World Trade - August 2008 - (Page 45)

ing time at border crossing points improve customer service levels and lead to other beneﬁts, including less variable delivery schedules, and lower operating costs from less handling and fewer movements. While overall, participating 3PL customers like ours have had a positive experience, we still see misunderstanding throughout the shipping community about who is responsible for different components of the security criteria associated with C-TPAT. Confusion about driver passport requirements and the manifest process are common amongst shippers. However, as a certiﬁed partner, we have been able to help navigate our customers through the process and ultimately facilitate the extension of the program for importers who are trying to meet C-TPAT requirements. Focusing security certification on specific logistics modes is a good start, but it’s time to move up to standards for outsourced integrated providers. BY BILL ANDERSON Deﬁning third-party logistics for C-TPAT With global operations throughout North Ame America, Latin America, Europe, and Asia, we move goods for hundreds of customers in and out of Canada and Mexico alone. For the customers who rely on us to safely and securely transport their products in and out of the U.S., working with a C-TPAT partner has certainly been beneﬁcial. Our border crossings are faster and smoother, and our validated status gives customers added comfort that their loads are secure. In our experience so far, C-TPAT has become the benchmark for doing business with importers and large manufacturers in the U.S. (Ryder currently supports more than 50 different C-TPAT importers from hundreds of locations across North America). U.S. Customs and Border Protection (CBP) reports that ﬁrms participating in C-TPAT have received tangible beneﬁts in terms of reduced customs examinations. In addition, faster throughput times at border crossings result from fewer inspections by virtue of being in compliance with government regulations. Reduced process- To properly deﬁne minimum security criteria for 3PLs, let’s properly deﬁne the outsourced logistics sector. There are about 20 to 25 companies who have the global capabilities necessary to provide lead logistics management service to Global Fortune 500 companies. In general, these 3PLs could be the single provider for Fortune 500-1,000 companies. These largest 3PLs are classiﬁed as Tier 1 Global Supply Chain Managers (GSCMs). In general, they have very sophisticated information technology capabilities, employ 4,000 or more people, and service over 100 countries with a typical net revenue of $1 billion. Companies hire 3PL services primarily for freight payment, shipment consolidation, direct transportation services, customs brokerage and warehouse management. Currently, ten percent of goods entering the U.S. are managed by 3PLs. And, the global supply chain market is large and growing. Manufacturers are increasingly open to outsourcing of complex activities and are expanding their reliance on 3PLs. Because globalization of supply chains brings increased variability and uncertainty, more companies are outsourcing to logistics experts and are migrating to fewer providers. As this trend continues, the security of the global supply chain will rest more and more in the hands of top tier supply chain managers. What does this mean to C-TPAT? A common misperception about outsourced logistics providers that may be an obstacle to developing effective security criteria is that 3PLs don’t do the “actual work,” but rather manage supply chain activities from afar. In reality, the breadth and depth of freight movement that a 3PL touches, and is ultimately responsible for securing, is extensive. According to Armstrong & Associates, Tier 1 Global Supply Chain Managers serve most of the world’s GDP. And while, yes, there are cases where “asset light” logistics providers act in a more consultative role, most of the major Tier 1 logistics providers are directly responsible for transporting goods, running distribution centers, employing drivers, and managing a carrier network. So, what is the security impact of a 3PL on the supply chain? • Carrier selection and procurement – 3PLs are responsible for hiring carriers used by most major importers. Based on an importer’s requirements, WWW.WORLDTRADEMAG.COM 45 http://WWW.WORLDTRADEMAG.COM

Table of Contents Feed for the Digital Edition of World Trade - August 2008

World Trade - August 2008 Contents Weathering the Storm Helping the World’s Poorest Nations Benefit from Global Trade Supply Chain Watch Tradewinds World Trade’s Top U.S. Trading Partners LTL Shipping ‘On the Fly’ Air Cargo Flies a New Heading Getting More from China Sourcing Why 3PLs Need a Seat at the C-TPAT Table Performance-based Supply Chains Drive Total Lifecycle Value SmartWay Navigates Sustainable Transportation Around the World in 80 Days—Hours—Minutes

World Trade - August 2008

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