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GLOBAL FORWARDING: BIGGEST, FASTEST SAVINGS FOR GLOBAL SUPPLY CHAINS

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GLOBAL FORWARDING: BIGGEST, FASTEST SAVINGS FOR GLOBAL SUPPLY CHAINS

Increasingly complex omnichannel business models are resulting
in correspondingly complicated global supply chains. Maximizing
efficiencies for time and cost in moving freight around the world
is mission critical. This paper takes a high-level look at three
opportunities for optimization: cargo consolidation, cargo risk
management, and customs management.

The multichannel retail business model, along with increasing levels of global sourcing, have created staggering opportunities for importers and exporters around the world, whether huge multinationals or small companies shipping globally for the first time.

Global supply chains are becoming longer and more fragmented,
presenting significant new issues for logistics professionals. In one
survey, 104 global supply chain executives reported that visibility
(21.1%), fluctuating consumer demand (19.1%), and inventory
management (13.2%) were their biggest challenges (1).

Many factors add complexity to global supply chains, including longer lead times and lead-time variability and an increasing number of suppliers, partners, carriers, customers, countries, and logistics channels. Contrary to what you might think, global freight forwarding can offer relief for these concerns and when people, processes, and technology are leveraged, can even offer competitive advantages.

10 Approaches to Savings in the Global
Forwarding Supply Chain

EASY

1. Align shipping activities to leverage benefits of consolidation
services.

2. Minimize financial impact of cargo loss and damage by
purchasing marine cargo insurance.

3. Take advantage of transportation providers’ TMS to create
visibility and take control of the supply chain.

MODERATE

4. Develop strategies to match service modes with inventory
planning and sales forecasting.

5. Create a risk management strategy—identify and understand
risk types, probabilities, and potential costs.

6. Integrate with a single transportation provider’s TMS and
connect with suppliers and carriers globally.

DIFFICULT

7. Effectively use Incoterms® when negotiating with suppliers to
impact unit price, cash flow, inventory levels, and logistics costs.8. Actively engage with a customs professional to deploy best
practices in customs management.

9. Leverage transportation provider’s business intelligence
reporting and analytics to improve supply chain performance.

10. Utilize PO management to control the purchase order lifecycle;
go upstream to supplier order fulfillment logistics activities.

CARGO CONSOLIDATION

What it is
Few companies can fill an entire ocean or air container with their
own freight. Both ocean and air carriers require shippers to work
with freight consolidation services to accommodate small volume
shipping needs. These freight consolidators accept complementary
freight from multiple shippers, and consolidate freight all kinds
(FAK) containers for ocean shipping or unit load devices (ULD) for
air. This results in better freight rates and cargo security measures.

Why it’s important
One of the biggest areas for savings in a global supply chain is
taking advantage of space. Companies of any size can use freight
consolidation services, but it’s particularly useful if you have a lean
supply chain or operate in a just in time environment. Using logistics
efficiencies from freight forwarders, consolidators, and third party
logistics providers (3PLs), you can choose to move smaller quantities
of material more frequently. In doing so, you make a strategic
decision to spend more on consolidation shipping services and less
on inventory, storage, returns, and other costs.

Ocean versus air
Whether air or ocean consolidation is the right choice for you
depends on the required service level and transit time. Globally,
ocean is the less expensive transportation method. That cost
advantage must be carefully weighed against longer transit times, as
well as potential delays caused by adverse weather conditions, port
strikes, or other issues.

In addition, there are faster and slower ocean options. Some ocean
freight goes directly to the port of call. Other shipments can stop at
multiple ports of call, which is less expensive, but takes longer and
is more prone to unexpected disruption. Working with a reputable
freight forwarder can help reduce unexpected supply chain failures
and delays, and provide options if disruptions occur.

Air freight consolidation service is a faster, more expensive option
than ocean, but here, too, there are faster and slower options that
determine the cost. For example, if you don’t need direct service
(next flight out), choose a slower transit time at more favorable
pricing.

Best Practices for Cargo Consolidation

Choose a forwarder with:

-Sufficient freight volumes to effectively consolidate without delays and to aggressively negotiate rates with ocean and air carriers.

-Dedicated space allocations for capabilities when they are needed.

– Work in major markets with high flight capacity.

Generally, in any type of transportation, the more time there is between pickup and delivery, the less you pay. In air, for instance, use providers with gateways (vs. a hub and spoke approach)
to get cost-efficient options that meet your deadlines. Use consolidation schedules if you can for more savings.

CARGO RISK MANAGEMENT

What it is
Global shipments are exposed to risk from a wide range of human
and natural forces. Yet, global shipments are subject to a unique set
of international laws and/or treaties that limit the liability of carriers. Whether you import or export, you should understand the various types of risks that cargo could face and how you can help protect the value of the goods shipped globally.

Why it’s important
Even with proper packing, stowage, and securing of containers on
a container ship, severe weather and rough seas can cause rare but
catastrophic events like ship groundings, structural failures, even
collisions, any of which can result in loss of cargo. On average, the
World Shipping Council estimates that there were 1,582 containers
lost at sea per year between 2008 and 2016; 1,012 of these
containers (64 percent) were lost due to a catastrophic event.2 Theft, counterfeiting, hurricanes, floods, political unrest, labor disputes, documentation errors, or mechanical problems can also delay or ruin delivery of the most perfectly planned global shipment. Protecting the value of products while they are in transit across the globe can have a significant impact in protecting the bottom line.

Air and Ocean Carrier Liability

When events occur, companies are often dismayed to find that not
all risks or damages are covered by carrier liability.

Air carriers are not liable if damage was caused by:
-An inherent defect, quality, or vice of the cargo
-Defective or insufficient packing of the cargo
-An act of war or armed conflict
-An act of a public authority carried out in connection with the
entry, exit, or transit of the cargo

Even if an air carrier is held legally liable for damages, they pay the
value of the goods or 19 SDRs3 per kilogram, whichever is less.
If a ship experiences an extraordinary sacrifice or expenditure at sea,ship owners may declare general average. The concept of general average hearkens back to the days when a crew tossed cargo overboard to lighten the ship in a storm. During the emergency, there wasn’t time to figure out whose cargo should be jettisoned. After the fact, to avoid quarreling, merchants whose cargo landed safely would be called upon to contribute a share or percentage to the merchants whose goods were tossed overboard to avoid imminent peril. Today, general average declarations still mean that all the merchants with freight on the vessel are required to share in the cost of the expenditure before the goods are released.

General average is a growing risk and concern for many risk
managers and insurance experts. In recent times, there has been a
rise in the frequency and severity of extreme weather events that
have led many vessels to become grounded, causing container loss
and/or vessel damage. In addition, fires on container vessels are
more common now than in the past.

Today, when these events occur and general average is declared:

1. Ship owners have a lien on the ship’s cargo. At the time
the voyage is completed, the level of sacrificial losses will not
normally be known. Ship owners will usually call for security
from cargo interests, against which the assessed contributions
can be enforced. The amount of the claim is usually calculated
by average adjusters, appointed by ship owners. Each cargo
owner’s contribution is calculated on a percentage of the cargo
owner’s interest or commercial invoice value, ranging from
1 to 100 percent.

Ship owners have a lien on the cargo until each cargo owner’s
contribution or security is satisfied. Unless a shipment is secured
with all-risk marine cargo insurance, the cargo owner will be
required to post their contribution or security in cash before
their cargo will be released. As the frequency of general average
declarations has increased, so has the amount of the required
securities—from about 12% a year ago to about 50% today.

2. Ocean carriers are not automatically liable for loss or
damage to your cargo. The U.S. accepted the Hague Rules in
1936 through the passage of the Carriage of Goods by Sea Act
(COGSA). The rules expressly remove the ocean carrier’s liability
for loss or damage to cargo that arises from one of the 17 stated
liability exclusions. Legal liability claims are often met with
resistance by carriers.

Even if the ocean carrier is found liable at the end of a legal
process that can take months to settle, their limit of liability
under COGSA is $500 per package or customary shipping
unit, or the actual value of the goods, whichever is less. In other
words, the onus is on you to assess and minimize your
risk exposure.

Best Practices for Cargo Risk Management

-Buy the appropriate amount of marine cargo insurance for ocean or air shipments.

-Ensure the valuation clause for a given shipment defines the maximum amount an insurance company will pay for a loss. Most valuation clauses include the commercial invoice value and any prepaid charges associated with the shipment, such as freight, customs clearance, or duty. This clause can be modified to include other charges or profit margin—if requested and approved by underwriters.

-Choose an insurance intermediary with experience or specific training in international logistics and transportation insurance.

Calculating Costs to Determine Risk Exposure

The risk of lost cargo is real. Yet, without a crisis to motivate
action, most companies place risk management at the bottom of
the priority scale. The most common method used to protect the
value of goods from physical damage, theft, or other calamity is the
purchase of marine cargo insurance.

The first step you can take is to understand your risk exposure
by tying dollar values to varying types of risk. The challenge is
quantifying the potential cost. You can brainstorm to gather that
information, or can work with a logistics provider that has in-house
risk management professionals to help uncover potential liabilities
in the supply chain.

You can apply subjective probability to calculate possible losses. In
other words, you can estimate the chances of a risk event happening
and multiply it by the cost if it did happen (see below). Once the
dollar amount is calculated, the next step is to reduce the expected
loss by reducing the probability of the occurrence, or the cost of the
occurrence.

Armed with subjective probability estimates, you can effectively
buy the appropriate amount of insurance. While insurance is readily
available, it is your responsibility or the consignee’s to ensure the
coverage purchased best fits the unique exposure.

CUSTOMS MANAGEMENT

What it is
Most companies choose their customs broker for the long term.
That’s because the customs broker must truly understand your
company and products. They must also know how to navigate each
country’s compliance requirements with their own specific set of
customs rules, governmental regulations, VAT, duty rate calculations, and payment plans.

Why it’s important
Even simple trade-related mistakes, such as an incorrect spelling on
a declaration, can result in fines, penalties, or even cargo seizure.
Penalties for transgressions can be severe, depending on the
seriousness of the infraction.

For example, U.S. Customs and Border Protection (CBP) imposes
fines of up to $10,000 per entry for recordkeeping infractions.
Non-financial costs, such a shipment delays, the diversion of staff
resources to correct problems, and in rare instances, the loss of
trade privileges, can be detrimental to an importer’s business.
When you work with Trusted Advisor® experts in customs, you can
learn where the most common mistakes occur and implement best
practices to avoid them. In addition, CBP can conduct a customs
focused assessment—essentially, an audit—with any U.S. importer. A
customs expert can help your company prepare before, during, and
after a focused assessment to minimize risk exposure.

Compliance programs and options that are worth investigating
Not every compliance option will fit or resonate with every business.
Discuss specific issues with an attorney or Trusted Advisor® expert
in customs compliance and learn which elements might be the most
useful. Always seek out an expert opinion.

-Customs bond sufficiency. If you import into the U.S., you must
have a customs bond, generally 10% of the duties and taxes
you expect to pay to CBP for import transactions throughout
the year. CBP can shut down all imports if they discover you
have an insufficient customs bond. Since tariffs (and duties)
are increasing substantially, existing bonds may no longer
be sufficient. Bond insufficiency will lead to additional costs
and delays if not monitored or addressed in a timely manner.

Consider the increased duty amounts well before the bond
renewal period comes up. If the customs bond will need to be
significantly higher, the surety company may require additional
documentation—including financial statements and possibly
letters of credit—before they issue a new customs bond, all of
which will take time to get into place.

-Duty drawback programs. Duty drawback programs refund
99% of certain import duties, taxes, and fees for goods that are
subsequently exported; this supports both U.S. manufacturing
and foreign export sales. Before 2018, duties might only have
been in the 1% to 2% range, and since there is paperwork to file
to get the refund, many companies did not bother with it. Today,
those 1.2% duties have jumped up to 25% in some instances,
making duty drawback programs a potential game-changer for
your business. The downside: duties must be paid up front; your
company may wait for 1 to 2 years to receive the refund under
the current drawback environment, which can become a cash
flow issue for some companies.

-Foreign trade zones (FTZs). Foreign Trade Zones (FTZ) are
secure areas located in or near CBP ports of entry, and are under
CBP supervision. Unlike duty drawback programs, companies
don’t have to pay duties when goods enter an FTZ. Instead, FTZs
enable duty deferment; the duties are paid when the goods
enter CBP territory for domestic consumption. At that point, the
importer pays the duties at the rate of either the original foreign
materials or the finished product.

-Exclusion requests. If a company thinks their product should
be excluded from Section 232 and Section 301 tariffs, they can
request an exclusion. When filing an exclusion, make certain that
the classification used is the best classification for the product.
Also, work with a trade attorney; they can help you navigate
the law and apply it to a specific product so the exclusion isn’t
rejected on a technicality.

-Changing sourcing locations. It’s not always easy to change
suppliers, but some companies are looking at it in a new era of
tariffs. Yet, suppliers for some materials are only found in China,
and even if you locate a source in another country, there can be
issues. Can they supply at the necessary level? How long will it
take to test the new supplier against specifications? The more complicated the product, the more challenging a switch will be.
Also, keep in mind that if the cargo ships from Singapore but its
origin is China, U.S. tariffs may still apply.

-Incoterms®. Incoterms®, or International Commercial Terms,
are published by the International Chamber of Commerce.
They are the rules that define the responsibilities of sellers and
buyers for the delivery of goods under sales contracts, and
they establish where the transfer of risk takes place. However,
they vary from situation to situation. For example, if a container
being moved across the ocean from Shanghai to the United
States falls overboard, who is at risk? The Incoterms® tell the
story. If the U.S. buyer purchased the product FOB (free on
board), the importer took responsibility for the risk as soon as
the freight was loaded on the vessel in Shanghai. If the same
product was purchased DDP (delivered duty paid), the shipper
would be responsible until the product reached the purchaser’s
door in the United States. You can save money if you ensure
your purchasing team understands how Incoterms® rules will be
applied to freight.

Best practices in Customs Management

-Buyers are not transportation and compliance professionals who understand Incoterms®—they choose suppliers based on favorable pricing. You can establish internal structures or education to help buyers understand how Incoterms® impact risk management and pricing.

-Rely on a customs professional to leverage U.S. Customs data. They can combine a company’s unwieldy historical shipping data into usable trade reports to reveal whether an organization is taking proper advantage of free trade agreements around the world.

GLOBAL TECHNOLOGY CAN TIE IT ALL TOGETHER

As companies large and small continue to expand internationally,
they can no longer afford to single-handedly manage the countless
details and nuances of global freight forwarding. Shortened lead
times, the use of multiple transportation modes and carriers to
deliver product efficiently across continents, and an environment
fraught with risk requires both worldwide and regional management
of cargo flows.

Many companies rely on a transportation management system
(TMS), hoping to keep their fingers on the pulse of their global
supply chain providers. However, TMS products were developed
initially to track domestic or regional truck shipments and to
automate tedious, low-value processes performed by an enterprise’s
transportation staff. Today, few TMSs can enable global visibility to
every shipment, or can interconnect disparate systems on multiple
continents to provide the level of visibility to show where products
are at any given point in time.

A truly global supply chain network has a single TMS architecture
that spans all continents. Global visibility enables your organization
to clearly see the entire supply chain. Utilization reports for multiple
services and modes (air, ocean, rail, and road) on all continents
confers specific strategic advantages:

-Continuous improvement to supply chain logistics in real time

-Access to business intelligence, crossing all freight and spend.categories to strategically understand the impact of decisions

-Access to a centralized network of multiple providers–without
integrating individually with each provider

Work with a logistics provider that offers a full suite of services,
manages service performance, consistently communicates
performance metrics, and offers strategic optimization to gain
distinct advantages in the marketplace.

A case in point: purchase order management

-Purchase order management (POM) within a TMS delivers end to end visibility throughout the purchase order (PO) life cycle. POM enables you or your provider to manage shipment windows, work
with overseas vendors to coordinate bookings, manage exceptions,
collect and distribute documents, and provide reporting at the shipment and PO/line item level.

-POM options include PO tracking and visibility, reporting, online booking, document management, check and verification process, vendor self-service, vendor management, exception management,
and PO and shipment analytics.

5 Questions to Ask a Potential Global Freight Forwarder

IS YOUR TMS TRULY GLOBAL? There should be one system architecture that works across regions and covers all types of transportation.

CAN YOU PROVIDE CAPACITY OPTIONS?
They should ship goods by ocean, air, rail, and truck,
choosing the option that best aligns with the business
need. Ask about their consolidation programs to
optimize spend, routings, and transit time performance.

DO YOU HAVE “BOOTS ON THE GROUND” IN KEY
GEOGRAPHIC REGIONS?
Your global freight forwarder should think globally, act locally.
That is, they should know global transportation, but also
have deep knowledge of the local population, infrastructure,
languages, politics, economy, customs, currencies, tax laws,
and tariffs for each country your shipping routes touch.

CAN YOU HELP ASSESS CARGO RISK?
They must adequately help you assess and mitigate cargo
risk to help protect your bottom line.

DO YOU OFFER CUSTOMS ADVICE?
They should be experts in leveraging customs information
and programs to your company’s advantage.

 

_________________________________________________

1. “What is the biggest challenge you are facing in your supply
chain?” eft Supply Chain & Logistics Business Intelligence,
April 2018. Accessed at https://www.statista.com/
statistics/829634/biggest-challenges-supply-chain/.

2. “Containers Lost at Sea-2017 Update,” World Shipping
Council, 2017.

3. SDRs, or Special Drawing Rights, refers to a basket
of currencies designed to iron out currency exchange
fluctuations in International valuations, now used to express
the limitation under the Hague-Visby Rules and the MSA
Limitation Convention.

4. “Global Trade, Trade Statistics,” World Shipping Council,
2018. Accessed at http://www.worldshipping.org/about-theindustry/global-trade.

5. “Containers Lost at Sea-2017 Update,” World Shipping
Council, 2017.

6. Larry Kivett and Mark Pearson, “Understanding risk
management in the supply chain: Using supply chain data
analytics to drive performance,” Deloitte, 2018.

Every Loading Dock Should Have a Vehicle Restraint. Here’s Why.

In 2017, there were 270,000 injuries reported in the transportation and warehousing industry. The same industry also saw 819 deaths, a number only surpassed by the construction industry. The number of preventable fatal work injuries in transportation and warehousing grew 5.3% from 2016 to 2017 (1). 

What do these statistics have to do with loading docks? More than 25% of all industrial accidents happen at the loading dock, and for every accident, there are about 600 near misses (2). If your job has anything to do with loading docks, these figures are meant to help you understand how important loading dock safety really is. 

Forklift Fall-Through

One of the most dangerous types of accidents that occur at the loading dock is forklift fall-through. This type of accident happens as a trailer is being loaded or unloaded. Sometimes, the momentum of the forklift transfers to the trailer, causing it to move forward until it separates from the dock leveler. Other times, the truck driver thinks loading or unloading is complete and pulls away from the dock prematurely. When the forklift leaves the trailer, it falls into the gap. The forklift driver often falls out or tries to escape, and the forklift falls on him or her. The average forklift weighs as much as three cars. 

“Forklift fall-through doesn’t happen every day, but when it does, it’s one of the worst types of accidents that happen in a warehouse or distribution center,” says Jeff Schulze, Vice President at loading dock equipment manufacturer Systems, LLC. “Fortunately, when used correctly, vehicle restraints help minimize the chances of a forklift fall-through accident.” 

When a trailer backs up to a loading dock, the most common types of vehicle restraints capture or block the trailer’s Rear Impact Guard (RIG), sometimes called an ICC bar, securing the trailer to the loading dock until the restraint is disengaged.

Wheel Chocks Are Not the Answer

The Department of Labor’s Occupational Safety and Health Administration (OSHA) states that companies with warehouses and distribution centers are responsible for the safety of their employees, which obviously includes dock personnel, and requires that all vehicles are, at minimum, restrained by wheel chocks prior to and during loading and unloading. 

If someone believes wheel chocks are an acceptable substitute for vehicle restraints, he or she must ensure that every trailer is properly chocked, which is rare. In one facility, every dock position might have an immaculate set of wheel chocks that are always stored in their cradle, but they’re only immaculate because they aren’t used very often. Dock personnel at another facility might believe truck drivers should chock their own trailers, but all they’re legally required to do is set their brakes. At another facility, perhaps wheel chocks are not even available. They were there at some point in time, but on a frigid winter day they weren’t returned to their cradle and the snowplow picked them up and ripped them off the wall. At yet another facility, some of the chocks have simply broken down from years of use and were never replaced. In each case, the company is not only risking OSHA fines, but also the safety of its dock personnel.

Wheel chocks also must be applied firmly against the closest set of wheels to the dock, or they may not prevent trailer creep. This requires more than just casually tossing the chock near the trailer wheels. A gravelly drive or wet or icy conditions also reduce the effectiveness of wheel chocks. To top it all off, in most cases, trucks can simply pull trailers right over wheel chocks, so they’re generally not very good at preventing early pull-away. 

Communication is Key

Securing a trailer to the loading dock is only part of the reason vehicle restraints are preferred over wheel chocks. Communication between dock personnel and truck drivers is essential for maintaining safety in the loading dock, and wheel chocks do nothing in this area. Vehicle restraints often include light communication systems that know when the trailer is restrained and use interior and exterior lights to communicate this to the truck driver and dock personnel so loading or unloading can safely begin. 

Safety is an Investment

Anyone who thinks vehicle restraints are too expensive should consider that loading dock accidents cost companies an estimated $675 million every year,(3) and the average cost of a worker injury accident is about $189,000 (4). A better way to spend $189,000 is to install automatic vehicle restraints and greatly reduce the chances of a forklift fall-through accident in the first place. 

There is also a possibility that installing restraints at your loading docks may lower your insurance rates. “When you install restraints, you’re acting to not only reduce the chances of employee injury accidents, but also damage to equipment, vehicles, and cargo from accidents,” says Schulze. “It’s definitely worth a call to your insurance provider.”

A Chance Not Worth Taking

It’s been said that forklift fall-through accidents are a one-in-a-million incident. That might not be far from the truth. If a facility has 20 dock positions and each sees 10 trailers per day, and each of those trailers sees 40 forklift entries and exits during loading or unloading, it only takes 25 weeks for this facility to have a million opportunities for a forklift fall-through. Suddenly one-in-a-million feels much too close for comfort.

Don’t Wait Until It’s Too Late

The time to put on your seat belt is not after you’ve been in a car accident. It’s a bit late to install smoke detectors after your home has burned to the ground. If you drive a forklift to load or unload trailers and wheel chocks are all you’ve got, ask your supervisor about vehicle restraints. If you’re a warehouse manager or safety officer, don’t wait until someone gets hurt to put vehicle restraints in the budget. When you install vehicle restraints in your loading docks, rest easy knowing you’ve done the best thing you can do to help minimize the risk of forklift fall-through accidents. 

 

Jeremy Artz is the Product Manager for loading dock equipment manufacturer Systems, LLC. He has 20 years of marketing and product management experience in various industries from manufacturing to financial. Jeremy specializes in connecting people and products by focusing on how those products can benefit businesses and improve lives.

 

___________________________________________________________________________

1 National Safety Council Injury Facts https://injuryfacts.nsc.org/work/work-overview/work-safety-introduction/ 

2 Industrial Safety & Hygiene News https://www.ishn.com/articles/107356-slow-down-watch-out-know-the-facts-about-loading-dock-hazards 

3 Material Handling & Logistics https://www.mhlnews.com/warehousing/safety-and-security-loading-dock-know-your-risks-and-take-control 

4 National Safety Council: $39,000 medical cost https://injuryfacts.nsc.org/work/costs/work-injury-costs + estimated $150,000 property damage ($75,000 forklift + $75,000 building repair cost)

lean supply chain

LEAN OR AGILE? FOR A COMPETITIVE ADVANTAGE IN THE SUPPLY CHAIN, THE ANSWER IS BOTH

Maintaining competitive advantage in the global logistics playing field is no easy task. There are hundreds of companies striving to earn the loyalty and business of global and domestic clients and the competition is becoming more intense with each passing day. Thanks to technology, companies are now able to take a step back and truly evaluate what structures make the most sense to meet customer demands in unpredictable markets.

Technology offering features such as predictive analytics are enabling logistics leaders to employ proactive measures for even the most complex of disruptions. However, readily available technology does not prove successful without careful consideration of the right platform and what supply chain management structure will meet the needs for specific company goals and customer demands. Company A might require a lean approach, while company B requires characteristics of both lean and agile supply chain structures. Before diving into which one benefits the most, it’s important to understand the differences between the two. 

An agile supply chain structure focuses heavily on layered benefits including visibility, predictability, and speed in terms of reaction times. Lean supply chain focuses on the most cost-effective options, ultimately reducing costs and recovering what’s been spent. Both are extremely important and attainable, but the trick is finding the right balance between the two while recruiting the best partners fit to support meeting the needs of customers. This element is critical in maintaining competitive advantage and ultimately makes or breaks customer relationships. 

“Everyone is striving to find that balance between having an agile supply chain and a lean supply chain because logistics and transportation costs fall to the bottom line,” explains Matt Castle, vice president, Global Forwarding Products and Services at C.H. Robinson. “These costs need to be recovered at some point in time, regardless of what business you’re in. There’s always going to be a focus on ensuring a lean supply chain in terms of cost and the economy, as well as how to find that balance of also maintaining flexibility based on the needs of the business. Having that agility can be a major differentiator in delivering on customer expectations.”

Castle adds: “Another question to think about is how to approach diversification in your supplier base. There can obviously be restraints based on a particular importer or exporter in terms of where they’re sourcing or buying product and availability, but I recommend ensuring you have an outlet from a secondary supplier. It’s worth the front-end legwork from a planning perspective to ensure you have a multitude of choices.”

The advantages of agile supply chain go far beyond mastering efficiencies or recovering costs and requires taking a holistic look at all the moving parts of your business. Implementing this type of approach relies heavily on planning and thinking differently in approaching the management of customer expectations while ensuring your business can offer a level of flexibility your competitors can’t offer. 

“When I think about an agile supply chain, I think about having flexibility—the ability to adapt at a quick pace, speed and the ability to recover from a certain level of uncertainty,” Castle says. “I believe it’s important to collaborate with a company that has a diverse portfolio of services. This is so businesses are able to adjust quickly from an ocean service to an air service, from an intermodal to a truckload, or even breaking down at a warehouse facility, LTL or small parcel.

“Having a provider that can seamlessly move from one product to the next is extremely important. It’s also important to ensure you’re engaging with a provider that has a global footprint. There are different scenarios playing out in different countries, so your ability to have a presence that can engage a global environment is critical.”

Any business implementing an agile supply chain approach must ensure supporting providers and partners are a good fit. Choosing the right third-party logistics provider can determine just how quickly your business can recover from an unpredictable situation and continue operations. Uncertainties cannot be completely eliminated, but they can be managed in a way that your business and customer relations do not suffer with the right partner. Without this, an agile supply chain structure is limited. 

“When thinking about uncertainty in the supply chain, having a third-party logistics provider that’s multimodal or that offers a variety of products allows you to seamlessly move from one product to the next,” Castle advises. “That is one of the best defenses against being able to navigate any level of uncertainty–from speeding up or slowing down products. It comes back to having some level of a global presence, as it’s something a lot of importers and exporters are trying to navigate today.”

Technology is equally important when aligning operations with an agile approach. This also requires careful consideration of what works in terms of what kind of products and the regions associated with operations. The technology needs to provide a level of visibility that enables your business to react to a variety of disruptors–from weather to policy, disruptions can come in different forms and require proactive, quick solutions to mitigate additional risks. 

“Put simply, it’s a matter of having product available–whatever your business may be, to either sell or have within the production cycle so that you’re not ending up with a plant shutdown,” Castle says. “An agile supply chain creates an opportunity to deliver product on the shelf that a competitor isn’t able to.”

“For C.H. Robinson, Navisphere is our technology platform. Managing any kind of supply chain is about how you bring visibility to what’s happening with the movement of your goods. What’s changing in terms of expectations around technology is how do you start to weave different factors in so that it starts to align with more predictive elements.”

____________________________________________________________________

Matt Castle is vice president of Air Freight Products and Services at C.H. Robinson. He joined C.H. Robinson in 1996 and has 25+ years of experience in the transportation industry. Castle is responsible for driving growth through global airfreight product. He received his degree in Aviation Administration and Management from the University of North Dakota.

TMS

Signs You’re Ready for a Transportation Management System and What to Look For in Finding the Right One

The transportation management system (TMS) market is growing globally, and for good reason. Common objectives like controlling costs, establishing internal efficiencies and managing capacity restrictions have established the need for technology that provides uninterrupted visibility across the supply chain and helps streamline operations.

In fact, in Gartner’s first Market Guide for Real-Time Visibility Providers, published November 2018, supply chain leaders surveyed for the report ranked visibility as the highest priority in the supply chain.

But it’s not simply a given.

Especially in today’s volatile global trade climate, having a TMS in place can ease the burden on transportation leaders to ensure goods get to their destination on time without crippling costs. The modern supply chain requires the flexibility and scalability provided by transportation management systems.

Knowing when a TMS is right for your business

A growing business means more robust transportation needs. Being equipped to manage the increased volume and complexity is crucial, especially as you onboard new customers, some of which likely have strict retail compliance policies that can result in fines and penalties for not following suit.

Greater complexity in your transportation needs also means the need for greater visibility. If you can’t confidently say you know where all of your shipments are at a given time, it’s time to consider a TMS. Implementing a TMS arms your business with visibility and provides the real-time information needed to also keep customers informed. That access to real time data and insight is not merely a nice to have, as it was in the past. With trade volatility on the rise, the ability to stay informed and to make quick pivots is imperative. Those who can accurately see the whole picture at the click of a button will surpass the competition as they rush to make less informed decisions.

In addition to business growth and the complexity that comes with it, a TMS is an especially crucial tool to have in place if your business is considering M&A activity. As shippers are suddenly faced with the myriad challenges that comes with integrating disparate systems, having a TMS in place serves as a binding source for systems and data.

I know I need a solution. What now?

TMS solutions have become more robust and powerful over time while also decreasing in price. This has made them more accessible to companies of all sizes, especially given the ability to get them up and running quickly thanks to cloud-based software.

A few questions to consider as you think about which kind of TMS to purchase are: What key pain points am I hoping to address? Do I want a standalone TMS solution or a TMS and a 3PL that can I partner with to manage my logistics needs? And how do I ensure disparate systems are cohesively integrated?

Businesses will commonly implement a TMS to increase supply chain visibility and operational efficiency, integrate disparate and/or legacy systems, optimize costs and have access to detailed analytics and reporting. To achieve these goals, you’ll want a solution that includes the following:

-End-to-end automation and dynamic collaboration so you can seamlessly manage your entire supply network, across all modes;

-Detailed shipment visibility providing insight around pricing and load management to ensure your shipments are delivered on time and on budget;

-Actionable business intelligence and analytics that can provide the immediate insight needed to make better shipping decisions;

-A healthy carrier network of local, regional, and national multimodal carriers to provide services on a shipment-by-shipment basis or dedicated lane opportunities. If you opt for a managed TMS, your provider can help you pinpoint more efficient routes, cost reductions and opportunities to explore new markets versus needing to do that work internally.

As transportation management technology has advanced in recent years, the price of transportation management systems has dropped, offering businesses of all sizes the opportunity to take advantage of the myriad benefits. From providing an unprecedented level of visibility to compelling opportunities for cost savings and increasing operational efficiency, the decision to adopt a TMS in today’s uncertain global trade environment should be an easy one.

Ross Spanier is senior vice president of operations at GlobalTranz, a leading technology and third-party logistics solutions company providing award-winning Transportation Management System (TMS) products to shippers, logistics service providers and carriers.

ExxonMobil-SABIC JV

Savage Selected as Partner for ExxonMobil-SABIC JV Rail Project

San Patricio County, Texas can expect to see the completed ExxonMobil-SABIC JV Rail Project facility as early as 2021, according to information released this week confirming global partner Savage, as the partner of choice behind the design, development, and operations of the facility.

The rail facility is the product of the joint venture, Gulf Coast Growth Ventures (GCGV), between ExxonMobil and SABIC and will handle railcars transporting plastic polymer, polyethylene. The facility will be completed in San Patricio County, Texas, next to the GCGV facility.

“We’re excited to partner with GCGV on rail infrastructure and operations to support what will be a world-class petrochemical facility,” said Savage’s Energy and Chemical Sector President, Brad Crist. “Our nearly two decades of handling plastics and working with major industry producers, coupled with our extensive rail experience, enable us to design this rail facility from an operator’s perspective to ensure it functions safely, efficiently and reliably without impact on the surrounding environment.”

Savage currently boasts a network of 50+ rail terminals currently under its operation. The company provide support with services including rail switching and indexing, railcar washing and loading, railcar repairs and facility maintenance in addition to designing and building the ExxonMobil-SABIC JV rail facility.

“This project is an example of how we can bring our diverse rail, logistics, engineering and facility operations capabilities together to create value for our Customers,” said Kirk Aubry, Savage President and CEO. “It’s the quality of our people, our solutions and our consistency delivering results that truly makes us distinctive in the markets we serve.”

2019 Tariff Changes: Expectations and Supply Chain Strategies

If you’re currently navigating the impact of tariff changes as well as the potentially additional billions of dollars’ worth of tariffs on Chinese goods, we have the information you need to understand what’s changing—and just as important—what you can do about it.

What is a tariff?

In the United States, a tariff is a tax on imported goods. Tariffs are a major source of revenue and can promote/encourage domestic products.

How do tariffs work for section 301?

Tariffs can make trade with another country more costly. There are several types of tariffs, each with their own rules, but section 301 tariffs are based on a percentage of the item’s value. This is called an ad valorem tariff.

For example, plastic eyeglass cases in List 3 fall under the Harmonized Tariff Number 4202.32 1000, with the general rate of duty: 12.1 cent per kilo and 4.6% based on value. Now, with the Section 301 duties added in, there’s an additional 25% charge on top of the others. This simple product, which sells for less than $10 USD could be charged 29.6% plus 12.1 cents per kilo in tariffs.

What tariffs are changing?

Since we’ve previously covered the tariff changes from 2018, I won’t go into detail about them here. Instead, let’s focus on the most recent Section 301 trade actions that have taken place. There have been three major announcements regarding tariffs with China:

Section 301 List 3 tariffs

On May 9, 2019, the United States Trade Representative (USTR) formally announced Section 301 List 3 tariffs would increase to 25% from 10%, effective Friday, May 10, 2019. However, unique to how the Section 301 tariffs were previously implemented, this increase added some specific date criteria. The 10% tariff would still apply to goods exported prior to May 10, 2019, and entered into the United States before June 15, 2019. This was originally noted by the USTR as June 1, 2019, but updated on May 31 to extend an additional 15 days.

Proposed List 4 tariffs

In another major announcement, on May 13, 2019, the USTR published a notice requesting comments on a proposed List 4. The proposed fourth list of tariffs would impact about $300 billion USD in Chinese origin goods at a 25% tariff rate. This could go into effect as soon as late July or August 2019. If List 4 does go into effect, the Section 301 tariffs would cover over 96% of all U.S. imports from China. Public comments regarding List 4 are due into the USTR by June 17, 2019, when a public hearing will commence.

China’s tariffs on U.S. goods

These changes and proposals have not gone unnoticed by China. On May 13, 2019, the Chinese Government announced they will raise tariffs on $60 billion worth of U.S. goods. These increases in tariffs affect the three retaliatory tariff lists put into place by China in 2018, and raise the initial tariffs rates, depending upon the harmonized tariff code 10%, 20%, or 25%.

What do tariff changes mean for your supply chain?

At C.H. Robinson, we strive to be your Trusted Advisor® experts by providing you with information on matters affecting your supply chain. By leveraging data from 18 million shipments a year, we are able to deliver an information advantage to the over 200,000 companies that conduct business on our global platform, creating better outcomes for our customers, carriers, and employees.

That’s why we’ve recorded our top transportation, customs, and trade policy experts explaining the ongoing tariff changes. The discussion will help you understand:

-The current state of tariffs

-The impact on global and domestic transportation strategies

-What you can do right now

Watch the discussion and consider how you will manage potential disruptions to your supply chain as tariff developments continue to unfold.

Next steps

Done watching the video? If you would like more information or have questions about the information covered in the recording, please connect with one of our trade experts.

This blog originally appeared on chrobinson.com. Republished with permission.

Arrive Logistics Announces Third Consecutive “Best Workplaces” Recognition

Austin-based technology transportation provider, Arrive Logistics, now boasts a third consecutive recognition from Inc. Magazine as one of their
“Best Workplaces” for 2019.

This is the magazine’s fourth annual “Best Workplaces” list highlighting 346 companies based on survey results ranking for exemplary company culture, employee engagement, and benefits based on a comprehensive evaluation of American companies within the private company sector.

“We are a people-first organization and we invest heavily in creating an environment that sets our team up for success,” said Matt Pyatt, chief executive officer, Arrive Logistics. “We are very thankful to be receiving this award for the third year in a row.”

Inc. Magazine recognizes Arrive’s focus on employee development through the company’s consistency in employee recognition and performance checks. Among the companies evaluated, Arrive Logistics separates itself by identifying and polishing employee strengths and building on them, creating a healthy culture and growing employees for growth and success, benefiting both parties.

“With today’s tight labor market, building a great corporate culture is more important than ever,” says Inc. magazine editor in chief James Ledbetter. “The companies on Inc.’s Best Workplaces list are setting an example that the whole country can learn from.”

Source: Arrive Logistics, Inc. Magazine


Dupré Logistics Honors Drivers with New Incentive Plan

Privately-held transportation and logistics services provider, Dupré Logistics announced a new incentive plan totaling approximately $1 million in bonus payouts to eligible drivers in its Energy Distribution Services division. This incentive was specifically implemented to extend appreciation to drivers for performance excellence.

“We wanted our drivers to know that they are our most valuable asset, and we are committed to maintaining the “Ideal Place to Work” for them.” said Tony Becnel, Director of Operations Energy Distribution Services at Dupré Logistics. Our goal is to continually recruit and retain the best drivers within the industry.”

Structured to highlight driver longevity and commitment to customers, the incentive serves as a fresh approach to maintaining employee satisfaction while supporting the company’s goal in maintaining itself as an “Ideal Place to Work.”

“Many companies have bonus programs that are dispersed yearly and have a low percentage at paying out. We feel that Dupré’s new bonus structure is unique to the industry in that it was designed to be awarded more frequently and to reward 99% of Dupré drivers with added compensation in addition to our current driver wage increases.”  

“In recent months it has become evident that recruiting and retaining the best drivers in the industry would require a different approach,” said Doug Roberie, Dupré Logistics Vice President. “Traditionally, we have provided normal annual wage increases for our drivers, but in today’s market it requires more. We wanted to put a check in our drivers’ hands to show our appreciation for their commitment to Dupré and our customers.” 

Photo credit: Dupré Logistics