intermodal university transloading: reproduction...intermodal university transloading: what, why,...

Intermodal UniversityTransloading:

What, Why, Where and When?Monday, September 16th

Long Beach Convention CenterRoom 204

NOT FOR DUPLICATION OR REPRODUCTIO

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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

3NOT FOR DUPLICATION OR REPRODUCTIO

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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


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


• Static POs issued to final DC


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Importing 1985 (CFS – MLB)

Factory in China

Cargo stuffed at

Hong Kong CFS


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


• 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


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


• 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


• China factory scale

Technology

• 8000 TEU vessels• Point-of-sale scanning


• 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


• Industrial real estate• Ocean 53

Technology

• 15000+ TEU vessels


• “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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