outsourced logistics 200806
TRANSCRIPT
J u n e 2 0 0 8
A Penton Media Publication outsourced-logistics.com
THE RISE OF
OUTSOURCING
Also in this issue:7 Steps to Improve
Transport Management
Premium Services Grow in Asia Trades
Entrepreneurs at Monster Tower Tame Logistics
Opening and Widening the Doorway
Cover.Final.indd 2 5/30/08 9:55:58 AM
Logistics Puzzle Solved
Warehousing ■ Transportation ■ Contract Packaging ■ Integrated Logistics
Rubik’s Cube® is used by permission of Seven Towns Ltd. www.rubiks.com
Let us put the puzzle pieces together for you. Our nationwide integrated
logistics capabilities increase supply chain efficiency, streamline
business, and help manage costs. Flexible, single-source solutions
backed by Whatever It Takes service and personal, top-of-house
attention…If only all puzzles could be solved this easily.
888-878-1177 • www.saddlecrk.com
806LT.indd 1 5/29/08 12:32:03 PM
A New Paradigm in Logistics Outsourcing
at an inflexion point and that this is the beginning of an explosion in spending on logistics outsourcing.
A third metric is the breadth of spending on logistics services. For years, “transportation services” was the prin-cipal candidate for outsourcing. In recent years there has been dramatic growth in spending on third party provid-ers and on warehouse services. It is clear that as compa-nies make the move to outsourcing their decisions impact an array of Outsourced Logistics options.
Our research also shows that outsourcing knows no geographic boundaries. It is no secret that companies source raw materials, finished goods and services from around the world. Our new editorial lineup reflects the global nature of outsourcing in several ways. We have contributors who offer a Euro-centric, Sino-centric or Latin American view of outsourcing. We have features dealing with 3PLs in China, compliance issues in the European Union and transparent global Outsourced Logistics networks, to name a few. When we speak the language of logistics outsourcing, we may communi-
cate in English, but be speaking in the tongues of the global market.
The market is changed and so is our magazine. We continue to write and editorialize about traditional logistics and SCM topics, but now we take a broader view. Our intent is to provide the community of manufacturers, 3PLs and logistics services providers with reliable information, useful case studies, and a forum for the discussion of best practices.
There is indeed a new paradigm, in the market and in our magazine. It is called Outsourced Logistics.
In recent years there has been a significant evolution in the use of logistics outsourcing in supply chain management. What was formerly an ad hoc deci-sion to hire a transportation provider or 3PL is now
a transformative business practice. What was a business transaction is now a strategic business decision. What used to be ”contract logistics” has become Outsourced Logistics.
This magazine, Outsourced Logistics, is evolved from Logistics Today, and is edited to reflect the new paradigm in logistics outsourcing. Content of Outsourced Logistics is a mix of articles, features and stories about operations and strategy, logistics services and global markets. Our intent is to deliver useful content and to stimulate con-versation among the community of logistics management decision makers. Our message to our fellow community members is not as much the “how to” of global logistics outsourcing, but the “why” these are sound business practices.
Our decision to re-focus our magazine and website is based on an analysis of over 15 years of data, extend-ing back at least to the early 1990’s. References like Cap Gemini, Armstrong and Associates, our own “Strategic Decision-Making in Supply Chain Management” and other sources document clearly the move-ment of companies in three important areas. The first indicator is the grow-ing number of companies the data showed were and are using outsourc-ing to replace existing services. These companies use outsourcing not only as replacements but also as a way to enter new markets or to support new product introductions. Outsourcing is more than just cost savings.
A second indicator is the hundreds of billions of dollars being spent annu-ally on outsourcing. In 2008 the num-ber is forecast to be well north of US $130 billion. And while that number is significant, indicators are that we are
Outsourced Logistics | June 2008 | 1
David H. Colby, Publisher, [email protected]
Publishers Page
Publishers Page.rev.indd 1 5/30/08 9:33:40 AM
Call 1.800.VZW.4BIZ Click verizonwireless.com/distributionSee verizonwireless.com/bestnetwork for details. ©2008 Verizon Wireless.
Efficient distribution systems demand a reliable wireless network.Lower operating costs and improve overall efficiency with smart, simple solutionsfrom America’s most reliable wireless broadband network, Verizon Wireless.
• Access email on our high-speed wireless broadband network from warehouses and distribution centers
• Improve dispatch operations, manage drivers and track job progress with Field Force Manager
• Communicate instantly with TXT messaging and Push to Talk
Untitled-1 2 5/28/08 12:07:44 PM
8Global Markets
Logistics Functions Returning in Earthquake Area
Community VoiceChina's Economic Arteries
14Operations
Gliding Over the Waves, Inbound and Out
Community VoiceAs Boundaries Blur, Communities Take
Shape
42Logistics Services
Premium Services Grow in Asian Trades
Community VoiceIntermodal Fights for a Role
Features
22OutlookThe Rise of OutsourcingOutsourcing has moved from a backroom secret to a boardroom strategy.
26New MarketsOpening and Widening the Doorway
Creating or expanding business opportunities is a particular strength for third party suppliers.
30Field Report7 Steps to Transportation Management Excellence
563PL FileOzburn-Hessey Logistics
Departments
1 Publishers Letter A New Paradigm in Logistics Outsourcing
4 Advertiser Index
7 Editorial So you want to be a 3PL?
41 Classifieds
Outsourced Logistics | June 2008 | 3
June 2008 Vo lume 1 , Number 1
30
8
Contents.Final.indd 3 5/30/08 12:11:07 PM
13 Agility Logistics www.agilitylogistics.com
21 Averitt Express averittexpress.com
31 BNSF Logistics www.bnsflogistics.com
15 Con-way Freight www.con-way.com/ oceanguaranteed
29 CRST www.crstmalone.com
11 Dodge dodge.com/chassis_cab
17 Fedex Truckload Brokerage truckload.fedex.com
40 Interchez Logistics Systems Inc www.interchez.com
45 KC Smart Port www.KCSmartPort.com
19 Kenco Group Inc. kencogroup.com
5 Old Dominion Freight Line Inc www.odfl.com
35 Ruan Transportation www.ruan.com
6 Ryder www.ryder.com
COV2 Saddle Creek Corporation www.saddlecrk.com
41 Santa Monica College cal-westjobs.com
COV3 SMC3 www.smc3.com/go/betterbid
25 TMSI www.tmsilog.com
37 Toyota Material Handling, USA, Inc.
COV4 UPS ups.com/whiteboard
2 Verizon Wireless verizonwireless.com/distribution
32-33 XATA Corporation xata.com/expert
Outsourced Logistics (ISSN 1547-1438) is published monthly by Penton Media, Inc., 9800 Metcalf Ave., Overland Park, KS 66212-2216.
The magazine is sent to qualified management in the field of logistics.Periodicals postage paid at Shawnee Mission, KS and at additional mailing offices.
Can. GST #R126431964. Publications Mail Agreement # 40026880. POSTMASTER: Send address changes to
Outsourced Logistics, P.O. Box 2113, Skokie, IL 60076-7813.
Printed in U.S.A. Copyright © 2008 by Penton Media Inc.
Send editorial correspondence to: Editor, Outsourced Logistics, 1300 E. 9th Street, Cleveland, OH 44114-1503, or [email protected]
For information on obtaining reprints:Contact Penton Reprints at [email protected]
List Rentals:Elizabeth Jackson, MeritDirect, 847.492.1350,
[email protected], www.meritdirect.com/pentonCopying: Permission is granted to users registered with the Copyright Clearance Center Inc. (CCC) to photocopy any article, with the
exception of those for which separate ownership is indicated on the first page of the article, provided that a base fee of $1.25 per copy of the article plus 60¢ per page is paid directly to the CCC, 222 Rosewood Dr., Danvers, MA 01923. (Code No. 0895-8548/08 $1.25 + $.60)
Out-of-print copies are available as positive microfilm and can be ordered from National Archive Publishing Co. (NAPC) 300 N. Zeeb Road, P.O. Box 998, Ann Arbor MI 48106-0998.
Editorial
Publishing Director David H. ColbyeMedia Market Development Manager Jason Washburn
Circulation Manager Tyler MotsingerProduction Coordinator Rachel KlikaCustom Media Group Terrence Grogan
Bob MacArthur Senior VP Industrial Group
Chief Executive Officer John [email protected]
Chief Financial Officer Eric [email protected]
Chief Revenue Officer Darrell [email protected]
1300 E. 9th Street Cleveland, OH 44114-1503
216.696.7000 216.696.2737 faxwww.outsourced-logistics.com
249 W. 17th St., New York, N.Y., 10011 212-204-4200
Chief EditorPerry A. Trunick
Senior EditorRoger Morton
Professional Contributors James A. Calderwood
DesignArt Director Bill Szilagyi
Business
EASTERN REGION Mike Antell, Phone: 978.282.5625, Fax: 978.282.9749, [email protected]
CENTRAL REGION. Terry Davis, Phone: 404.325.9037 Fax: 404.325.6737, [email protected]
WESTERN REGION Christopher Hartnett, Phone: 832.237.4004 Fax: 832.237.4114, [email protected]
FLORIDA Bob Eck, Phone: 352-391-5577, [email protected]
ENGLAND Paul Barrett, Mark Whiteacre, David Moore Phone: 44-1268-711-560, Fax: 44-1268-711-567FRANCE Fabio Lancellotti, Phone: 331-4294-0244, Fax: 331-4387-2729
ITALY Cesare Casiraghi, Phone: 39-31-261407, Fax: 39-31-261380BELGIUM, HOLLAND Peter Sanders, Phone: 31-299-671303, Fax: 31-299-671500
TOKYO Yoshinori Ikeda, Phone: 813-3661-6138, Fax: 813-3661-6139SEOUL, KOREA Young Sang Jo, Phone: 822-739-7840-2, Fax: 822-732-3662
TAIWAN Charles Liu, Phone: 886-2-707-5829, Fax: 886-2-707-5825CHINA Ballycastle Trading, Inc. Ltd., Phone: 852-524-7256, Fax: 852-524-7027
INDIA Shivaji Bhattacharjee Phone: 91-11-268-7005, Fax: 91-11-2652-6055SINGAPORE Mike Seah, Phone: 65-299-0413, Fax: 65-758-7850 or 65-296-6629
Sales
4 | June 2008 | Outsourced Logistics
Ad IndexPg. Company/Website
OL Masthead.Final.indd 4 5/30/08 9:35:12 AM
YOU NAME IT
S U P P L Y C H A I N , W A R E H O U S I N G & T R A N S P O R T A T I O N S O L U T I O N S
We’ll Customize A Supply Chain Solution For ItWhatever you manufacture or wherever you store and distribute your products, Ryder’s end-to-end supply chain solutions
are designed to fit perfectly with your company’s unique needs. Unmatched experience, flexibility and innovative thinking.
This is what we offer to hundreds of companies around the world, from electronics and car makers to consumer product
and aircraft manufacturers. We can do the same for you. Call 1-888-88-RYDER or visit www.ryder.com.
©2008 Ryder System, Inc. All rights reserved.
Untitled-1 6 5/28/08 12:22:07 PM
Areader called recently to ask where he might find a customer to fill his warehouse space. Be-fore referring him to advertising sales, I asked a
few questions and learned he was a manufacturer with a facility available where he had performed full pick and pack operations and transportation management for his company and now wanted to keep that facility operating by offering that service commercially.
The question this left for me was not where he would find someone to occupy that space but why he would want to become, in effect, a third-party logistics provider (3PL). Even if you are a superb logistics executive, becom-ing a successful commercial provider of logistics services is not an easy path.
When transportation deregulation granted privately op-erated motor carrier fleets the ability to provide “compen-sated inter-corporate hauling,” private fleet operators saw an opportunity to offset the cost of their fleets or even earn some profit for the company. Now they could put their capacity out for bid and fill those empty backhauls. Some fleets even developed logos and printed business cards.
Also in the 1980s, the rise of technology was leav-ing some functional areas behind and various facets of
the logistics function found the means to develop home-
grown software for inven-tory control, warehouse management and other functions. Pleased with the results, some com-panies decided to try their hand at commer-cializing their software
systems to pay back the development
costs and pos-
sibly create a new profit center.In each of these cases, there was strong functional capa-
bility, but in none was the proposed commercial venture a core competency. That presents some distinct problems as you get deeper into the “business” you just created. One is resources. Will your corporate management back investments in a non-core business unit?
Another issue is the liability you take on when you are handling someone else’s product or data. For instance, if you don’t presently store, handle or transport hazardous materials, what happens if your client’s product fits a Department of Transportation hazard class? Do you have the appropriate safety equipment, insurance, security, staff and training?
The companies that sought to commercialize their proprietary software quickly learned that after-sales sup-port was a major burden—well beyond what was needed for internal upgrades and user support. Similarly, fleet operators had to prospect for loads and handle billing and collecting for shipments as well as claims for loss and damage. And, if your contracted warehouse suffers a power outage or worse catastrophe that interrupts the client’s business or damages the product, what is your level of liability?
Logistics transactions and contract negotiations look a lot different when you’re sitting in the supplier’s chair instead of on the user’s side of the table, and even the most knowledgeable and skilled practitioners can find themselves in an uncomfortable situation when they aren’t backed by an organization whose primary business supports the service they are selling.
In the end, a few of the fleet operators, some of the soft-ware developers and perhaps some distribution opera-tions can commercialize, but against a growing market of commercial outsource logistics providers and corporate management that wants to become asset light themselves and outsource non-core functions, the warning of the acrobat about to perform a difficult and dangerous feat comes to mind—Don’t try this at home. OL
Editorial
So You Want To Be a 3PL?
Outsourced Logistics | June 2008 | 7
Perry A. Trunick, chief editor, [email protected]
Perry OL Edit.Final.indd 7 5/29/08 2:49:25 PM
8 | June 2008 | Outsourced Logistics
Logistics Functions Returning In Earthquake Area
The Ministry of Communications immediately al-located RMB 10 million ($1.43 million) in emergency funds to restore transportation to quake-hit areas. Efforts were begun to restore access for rescue and re-covery efforts, and the 312 National Highway leading to Chengdu was repaired within a couple of days and other roads leading to the disaster area were at least partially restored. (The 312 highway spans 3,000 miles from Shanghai to Xinjiang.)
A rail line from Shaanxi to Chengdu was damaged by the earthquake, causing a cargo train carrying pe-troleum products to derail and burst into flames. A petroleum pipeline that was initially closed for inspec-tion was reopened, allowing petroleum products to flow to the affected area. In addition, oil transport was arranged by truck, although initial moves were ham-pered by blocked roads due to landslides. The Sichuan region does not have oil refineries, and so it is depen-dent on shipments of petroleum products from outside the region.
Toyota Motor Company, which operates a produc-tion plant in Chengdu, suspended production while it inspected its plant. That stoppage was initially ex-tended as the company inspected a crack in the paint line to determine whether safety requirements could be satisfactorily met and to determine whether the dam-age would affect production quality. The initial shut down affected production of 200 vehicles.
“Within our plant, the safety of our employees is top priority,” said a Toyota spokesman. “Another require-ment for resuming production is the status of our sup-pliers and the state of the logistics infrastructure,” the Toyota representative continued.
As the company examined its own operations, en-sured the safety and well being of its employees and its suppliers, it committed RMB 10 million ($1.43 mil-lion) in aid and provided 10 Land Cruiser Prados for the recovery effort.
The earthquake that struck Sichuan Province in China on May 12th was immediately destructive and disrup-tive to manufacturing and logistics operations in the area. Recovery of the infrastructure has been slow, and initially focused on support for relief efforts.
Almost immediately, the Chengdu airport closed and diverted flights to other regional airports, stopping or di-verting 169 inbound and 108 outbound flights. Within a day, the airport was inspected and service was restored.
Global Markets
Global Markets.Final.indd 8 5/29/08 2:50:29 PM
Outsourced Logistics | June 2008 | 9
Logistics Functions Returning Earthquake Area
meat production had increased substantially, the in-dustrial sector showed a 25.8% increase over the prior-year period. Production volume in six key industries make up 77.4% of the increase.
Software and information service businesses in-creased by 50% in the period. Service industries were up 13%, and income from tourism rose 7.9%.
Foreign direct investment jumped 91.2% to $1.15 billion.
With whole villages leveled, infrastructure issues will continue to plague the recovery. As Peter Lim of Supply Chain Asia observed, referring to the dual disasters in Myanmar and China, “Logistics is a major issue in our region already without these natural ca-tastrophes and both the government of Myanmar and China are finding it hard to cope.” He noted that ini-tially access to Chengdu was restricted to a few points of entry through southern China and Shanghai.
He commented to Outsourced Logistics that, “Any aid or support that your audience can give to the region will be highly appreciated. The World Food Program (WFP) and companies like TNT and DHL have active programs to support the transporting of aid to disaster areas in this region, we only hope that more such logistics companies will come forward to help,” he concluded.
NOTE: Outsourced Logistics wishes to thank Peter Lim, Supply Chain Asia; David Lammie, Yangtze Transport 2008; Toyota Motor Company and others for providing ac-cess to first-hand accounts from the region.
The region has seen substantial investment recently and has been growing its manufacturing base. Many infrastructure projects were in their beginning stages at the time of the earthquake. Construction was ex-pected to start soon on the Chengdu Railway Container Center. The RMB 2 billion ($286 million) investment was expected to create a terminal with a throughput of over 2 million twenty-foot-equivalent units (TEUs) per year. It would open direct lines to Shanghai, Guangzhou, Shenzhen, Qingdao, Lianyungang and Tianjin ports and shorten transport times from the current five or six days to just 48 hours. Along with the Chengdu International Container Logistics Park, the development was slated to create the largest inland port in Western China when completed.
Linksys, a division of Cisco Systems Inc., had an-nounced on April 24, 2008 that it established a logis-tics center in Chengdu with ModusLink Corp. The center had begun trial operations five weeks earlier, in mid-March. The center provides logistics services to five Linksys product change centers in Chengdu, Beijing, Guangzhou, Shenzhen and Shanghai. Its goal was to change problem products in five to seven days vs. the previous period of three weeks to one month. Through its trial and start up operation, the facility had improved customer service levels.
Chengdu boasts an industrial development zone that includes major multinationals such as IBM, Nokia, Alcatel, Motorola, SAP and Microsoft as well as local high-tech manufacturer Lenovo. Intel’s Chengdu fac-tory is its second after Shanghai and the first large-scale foreign investment in the electronic industry in the interior mainland of China.
From January to November of 2007, Chengdu ap-proved 157 projects using foreign capital investment.
The city of Chengdu recently reported its gross domestic product (GDP) hit RMB 76.2 billion ($10.9 billion), up 15.1% year on year. While agricultural and
Toyota Motor Company’s Chengdu
plant was shut down for inspection
and some repairs following the
earthquake. The company donated
$1.43 million and 10 Land Cruiser
Prado’s to the relief effort.
Global Markets.Final.indd 9 5/29/08 2:50:42 PM
10 | June 2008 | Outsourced Logistics
Global MarketsN
ews
Bri
efs
• Ju
ne
08 Tradenex.com Partners With SeeburgerThe Tradenex.com subsidiary of the Federation of Malaysian
Manufacturers announced a strategic alliance with German-based Seeburger Asia Pacific Ltd.
Tradenex is an e-commerce collaboration solutions provider which offers nexCONNECT to help business-to-business supply chain integration of large multinationals.
Seeburger is a global business integration solutions provider.“Tradenex’s nexCONNECT currently services SMEs (small and medium
enterprises) in the manufacturing, retial and logistics industries,” says Soon Koi Voon, CEO. It has some 500 users, “mostly ranging from small to medium sized businesses,” he adds.
“Tradenex will be introducing Seeburger solutions to our customers who are looking for competitive advantage,” says Soon.
Seeburger is known for its electronic data interchange-based solutions, with an installed base of over 7,000 customers. It will use the Tradenex partnership to expand in the region, according to James Hatcher, managing director for Seeburger Asia Pacific Ltd.
Menlo Relocates Asia-Pacific Headquarters
Menlo Worldwide Logistics LLC announced it would relocate the regional headquarters office of Menlo Worldwide Asia Pacific Pte. Ltd. from the Airport Logistics Park of Singapore to a new loca-tion in Singapore’s Jurong Port.
The move wil l central ize Menlo’s regional management, sales and administrative support operations for Singapore and the South Asia region. The company obtained the facility at 30 Boon Lay Way near the Jurong Port with its acquisition of Cougar Holdings Pte Ltd.
Menlo will continue to operate extensive warehousing, inventory management and distribution fa-cilities at the Air Logistics Park of Singapore (ALPS) and other loca-tions in Singapore, Malaysia and Thailand.
Hong Kong Air Cargo Terminal Expands
Hong Kong Air Cargo Terminals Ltd. (HACTL) broke ground on a contingency horse handling center in preparation for the Olympic and Paralympic Equestrian Events in Hong Kong.
The 3,269 square-meter (35,000 square foot) area will serve as a back-up staging area for the competition horses as well as additional facilities for unit load device (ULD) handling service to support the event.
“Our initiative to expand our facility highlights our ongoing commitment in providing additional infrastructure and investing to service the requirements of this Olympic event, our airline clients and the air cargo industry,” said Kenneth Bell, director of service delivery for HACTL.
UPS Global Freight Forwarding Names Kirchner
Eric W. Kirchner was named president of Freight Forwarding to oversee freight forwarding, global brokerage and non-asset network management services for UPS.
He will direct transportation and commercial air and ocean carrier relationships as well as trade lane development and international freight sales to mid-sized businesses.
The management team reporting to Kirchner includes Everette C. Riley, president North American Freight Forwarding and Transportation District, and Terry Gavin Smabrook, vice president of global brokerage.
Ryder Honored in ChinaRyder System Inc. received the Golden Service Enterprise
Award for outstanding performance and leadership in logistics from the Wuhan International Logistics Committee in China.
“Ryder has shown strong performance providing quality logistics solutions in China, with special leadership in supply chain integration management and serving the automotive industry,” said Xiao Gongqiao of Wuhan International Logistics Fair.
“Wuhan is represented by a diverse blend of industries and is a strategic central hub for logistics in China,” said Chris Woodward, vice president and managing director of China for Ryder.
Global Markets.Final.indd 10 5/29/08 2:50:58 PM
At Toyota, we’re doing as much for the environment as we are for material handling. For every innovation like our System of Active Stability™ (SAS) that revolutionized operator safety, there are innovative accomplishments in conservation.
Our zero-landfi ll manufacturing process has eliminated landfill waste disposal and increased our recycling by 70%. We’ve reduced our CO2 emissions at our manufacturing plants by 120,000 tons—that’s roughly equivalent to planting 45,000 trees. We’ve implemented more than 1,700 energy-saving measures companywide. And most recently, Toyota introduced the cleanest I.C. lift truck in the world.
Number one with people. Number one with the planet. No wonder Toyota is Earth’s #1 lift truck.
PROTECTING THE DRIVER WAS ONLY THE BEGINNING.
8 0 0 - 2 2 6 - 0 0 0 9 • t o y o t a f o r k l i f t . c o m
All Toyota 8-Series models count as 0.6 g/bhp-hr (0.8 g/kW-hr) HC+NOx towards California’s end-user fl eet average calculation—measures do not apply to diesel confi gured models. Contact your local dealer for additional information.
806LT.indd 11 5/29/08 4:00:14 PM
12 | June 2008 | Outsourced Logistics
China's Economic Arteries By David Lammie
Since China’s opening up policy began 30 years ago, the coastal regions have enjoyed a sustained period of double-digit economic growth. Now, confronted with widening geographical wealth disparity,
the central government is desperate to attract more investment to the relatively backward central and western parts of the country. Central to its “Go West” policy is the development of core transport infrastructure in and around the “Golden Waterway” —the Yangtze River.
Though container traffic volumes on the river surged to a record high of 5.54 million twenty-foot-equivalent units (TEUs) in 2007, the Yangtze is still an underutilized transport resource. Ongoing dredging at the mouth of the river contributed to the 38% increase in container volumes and a surge in overall shipping volumes that include bulk commodities. Yet nearly all of this activity takes place in the lower reaches: cargo throughput in the Jiangsu province ports up to Nanjing, just 300 km from the sea, accounted for two thirds of the Yangtze’s total in 2007.
The western development strategy, which began in 1999, will have achieved a number of important gaols by the end of this decade. Most important of all, the Three Gorges Dam will be completed, creating a year-round shipping channel that will allow 10,000 dead-weight-ton barge fleets to sail from Chongqing to Shanghai, a distance of 2,500 km, in no more than seven days. Huge sums of money are also being spent to build a Riverside Expressway, a Riverside Highway and a Riverside Railway, all running parallel to the
Yangtze and due to open in the next few years.A significant amount of development is also taking
place at the local level. For example, Chongqing municipal government invested RMB 27 billion ($3.9 billion) in transportation infrastructure in 2007 alone. Five major road routes are also slated to be established by 2020 that include links from Chongqing to the Yangtze River Delta and Pearl River Delta regions. This will help establish Chongqing as a major logistics hub.
In January 2008, neighboring Sichuan province signed an agreement to build six railway lines that will pass through the province, most lines to be completed by 2012. The rail connections will link Chengdu to neighboring provincial capitals of Guiyang, Lanzhou, Kunming, Xian and Wuhan in less than four hours.
David Lammie is editor of Yangtze Transport 2008: Accessing China’s Interior
Global Markets
Community Voice
Global Markets.rev.indd 12 5/30/08 10:06:03 AM
agilitylogistics.com
Hans MiedemaRegional Support Leader
Agility Global Account Team
When does Agility’s Hans Miedema consider a job done? When he successfully executes critical gas turbine shipments for his global energy customer? When he applies Lean Six Sigma Methodology to eliminate defects for his clients in Eastern Europe and India? For Hans, and more than 32,000 other Agility employees in over 100 countries around the world, success isn’t measured in parts assembled or products shipped. Success occurs when our partners achieve their goals. It’s an intimate approach to logistics that demands individual attention and personal ownership. It’s how Hans Miedema brings Agility to supply chain challenges.
YOU NEED TO SOURCE FROM EMERGING MARKETS.
YOU NEED HANS MIEDEMA.
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14 | June 2008 | Outsourced Logistics
Offshore manufacture and outsourced logistics make for success. the beginning. An aftermarket supplier, the company
sells a number of accessories that go on its towers that mount on ski boats used by wakeboarders.
Wikipedia explains that wakeboarding is a surface water sport. It involves riding a special board over the surface of a body of water behind a boat. It combines techniques drawn from water skiing, snowboarding and surfing.
Although wakeboarding and wake board towers existed before Monster Tower began in business, the fledgling company saw there was a market need for an affordable tower that would collapse into the boat. Monster Tower was designed to be more affordable when compared to the competition, explains Reagan.
By Roger Morton
Outsourcing its manufacturing, in-bound and outbound transportation means smooth water for Monster Tower. This success story began in 2003 with creation of the company in
the basement of a home, rapidly growing, and then be-coming part of Marine Accessories Corp. in 2006. Brad Reagan, Monster Tower’s COO (his business cards say “Chief Operating Monster”), was one of the two in at
Operations
Gliding Over the Waves, Inbound and Out
Brad Reagan of Monster Tower.
Operations.rev.indd 14 5/30/08 1:20:01 PM
Port-to-door LCL service from Asiawith 98.5% on-time delivery.**
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For OceanGuaranteed booking and zone pricing information, simply call toll-free in the U.S. at 866-896-2005. Or visit www.apllogistics.com or www.con-way.com/oceanguaranteed.
*Conditions and restrictions apply. See www.apllogistics.com for complete details.
**98.5% on-time performance represents fi rst 11 months of operation.
With new levels of speed and dependability from Asia to the U.S., OceanGuaranteedSM is changing the rules of trans-Pacifi c LCL shipping. Your freight arrives at its continental U.S. destination on the day promised, or you’ll receive a 20% refund on your shipping bill.*
How is this performance possible? OceanGuaranteed combines the power of two industry leaders – APL Logistics and Con-way Freight. The result: faster LCL shipments, and single-provider convenience,accountability and invoicing. Pricing is simple: Enjoy the same per-kilo rates from origins in China, Japan, Singapore, South Korea and Taiwan to any U.S. ZIP Code location. With savings as much as 75% compared to airfreight.
Untitled-1 15 5/28/08 12:34:02 PM
16 | June 2008 | Outsourced Logistics
Manage is web-based and permits him to see when a package is processed, in transit or when it arrives. He notes that he uses it “more for outbound ship-ments. You can see how many ship-ments you have out right now. It will tell you how many are delivered and if there are any exceptions.”
With Flex Global View, the UPS Supply Chain Solutions event manage-ment and visibility tool, Reagan can query the status of air, ocean and sur-face freight shipments, warehouse in-ventory, purchase orders and customs entry details. “It allows me to view in-bound shipments,” says Reagan, “in-cluding less than container load and full container load. Those are both great sites to use because I can see what’s on the water.”
Monster Tower does its product forecast in October and November, then places purchase orders in November-December for the product it will need for the year ahead. “We do like to have inventory, especially during the busy season,” notes Regan. “It’s a fun industry, being water sports. Customers are pretty laid back. It cen-ters on fun, people getting accesso-ries for their boats and then going out on the lake and enjoying them. May, June and July are our insanely busy months. It’s just about making custom-ers happy in that general time frame from Memorial Day to Labor Day.”
ment. “Once that’s done,” notes Reagan, “we instruct them to have the prod-uct shipped with UPS Supply Chain Solutions directly to our door.”
When product arrives at Monster Tower headquarters, minor operations including quality control, adding of instruction manuals and tightening of
bolts the only additional work needed. All sales, operations, warehousing and shipping is handled from the one office. Product is shipped to final customers via UPS, as well. “Most of our items will ship UPS Ground,” says Reagan. “We occasionally will use UPS Freight for less than truckload. It’s really based on customer orders. We sell through boat dealers and direct domestically.”
UPS Freight also helps with Monster Tower’s international business in Australia, South Africa, Canada, and Europe, among other places with UPS Freight and International UPS Returns. “Our pattern is to set up a distributor network,” Reagan explains. “For instance in Australia we have a distributor who sells through dealers all across the coun-try. That’s how we’re set it up in each country. And it’s worked well for us.”
Distributor orders will not just be for towers but will include them along with racks, speakers, lights, mirrors and a wide range of products. All of those shipments are organized at the Alpharetta facility and then shipped on to the international distributor network.
Regan uses several UPS tools for supply chain visibility. Quantum View
Up to then, wakeboarders had to buy a custom tower.
“There were other towers on the mar-ket that would fit a variety of boats,” Reagan recalls. “They were fairly in-expensive but weren’t the quality of Monster Tower. We designed our tower to be of high quality and so that it could
be installed on virtually any boat—a ski boat, runabout or a jet boat. We also made it affordable. With this as our business model we have become the market leader.”
After creating its design, Monster Tower sought to have manufacturing done within the US, but had little suc-cess in getting the job done. “We looked at trying to source manufacturing here and really didn’t have too much luck,” says Reagan. “It was difficult to get companies to call us back and to get samples. Bill Bierbower, PE, Founder & Chief Executive Monster of the com-pany at the time had relationships with some companies in Taiwan. He sent over drawings of the Monster Tower and had them do a sample and send it to us. We tweaked some things in the initial sample and eventually placed a purchase order with them.”
Monster Tower headquarters are in Alpharetta, GA, an Atlanta suburb, where it receives all product from its manufacturing sites in Taiwan and on the Chinese Mainland. The company uses third party sourcing in Taiwan to make final decisions about which fac-tories will be manufacturing the equip-
Operations
UPS Freight also helps with Monster Tower’s inter-national business in Australia, South Africa, Canada, and Europe, among other places with UPS Freight and International UPS Returns.
Operations.Final.indd 16 5/29/08 2:54:10 PM
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Untitled-1 17 5/28/08 12:37:58 PM
18 | June 2008 | Outsourced Logistics
during 2007. It reached a milestone of moving its 12 millionth heavy goods vehicle last May. The increase in truck traffic was 9% more in 2007 than 2006.
Eurotunnel claims a 38% share in its market. It boasts that 90% of trains leave within three minutes of their scheduled time. Average door-to-door transit time between France and England is 90 minutes. As truck drivers have become familiar with the automatic registration system in-stalled in 2006, there has been a re-duction in the average time for each transaction. Such operations took an average of 45 seconds as 2007 began and by the end of the year that time was reduced to 30 seconds.
In January 2007 a revised time-table was introduced for the Shuttle. It is now adjusted for seasonal varia-tions in traffic. Now during eight months of the year there is at least one departure every 15 minutes. Such a schedule was maintained for only six weeks during 2006.
Overall, revenues for the first quarter of 2008 are €187.6 million, an increase of 15% year over year. Observes Gounon, “The results are due to remarkable levels of perfor-mance and to strict management of operating costs. They also ben-efit from the massive reduction in debt achieved through the finan-cial restructuring. The excellent level of activity in the first quarter of 2008 confirms our rapid progress. These results and the future value represented by the Channel Tunnel Concession enable us to look for-ward to 2008 with confidence and determination.”
Eurotunnel Shows Continued GrowthTruck traffic has increased 10% and passenger traffic 11% in
the first quarter of 2008. Overall under the direction of the new Groupe Eurotunnel, traffic through the Channel tunnel had a pro forma profit of €1 million in 2007, leading Jacques Gounon, chair-man and CEO of the organization to boast that, “2007 shows that the new Groupe Eurotunnel is nothing like the old.”
Claiming to be the world leader in intermodal transport vol-ume, Eurotunnel moved some 1.415 million trucks on its shuttles
What are you doing to control transportation costs? Rebidding contracts
Consolidating volumes onto fewer carriers
Collecting competitive bids for leverage
Using technology to optimize lanes (using transportation management systems, etc.)
Linking to carrier and 3PL technologies for planning/optimizations
26%
31%
16%
13%
13%
Quick Poll Results
One shipper commented:“I feel I am in the cat bird seat: lots of freight and a ton
of carriers wanting it. The bidding wars have been go-ing on for years but I have found this year’s battles to be quite fierce.
Even the big boys have come down to regional freight rates. We are saving our customers freight dollars which in turn generates more orders that turns into more freight.”
And one more:“Oddly enough, I find that costs decrease when I loy-
ally use smaller carriers. Their actual service and care is more genuine because they literally need each and ev-ery shipment in order to survive---and they can’t afford to price themselves out of existence, either, which of course benefits my transportation budget.”
OperationsN
ews
Bri
efs
• Ju
ne
08
Operations.Final.indd 18 5/29/08 2:54:24 PM
20 | June 2008 | Outsourced Logistics
As Boundaries Blur, Communities Take Shape By Rick Blasgen
The times they are a-changin’. . . and so they were back in 1964 when poet/songwriter Bob Dylan soulfully sang that song.
But the times, they still are a-changin’ more than four decades later, and chang-ing more rapidly, more dynamically, and
more profoundly than ever before. And nowhere has change occurred more dramatically than in the world of business, much of it propelled by the marvels of modern technology.
Take a look at the “business” of supply chain manage-ment (SCM). Since the 1960s, it has evolved from physi-cal distribution to logistics to supply chain management. From a humble, invisible corporate necessity to a criti-cal component of commerce that has achieved global prominence in boardrooms and on Wall Street. Supply chain management has shed its dowdy image as a “cost center” in favor of a more glamorous image as “revenue generator.” SCM has become a 21st Century global su-perpower.
The Council of Supply Chain Management Professionals (CSCMP) was born in 1963 and given the name of the National Council of Physical Distribution Management (NCPDM). The organization was formed by a visionary group of managers, consultants and educators who foretold the integration of transportation, warehousing, and inventory as the future of the disci-pline. Forty-five years later, we can see that CSCMP’s founders were at the forefront of forecasting the future of the physical distribution field.
The eventual integration of SCM functions has been but a microcosm of what has been happening in recent times…wherever there are boundaries and borders. The walls are coming down, in countries and in companies around the globe, as the worldwide web of technology has connected and united us into the seamless, border-less commercial community of today.
As supply chain managers, our mission is vital. We deliver the products and services that our customers want—and need—to survive and thrive, 24/7/365, on all seven continents and beyond.
SCM leaders have common goals: to satisfy our cus-tomers, minimize our costs, maximize our profits. When key participants—shippers, carriers, and 3PLs—collab-orate and share information within and across the sup-ply chain, the entire process is more efficient and effec-tive than it would have been had all the players operated independently.
Without authentic collaboration, all we have is a col-lection of companies, each one following its own path, and nobody wins. When a community of partners work together, everybody benefits, especially the consumer.
Today’s technology enables us to better understand our customers and communicate with our supply chain community in real time, creating a unified, fluid process from beginning to end. Collaboration is the driving force behind supply chain management excellence. That is why today, more than ever, it is critical for us to under-stand the new paradigm of “community,” and what it means to us, our companies, and our customers.
CSCMP understands the importance of community as we seek to bring global SCM professionals together, and collaborate with those who share our goal of educating today’s and tomorrow’s leaders. CSCMP is working hard to promote collaboration as the cornerstone of SCM excellence.
So, spread the word and tear down those walls. Advocate the need for supply chain partners to work as a community, one based on transparency and trust. Continue to pursue supply chain excellence by creatively collaborating with others, and you will elevate the profes-sion—and yourself—to world-class status.
Blasgen is President and CEO of the Council of Supply Chain Management Professionals CSCMP)
Operations
Community Voice
Operations.Final.indd 20 5/29/08 2:54:35 PM
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Untitled-1 21 5/28/08 12:57:41 PM
22 | June 2008 | Outsourced Logistics
By Perry A. Trunick
The Rise Outsourcing
Outsourcing has moved from a backroom secret to a boardroom strategy.
Outlook.rev.indd 22 5/30/08 9:43:15 AM
Outsourced Logistics | June 2008 | 23
When Penton Media, parent of Outsourced Logistics, partnered with the University of Tennessee and PriceWaterhouseCoopers to study supply chain management trends, part of the discussion centered on what to call the practice of contracting logistics services to a third party. Outsourcing was being bashed in the gen-eral media in association with manufacturing job losses and production moved offshore.
The mood among logistics professionals wasn’t much different. What we elected to call contract logistics in 1998 often spelled the elimination of mid-level positions at tradi-
When Penton Media, parent of When Penton Media, parent of hen Penton Media, parent of WOutsourced Logistics, partnered with the University of Tennessee and PriceWaterhouseCoopers to study supply chain management trends, part of the discussion centered on what to call the practice of contracting logistics services to a third party. Outsourcing was being bashed in the gen-eral media in association with manufacturing job losses and production moved offshore.
The mood among logistics professionals wasn’t much different. What we elected to call contract logistics in 1998 often spelled the elimination of mid-level positions at tradi-Rise of
Outsourcingtional manufacturing companies. (Many of those roles resur-faced at the logistics service providers contracted to perform the former in-house function.)
A slightly larger number of respondents to the 1998 survey said they bought third party logistics (3PL) services to replace in-house functions. Others used 3PLs for tactical purposes—about 20% each for entering new markets or new product introduction.
That was then. Ten years later, logistics outsourcing is a critical enabler for strategic sourcing and global marketing strategies that provide companies with the agility to adjust to rapidly changing market conditions. True, there are still tacti-cal reasons for outsourcing, but the boardroom understand-ing of the role of logistics in supply chains has improved, and that recognition helps elevate the outsourcing decision to a more strategic level.
In the 12th Annual State of Logistics Outsourcing study, Dr. C. John Langley Jr., Georgia Institute of Technology, notes that 82% of the respondents (a total of 1,287 individuals) identified their organizations as users of 3PL services. The study was about evenly split among four major regions of the
Outlook.rev.indd 23 5/30/08 9:43:25 AM
24 | June 2008 | Outsourced Logistics
closely matches activity levels.” Among the areas where manufacturing compa-nies have benefited from outsourcing logistics operations, Lilja points to the fact that facilities that are underutilized may choose to outsource the warehouse and shipping process, and either close the facility or avoid the required capital expenditure that could be difficult to ap-prove in uncertain times.
Companies are cutting costs by ra-tionalizing and consolidating multiple locations into single—often outsourced —distribution center (DC) operation, Lilja continues. Among the benefits of consolidating smaller warehouses into larger more centralized distribution cen-ters, the process can provide better uti-lization and control of inventory as well as strengthening inventory position for a greater mass of customers, says Lilja.
This consolidation also can Improve service through more efficient replenish-ment to the forward DC’s by enabling inventory planning to position inven-tory based on forecast demand with less volatility due to customer sourcing, fore-cast deviations and poor service levels at multiple smaller DC’s.
Users often cite opportunities to im-prove their technology base or push pro-cess improvements through outsourcing. Lilja agrees that adhering to common operations practices across distribution centers provides benefits—among them, more focused operations as a user be-comes a key partner for the 3PL. This in-creases the mutual efficiencies and over-all value of the relationship, he says.
In addition to efficiencies of higher volume throughput, users often gain purchasing leverage through a 3PL. The user’s business becomes more carrier friendly as there is more volume out
logstics services should top $150 billion, adds Armstrong.
Outsourcing has penetrated all seg-ments of the economy. The global Fortune 500 3PL market is $162 billion, says Armstong. (That’s out of a $487 billion world 3PL revenue estimate.) The auto-motive sector, says Armstrong, spent an estimated $39.1 billion with 3PLs. Major companies like General Motors, Wal-Mart,
DaimlerChrysler and Ford Motor each use 31 or more 3PLs, says Armstrong.
What’s driving all of this growth? Clearly, cost always plays in the decision, but how much of a driver it is depends on the organization and market condi-tions. Recessions tend to cause people to outsource more, says Armstrong. And some of the fastest growth areas for out-sourcing are in value-added warehousing and distribution, he notes. Since 1995, compound annual growth rates in value-added warehousing have been a little over 18%. But more recently, since about 2003, “the real pace setter has been in-ternational transportation management.”
“Transportation is still 70 to 80% of the solution,” Armstrong points out. “And you know so often the guys who are on the buyer’s side of the fence get so enamored of how the warehouse works and saving 2% in the warehouse that they forget that the big money is in how you manage transportation.”
That said, there is still plenty of op-portunity in the area of warehousing, distribution and facilities. According to Bob Lilja, vice president of Weber Distribution, “Outsourcing logistics op-erations is at least as valuable a tool in a down or uncertain economy as in a ris-ing one. Companies with lower demand may reduce asset-based infrastructure and build a logistics spend that more
world, North America (29%), Europe (27%), Asia Pacific (23%) and Latin America (21%). Clearly, the adoption curve—on a global scale—is on the rise for logistics outsourcing.
And, while many organizations may base part of their decision to outsource on a tactical need for “hands and feet,” the study, jointly sponsored by Cap Gemini, DHL, SAP and the Georgia Institute of
Technology, indicated 3PLs play a criti-cal role in providing new and innovative ways to improve logistics effectiveness.
Respondents said 3PLs had a positive impact on customer service, a positive impact on business process efficiency, and provided a measurable return on investment for users.
Despite an ongoing freight recession, says Richard Armstrong, Armstrong Associates Inc., third party logistics ser-vice provider revenues in the US grew to $122 billion in 2007. Revenue growth for 3PLs was highest in non-asset trans-portation management, says Armstrong. This is supported by the results Langley highlights from the global 3PL study. The most frequently outsourced functions are domestic transportation, international transportation and warehousing (with some regional variation in the order).
With US outsourced logistics spend-ing up nearly 8% over 2006, Armstrong projects a further 7% growth in 2008, reaching an estimated $131 billion. Spending on outsourced logistics has been growing at roughly three times the growth of the US gross domestic product and continues, driven by companies out-sourcing to concentrate on core compe-tencies, the need for sophisticated sup-ply chain information technology solu-tions and globalization, says Armstrong. By 2010, US spending for outsourced
With US outsourced logistics spending up nearly 8% over 2006, Armstrong projects a further 7% growth in 2008, reaching an estimated $131 billion.
Outlook.Final.indd 24 5/29/08 3:24:27 PM
Outsourced Logistics | June 2008 | 25
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“Out of the Box?”
parency between user and supplier are not tactical- transactional-level functions. They don’t focus on driving another penny out of a rate. And that’s why lo-gistics outsourcing has moved from the backroom to the boardroom.
across the extended supply chain, sharing key performance indicators (KPIs), focus-ing on continuous process improvement.
Aligning organizations to achieve com-mon goals, sharing economic and business risks and benefits and creating a trans-
of each DC, explains Lilja, and thus the user can become a more important player for key transportation companies in the area.
A strong majority of companies feel their outsourcing has been successful. The highest satisfaction was in Asia, where 88% agreed outsourcing was suc-cessful, reported Langley in the annual State of Logistics Outsourcing survey. Further, 31% of non-users said their fu-ture plans included outsourcing. Other regions exhibited similar results. North American respondents were satis-fied (87%) and 45% of non-users said they planned to outsource logistics. For Europeans, 86% said outsourcing was successful and 42% of non-users planned to adopt logistics outsourcing. Latin Americans, arguably the later adopters of outsourcing, were only slightly less satis-fied, 76% reporting successful outsourc-ing. But, they were among the strongest adopters with 53% saying they had plans to outsource logistics.
Relationships continue to be vitally im-portant to logistics success, acknowledges Langley in the report. That said, the 2007 report concludes, “with ever-growing trade volumes and increasing logistics costs, managing those activities will remain a daunting task, but the best managers are proving that global collaboration is now the key to improved efficiency.”
Users and their 3PLs will need to work towards common goals, what Langley de-scribes as more than “vauge expressions of partnership and aligned interest.” He con-tinues, “The 3PL and the customer [user] must leverage each other on a strategic and operational basis so that when work-ing together, they perform better than they would separately.”
Leading companies embracing col-laboration in outsourced logistics re-lationships will exhibit organizational and strategic alignment from the execu-tive down to the operational level. The user, the 3PL, and all trading partners will work together to optimize processes
Outlook.Final.indd 25 5/29/08 3:28:36 PM
Creating or expanding business opportunities is a particular strength for third party suppliers.
Opening and Widening the Doorway
By Roger Morton
Whether it’s initiating business in an emerg-ing area of the globe, supplementing or grow-ing existing markets, increasingly companies are turning to outside suppliers to overcome logistical challenges they can’t deal with (or
chose not to). Through collaborative relationships with suppliers, users can gain local knowledge, consistency and repeatable results. Return on investment is higher when logistics providers aren’t treated like commodities and the relationship doesn’t focus only on price. For one US automotive company that wanted to introduce its cars to the Chinese and Taiwanese markets, leveraging outsourcing solutions from providers like Exel helped it gain market penetration and expan-sion in these developing markets. Although the manufacturer estab-lished joint and contract ventures for assembly within those Asian locations, it determined that using outsourced logistics services from providers like Exel would speed its market entry. From the outset the manufacturer would use supplies from its North American base and gradually migrate to using local production. As it explains, Exel moved to accomplish four critical factors for success: quickly find and evaluate financially viable component suppliers in China; develop processes to avoid customs delays and regulatory penalties; establish an effective quality and claims process for defective or damaged mate-rial; and adopt a lean manufacturing strategy. The Exel solution fully met the manufacturer’s launch schedule.
Dave Rumler, senior director international services for Exel, points to a project the company is handling in Brazil for a major US automo-tive manufacturer. “The days of storing multi-million dollars of inven-tory in a warehouse somewhere for line-side use is not cost efficient anymore,” he explains. “For some large automotive customers we
26 | June 2008 | Outsourced Logistics
New Markets
New Markets.Final.indd 26 5/29/08 3:29:51 PM
Creating or expanding business opportunities is a particular strength for third party suppliers.
Opening and Widening the Doorway
sourcing as an opportunity and a risk. “From a global sourcing standpoint the key focus is just the efficient movement of product,” he observes. “The ability to exe-cute that really takes expertise at several points along the supply chain. This can include things such as in-country local knowledge; understanding the local infrastructure; local staffing; different business processes; local laws; and cultural differences, just to name a few. There’s a myriad of different and unique aspects of the supply chain. It varies by country, as well. Typically they look to a large 3PL, such as ours, that have the resources and foundations built within those countries.”
Without specific geographic knowledge or assets, creating opportunities for new markets is one reason for engaging the services of a third party provider well established in a region. Another reason for reaching for an outside supplier is to extend market penetration. The desire to grow their business in the Baltic States led Samsung to seek the services of Kuehne + Nagel.
Bob Mihok, the 3PL’s regional manager for Eastern Europe, explains that Kuehne + Nagel, “provides comprehensive warehousing and distribution service throughout the Baltic States. Shipments arrive at our Riga facility from suppliers across Europe and the Far East. There we provide a full range of services, from inbound reception (this includes packaging and seal-integration checks) to storage, picking and packing per EDI orders received from Samsung through to onward distribution to local Samsung trade partners. In addi-
provide what we call ‘buffer warehouse services.’ It’s pri-marily from material that originates in Asia. We’ll hold anything from a two-week to 30-day supply on hand in our facilities. Then we will meter them out to the plants as they are required.”
Rumler breaks Exel services into three areas: trans-portation and warehouse management, operations man-agement and integrated systems. “From a transportation management perspective,” he claims, “we offer every-thing including domestic and global forwarding, custom brokerage, and import and export services. As related to the destination side, we offer port and merge manage-ment, customs brokerage, deconsolidation, and a big part of what we do today is direct to store delivery.”
Among its international services, Exel provides ship-ment visibility and manages capacity whether air or ocean as well as inland transportation. The provider’s size and buying power helps command capacity. In ad-dition to automotives major industry groups it serves are consumer, retail, chemical, an industrial, division, life sciences and technology.
In reporting to customers on its international activi-ties, Exel establishes what it calls “milestones.” For air shipments it will manage up to 11 milestones though not all customers request them all. For ocean move-ments it has nine milestones. Exel provides customers with key performance indicators they use on a daily basis.
Rumler understands that Exel customers view out-
Outsourced Logistics | June 2008 | 27
New Markets.Final.indd 27 5/29/08 3:30:01 PM
28 | June 2008 | Outsourced Logistics
avoid port congestion at St. Petersburg or delays at the Finnish-Russian over-land crossing.
Beyond hi tech, Kuehne + Nagel offers comprehensive services specifically for aerospace, automotive, FMCG, indus-trial goods, pharmaceutical & healthcare and retail. It also specializes in provid-ing selected niche segments with highly specific, tailored services: for instance the hospitality & casino industry, the beverages industry, emergency & relief logistics, or for oil & gas projects.
to western standards (except Moscow Domodedovo, which is showing very promising development); weight re-strictions; traffic jams in and around Moscow; the railway network, which is important for domestic freight car-riage and needs to be linked up with the seaports; and the lack of sufficiently available modern Class A warehouse capacity. A solution offered by Kuehne+ Nagel to overcome some of these issues is to route freight via the Baltic ports into Russia, even on short notice, in order to
tion, we perform value-added services that include serial number management for Samsung mobile phones.”
Mihok observes that customers like Samsung, are increasingly looking for a provider who can support them as their single point of contact for all supply chain requirements. For the hi tech pro-vider Kuehne + Nagel demonstrated its ability to deliver a seamless implementa-tion of their operations through its CTI Customer Implementation Program that includes a clear Toolbox, framed and transparent project stages.
Standardization of its IT systems pro-vides what Mihok characterizes as a “plug-and-play” approach when it comes to linking up a customer’s in house infor-mation technology systems with Kuehne + Nagel’s. “This level of standardization in processes and services,” he notes, “also allows for solutions that are imple-mented at one location for a customer, for instance in Mexico, to be easily repli-cated at another location, for instance in Poland—a huge benefit when it comes to expanding into new markets.”
Whether opening a new market or expanding an existing one, having on-the-ground support is critical to suc-cess. This is where a 3PL, like Kuehne + Nagel, offers strength. Looking further East, toward Russia for example, Kuehne + Nagel is expanding its strategic loca-tions. Mihok recalls that, “last year in Russia, for instance, we opened a new office in Kaliningrad, a new airfreight of-fice at Moscow Domodedovo airport, ex-panded warehouse space in the dynamic St. Petersburg and Moscow region, as well as extending deeper into Russia and strengthening our network across Eastern Europe.”
Mihok characterizes challenges to doing business in Russia as includ-ing infrastructure, things like limited capacity and congestion issues at sea ports; the lack of airports equipped
Providing for Specific RequirementsHere, according to Kuehne + Nagel’s Bob Mihok, is how a 3PL meets
customer needs in new and emerging markets.Scalability—Scalability has to do with visibility: Established key perfor-
mance indicators can easily be monitored via our visibility tools, such as our KN Login, as well as via door delivery tools which enable truck drivers to report deliveries just-in-time with mobile devices.
Visibility—A globally standardized monitoring and visibility platform provides complete supply chain and inventory transparency around the clock and around the world. Ranging from basic tracking and tracing features to offering highly sophisticated order and network management applications, it is the customers’ single 24/7 online entry point to all rel-evant logistics information.
Security—Kuehne + Nagel has an integrated quality, safety, health, environment and security (QSHE) program in place, which systematically addresses all security relevant issues associated with supply chain man-agement. This ranges from equipping warehouses with state-of-the-art security equipment (CCTV, 24/7 guards, etc.), complying with recognized security standards and playing an active role in relevant industry asso-ciations.
Bob Mihok of Kuehne + Nagel
New Markets
New Markets.Final.indd 28 5/29/08 3:30:30 PM
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Untitled-1 29 5/28/08 1:10:27 PM
30 | June 2008 | Outsourced Logistics
In this first installment, three transportation management experts offer the first steps in building a top-performing transportation management function.
Steps to
Transportation Management Excellence
Here are seven steps to help identify the potential for trans-portation management excellence and communicate your improvement project’s potential to top management by helping to “size the prize,” design the moving parts of the solution, and articulate the path forward.
1) Assess your transportation management capabilities.2) Identify your “target state” of transportation operations
performance.3) Size the prize.4) Determine the appropriate moving parts to move forward
to the target state.5) Determine the appropriate solution deployment strategy to
move to the target state.6) Plot the course.7) Keep score for continuous improvement.Approaching the transportation management business pro-
For many firms, their current capabilities in trans-portation management are incomplete and they are, therefore, spending more money on freight transportation than necessary. They are caught in a dilemma because many recognize the critical importance of transportation management as the
last mile in the customer service experience. Despite balanc-ing cost and customer service precariously on the ability to manage the transportation function, they leave any project to improve transportation management to the next phase in their corporate projects planning process.
Taking these steps provides a solid execution plan whether the domestic transportation management process is man-aged internally or is outsourced. And for third-party logistics providers, it offers a view of what is needed to make the user’s network operate more efficiently.
By Scott Sykes, Matthew Menner, and Vincent Chiodo
Field Report
Field Report.Rev.indd 30 5/30/08 9:45:20 AM
Finding the optimal supply chain configuration for your
business is challenging. The experts at BNSF Logistics
create efficiencies that harness your organization’s
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The Most Critical Pieceof Your Sustainable Logistics Operation
Untitled-1 31 5/28/08 1:19:48 PM
EVERY TRUCK TELLS A STORY. XATA® has the fl eet management technology and human expertise to help you identify issues, translate data and determine the
Assess Your CapabilitiesThe first step in the process comes with some distinct
challenges. Given the sheer volume of transportation man-agement research and analysis, and the fact US companies spend more than $800 billion annually on moving freight, one would think that firms would be further along in achieving transportation management excellence. To the contrary, many shippers today report higher transportation expenses, lower customer service performance (defined as percentage of on-time deliveries), and a concerned outlook for their future transportation performance. While the causes for this degradation in performance are many and the depth of impact varies across companies, a few consis-tent themes emerge across sectors and size of company.
Those factors include:• Globalization.• Heightened customer demands.• More complex sales channels.• Increasing product portfolio complexity.
cess in this manner provides a series of facts and insights that guide improvement and can instruct top management on the value and importance of the transportation manage-ment discipline. To achieve these goals, people, process, and technology will be important. All three dimensions are central to progression toward transportation management excellence.
Steps one through four, work through the process of es-tablishing a current performance baseline and setting goals. These steps also help determine how much opportunity exists, and will define what additional capabilities (people, process, and technology) will be required to realize those benefits.
Steps five through seven, focus on ascertaining which de-ployment strategy best fits your company’s environment and helps plot the path forward. The final step helps provide perspective on the importance of performance measurement and the need for a cultural commitment to continuous im-provement.
Field Report
806LT30,32-34,36,38,40-41.indd 32 5/30/08 12:52:14 PM
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proper merchandising strategy are critical. In the middle of these two ends of a supply chain, however, the leaders, lag-gards, and also-rans are separated. Attention to detail and operational excellence in the supply chain distinguish the winners.
To determine where your firm rests on the leader-laggard continuum, you must assess your performance against your industry peers and supply chain trading partners. Once you have done this assessment, you will have your baseline of performance against which to take proactive steps.
Leader, Laggard, or Middle Ground?While your specific assessment will need to be tailored to
your industry and conducted in the context of your com-pany’s business strategy, you can take a high-level snapshot of your current performance to place yourself in a direction-ally correct position on the leader-laggard continuum. Use the People, Process, Technology Scorecards to assess your current “As-Is” state.
In the context of these operational realities, many firms point to organizational skill deficiencies and inadequate information systems as consistent (bordering on chronic) challenges. The first step in determining where to focus attention and resources is to conduct a current capabilities assessment, in conjunction with establishing a forward-looking context for your company’s overall transportation strategy.
Capabilities AssessmentCompany leaders at most firms can readily articulate their
overall business strategy, the critical success factors associ-ated with achieving success, and the operational outcomes necessary to achieve their financial targets. Product-based manufacturing companies consistently address attention to product quality, unit production cost, and product fea-tures and functionality. For retailers, having a presence in the proper markets (physical stores or e-commerce chan-nels), delivering the right product mix, and following the
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34 | June 2008 | Outsourced Logistics
Field Report
Scorecard Guideline: Score your company on each topic by selecting the answer that best applies.
People Our people have consistent training and procedural rules across all locations from which we ship products to customers or receive products from vendors.
Our management has the same expectations and guidelines for managing trans-portation across all our locations where products are shipped or received.
Our company has one executive leader who is the “go to” person for questions or concerns with respect to policy and procedure in regard to transportation.
Our staff people have an appreciation for customer service and cost implica-tions of decisions regarding the transportation process.
Process Our company has a documented business process for managing outbound transportation (shipments to customers) and inbound transportation (ship-ments from vendors, or returned shipments from customers).
Our company’s customer service representatives have visibility to the trans-portation and shipping process after they have processed the order.
Our company has electronic means of communicating with our transporta-tion carriers and we can consistently see where our shipments are in their route outbound to the customer, or inbound to us.
Our company has a specific guideline for our vendors to use when they ar-range transportation from their facility to us. Our company has a specific guideline for how to ship our products to our customers.
Technology Our company has a Transportation Management System that is fully imple-mented at all locations where products are shipped outbound, or products are received inbound.
Our company has a communications infrastructure for interacting electroni-cally with our transportation carriers, our suppliers, and our customers (e.g., EDI, Internet Portal, or other system-to-system connectivity).
Our company has an established and documented set of key performance indi-cators (KPIs) for managing the effectiveness of our Transportation Management (e.g., % on-time delivery, % damage free).
Our company has an electronic means of managing our freight bills, and ensur-ing that our bills received match our transportation process documentation.
Strongly Disagree Neutral Agree Strongly Disagree Agree (-2) (-1) (0) (+1) (+2)
Strongly Disagree Neutral Agree Strongly Disagree Agree (-2) (-1) (0) (+1) (+2)
Strongly Disagree Neutral Agree Strongly Disagree Agree (-2) (-1) (0) (+1) (+2)
Field Report.Rev.indd 34 5/30/08 9:50:08 AM
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36 | June 2008 | Outsourced Logistics
While your company’s participation in more than one indus-try sector might make aggregate scoring difficult, these figures will give you a sense of where your company sits in relation to other competitive benchmarks. With these three transporta-tion management performance criteria, you can begin to assess what capabilities and attributes the leaders exhibit, and where you need to place emphasis and focus.
Attributes of the LeadersTop-ranked companies in transportation management share
a set of common attributes across industries. The most signifi-cant attributes are:
• Process rigor.• Centralized leadership.• Strategic Sourcing.• Utilization of Transportation Management Systems (TMS).• Consideration of transportation management in the con-
text of the firm’s overall supply chain strategy.• Reliance upon fact-based metrics and score-carding to
drive performance.As your company determines its aspirational or “To-Be”
state for transportation management, you must give due con-sideration and focus to all five attributes listed above. While there is no hard-and-fast sequencing of topics to undertake first, second, and third, there are guiding principles. The first is to have an appropriate appreciation for the importance of process. Without adequately detailed process design, good leadership, and automation; technologies will not yield your desired outcome. A process design phase, coupled with leadership and change management, helps draft the proper roadmap. With process and organizational considerations ad-dressed, making technology decisions and designing perfor-mance metrics reports will proceed much more smoothly, and with far less ambiguity.
The Aspirational Report CardUsing your responses in step one as your baseline, complete
the same assessment process with your aspirational view of where your company needs to be. This aspirational vision should be completed in the context of your company’s overall business strategy. At the conclusion of this step, you will have a summary picture of where you are, where you aspire to be, and the resulting performance gap to be addressed and rem-edied.
With this vision of your prospective “To-Be” transportation management capability, you are now ready to begin step three of the program.
Identify Your Target StateStep two helps you determine where along the transporta-
tion management excellence continuum your company needs to be to support the realization of the business strategy. To de-termine where your company belongs, consider what it means to be best-in-class.
To be best-in-class, your company must have transportation performance metrics that place you in the top quintile of perfor-mance for your competitor grouping. The categories of perfor-mance consist of the following three outcome-based metrics:
Field Report
What is Best in Class?
Leader Middle Laggard
Freight Cost as a at or 3% to 8% over 8%Percentage of Revenue below 3%
Freight Cost at or Containment/Reduction below 100 100 to 107 over 107year-over-year (Index Baseline Year to 100)
On-Time Delivery at or 85% to 97% at orPerformance above 97% below 85%
As you total your high-level assessment, determine if there is a particular area within transportation management that you see as most in need of management attention. For example, if you scored yourself in an aggregate positive number, but you were significantly in the negative in one area (people, process, or technology), then this is your first indication of where atten-tion needs to be focused.
Scoring Your Report CardClearly, a deeper assessment of your business is required
to make definitive statements about your overall level of transportation management excellence. However, to conclude the first of the seven steps to transportation management ex-cellence, let’s determine where your company stands at first review:
If you scored your company at or below -10 …then your company is most likely a laggard.
If you scored your company between -10 and +20 …then your company is a middle performer.
If you scored your company at or above +20 …then your company is most likely a leader.
With a reference position in mind, you can now move to Step Two in your pursuit of transportation management excellence.
Field Report.Rev.indd 36 5/30/08 9:50:18 AM
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38 | June 2008 | Outsourced Logistics
Move to the Target StateAt this point, the case has been made to top management
and either gained C-level sponsorship or confirmed that your company’s leadership does not see transportation management excellence as a critical component of its business strategy. The good news is, much of the tedious and challenging work is done. It’s time to determine the specific attributes and capabilities (the moving parts) of your transportation management program.
The first action item is to lay out your “To-Be” transportation management business processes.
Business Process RequirementsDetermining and agreeing on the process model is the single
most important step in this journey. The complexity of this task is directly related to the complexity of your business. If your com-pany has a single division, the business process blueprinting is less complex. However, if your company has multiple divisions that compete in a cross-section of industries and markets, the task at hand is more challenging.
In either case, begin with the most complex business process scenario or situation. By hammering out the details of the most challenging scenario first, the design of the remaining scenarios will run much more smoothly and require far less re-work. Considerations in this step include:
• How many customer types must we segment our customer base into for transportation execution purposes?
• How many shipping order types will we need to manage the complexity of the business?
• How many (and what types) of supplier relationships will we need to manage the business?
• How many (and what types) of transportation carrier relation-ships will we need to manage the business?
In this portion of the project, you will most likely discover that your business has evolved over time to include too many order types, too many customer classifications, and too many trading-partner-specific business rules. This project is your opportunity to streamline and simplify the business.
With a clean and logical set of business rules, established by cus-tomer, supplier and carrier class, the path to transportation man-agement excellence becomes much clearer and more achievable.
Supply Chain RelationshipsAnother consideration at this point is to define specifically
and document the nature and types of relationships in your company’s supply chain ecosystem. For instance, most of your existing suppliers may control the transportation and ship-ping process as part of their current relationship with you. Many companies have discovered that when they altered this
Size the PrizeIn steps one and two, we established an understanding of
what it takes to be a transportation management leader. The third step, “sizing the prize,” is perhaps the least often applied step in the program, and the one which most often causes a company to remain in the baseline position of performance.
While many logistics managers aspire to transportation management leader status, this ambition and passion must be conveyed to the corporate C-Suite in a form and fashion that will compel them to act. To gain the attention for transporta-tion operations, you must answer your C-Suite’s essential question: Is this a $1,000 problem or a multi-million dollar opportunity? With a proper baseline established, and a set of competitive benchmarks to gauge your company’s perfor-mance, your next task is to quantify the potential economic impact delivered by a properly sponsored transportation man-agement excellence program.
The Case for Action In brief and clear language, seek to answer the following ques-
tions:• What is the potential economic benefit of moving from our
current state to industry average?• What is the potential economic benefit of moving from our
current state to best-in-class performance?• What additional operational benefits will the business see by
pursuing improved transportation management capabilities?• What potential impacts in customer service and customer
satisfaction will the business see by pursuing improved transpor-tation management capabilities?
• What steps and specific actions are required for the company to migrate from our “As-Is” condition to our desired “To-Be” Model?
• What are the organizational and leadership requirements?• What are the process and business methods requirements?• What are the infrastructure and technology requirements?• When will we see operational benefits?• When will we see positive economic results?This might appear daunting, but having completed the assess-
ment work in steps one and two, you have the bulk of the infor-mation required to put a number on the potential project. You will know your own company’s culture in terms of project sponsor-ship thresholds and funding/staffing requirements. Unlike other logistics business cases, in transportation management business cases, every dollar identified in the analysis drops immediately to the bottom line of the company’s financials.
Field Report
Field Report.Rev.indd 38 5/30/08 9:50:28 AM
Phil PierceExecutive Vice President of Sales and Marketing
Which are the growth areas in your business model that offer the greatest potential?
We expect the international market to continue to strengthen, especially as offshoring continues to play a role in our economy. We began responding to international opportunities with the opening of our PortSide™ distribution center in Los Angeles/Long Beach, and now have 17 PortSide™ and cross-border dis-tribution centers to help our customers streamline their import/export transportation processes.
Our PortSide™ and cross-border capabilities range from trans-loading and drayage services to a variety of warehousing services, including consolidation and deconsolidation. As an example, we’ve been able to improve portside processes for several major apparel manufacturers. We’ve taken weeks out of port-to-distri-bution center cycles, helping lower costs by millions of dollars.
Have you added third party logistics (outsourcing) capabilities in response to market demands?
Yes, in addition to our traditional LTL and truckload services, we’ve been offering multiple services for more than 28 years. We tailor our services for our clients based on their specific needs. Today we have more than 130 diverse facilities where Averitt has the flexibility to streamline inventory, order and distribution pro-cesses providing improved efficiency, faster order fulfillment and reduced costs. We provide a full range of value-added services that includes warehousing, import and cross-dock operations, round-trip port drayage, bar-code scanning, kitting & labeling, assembly/disassembly, and a wide range of transportation man-agement capabilities.
We also provide dedicated fleet management for several cli-ents. For some clients this means that we manage their entire fleet operation and for others we supplement their fleet during peak shipping seasons.
What kinds of services have you added or planned to add in the near future?
We are constantly reviewing our service offerings and tweak-ing them to provide better service for our customers. With our alliance in The Reliance Network, we are now offering customers across-continent services with just one call to their Averitt Trans-portation Specialist.
What opportunities do you see in global markets, and how are you reaching out to serve them?
While we are focused on serving our customers who move freight in and out of the South, we also know that many of these customers have shipments moving to and from destinations all over the globe. Several years ago, we began putting the infrastruc-ture and resources in place to become a single-source provider for all of our customers with freight moving into or out of the South.
About four years ago, we began opening PortSide™ distribu-tion centers near strategically located ports along the east, west and gulf coasts. At these centers, we provide transloading services for customers importing goods from around the globe. Having fa-cilities located close to significant ports allows us to meet the ship, get the containers and immediately transload them. We can break them down for truckload or LTL shipments going straight to the customer, or we get them traveling to their destinations via rail.
We have also invested heavily in facilities that can benefit our customers, such as our Memphis service center which is a bond-ed Container Freight Station (CFS). Our customers can depend on us as a single-source provider to manage the movement of their goods from point of entry to destination.
How are you defining and responding to changes in your domestic markets?
We value the trust our customers have placed in Averitt for shipments that are moving in and out of the South, and we want-ed to offer them the benefits of our flexibility and personal service for all of their North American shipments as well. To meet this need, we have come together with five other regional carriers to form The Reliance Network to provide seamless, fully integrated freight services across the continent. Now our customers have the convenient option of working directly with their trusted Averitt Transportation Specialist to service their regional, national and worldwide shipping needs.
All of the carriers in The Reliance Network (Averitt Express, Canadian Freightways/Epic Express, DATS Trucking, Lakeville Motor Express, Land Air Express of New England and PITT OHIO EXPRESS) are known for their exceptional customer ser-vice, on-time delivery and strong reputations within their regions. Together, we can serve 100% of North America with seamless coverage through hundreds of service centers and exceptional customer service from more than 15,000 team members.
Executive Q&A
Outsourced Logistics | June 2008 | 39
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project’s change management strategy. While considerations such as the optimal number of dis-
tribution centers and their locations are not easily made at this point, it is appropriate to include that type of analysis in the scope of the project. Transportation network design and modeling can help identify significant long-term supply chain savings in terms of transportation rates, inventory car-rying costs, and real estate considerations.
Transportation Carrier Relationships
Yet another essential ingredient in a transportation man-agement excellence program is the nature of your company’s relationship with your transportation carrier community. Asset-based companies, whether manufacturing firms or transportation carriers, concern themselves with asset uti-lization. High levels of asset utilization make the difference between profit and loss for asset-intensive firms. You can help your carrier community achieve the visibility and pre-dictability it needs to manage its assets for your needs. Your “to-be” transportation management model should recognize the strategic importance of having a strong and healthy rela-tionship with your carrier community.
Some of your lanes will be easy to cover with adequate and
relationship and opted to take control of the transportation process, they enhanced on-time delivery while reducing the total freight costs associated with the relationship. In your company’s supply chain, some trading partners will find it operationally viable, as well as economically advantageous, for you to control and arrange transportation. For others, this will not be advisable. The key is identifying and under-standing the grouping of suppliers and customers in which your company can be the lead transportation coordinator and those where you cannot. By doing so, you refine your controlled freight spend, and identify those trading partner relationships where you must employ performance scoring methods to ensure that your trading partners’ transportation management performance is of leader quality.
Transportation Network DesignThe next area of consideration is to get a full view of your
transportation network. This is a visual representation of your company’s freight flows—typically depicted with map-ping software. Seeing the “as-is” map for the first time can be surprising (or even a little shocking). The visualization offers an excellent opportunity to analyze your transporta-tion network and identify cost and service opportunity ar-eas. Once identified, these can be integrated into the overall
Field Report
40 | June 2008 | Outsourced Logistics
Field Report.Rev.indd 40 5/30/08 9:52:25 AM
Outsourced Logistics | June 2008 | 41
infrastructure investments in communications tools (e.g., Electronic Data Interchange), and applications licenses. On the other hand, your leadership might consider transportation management a domain and discipline that is best outsourced to a third-party spe-cialist that can be held accountable for results. Many companies fall somewhere along the continuum in this respect.
Two key questions to consider are:1. If we make a capital appropriation for new transportation
management technology, will a third-party be able to use the pur-chased system if we choose to outsource key transportation func-tions somewhere down the road?
2. If we outsource much of the transportation management process to a third-party early on, will our company have the ability to bring the third-party’s technology in-house later, if and when our strategic direction shifts?
These are questions of deployment, which are addressed in step five. Steps five through seven will be presented in the next issue.
Scott Sykes is senior director of soluton sales for Transplace. Matthew Menner is senior vice president of sales and alliances for Transplace. Vincent Chiodo is senior vice president of solution sales for Transplace.
highly consistent capacity, while others will consistently present challenges. In your subsequent core carrier selection process and resulting awarding of business, be certain that you leverage and combine your total freight profile to ensure that your tough lanes get as much attention and care as your easy lanes.
Enabling Technology RequirementsThe last step at this stage is to define the necessary technology
enablers for your “To-Be” model to deliver results. In this portion of the project, it is important to keep your “To-Be” process model top-of-mind.
Technology requirements can quickly become power-user wish lists if not managed within the context of the stated process objec-tives. To achieve transportation management excellence, your technology requirements list should address the following areas:• Business process enablement–via a transactional system that
instills process rigor via business rules.• Business process measurement–via an analytical application or
reporting toolkit.• Trading partner collaboration–via communications infrastruc-
ture and application tools.• Trading partner relationship management–via procurement and
sourcing applications, as well as financial settlement applications.A final consideration at this point in the journey toward transpor-
tation management excellence is the determination of what method is best for acquiring the technology needed to enable the vision. If your company’s long-term vision includes transportation manage-ment as a mission-critical success factor, your company might make
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Collaboration among logistics service providers helps synchronize global supply chains.
42 | June 2008 | Outsourced Logistics
service relies on a partnership with Con-way. The FCL operation employs strategic vendors Schneider National and Werner Enterprises.
Time-definite ocean transport may sound like an oxy-moron, but APL Logistics has made it work by collabo-rating with other service providers. “The landside piece is important, as well as having partners who can deliver and have assets available” says Villalon. “It takes systems and processes,” he continues. “We can tell our partners at least 10 to 14 days in advance where we need trucks and teams, so there are economies in telling them where de-mand will be and also in telling them where the loads are going so they can plan those days forward and do the load planning for the empty ‘box’ they’ll have for the return to the West Coast.”
Those links are important, says Villalon, because run-ning synchronized supply chains requires the service to be time- or day-definite. The services are positioned to compete with air freight and, admits Villalon, at least anecdotally, shippers indicate a major reason for using air freight services are speed and reliability. Ocean service can’t change its speed to match air, but it can compete on reliability, and that’s where APL Logistics targeted its effort.
A major challenge in international moves is the pricing model. Ocean carriers price in cubic meters, air carriers price in kilograms and US motor carriers use class rates and cents per hundredweight, explains Villalon. APL Logistics needed a model that was highly transparent and allowed easy comparison among the modes. It adopted the same method as the mode it chose to compete with —pricing in kilograms.
Most network designs are based on a domestic sourc-ing model, says Villalon, and shippers are accustomed to a number of choices that don’t exist in international trade. It’s pretty much ocean or air, he notes. With air priced at between eight times and 10 times the ocean rates, APL Logistics saw an opportunity for new price/service points. APL’s goal was a branded, differentiated product that re-flected high quality and service, marketed to the beneficial
Already an asset-based third party with over 24 million square feet of warehouse space worldwide, APL Logistics turned to partners and strategic vendors to launch innovative ocean freight services in the
Asia trades. OceanGuaranteed, a time-definite, less-than-contain-
erload (LCL) service launched out of China and serving the US destination market has been operating for over a
year, and growth has been tremendous, according to Bill Villalon, vice president of land transportation and prod-uct development for APL Logistics. A recently launched full containerload (FCL) service is also off to a good start. On-time performance for OceanGuaranteed is over 98% and the new full-container service is running at 100% on time.
“The key to delivering the precision goes to having as-set players involved and being able to control the vessel stowage and discharge,” says Villalon. On the vessel side, APL Logistics, part of the NOL Group, relies on its sister companies to perform many of the core functions for the line-haul move from Asia to the US. On land, the LCL
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Logistics Services.Final.indd 42 5/29/08 3:32:21 PM
Outsourced Logistics | June 2008 | 43
build up inventory, he explains. “They’re increasingly cost conscious, and any up-tick in demand in the second half of the year will drive very strong demand for [time-definite transport services].” It’s not a panacea, he cautions, but it is one more tool in international shipping that sup-ports a different price/service point that previously did not exist. “We treat it as more tools in the toolbox.”
Balancing cost, service and reliability in support of synchronized global supply chains has required careful consideration and close cooperation among a number of logistics service providers who first had to work out issues around people, process and technology to make the complex appear simple and, probably more impor-tant, do it consistently. APL Logistics may have defined an opportunity, but there’s already a buzz among competitors, and YRC Worldwide has already moved into this space.
charter and filling it can take a weak in peak season. The forwarder might have to consolidate multiple loads for a charter or use multiple carriers, says Villalon. He points out that a 747-400 freighter can haul 115,000 kg. “We can take that and guarantee the booking today,” he adds.
Two other, more strategic factors come into play, according to Villalon. One is sustainability and carbon emissions. “There’s no standard way of calculating this,” he says, but an ocean/truck combi-nation will contribute a fraction of the car-bon emissions of a comparable air ship-ment. “We believe that over time this will become an increasingly important feature. In the last six months, we are getting requests for information and requests for proposals asking about carbon footprint and what programs we have in place.”
Another driver, says Villalon, is the fact that inventories are are very low lev-els. Everyone is being cautious not to
owner of the cargo and providing the reli-ability those shippers and their customers wanted on ocean moves.
Nearly as soon as it premiered the LCL product, APL Logistics was getting ques-tions about a full containerload product. Once it had the service in place, APL Logistics saw some of the expected groups using it: high value, apparel, electronics and automotive components. But, says Villalon, they were a little surprised when other “weight” cargo shippers started us-ing the service for products like books and printed materials. “We’ve seen mul-tiple container bookings or two, three or four containers at a time,” says Villalon. That’s 30,000 to 40,000 kg. or more. Those are large air shipments, Villalon ex-plains. “In peak season it can be difficult for a forwarder or air carrier to respond to that type of demand short of an air charter.”
Putting together the capacity for an air
New
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rief
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Jun
e 08
Lufthansa Cargo Offers E-Freight, Expands China ServiceAfter strong 2007 results, the carrier expects a good 2008 as it enhances and expands its customer
offerings. Getting rid of paper documents for air cargo shipments has been a goal of the International Air Transport Association (IATA) that began its “Simplifying the Business” initiative in 2004. The airline will take over project management of the IATA project in Germany, and oversee its implementation for all stakeholders in the logistics supply chain.
Markus Witte, the designated project manager at Lufthansa Cargo, says, “The IATA initiative will allow us to handle all the paperwork in the entire supply chain electronically and make it more environment-friendly. E-freight will furnish cargo carriers with better data quality. It will improve supply chain efficiency and customer service at lower cost.”
In 2007, Lufthansa Cargo moved 1.8 million tonnes of freight and mail. This was an increase of 2.6% year over year. Its overall cargo load factor was up ¼% to 69.1%. Despite a number of problems facing the industry, the airline expects to continue its positive results this year.
The carrier is expanding its coverage in Asia. It added two weekly direct flights to Beijing and its MD-11F service from Frankfurt to Shanghai and Seoul will be non-stop for the first time. Lufthansa Cargo will have two new destinations in China. Beginning in April there are five weekly flights from Frankfurt to Nanjing and the airline has added three weekly flights from Munich to Shenyang beginning in June. These latter routes will employ A340-300 passenger aircraft that have belly cargo capacity of 17 tonnes.
Logistics Services.rev.indd 43 5/30/08 9:57:38 AM
44 | June 2008 | Outsourced Logistics
Intermodal Fights for a Role By Lawrence J. Gross
After pounding along at full throttle for a number of years, the intermodal sector has seemingly run out of steam in recent months. Its previous healthy volume growth has stalled and even
moved into reverse. Given $4.00 per gallon diesel fuel, shouldn’t intermodal be gaining freight off the highway? What’s going on? How much of intermodal’s troubles are due to softness in the US economy? Are there other factors at work? And what does the future hold?
To understand the situation we need to understand that Intermodal is not really one market, but rather at least two: International and domestic. The first, and larger, segment deals with the movement of intact ISO containers (20, 40 or 45 feet in length) between the ports and inland points. This segment accounts for roughly 60% of intermodal revenue movements and was the major growth driver from the year 2000 through the peak in 2006.
Movement of “domestic” equipment accounts for the balance. This segment is further divided into truckload and less-than-truckload/parcel sectors. The truckload segment includes domestic containers (48 and 53 feet in length), and 53-foot trailers. Smaller trailers (28-foot up to 48-foot) serve the less-than-truckload (LTL) and parcel sectors. The term “domestic” is placed in quotes because a significant portion of freight moving in the truckload domestic units is actually import freight that has been transloaded near the ports. The bottom line is that the intermodal business has been heavily dependent on the health of international import traffic.
Through February 2007, the rolling 12-month total for intermodal revenue movements was down 1.3% versus year-ago levels. Examining the performance of the market segments shows where the weakness lies. International con-tainer movements were down 3.1%, while movements of domestic equipment were up 1.4% for the same period.
Much of the current weakness in International inter-modal can be traced to a combination of three factors:
1. Substantial volumes of import cargo from Asia have been diverted from their former intermodal routing: via US West Coast ports with intermodal moves into the Midwest and East. Now, more of that traffic is moving all-water direct
to the East Coast via the Panama or Suez Canals. What had been profitable, long-haul intermodal traffic has been transformed into a short-haul move more likely to be delivered by highway without touching the rail.
2. The weak dollar has helped cause import vol-umes to stagnate while helping export volumes to soar. Comparing 2007 with 2006, import TEU’s handled at continental US ports slipped 0.6% while export TEU’s grew over 18%. From an intermodal standpoint, import containers are ideal traffic, with highly concen-trated, high volume and long-haul movements from ports to major points of consumption. In contrast, ex-port flows tend to be more dispersed and shorter haul. For these reasons, intermodal has a tougher time com-peting for exports. Recent press accounts indicate that exporters are having a tough time finding sufficient container capacity to meet their needs, simply because the containers are not becoming empty and available in the right locations, and it is too expensive to reposition them for the export loads.
3. The general weakness in the US economy is an additional factor reducing our appetite for imported goods.
While there are indications that the diversion of freight to all-water routings has run its course at least for now, it appears that growth in import cargo will not resume until economic activity begins to pick up. In the meantime, for intermodal to grow it will have to more effectively divert domestic freight movements from the highway. $4.00 per gallon fuel provides a powerful incentive for shippers to give intermodal a fresh look. We are beginning to see evidence that inter-modal is beginning to gain share in the domestic arena. This is the sector that will bear close watching in the months ahead.
Gross is president of Gross Transportation Consulting and a consultant with FTR Associates.
Logistics Services
Community Voice
Logistics Services.Final.indd 44 5/29/08 3:32:50 PM
CENTERED CENTERED
INTERSTATE
RAIL
DesMoines
St. Louis
DallasFt. Worth
Laredo
El Paso
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Morelia
DesMoines
St. Louis
DallasFt. Worth
Laredo
El Paso
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Saltillo
Mexico City
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San Luis PotosiTampico
Veracruz
NewOrleans
Atlanta
Wilmington
Baltimore
Norfolk
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Montreal
Indianapolis
Detroit
Toronto
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Los Angeles
SanFrancisco Salt Lake
City
Seattle
Vancouver
Wichita
Houston
Oklahoma City
Winnipeg
Thunder Bay
Duluth
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Chicago
LazaroCardenas
T W O D A Y D R I V E T I M ET W O D A Y D R I V E T I M E
ON E D A Y D R I V E T I M
EON E D A Y D R I V E T I M
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NORTH AMERICA’S MOST RELIABLE MULTI-MODAL NEXUS
Today, a cargo container in North America is more than likelyto move to the Kansas City region. Global supply chains arechanging to adapt to the need for efficient and reliabletransportation corridors. KC’s central location is unbeatable.
A distribution center located in the KC area can reach 98%of the U.S. market and 60% of the population within twodays trucking. With new regulations on trucking hours ofservice and a shortage of long haul truck drivers affecting
the transportation industry, KC’s central location is anattractive option for development.
More than 3,100 acres of intermodal logistics parks arebeing developed and close to 3 million square feet ofspeculative industrial space is planned for 2008 across the KC region. This expansion of intermodal assets adds to aregional trucking destination that is flourishing. To find moreinformation, please visit KCSmartPort.com.
KCSmartPort.com C O N T A C T : Chris Gutierrez: [email protected]
Untitled-1 45 5/28/08 1:22:36 PM
CORPORATE PROFILE
For over 58 years Kenco Logistic Services has guided some of the most demanding supply chains in the world.
We are committed to providing the highest level of quality at the most competitive rates in the following areas: Warehousing - Kenco operates over 90 facilities in 22 states and Canada totaling over 22 million square feet of warehouse space. Our Contract Warehousing Division manages over 70 facilities for many industries including pharmaceutical, automotive, food, textile, and appliance, while the Shared Warehousing Division offers over four million square feet of multi-client space across the United States. Transportation - Companies rely on Kenco for innovative solutions that lower transportation costs, improve customer service,
and reduce order cycle times. Value Added Services – At Kenco, we perform services that go far beyond the receiving and storage of freight. Site optimization and selection, sequencing, shipping crate assembly, raw materials management, product testing, corporate mailroom management, vendor managed inventories, and regulated pharmaceutical destruction are just a few of the value-added services we perform. Information Systems – We provide a combination of several powerful tools that can help you manage your information, workforce, space, and time. For over 20 years we have implemented our proprietary Warehouse Ef� ciency System (WES) or integrated with in-house and tier-1 systems, like Manhattan Associates and Red Prairie.
Kenco Logistics Services
For more information about Kenco Logistics Services call 1-800-758-3289 or visit us online at www.kencogroup.com.
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806LT.indd 46 5/30/08 12:20:26 PM
CORPORATE PROFILE
When you ship freight, you want to know how much it will cost and how long it will take
to get there. SMC3 has the pricing expertise you need to build carrier relationships that get your LTL shipment from point A to point B in the most cost-effective, timely manner.
Start Price Negotiations with a Uniform Base Rate. A uniform base rate serves as a pricing benchmark from which all carriers can base their overall pricing offers. The focal point for successful shipper, carrier and third party transportation agreements, SMC3 CzarLite® enables shippers to make informed LTL purchases by negotiating their transportation spend using the same base rate system, regardless of the carrier.
Partner with the Best Carriers for Your Transportation Needs. LTL buyers have long relied on simple spreadsheets and other sub-par
tools for carrier bid analysis, making costly mistakes that result in lose-lose relationships. Recognizing this, SMC3 created Bid$ense® – a true, end-to-end LTL procurement process that combines detailed pricing scenarios with powerful tools for carrier response analysis. A Web-based solution, SMC3 Bid$ense facilitates and manages a collaborative bid process between shippers and carriers.
Comprehensively Manage Your Carrier Pricing Agreements. You’ve got your benchmark pricing and your carrier agreements are in place. SMC3 RateWare® takes you to the next level, allowing you to manage all of your carrier-speci� c pricing, including calculating discounts, minimum charges, de� cit rating and FAK charges, in one comprehen-sive system. Add SMC3 CarrierConnect™ points of service and transit time data for ultimate � exibility in shipment planning.
Expert Solutions for Optimizing LTLPrice Negotiations & Carrier Partnerships
Pricing visibility saves time and money for a higher return on your transportation investment. Visit www.smc3.com or call 800-845-8090 today to put our expert technology to work for you.
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806LT.indd 47 5/30/08 12:25:33 PM
CORPORATE PROFILE
The CRST family of companies puts nearly six generations of expertise to work on your toughest supply chain challenges. Our focus on every aspect of
product transfer, from long hauls to supply chain logistics, has allowed our six operating companies to drive the industry. With more than 2,000 drivers, CRST Van Expedited operates the trucking industry’s largest fl eet of team drivers. The company provides customers with all its truckload shipping needs, including long haul, short-haul regional, and air cargo shipping. CRST Malone is an industry leader in the man-agement of fl atbed freight with 1,750 trucks, independent contractors and drivers covering 48 states and 130 million miles annually. The company also has one of the industry’s largest fl eets with removable side kit equipment. CRST Premier Transport’s single-driver fl eet hauls TL and consolidated LTL freight for customers in a variety of
industries, including retail, distribution and manufacturing, among others. CRST Dedicated and CRST Capacity Solutions are the company’s newest additions. CRST Dedicated provides customers with services ranging from a pure dedicated fl eet to a single source dedicated truck capacity and transportation network. CRST Capacity Solutions provides supplemental truck capacity to the Carrier Group of companies, including CRST Van Expedited, CRST Malone, CRST Dedicated Services and CRST Premier Transport. Finally, as a full-service third-party logistics provider, CRST Logistics helps its customers manage freight transportation and ensure that their valuable product moves from loading dock to loading dock in the most effi cient way possible. CRST Logistics is a non-asset-based-company.
CRST International: nearly six generations of expertise
For more information contact: www.crst.com or 1-800-736-CRST (2778)
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806LT.indd 48 5/30/08 12:26:01 PM
CORPORATE PROFILE
Ryder provides a complete array of leading-edge supply chain, warehousing, and transportation solutions across North
America, South America, Europe and Asia. Services range from developing global supply chain strategies to managing and executing day-to-day logistics operations. Integrated solutions for optimizing and managing the � ow of products, currency and information are all part of the company’s expertise. Ryder’s
objective is to identify opportunities to better streamline and integrate your unique supply chain operation. Ryder’s operational expertise in transportation and warehousing processes is enabled by world-class technology to deliver quanti� able value to its clients. Ryder designs the layout of the facility, develops the processes, deploys a Warehouse Management System (WMS) to manage the inventory and manages shipment planning and execution through electronic and web-based solutions. Ryder’s proven know-how and team of 28,000 logistics professionals deliver operational excellence to 16,000 customers in a diverse range of industries, including Aerospace & Defense, Automotive, High-Tech/Electronics, Consumer Products, Retail, Utilities and Food & Beverage. We understand that getting information, materials and products to the right place at the right time for the right cost has become ncreasingly complex. Allow us to show you how Ryder’s experienced people, proven processes and cutting edge technologies can help reduce cycle time, improve customer service and quickly respond to your changing market needs. All of which increases your speed to market – making you more competitive.
You Name it. Ryder will Customize a Supply Chain Solution for it.
RyderWorldwide Headquarters11690 NW 105th StMiami, FL 33178888-887-9337
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806LT.indd 49 5/30/08 12:26:40 PM
CORPORATE PROFILE
Increase ef� ciencies in your supply chain... Manage operational costs... Streamline your business... Whatever your goal, Saddle Creek Corporation (www.saddlecrk.com) can
customize a � exible, integrated logistics program to help you achieve it.
Turnkey capabilities. We’ll deliver a single-source solution using our wide array of services—warehousing, transportation, contract packaging and logistics.
Industry expertise. Count on our knowledgeable and experienced associates to identify innovative logistics solutions that make sense for your business.
Flexible solutions. You’ll have the resources to meet your changing business needs, thanks to our well-equipped facilities in convenient locations nationwide.
Advanced technology. Our services are backed by best-in-class software tools, and our systems can be fully integrated with yours to provide accurate up-to-the-minute information.
Service excellence. We are driven by a keen sense of entreprenurial responsiveness. You can depend on us for personal, top-of-house attention and Whatever It Takes service.
We have the expertise, resources and � exibility to help you meet customer demands, accommodate business growth, and gain a competitive edge. Experience the integrated advantage.
Saddle Creek Corporation3010 Saddle Creek RoadLakeland, Florida 33801863-665-0966888-878-1177www.saddlecrk.com
The Integrated Advantage
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806LT.indd 50 5/30/08 12:27:10 PM
CORPORATE PROFILE
For more than 75 years, Ruan has taken an idea-driven approach to each new challenge our customers face. Every day,
our team of experts offers a variety of tailored transportation services to meet the diverse needs of businesses across the country.
Look to Ruan for the following services: Dedicated Contract CarriageOur customers bene� t from our ongoing investments in equipment, driver management, and nationwide service centers. By employing the latest technologies, ranging from supply chain optimization to mobile communications, we demonstrate our commitment to delivering the highest quality of service.
Bulk CarriageWe provide the equipment, expertise, and leadership necessary to ef� ciently, pro� tably, and safely transport any bulk commodity. We successfully manage diverse customer needs through our breadth of hauling capabilities,
including chemical products, construction materials, and food grade products such as bulk dairy.
Ruan Certifi ed Brokerage ServicesWe offer a one-stop intermediary transportation solution that enables one-way truckload freight customers to replace empty miles with pro� table backhaul revenue.
Integrated ServicesWe can integrate other scaleable supply chain solutions seamlessly into our customers’ operations as needed — from cross-docking to intermodal freight management, logistics, LTL consolidation, and more.
At Ruan, we take care of our customers’ business while continuously exploring new ways to improve logistics systems and save company resources. We’re more than just a transportation company; we’re a dedicated partner who’s committed to our customers’ success.
Supply Chain Solutions That Provide A Competitive Advantage
Ruan Transport Corp.3200 Ruan Center666 Grand Ave.Des Moines, Iowa 50309Phone: (866) RUAN NOWwww.ruan.comEmail: [email protected]
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806LT.indd 51 5/30/08 12:27:44 PM
CORPORATE PROFILE
Technology innovation is a core component of XATA Corporation’s overall strategy and mission. XATA has pioneered such innovations as electronic
driver logs and exception-based management reporting. Today, we are the � eet operations experts. With our proven on-demand � eet optimization software and expert professional services, we’re reducing our customers’ � eet expenses and moving our customers toward 100% regulatory compliance and improved driver safety. XATANET integrates your � eet operations and technology needs into a single solution.As a web-based application, XATANET helps � eet managers control the factors important to their businesses with visibility into their � eet
operations. XATA also provides expert services to develop the business processes required to deliver the pro� tability, safety and service level demanded in today’s competitive transportation environments.XATANET helps � eet managers reduce fuel costs through reduced idling, managing vehicle speed and improving driver performance. Three things are driving the industry today: controlling costs, maintaining regulatory compliance and improving customer service. XATANET helps organizations better manage all three.We provide the right � eet solution for every environment. Whether you manage a private � eet or a for-hire carrier, choose XATA to get a busi-ness partner that’s committed to your success—today, tomorrow and years down the road.
Long-haul or Short-haul, XATA Partners for the Long Term
For more information, visit www.xata.com
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806LT.indd 52 5/30/08 12:28:08 PM
CORPORATE PROFILE
BNSF Logistics is an indirect, wholly-owned subsidiary of Burlington Northern Santa Fe Corporation (NYSE: BNI) and is one of the fastest growing 3PL’s in the U.S., providing comprehensive services to clients with complex supply chain challenges. We offer innovative solutions that range from single shipment execution to complete network design and operations, built upon relationships with thousands of service providers. Our modal expertise spans from parcel, through truckload, intermodal, and rail and our geographic reach is global.
BNSF Logistics recognizes that supply chain planning decisions made today impact resources beyond the bottom line and have long-term in� uence. We facilitate transportation decision-making that effectively balances environmental impact, � nancial objectives, and customer service requirements towards a focus
on sustainable supply chain implementation.
BNSF Logistics has over twenty of� ce locations throughout the United States to service your needs and, as a member of the World Cargo alliance, we have relationships with agents across the globe. Our priority is to provide you with effective and timely communications regardless of your geographic location.
BNSF Logistics is af� liated with a number of industry, advisory and academic groups, including the Council of Supply Chain Management Professionals, Association for Retail Environments, National Industrial Transportation League, Intermodal Association of North America, Retail Industry Leaders Association, National Shippers Strategic Transportation Council, American Wind Energy Association, and the SmartWay Transport Partner program.
BNSF Logistics, LLC
For more information contact: info@bns� ogistics.com or 877-853-4756 www.bns� ogistics.com
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806LT.indd 53 5/30/08 12:28:28 PM
CORPORATE PROFILE
Con-way Inc. (NYSE:CNW) is a $4.7-billion freight transportation and logistics services company. Named FORTUNE magazine’s “Most Admired
Company” in transportation and logistics for 2007, Con-way delivers industry-leading services through three primary operating companies: Con-way Freight, Con-way Truckload and Menlo Worldwide Logistics. These operating units provide day-de� nite less-than-truckload, full truckload and intermodal freight transportation; logistics, warehousing and supply chain management services; and trailer manufacturing. Con-way provides services from more than 500 locations across � ve continents.
Con-way Freight delivers fast, consistent less-than-truckload (LTL) performance, comprehensive direct coverage to markets of every size, and best-in-class service across North America. Con-way Freight’s single network of more than 400 operating locations ensures reliable and seamless coverage nationwide. This network drives Con-way Freight’s industry-leading transit times in local, regional and national markets.
Con-way Freight also extends our customers’ reach by providing full-service LTL throughout Canada and cross-border service to and from Mexico. Exceptional, personal customer service at every level is supported by the most experienced people in the business and state-of-the-art technologies that ensure visibility, help customers save time, and provide them with the con� dence that their freight will be there — when and where they need it.
Menlo Worldwide Logistics designs and implements logistics solutions that become our customers’ greatest competitive advantage in their global supply chains. Menlo helps our customers achieve their
business objectives and improve performance while delivering the lowest total cost. Menlo provides consulting to determine optimal network design, and creates value when we implement this strategy. Menlo has developed and executed this plan for some of the top companies around the globe. Coupling our leadership in lean logistics and extensive transportation management resources with the assets of more than 16 million square feet of warehouse space, Menlo designs, delivers and operates � exible and cost-ef� cient supply chain management solutions for customers globally and across industries.
Con-way Truckload is a leading provider of expedited, time-de� nite full-truckload transportation services across North America. Con-way’s asset-based operations provide industry-leading capacity and consistently superior, on-time performance. The company provides full-truckload transportation serving the transcontinental shipping needs of commercial and industrial businesses.
Additionally, Con-way’s non-asset-based operation, Con-way Truckload Services, provides truckload capacity where and when our customers need it, and delivery performance consistent with the high standards they have come to expect from a Con-way company. With a network of more than 15,000 carriers, Con-way Truckload Services’ options include dry van, intermodal and specialized services for any equipment combination needed throughout North America.
Our customer-fi rst thinking, innovative solutions and advanced technology have made Con-way one of the industry’s most recognized and trusted brands in freight transportation and supply chain management. To learn more, visit us at www.con-way.com.
Con-way Inc.: Customer-fi rst thinking, innovative solutions
Con-way Inc.2855 Campus Dr.
Suite 300San Mateo, CA 94403
Tel: 650-378-5200Fax: [email protected]
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806LT.indd 54 5/30/08 12:28:56 PM
“MORE SPEED” “MORE TECHNOLOGY”
“MORE SMARTS” “MORE CONNECTIVITY”
Our logo says it all. About our commitment to deliver supply chain excellence through an optimal and flexible combination of industry-leading logistics services and technology. Tap into our dense network of shippers and providers, on demand transportation management and a suite of professional services tailored to your organization's needs. www.transplace.com
806LT.indd 55 5/30/08 9:13:25 AM
56 | June 2008 | Outsourced Logistics
3PL FileMission Statement: The mission of OH Logistics is to provide flexible logistics services that support the changing demands within our clients’ supply chains.
Capabilities: OH Logistics provides complete supply chain solutions including customs brokerage and freight forwarding; fulfillment and e-commerce fulfillment; real estate; small parcel; transportation and transportation management; value added services; and warehousing.
Financial Rating/Stability: $920 million (2007)
Ancillary Service Offered: OH Logistics provides services that fall outside of receiving freight or shipping orders including shrink wrap bundle pack; kitting; custom pallet displays; sequencing; return logistics; pick and pack; pick-to-light and much more. Subsidiaries include Material Handling Resources and ProVenture, a commercial real estate affiliate.
Technology Advantages: OH Logistics offers several comprehensive warehouse management systems (WMS) including Accuplus, Synapse, and Manhattan Associates. e-Focus is the company’s end-to-end global supply chain visibility tool. The company also offers Oracle Transportation Management and an online system.
Modes of Transportation Utilized: The complete transportation offering at OH Logistics includes the following modes: truckload, less than truckload, dedicated fleet, on-demand labor and transportation resources, expedited, final mile delivery, consolidation, drayage, parcel shipment management, air, rail, and intermodal.
Collaborative Partners: The Traylor Group (recycling); ATG (e-commerce fulfillment).
Specialized Logistics Services: OH Logistics provides supply chain management services for the Apparel, Industrial, Health & Beauty, Food & Grocery, Consumer Products and Electronics & High Tech sectors. The company offers primary and secondary packaging services and has expertise in e-commerce.
How It Differentiates: OH Logistics offers scalable supply chain management solutions for clients of all sizes; a multi-client campus distribution center network; multi-temperature supply chain solutions; 58 licensed customs brokers on staff; and U.S. Customs compliance rate consistently above the national average.
Company Name: Ozburn-Hessey
Logistics (OH Logistics)
Ownership: Private
Stock Symbol:N/A
US Headquarters: 7101 Executive
Center Drive #333; Brentwood, TN 37027; Phone Toll Free 877-
401-6400 or +1 615-401-6400
Outside the US; [email protected].
Website URL:www.ohlogistics.com
Foreign Locations/Markets Served: Global
Key Personnel: Scott McWilliams,
CEO; Bert Irigoyen, EVP and CFO; Denis
Reilly, President, Transportation; Bob Spieth, President, Contract Logistics;
Mick Fountain, President & CEO,
Barthco International.
Year Founded: 1951
Number of Employees:
5,700+
Third party page.Final.indd 56 5/29/08 3:23:05 PM
Smart LTL buyers combine the science of procurement – goal setting, vendor selection, benchmarking and cost reduction – with a powerful tool for analyzing carrier pricing and services. What if there was one system that delivered it all?
There is, and it’s SMC3 Bid$ense®
Bid$ense is an end-to-end procurement process designed specifically for LTL purchases. It puts you in control and significantly reduces the time required to prepare, conduct, analyze and award a bid. Select your bid participants from over 125 registered LTL carriers or easily add your own. Use the unique analysis engine to simplify your what-if studies and collaborate with carriers to create optimized pricing and routing assignments. This and much more delivered in one comprehensive LTL bid system.
Start making smarter transportation purchases – contact SMC3 at 1.800.845.8090, or visit www.smc3.com/go/betterbid
Advanced Technology for Transportation Bids
Streamline Your LTL Transportation Bid Process
Smart LTL buyers combine the science of procurement – goal
With the advanced bid technology of SMC3 Bid$ense®
Untitled-1 55 5/28/08 1:25:10 PM
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806LT.indd 56 5/29/08 8:47:40 AM