World Trade - October 2008 - (Page 27)

“This helps customers with their cost points.” Mike Miller, general manager for intermodal supply chain for Norfolk Southern, concurs that intermodal offers shippers various strategies for maximizing freight loads. These include using same-size boxes when loading box cars, minimizing dead head or empty miles, planning appointments of delivery, and minimizing the dwell and idling of assets. Recently, Norfolk Southern saved a forest products customer $1 million on one lane in one year by converting backhaul shipments of scrap paper to intermodal rail. “In this business, transportation costs determine from where a company sources scrap paper,” Miller says. “Better asset utilization meant a direct contribution to their bottom line.” Depending on the network, Miller suggests that shippers can save between 8 and 12 percent by using intermodal. “But after other factors are added, in UPS reality they realize four to six percent,” he says. Still, the savings add up. The biggest contribution is on mode shifts. “You must make sure you’re integrating service requirements in the most efﬁcient way,” he says. “For example, if a shipper switches from LTL to intermodal, the shipment might take an extra day. However, a customer might be ﬁne with that.” Speed-to-market can be critical, however, for some industries. “This warrants a strategy that emphasizes speed as opposed to greater levels of held inventory,” comments Matt McGee, UPS vice president of supply chain solutions. “For consumer and industrial goods, building the most efficient shipment load is of paramount importance, particularly with fuel and other ancillary charges now greatly narrowing the cost differential between different container sizes.” Consequently, integrated carriers like UPS are actively providing customers with service across a spectrum from multi-modal transportation to complete end-to-end supply chain solutions. “Customers rely on us for small package transportation, airfreight, for full container load and less-than load container ocean freight, and for LTL and LTL truck load service,” states McGee. “From within each of these modes, we provide our customers with options that can meet their needs for lower cost or high performance.” Within North America, UPS operates one of the largest deferred airfreight networks that provides a more cost effective alternative to next day air freight with the same handling, security, convenience and reliability advantages. In addition, it ties these formerly disparate modes together into cohesive shipping, routing and tracking solutions to maximize both effectiveness and efﬁciency. Then there’s the matter of trade compliance. “For international shipments, it’s no longer sufﬁcient to be just efﬁcient and effective,” he states. “It’s now paramount to be compliant.” That’s because over twenty-six new security requirements are now in place that regulate international shipments. UPS provides International Trade Services, in conjunction with international transportation, to prevent loss, delay, diversion, and regulatory penalty. “All of our solutions are designed to holistically manage ﬂows of goods, funds, and information,” he says. Most certainly, of all the cargo modes air cargo is the most challenged for its high expense. Concerning everyone is escalating fuel costs, particularly fuel surcharges that get passed on to shippers via their intermediary freight forwarders or 3PL provider. In response, AF-KLM Cargo just introduced a new fuel surcharge mechanism that takes into account the current realities of key external parameters: jet fuel price and the euro-U.S. dollar exchange rate. “In order to increase stability and prevent changes due to short-term peaks, a monthly moving average will be used for the jet fuel price,” says Michael Wisbrun, chairman, Joint Cargo Management Committee, Air France-KLM Cargo. Supply chain management is a complicated business that changes with the economic tide. Shippers, who even do a good job of handling their logistics, will miss the quick and ever-changing nuisances that 3PLs and logistics providers bank their business on staying on top of. WT Karen Thuermer is a Washington, D.C. based writer who specializes in transportation and logistics. For international shipments, it’s no longer sufﬁcient to be just efﬁcient and effective. It’s now paramount to be compliant. WWW.WORLDTRADEMAG.COM 27 http://WWW.WORLDTRADEMAG.COM

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

World Trade - October 2008 Contents Tune Up Your Supply Chain Globalization: The Real Competitive Threat Supply Chain Watch Tradewinds Shippers and Providers Collaborate to Take on a Challenging Economy Tweaking the Supply Chain to Optimize Value and Minimize Cost Supply Chain Software Morphs Into Enterprise Management Can Warehousing Really, Truly Be Strategic? Everybody is Global Between the Devil and the Deep The Hidden Costs of ‘Free’ Translation Blowing Smoke

World Trade - October 2008

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