May 2014 | Capacity LLC

Six Statistics on Logistics Globalization

May 28, 2014

English: Yangshan Deep-water Harbour Zone, Por... — Yangshan Deep-water Harbour Zone, Port of Shanghai. (Photo credit: Wikipedia)

Last year we wrote about the logistics of globalization, examining the challenges that 3PL providers face whether goods from the next state over, or a country on the other side of the world.

That proved to be one of our more popular posts, so we thought we’d see what things look like almost a year on.

Rather than delve into any one topic (which we’ll probably end up doing in several future posts anyway!), though, here’s a look at global logistics through the lens of statistics.

Six Statistics Reflecting the State of Global Logistics

1. The top five U.S. trading partners in terms of cargo containers in 2009 were all Asian countries, of which China accounted for almost half (48%) of the shipments in question. This means that American trade with China has almost doubled since the turn of the century. [Source: RITA, 2011]

English: A 20-foot long ISO container Русский:... — A 20-foot long ISO container (1 TEU) | Photo credit: Wikipedia

2. Containerisation was associated with an increase in bilateral trade of 790% over 20 years. A bilateral free-trade agreement, by contrast, boosted trade by just 45% in the same period. Membership of GATT raises it by 285%. In other words, containers have boosted logistics globalization significantly more than trade agreements in the past 50 years. [Source: The Economist, 2013]

3. On a typical weekday, U.S. container ports handle around 70,000 TEUs (twenty foot equivalent unit containers – see right) of freight from all around the world. [Source: RITA, 2011]

4. Container ships seem to get larger every year. The biggest container vessel currently sailing the seas can hold a whopping 18,000 TEU [Source: BBC, 2013]. Contrast that with statistic number 3 and multiply it by hundreds of bustling ports in countries across the globe. That’s a lot of cargo on the move on any one day!

5. Expenditure on U.S. logistics was $1.1 trillion in 2009, which is larger than the national GDP of every country in the world, except for the top 12. [CSCMP,2009]

6. Container trade with the top 10 countries made up nearly three-quarters (71
percent) of global import container shipments and over half (56%) of exported container shipments. [Source: RITA, 2011]

Which stats strike you as the most representative of global economic expansion and logistics globalization?

Let us know on Facebook or Twitter!

3PL Questions: Should Businesses Ask for Custom Logistics Solutions?

May 21, 2014

dovetail joint from enWP: 05:42, 17 August 200... — Think of your 3PL like a dovetail joint; the closer the connection, the sturdier the solution! (Talk (Photo credit: Wikipedia)

Earlier this month we recommended eight questions to ask a potential 3PL when you decide to outsource some or all of your supply chain operations.

As some of those questions warranted a deeper dive, we’ll be looking more closely at the considerations to make and what to listen for when you ask them.

Today we look at services or processes specifically designed for your business and why it’s wise to ask your 3PL for some custom logistics solutions.

The Benefits of a Custom Logistics Solution

As we said in the previous post, it’s vital that your supply chain partners give you the confidence that comes from understanding your industry. More importantly, you need them to have a good handle on your business itself and the inevitable quirks that come with your order fulfillment process.

A good logistics partner who knows how you work will be able to make suitable recommendations about supply chain improvements that better serve your customers. This could be anything from consolidating a variety of processes into one unified shipping solution, to improved packaging practices that reduce damage potential and customer complaints.

Some of the advantages of probing for these custom logistics solutions include:

Cost reduction from driving out supply chain inefficiencies.

Open your eyes to new technology solutions which may be commonplace to your 3PL but that you hadn’t considered (or even heard of!)

You flag any potential misunderstandings about how your existing business processes work before you’re up and running, at which point they’re more costly to resolve.

Closer integration with your logistics provider by “learning on the job” and making incremental improvements on the fly.

Greater business trust between both parties, as you have confidence that they improve your operations and the aforementioned integration gives your 3PL a significant stake in your success.

Know Your Limits

Dont be a Bottleneck. Beat the Promise - NARA ... — Beat the bottlenecks before they begin… (Photo credit: Wikipedia)

The original question, “what custom service can you recommend for my business?” also helps both parties to understand any limitations that your logistics partnership will throw up.

Discussions around customization tend to dig into the details of what can and can’t be done. If you’re making a decision to outsource for the first time, this could throw up some show stopper issues. If you’re in the middle of a relationship, the question still has value in drawing out the limitations of your current provider.

Even simple misunderstandings about what is possible can lead to expensive disagreements further down the line, so it’s always better to get on the same page as your suppliers as soon as you can.

If you have any more questions about how custom logistics can help your business, we’re happy to help!

Dimensional Weight Pricing Disrupts the Delivery Industry

May 15, 2014

We’ve talked before about maintaining an efficient, cost-effective supply chain by reviewing industry shifts, variable costs. and eliminating waste.

Well, one such sea change may soon occur for shippers large and small, as FedEx moves forward with a waste elimination measure of its own.

The Shift to Dimension Based Shipment Pricing

The new Fed Ex pricing model is intended to cut costs that arise from light but bulky packages. Often these are everyday, low price items like toilet paper and kitchen roll, which take up more than their fair share of space on the delivery vehicle.

Essentially the announcement means that FedEx will now calculate shipping rates by size, should the dimensional weight of such packages be greater than their actual weight. There are clear implications for online retailers if the move goes industry-wide, as the likes of Amazon and Walmart rely upon the current price model in order to offer free shipping to consumers.

These companies are making great strides towards same-day delivery thanks to this growth, but dimensional weight pricing poses a threat to some items on its shopping list.

This pricing will take effect on January 1st, 2015. This means there is still some time to plan and adjust for additional costs, perhaps even switching services if other providers choose to compete with FedEx on this criteria.

FedEx Freight is also bumping up its fuel surcharge by 3% from June 2nd, 2014. Although fuel costs are a more recognized variable cost for shippers (and all of us, for that matter), this extra hike combined with the dimensional pricing announcement will prompt shipping teams around the U.S. to pull out their calculators.

Analyze and Adjust Your Shipping Options

"We're Moving!" — “We’re Moving!” (Photo credit: CarbonNYC)

The potential for this shift to reverberate around the supply chain means that every organization should review the likely impact on shipping costs.

Even if FedEx isn’t your chosen provider, it’s worth undertaking this analysis now to understand how wider adoption would affect your business.

Firstly, look at the immediate impact of these price changes on your monthly costs. As things run currently, how much extra can you expect to pay? Although the adjustments won’t be implemented by FedEx until next year, you’ll need to quantify the additional costs now in order to put a plan in place.

Longer term, for example, it may be possible to trim costs or alter packaging to make dimensional weight pricing more palatable. As this could be an extensive process, the more time you can give your team to review and take action, the better. The news may in fact be an ideal opportunity to review your wider order fulfillment process and weed out other unnecessary costs.

Depending on the size and scope of your logistics partners, you may also be able to negotiate preferential rates or some discount to offset the upcoming increase. Whatever the outcome of your review, understanding your options at this advance point is a much better option than running around at the last minute, during the busy holiday season.

If you need to better understand how these changes will impact your shipping process, don’t hesitate to give our experienced team a call on (732) 745-7770.

Capacity LLC Case Study #6: Corporate Collateral

May 13, 2014

When Capacity LLC first met our clients at ADP, the world’s largest provider of payroll services, they were not happy. The company was then using several warehousing and manufacturing facilities to ship and store all of its products, including time clocks, hand scanners, ID badges and software. Some of the logistics providers were also processing returns and handling collateral materials.

In addition to the inefficiencies inherent in the process, the inventory fulfillment system was also being handled manually. Errors abounded. When you consider that capturing a unique serial number on each time clock for both outbound shipping and returns management is one of ADP’s critical requirements, and that it was being processed by hand, there was a great deal of room for improvement.

The Capacity LLC Solution:

Capacity LLC was well positioned to solve ADP’s logistics dilemma. Through our work with pharmaceutical companies, we had already developed the capability to electronically capture lot, batch and serial numbers throughout the supply chain for selected Stock Keeping Units (SKUs) by scanning serial numbers. Daily reports of shipments and returns include this information, critical to the proper tracking of any and all products. This works well for shipments as well as for returns.

By consolidating all shipments and returns within a single warehouse, Capacity LLC helped ADP to achieve a robust, integrated and highly accurate solution for serial number asset tracking. ADP’s two initial divisions, Majors and SBS (Small Business Services), enjoyed such great success with our solution that they migrated the National’s Division over to Capacity LLC, consolidating all of its third party fulfillment activities under one roof.

8 Important Questions to Ask a Logistics Provider

May 8, 2014

When you make the decision to outsource your order fulfillment, next you need to plan what you’ll be asking prospective logistics providers.

Because of the depth of the partnership that you’re likely to forge, with a company that executes a significant portion of your supply chain, it’s a lot easier to get the decision right first time around! Continue reading 8 Important Questions to Ask a Logistics Provider

Month: May 2014