intermodal university transloading: reproduction...intermodal university transloading: what, why,...
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Intermodal UniversityTransloading:
What, Why, Where and When?Monday, September 16th
Long Beach Convention CenterRoom 204
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Our GuestsFacilitator:• Jeff Brashares, Dean of Intermodal University
Senior Vice President, Sales & National Accounts, SunteckTTS
Speaker:• Ted Prince, Chief Operating Officer & Co-Founder
Tiger Cool Express
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Today’s Agenda
• What are shippers looking to do?
Transportation and Logistics 101
• How did methods change – and why?
History 101
• What are the economic drivers today?
Economics 101
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Transportation and Logistics 101• What is transportation’s role?
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Supply chain management
Materials Information Finances
Logistics
Logistics
Inbound logistics
Materials management
Physical distribution
Supply chain management
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Shipper Choices• What is my goal?
– What am I optimizing?– What should “total landed cost” include?
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Transportation and Logistics
•Foreign inland•Line haul•U.S. inland•Accessorials• Insurance•Packaging
Purchase Price
•Price paid to seller
•INCOTERMS•Payment terms•Exchange rates
over time
Inventory Costs
•Cycle stock•Safety stock•Inventory in-
transit•Cost of stock-
out
Customs and Import
•Tariff rate•Merchandise
processing•Local [port]
charges•Broker fee•Less: Duty
Drawback
Overhead and Administration
•Sourcing staff•Due diligence•Relationship
building/travel•Learning curve
Risk and Compliance
•Compliance costs (technology, staff, other)
•C-TPAT program costs
•Cost of potential risk of damage to reputation
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Transportation Movement Deconstructed• From Asia sourcing to DC delivery• Not looking at ultimate store delivery
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Factory Pickup Ocean
Transit DC Delivery
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What (and Where) is Transloading?
Asia Factory
Ocean Transport US DC
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Asia Factory
Asia Transload
OceanTransport US DC
Asia Factory
Asia Transload
Ocean Transport
US Transload US DC
Asia Factory
Ocean Transport
US Transload US DC
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History 101 -- How Did We Get to Today?• Many drivers in the past – which continue today
Deregulation Globalization
Technology Supply Chain Management
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A Brief History Transloading• Historical drivers and change
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1968 1979 1985 1995 2007 2017
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A Quick Lesson in Ocean Freight TermsMovement
• T&E through overland substitution (e.g., Tokyo-Seattle-Newark-Rotterdam)
Land-Bridge
• Rail substitution to a port (e.g., Keelung-Los Angeles-Houston; or, Hong Kong-Seattle-Baltimore)
Mini-Land-Bridge (MLB)
• Delivery to any inland point (e.g., Busan –Dallas)
• Inland Point Intermodal
Micro-Land-Bridge (IPI)
Bill of Lading Terms
•Service begins or ends at a port•Customer performs delivery (aka “OCP: Overland
Common Point”)
Port
•Service begins or ends at a facility (e.g., rail ramp, CY, etc.)
CY (Container Yard)
•Service begins or ends at customer facility (aka carrier haulage)
Door
•LCL shipment begins or ends at groupage facility
CFS (Container Freight Station)
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Ocean ParticipantsOcean Carrier
• Issues B/L to their customer for transportation
Freight Forwarder• Travel agent for shipper• B/L is from ocean carrier
NVOCC• Issues B/L to their customer• Purchases transportation from ocean carrier• May be independent or owned by ocean carrier
Consolidator• Aggregates or disaggregates LCL into container-load• May be agent of ocean carrier, or freight forwarder, or NVOCC
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Importing 1968 (CFS – Port)
Factory in Hong Kong
Cargo stuffed at
Hong Kong CFS
Containers loaded in
Hong Kong
Containers discharged in Oakland
Goods transloaded in Oakland
Boxcar transit to Midwest and East
Deregulation
•Rail, truck and ocean regulated under public tariffs
Globalization
•Early offshoring in 4 Tigers (Japan, Korea, Taiwan and Hong Kong)
Technology
•Containerization comes to Asia
•Inland by boxcar and truck
Supply Chain Management
•West Coast transload•Purchasing to final market•Consolidators and freight
forwarders emerge
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Importing 1979 (CFS – MLB)
Factory in Hong Kong
Cargo stuffed at
Hong Kong CFS
Containers loaded in
Hong Kong
Containers discharged in Oakland
Goods moved by rail to NJ
MLB Drayage to Northeast
Deregulation
• Intermodal deregulated but joint tariffs remain with FMC and ICC
Globalization
• APL establishes Liner Train for MLB service via USWC to USEC
Technology
• 2800 TEU Vessels and liner train
Supply Chain Management
• Static POs issued to final DC
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Importing 1985 (CFS – MLB)
Factory in China
Cargo stuffed at
Hong Kong CFS
Containers loaded in
Hong Kong
Containers discharged
in San Pedro
Goods moved by rail to NJ
MLB Drayage to Northeast
Deregulation
• Rail (fully) and ocean(partially) deregulated
• Ocean conferences still inplace
Globalization
• West coast service expands• San Pedro surpasses Oakland• Plaza Accord
Technology
• 3500 TEU vessels• Doublestack• Intermodal mechanization
Supply Chain Management
• Static POs issued to final DC[No Change]
• NVOCCs proliferate after1984 Shipping Act
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Importing 1995 (Port – IPI Door)
Cargo loaded at factory in
China
Containers loaded in
China
Containers discharged in
San Pedro
Goods moved by rail to myriad
destinations
IPI/Storedoor delivery to DC
Deregulation
• Rail (fully) and ocean (partially) deregulated
Globalization
• China WTO admission• Port development in China• Delivery CY% grows• Direct service to USWC from PRD• Ocean carriers vertically
integrated
Technology
• 4800 TEU vessels• 53-foot domestic containerization• Bar scanning available• PO tracking
Supply Chain Management
• Static POs issued to final DC [No Change]
• Consolidator sell visibility instead of capacity
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Importing 2007 (Port – Group 4 Door)
Cargo loaded at factory in China
Containers loaded in China
Containers discharged in
San Pedro
Storedoor delivery to DC
for transloading
Goods moved by rail and
truck to myriad destinations
Deregulation Globalization
• China factory scale
Technology
• 8000 TEU vessels• Point-of-sale scanning
Supply Chain Management
• Inventory velocity
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Importing 2017 (Port – Local Door)
Cargo loaded at factory in China
Containers loaded in China
Containers discharged in multiple ports
Storedoor delivery to DC
for transloading
Goods moved by rail and
truck to myriad destinations
Deregulation Globalization
• Industrial real estate• Ocean 53
Technology
• 15000+ TEU vessels
Supply Chain Management
• “Four corners”• Increase in
eCommerce
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Economics 101
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Slow steaming (for Midwest)• USEC = USWC + 7-10 days
Consumer caution• Transloading reduces required safety stocks and inventory risk
Carbon footprint• More DCs (placed closer together) increases safety stock requirements
Total landed costs• The customer’s “invisible hand”
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Economics of Inventory• Inventory is not uniform …
• … and importers have many challenges
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Pipeline• Inventory required to
meet expected timefrom order to DC arrival
• Risk: supply forecasterror
Cycle• Inventory required for
DC to meet expected demand
• Risk: demand forecasterror
Safety• Inventory required to
prevent stock-outs arising from supply and/or demand errors
Sales data is real-time – how to manage
inventory
Vendor-managed inventory only pushes problem to supplier
How to compress action-reaction time?
Inventory is expensive (Cost ≈ 20%)
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Transloading Mitigates Economic Risk (1)• Demand error increases exponentially with time
– Transloading mitigates that risk– Safety stock reduced accordingly
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PO Issued for TotalQuantity
SKU assigned to Final Container
Stuffed at Factory 100-200 days prior 60 Days from DC
Stuffed at Asia CFS 100-200 days prior 30 Days from DC
Transloaded 100-200 days prior 5 Days from DC
Asia CFS is 36x riskier
Factory stuffing is 144x riskier
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Transloading Mitigates Economic Risk (2)• Transloading also reduces pipeline time
– Last-on and first-off vessel– Faster rail transit (50 mph vs. 35 mph)
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Intact Movement via Los Angeles Block 1Chicago
Block 2New York
Block 3Memphis
Origin Cutoff SAT (1) SAT (1) SAT (1)
Destination Discharge SUN (16) MON (17) TUE (18)
Rail Arrival SAT (22) MON (24) TUE (25)
Available MON (24) MON (24) TUE (25)
Transloading in Los Angeles Block 1Chicago
Block 2New York
Block 3Memphis
Origin Cutoff SUN (1) SUN (1) SUN (1)
Destination Discharge SUN (15) SUN (15) SUN (15)
Rail Arrival FRI (20) MON (23) FRI (20)
Available FRI (20) MON (23) FRI (20)
Transit Improvement 4 Days 1 Day 5 Days
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Transloading Mitigates Economic Risk (3)• Inventory to Sales Ratio supports transloading trend
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http://research.stlouisfed.org/fred2/graph/?id=ISRATIO
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Transloading Mitigates Economic Risk (4)• Transloading gateways must provide economies of scope and scale – and infrastructure
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Chicago Dallas Houston Memphis New York Atlanta Toronto
Score(3/1/0)
LA/LB 19Prince Rupert 11PDX, SEA, TAC 10VCR 9Lazaro Cardenas 3NY/NJ 4Savannah 4Lazaro Cardenas 3Prince Rupert 0
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© 2019 Intermodal Association of North America. This presentation was produced for the use of IANA members and may not be reproduced, re-distributed or passed to any other person or published in whole or in part for any purpose without the prior consent of IANA. IANA, 11785 Beltsville Drive, Calverton, MD 20705-4048.
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