The announcement of measures to prevent illegal imports follows reports of a surge in illegal trade in HFCs in Europe due to the European Union’s strict regulation of the greenhouse gases. The White House nods to this issue in its fact sheet on the matter, referring to “rates of noncompliance similar to what has been observed in other countries…” With the issuance of the EPA’s final rule, the U.S. has adopted a similar policy on HFCs but aims to avoid the enforcement issues observed in Europe, which have undermined the purpose of HFC regulations.

_______________________________________________________________________

Nithya Nagarajan is a Washington-based partner with the law firm Husch Blackwell LLP. She practices in the International Trade & Supply Chain group of the firm’s Technology, Manufacturing & Transportation industry team.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

Strategies
3pls, Archives, Global Logistics, Global Trade Daily, Warehousing

7 Proven Strategies That Eliminate Downtime in the Supply Chain

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Eliminating downtime is a concern for any business, but supply chains face more pressure than most. Disruptions and delays will ripple throughout the industries that rely on them, potentially causing massive losses. By the same logic, reducing supply chain downtime likewise reduces it elsewhere.

While most organizations likely understand the importance of eliminating logistics downtime, the path to that end is less clear. Frequent delays showcase considerable room for improvement in the world’s supply chains.

Thankfully, several companies have also found effective strategies for eliminating these delays. Here are seven of these proven methods.

1. Optimized Warehouse Layouts

Poor warehouse arrangements are easy to overlook, but they’re a common source of supply chain delays. A poorly laid-out warehouse slows the picking process and makes it harder to track inventory levels. With less insight into their stock, companies are more likely to run into shortages they could’ve otherwise avoided.

Lack of stock visibility is all too common an issue, with 43% of small businesses not tracking inventory. As a result, the U.S. retail industry has an inventory accuracy rate of just 63%. Without an accurate picture of stock levels, companies can’t expect to order new items in time, leading to delays.

Better warehouse layouts improve inventory visibility, informing more accurate orders. One of the most important changes to make is implementing an electronic tracking solution, like a warehouse management system (WMS). These systems will help keep track of stock levels, eliminating downtime from inventory issues.

2. Predictive Maintenance

Equipment breakdowns are another one of the most common causes of unplanned downtime. While these situations are common and highly disruptive, they also have a fairly straightforward solution. Supply chains should implement predictive maintenance systems to keep all machinery in optimal condition.

Predictive maintenance analyzes equipment performance data to determine when it will need upkeep. While this comes with high upfront costs from the necessary equipment, the results are impressive. Operating off these predictions lets facilities prevent unplanned downtime from breakdowns and unnecessary repairs.

These benefits aren’t just theoretical, either. Studies show that predictive maintenance increases equipment availability by 5%-15% and reduces maintenance costs by up to 25%. Those savings across an entire supply chain add to a tremendous reduction in downtime.

3. Distributed Sourcing

Another common source of downtime in supply chains is delays or interruptions from suppliers. Many supply chains get parts or products from a single source, which keeps costs down but exacerbates these disruptions. When an unforeseen event occurs at these suppliers, everything else comes to a standstill.

For example, in 2017, a fire at an auto part supplier in the Czech Republic stopped production. An automaker who relied on this plant as its single supplier consequently couldn’t produce 20,000 vehicles in time. Supply chains must embrace distributed sourcing to avoid massive disruptions like this.

When a supply chain has multiple suppliers, a shortage at one won’t affect the entire operation. Other companies can make up for it, and if not, the overall loss still won’t be as significant.

4. Contingency Plans

Similarly, supply chains must also create contingency plans for likely or potentially disruptive events. Companies can’t afford to expect that no unexpected circumstances will ever arise. Having a backup plan for any possible emergencies reduces downtime from these situations and shortens the recovery period.

Some emergency response plans can be relatively simple, but companies should still standardize and record them. For example, if a vehicle dies, drivers can start it without jumper cables fairly easily if need be. However, if there’s no standard practice in place for this situation, they may waste time thinking of what to do and who to contact first.

Having a specific, codified contingency plan ensures workers can respond quickly to any eventuality. The faster they can adapt, the less likely an unforeseen event is to cause significant downtime.

5. Employee Training

Some strategies to eliminate downtime are relatively straightforward but can have a significant impact. Employee training is the perfect example. While a single worker’s mistakes may not seem to have a considerable effect on overall operations, most downtime comes from user error.

Mistakes in data entry can lead to incorrect inventory information, causing order-related shortages. Similarly, machine usage errors can end in equipment failure, leading to downtime for repairs. Employee errors can cause substantial disruption, but that also means better training can prevent many stoppages.

Periodic refresher training can ensure workers remember proper techniques and best practices. Supply chains can also look to employees themselves for information on how to improve the training process. Workers can report what types of onboarding experiences they wish they had, revealing how to improve.

6. Emphasizing Workplace Safety

On a similar note, improving workplace safety can help eliminate supply chain downtime, too. On-the-job injuries have a considerable impact on productivity, resulting in 105 million lost days in 2019 alone. That figure doesn’t include non-disabling injuries, either, which may still hinder worker efficiency, making downtime more likely.

If supply chains can reduce employee injuries, they’ll decrease these days of lost work. One of the most important parts of improving safety is better safety training. When employees know what risks they face and how to avoid them, they’ll pay more attention to workplace hazards.

Other steps like automating the most dangerous tasks and using data analytics to find where most injuries occur will also help. Even seemingly small improvements can have a substantial effect on reduced downtime.

7. Improving Staff Communication

Another minor adjustment that can have significant ramifications is communication. Supply chains should ensure employees understand the causes of downtime and how they affect profits. This communication can help build a spirit of shared responsibility, helping workers understand their impact on the business as a whole.

Improving communication also means making it easier for staff to suggest improvements. Supply chains should reward employees whose suggestions lead to meaningful reductions in overall downtime. This will encourage more workers to take an active role in ensuring operations run as smoothly as possible.

Supply Chains Must Actively Reduce Downtime

Reducing downtime in the supply chain can minimize disruptions across an entire industry. Similarly, if supply chains don’t eliminate downtime, they could cause massive, far-reaching damage.

These seven strategies represent proven methods for eliminating downtime. Supply chains that implement them can become far more resilient and efficient.

warehouse management system
Archives, Global Logistics, Software, Warehousing

WMS Software: Is a Warehouse Management System Worth the Cost?

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In the modern business world, software such as word processing programs, expense report software, payroll software, etc., continue to emerge. The usage of these applications is to increase and measure operations and productivity and conduct other business functions effectively.

Like those mentioned above, another software program that aids in controlling and managing a warehouse’s everyday operations is the warehouse management system (WMS). The WMS software directs inventory receipt and storage, improves order picking and shipping, and offers recommendations on inventory replenishment. A warehouse management system could be used as a standalone tool or as part of a wider Enterprise Resource Planning (ERP) framework.

Primarily, warehouse inventory management systems could only deliver vital functions, primarily on the storage location information. WMS functionality can now range from basic best practices in grab, load, and ship features to sophisticated programs facilitating improved interactions with material-handling devices and yard maintenance.

A warehouse management system helps to reduce the possibility of errors occurring when a product is shipped. The program can also help you fulfill orders on time and track ordered products inside the warehouse in real-time.

Additionally, a third-party service provider can host WMS in-house (on-premise) or online (via the cloud). The latter is becoming more popular as the business landscape shifts more towards digital. A cloud-based WMS is simple to scale, allowing you to pay only for the number of users and software technologies you need. And, as appealing as this all sounds, keep in mind the underlying costs and other factors when considering WMS.

Factors You Should Consider When Estimating WMS Costs

You must carefully evaluate the offerings of your prospective technology providers and each merchant’s capabilities in providing a WMS. It is recommended to obtain quotations for the various services included in the system and compare them to the intended budget for the WMS implementation. But most importantly, it is first necessary to understand that WMS prices vary according to an organization’s size, products, industry, and specific needs. The following are some of the essential factors to consider when determining the cost of a WMS:

The Number of Users

The total sum of users who will use the software is one of the most important factors to consider when calculating a WMS cost. Note how many administrative staff or warehouse workers will have to use the WMS as this will definitely affect the fees of the subscription. The majority of technology providers base the cost of WMS on the number of users—the more users, the more expensive it may be. To determine the cost of these licenses, multiply the base WMS subscription fee by the number of users.

Products and Industry

Other things to consider when assessing the expenses of a WMS include the types of items processed or distributed by a company, as well as the sector to which they belong. WMS cost quotations vary by the complexity of a product’s storage, manufacturing, and shipping. Furthermore, companies’ regulated goods by governmental bodies, such as medicines or cosmetics, may increase WMS costs. These factors influence prices because the technology provider considers the scope and extent of an organization’s processes to assist the software.

Hardware

Companies may also have to consider the costs of any hardware or equipment integrated into the system. Some third-party vendors may offer devices such as a barcode or tag printers, data and voice terminals, and so on – but at a higher initial cost. If an organization already has hardware and software, it can be modified to save money.

Other than these, it is also essential to consider the value of purchasing a WMS for organizations. The best WMS for any company is one that can meet its specific needs and requirements, allowing it to grow and become more effective in an ever-changing business world. Following this, there is more discussion about the benefits of using a WMS.

Benefits of a Warehouse Management System

A good WMS benefits both your business and your customers. Here are a few reasons why having a good WMS is advantageous:

Faster Inventory Turnover

Improving inventory management is the first step toward improving the efficiency of your warehouse and, as a result, your business. It means complete inventory control, from receipt to shipping, when we say inventory management. An effective WMS can significantly enhance inventory management and speed up inventory turnover. A WMS can assist cut lead times by minimizing inventory movement and improving record accuracy, lowering the demand for safety stock.

Enhanced Customer Service

A warehouse management system (WMS) reduces inventory documentation by letting the digital storage of reports, pick tickets, move tickets, and do invoices and packing. Product availability may be more accurately determined, offering customers more realistic delivery dates, reducing customer complaints, and improving overall customer service by expediting operations from the order through delivery.

Warehouse Personnel Reduced

A WMS system can greatly help your warehouse run better and more efficiently by standardizing inventory movements, picking procedures and inventory placements, and minimizing potential error rates and of course, training expenses. It can also aid in stock-flow optimization through the use of an automatic replenishment system.

Better Stock Control

Because of the nature of warehouses, the stock is constantly in motion. Goods are traveling in multiple directions, whether they are coming in, being stored, or leaving, making the process confusing. It is recommended that you keep track of which stock items have the highest turnover rate so that you can store them more efficiently and keep downtime to a minimum.

Optimized Warehouse Space

Ample storage space is essential for a successful warehousing operation. Correct warehouse organization can increase the number of goods stored; for example, using narrow-aisle equipment allows you to place racking closer together.

Improved Labor Productivity

A slow, inefficient, and unproductive warehousing operation is likely the result of several minor issues, such as outdated processes and a lack of employee motivation. It is critical to develop modern systems and techniques to help increase efficiency. A warehouse management system can assist with this.

Final Thoughts

A well-designed Warehouse Management System (WMS) may give several advantages to the company. These benefits include real-time inventory visibility, substantial cost reductions, decreased mistakes, increased productivity, and efficiency gains. Expenses connected with implementing and maintaining a WMS might vary based on which solution is appropriate for your company. Thus, it is critical to carefully analyze all options and costs associated with implementing and maintaining a new WMS.

A successful warehouse management system will require internal preparation for the company before implementation. It will need configuration to ensure that it includes all of the necessary functions for the business. It must ensure that all employees understand how to operate the new system entirely. Each of these processes will have its own set of expenses, which may vary based on the size and complexity of the project. Costs associated with configuration might rise if modifications surpass the extent of the project’s initial scope. It must have careful preparation and think on the part that could help to avoid incurring unnecessary expenses.

The warehouse management system is worth the cost for companies trying to enhance their warehouse management operations. Instead of relying on employees to do repetitive and simple activities, a WMS enables companies to leverage their employees’ skills, knowledge, and experience to grow and improve the company. In addition, the new warehouse management system may demand modifications to their existing warehouse. Companies may need to upgrade their Wi-Fi or install cabling for specific hardware charging stations, reorganize inventory placements, or take other essential actions depending on the WMS. It is to ensure that they can fully benefit from all of the features available. Therefore, it is crucial to remember that these alterations may result in higher initial investment costs for their system than planned.

shippers
Archives, Global Logistics, Global Shippers 101, Ocean Ports

Dear Shippers, It’s Time for Creativity

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To offset many of the problems we are encountering today ― inflationary pressures, port delays and labor shortages ― shippers must think and act differently to ensure resilience. To be successful, leaders must take a new, more creative approach to minimize today’s adversities to increase revenues. Here are some new ways companies are successfully mitigating the plethora of challenges facing global trade today:

1. Creativity Within Modes and Port Selection: Presently, more than 100 container ships await dock space at the Los Angeles and Long Beach ports1, and the World Container Index price for 40 ft. containers stands at $9,669.472, 276% higher than a year ago. Shippers are not only struggling to secure capacity due to port inefficiencies but are paying premium prices even when they can secure containers. Once reserving container space, shippers then have to deal with long lead times. The door-to-door transit time for a container from China to Chicago is now 73 days versus 35 days in pre-pandemic times.

Minimizing the impact on your organization will require teams to think more creatively and collaboratively. For example, in the past, when Coca-Cola could not supply their production facilities due to limited vessel space, they refused to accept the current situation as their only option. Instead, their procurement and supply chain teams collaborated to leverage a nontraditional method of shipping. They decided to ship their manufacturing materials via bulk vessels typically used to ship dry cargo3. Coca-Cola safely shipped their products by securing the materials using plastic wrap and unloading at noncongested ports to avoid excessive demurrage fees being levied on shippers. Their priority was to keep the product lines running, and they accomplished it by actively seeking out alternatives.

Organizations need to think more broadly and explore the feasibility of using all available options, such as Coca-Cola did. Also, they must consider avoiding the West Coast ports whenever possible, as other ports, such as those on the East Coast, are currently less congested.

2. Seek Unconventional Partnerships: The boost in e-commerce sales and the growing driver shortage have negatively affected domestic trucking capacity. The result is like what we see in ocean shipping: premium prices and increased lead times. In pre-pandemic times, consumers took advantage of quick and reliable e-commerce delivery channels made popular by the likes of Amazon. Now, however, they are left hoping their products arrive within their expected delivery window, as shipping delays continue to become more common.

Understanding that customers have an insatiable appetite for fast and reliable delivery, Home Depot found a way to offer added convenience to its e-commerce business. Home Depot will become the first retail client in Walmart’s new delivery-as-a-service business called GoLocal. According to a Home Depot spokesperson, by leveraging Walmart’s existing delivery network, Home Depot will offer same-day and next-day delivery in select stores, with plans to expand by the end of the year.

In a market where capacity is hard to come by, Home Depot expanded its options by leveraging new partners who had capabilities that spanned beyond their own while offering convenience to the customer. As a result, they will reach more customers than before at lower costs to the consumer. Stephanie Smith, a senior vice president of supply chain for Home Depot, said, “This partnership brings us even closer to our goal of offering same-day or next-day deliveries to 90 percent of the U.S. population.”4 Seeking partnerships, even from those who may be competitors, is an excellent way to reduce the consumer’s expenses. Also, shippers should begin exploring alternatives in last-mile delivery to increase customer satisfaction, including added convenience and reduced shipping costs.

Difficulties in the supply chain are impacting shippers and consumers alike. On the one hand, consumers are experiencing inflation in certain products; on the other hand, shippers see their profits eroded. From either end, this situation is far from ideal. Labor shortages and capacity constraints are but two of several factors are contributing to higher costs. Organizations will have to wrestle with whether they will pass some of these costs on to consumers or allow them to affect margins. Either way, to overcome this dilemma, shippers must get creative to offset rising costs.

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Alex Hayes and Derrick Lopes are Senior Associates at GEP, a leading provider of procurement and supply chain solutions to Fortune 500 companies.

1 https://apnews.com/article/business-california-los-angeles-long-beach-shipping-ffbbf935495b0bbea064bcbb1ce330cb

2 https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry

3 https://www.businessinsider.com/coca-cola-uses-bulk-vessels-amid-shipping-crisis-2021-10

4 https://www.forbes.com/sites/walterloeb/2021/10/11/could-home-depots-partnership-with-walmart-lead-to-other-close-working-arrangements/?sh=25aebd867b88

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

WHY AND HOW BIG DATA IS A GAME CHANGER FOR THE SUPPLY CHAIN

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In its 2013 report titled Big Data in Logistics, DHL proclaimed that “The logistics sector is ideally placed to benefit from the technological and methodological advancements of Big Data” and predicted “huge untapped potential for improving operational efficiency and customer experience and creating useful new business models.”

Today, the transformation of logistics to a data-based model is no longer a futuristic fantasy. The ability to create a digital ID, carry it through the supply chain, capture all transactions along the way and implement action against that data has now become a reality. Intelligent identification solutions exist to optimize item-level data captured at the beginning of a product’s journey, enabling full inventory visibility and accuracy, as well as enhanced routing speed for all partners along the supply chain. With product-level data, supply chain execs are empowered to analyze and make intelligent real-time decisions with the ebbs and flows of demand.

As a global industry, 3PL professionals need to understand the promise of identity solutions and the key benefits they offer. The first step for leaders across the enterprise is recognizing that the supply chain is not a set of standalone “links.” On the contrary, supply chains should be viewed holistically to leverage advances in data infrastructure that enable a total ecosystem of item + shipping specific information across each touchpoint of a supply chain. 

The Importance of Accuracy 

Among the many advantages of assigning digital identities to products is speed—and the key to speed is accuracy. Think of it this way: The utilization of item data throughout the supply chain enables speed with accuracy. 

Consider a logistics scenario with an RFID-enabled intelligent label applied at the source of an item. As the item begins its journey, the data captured and carried in that label enables shipment verification. When the “intelligently” labeled products arrive at a facility or warehouse, the recipient can quickly confirm that what was received is precisely what was expected. 

The data contained in the intelligent labels also allow outbound verification to the store or e-commerce retailer. In turn, the same label gives the retailer the inbound verification they need to move the items directly into inventory, with data that assures its accuracy. At the end of the supply chain the retailer has confidence that they can show the customer exactly what is available.

Shipping errors are another logistics challenge that can be addressed through accurate data. Currently, up to 4% of shipping errors are due to misrouted items that must be returned to the distribution center for re-routing. Legacy operations that rely on separate processes (with the six to eight touchpoints that a product moves through) increase the chance of such errors. Therefore, there is an operational benefit to routing solutions that are based on item- or parcel-level data to allow cross-docking optimization within the supply chain that enables greater speed accuracy. Put simply, velocity increases as accuracy improves.

Moving Toward Sustainability

As the supply chain becomes more normalized post-pandemic, back-burnered sustainability goals are re-emerging, driven by consumers, regulations, and cost—not necessarily in that order. The supply chain as an industry is being specifically tasked with sustainability.

A report from the management consulting group BCG stated, “By implementing a net-zero supply chain (the state in which as much carbon is absorbed as is released into the atmosphere), companies can amplify their climate impact, enable emission reductions in hard-to-abate sectors, and accelerate climate action in countries where it would otherwise not be high on the agenda.” This report also noted that “in most supply chains, the costs of getting to net-zero are surprisingly low.”

On the consumer side, a research study from Deloitte found that “concerned consumers are adopting a raft of different measures to shop and live more sustainably. One of the most prominent lifestyle changes is “shopping for brands with environmentally sustainable values.” In fact, over a third of consumers surveyed indicated that they value ethical practices in the products and services they buy. 

The data captured and carried in intelligent labels provide real-world efficiency solutions for achieving sustainability in logistics. One of the areas in which supply chains can address carbon emissions is in the transport of goods. One factor that deters sustainability in 3PL is trucks not being loaded to their full capacity.

In fact, our own studies have shown that up to 14% more volume can be loaded into a truck by utilizing key data that consider size and weight of parcels, creates the most efficient delivery route and considers other variables such as perishability.  Clearly, such sustainability initiatives have the potential to lower costs as well.

Caution: Hazardous Materials

There is yet another issue that is becoming more urgent and that is the prevalence of hazardous materials in the supply chain. First, it is necessary to define hazardous materials. These are substances or materials that the U.S. Secretary of Transportation has determined are “capable of posing an unreasonable risk to health, safety and property when transported in commerce.”

These materials include hazardous substances and wastes, marine pollutants, elevated-temperature materials, and other materials designated by federal Hazardous Materials Regulations.

In supply chain operations, the Federal Aviation Administration (FAA) requires these items to have “Hazardous Material” markings and/or labels. There are significant financial penalties for incorrect shipping identification, including accruing fines that can amount to more than $78,000 per instance.

Among the many items on the FAA’s list are the lithium-ion batteries used in many consumer products, each of which require the special markings and/or labels and have their own specific requirements for placement in cargo. Sorting solutions that use digital product identities currently exist to alert shippers where certain items, such as these batteries, should and should not be placed.

The importance of data in logistics will only increase over time. Deploying RFID intelligent label solutions at the source of an item will carry it safely, sustainably and quickly through all of the touchpoints along the supply chain—and beyond. The future of a data-enabled logistics eco-system is here. 

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Michael Kaufmann is director, Market Development, Logistics with Avery Dennison. The company recently launched its the atma.io connected product cloud platform that gives unique digital IDs to physical objects for end-to-end tracking from the source to the customer and even beyond to take part in the circular economy. 

isocyanate
Archives, Global Trade Daily, Imports/Exports, News

Chinese Isocyanate Exports Skyrocket Due to Booming Demand from Brazil, Russia and Peru

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IndexBox has just published a new report: ‘China – Isocyanates – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

China strengthens its leadership in global isocyanate exports. In 2020, Chinese supplies abroad grew by +20.4% y-o-y to $716M with rising purchases from Brazil, Russia, Peru, Viet Nam and India. In physical terms, Chinese exports rose by +38% y-o-y to 376K tonnes. Brazil, Viet Nam and Taiwan constitute the largest importers of isocyanates from China. Among the leading importing countries, Brazil featured the highest spike in purchases of Chinese isocyanates, boosting the imports by $45M. The average export price for isocyanates from China decreased by -13% y-o-y to $1,905 per tonne in 2020. 

Chinese Isocyanate Exports by Country

China leads in global isocyanate exports. In 2020, Chinese supplies constituted 19.6% of the total isocyanate volume exported worldwide.

In 2020, exports of isocyanates from China skyrocketed to 376K tonnes, increasing by +38% against the year before. In value terms, isocyanates exports surged by +20.4% y-o-y to $716M (IndexBox estimates) in 2020.

Brazil (46K tonnes), Viet Nam (44K tonnes) and Taiwan (Chinese) (28K tonnes) were the main destinations of isocyanates exports from China, with a combined 31% share of total exports. India, Indonesia, Pakistan, the U.S., Russia, Australia, the Philippines, South Korea, Peru and Singapore lagged somewhat behind, comprising a further 33%.

In value terms, the largest markets for isocyanates exported from China were Brazil ($76M), Viet Nam ($70M) and India ($57M), together comprising 28% of total exports. Taiwan (Chinese), the U.S., South Korea, Pakistan, Russia, Indonesia, the Philippines, Peru, Singapore and Australia lagged somewhat behind, accounting for a further 35%.

In 2020, the increased supplies to Brazil, Russia, Peru, Viet Nam and India provided most of the increment in Chinese exports. Brazilian isocyanate purchases spiked by $45M against the previous year. Russia ramped up its imports by $20M. The supplies to Peru, Viet Nam and India grew by $13M tonnes, $9M and $8M, respectively.

In 2020, the average export price for isocyanates from China amounted to $1,905 per tonne, declining by -13.1% against the previous year. There were significant differences in the average prices for the major export markets. In 2020, the country with the highest price was South Korea ($3,402 per tonne), while the average price for exports to Australia ($1,295 per tonne) was amongst the lowest. In 2020, the most notable growth rate in terms of prices was recorded for supplies to India, while the prices for the other major destinations experienced more modest paces of growth.

Source: IndexBox Platform