Ocean shippers may have to come to terms with carrier “efficiency myths”: Part II

shippers may well be asking themselves if “slow steaming” should be embraced or resisted.
By Patrick Burnson, Executive Editor
March 07, 2013 - LM Editorial

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.

 



About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

NRF's Jonathan Gold explains that the past year was replete with disruptions, slowdowns and partial shutdown, which can no longer be the norm, saying ports and dockworkers must adapt to ensure they provide shippers with the predictability and stability they need.

Last month, I gave a presentation to a group of senior transportation and supply chain executives. It was entitled “Predictable Surprises,” because it addressed how transportation and supply chain professionals can eliminate unpleasant surprises by looking at and evaluating issues in the transportation industry, and projecting how those issues will affect their companies.

The Port of Los Angeles (POLA) and the Port of Long Beach (POLB) said this week that they have formally established working groups, which they said will aim to seek new supply chain efficiencies, and focus on various aspects of port operations, including peak operations and terminal optimization in an effort to augment the San Pedro Bay port complex.

A month ago, the Shippers Conditions Index (SCI) from freight transportation consultancy FTR indicated that shippers might be traveling on a rocky road in the coming months. And one month later it appears those concerns appear to have been confirmed.

The American Association of Port Authorities (AAPA) had nothing but praise for the Senate passage over the past weekend of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA-2015).

Article Topics

News · All topics

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA