Ocean shippers may have to come to terms with carrier “efficiency myths”: Part II
March 07, 2013
It should come as little surprise, that transit time data is not being used effectively by shippers for inventory planning. Indeed, argue researchers, only a handful of shippers collect lead-time reliability data, and it often does not even feed into their ERP systems. That’s because most of these systems only accept a single value for lead time – not a range of values or even a standard deviation. Therefore, the inventory level is usually based on the worst, rather that the average metric, and the business case for increased reliability is far from clear.
Given this scenario, shippers may well be asking themselves if “slow steaming” should be embraced or resisted. So far, The National Retail Federation, along with National Industrial Transportation League have been adamantly against it, insisting that the fuel cost savings are not being passed on to the beneficial cargo owners.
This was consistent with the findings in a study conducted by third-party logistics services provider BDP International in conjunction with Centrix – BDP’s consulting unit – and Saint Joseph’s University last year. Shippers surveyed here were in the chemical, consumer goods, retail, and healthcare sectors, with 73 percent involved in import and export activity, 15 percent in export-only and 12 percent in import-only.
Among the reasons shippers gave for opposing slow steaming was that it extended transit times, thereby requiring more comprehensive advance planning and increased inventory levels.
CTL researchers don’t take a position on whether slow steaming is good or bad, but do offer rather compelling evidence that the global carrier trend will remain with us for some time – especially on the Transpacific. And while shippers don’t actually save as much money as the carriers, they do benefit when some of the variability is taken out of the equation.
There is even some discussion of port efficiency in the CTL’s paper, but shippers seeking more on that particular aspect may benefit by following the progress made at a vital industry event in Los Angeles this May. For only the second time in this century, the International Association of Ports and Harbors will be meeting in the U.S., with the Port of Los Angeles playing host.
The port authorities in this case, may wish to consider busting some myths of their own…namely that the Panama Canal Expansion in 2014 and a seemingly ongoing contentious dockside labor situation will result in fewer inbound calls.
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