World Trade - October 2008 - (Page 40)

SMALL AND MEDIUM-SCALE ENTERPRISE little changed. In consequence, Heller says, there is more moving out; less moving in—a fact that is reorienting the patterns of shipping. All these, he notes, have a huge impact on the trucking and drayage industries. The big companies, Heller says, “are adjusting their models for the increase in fuel costs.” Regional companies, however, “are challenged, because of fuel costs; because the highways aren’t getting any bigger and they’re congested; plus emissions issues. All these support rail intermodal. They are structural issues that make it very difﬁcult for them to evolve.” But, he notes, these matters—rooted in the new international economy—affect everyone with a product to get to market or with supplies to obtain. Some observers are frankly startled that there are companies, which still don’t see themselves participating in the global economy. Theodore Prince, senior vice president for marketing and sales at the Austin-based Optimization Alternatives, asks rhetorically, “What do they make? Buggy whips?” The fact is, Prince adds, “if you’re a small manufacturer, then your own supply chain may well not be global. But, your tier two and tier three suppliers probably are, as you go downstream.” He cites, as an example, a small company in Tennessee: If it supplies to Toyota in Georgetown, Tennessee, then it knows it is part of the world system. But it is still part of that system if it supplies to that supplier, or that supplier’s supplier. The fact, he adds, “is that the demand is created by foreign direct investment.” Many people, he notes, do not equate supply chain and foreign direct investment, but “both are representatives of globalization.” There is, in the world, one big pool of potential investment capital. “If you borrow money, that money probably came from globalization somewhere.” Overall, Prince says, people who regard themselves as outside the globalized economy are “looking very provincially at their supply chain and they are not looking at the larger supply chain.” Heller presses this point. Hypothetically, he says, imagine a ﬁrm with all its suppliers and customers within 200 miles. How is globalization affecting them? In the business world, he notes, the small ﬁsh gets eaten by the bigger ﬁsh, and up the line. “So you’ve got this small ﬁsh that has learned to rely on products and services from a network that’s within a 200 miles radius. But that network isn’t freestanding; it’s tied to all the larger and global networks. Whether that business is aware of that supply chain or not, it exists.” Perhaps the key matter is executive mindset. At CEVA Logistics, Chris Monica, executive vice president for sales and marketing, has met with dozens of small- and mediumNorfolk Southern The ﬂow of U.S. trade has reversed direction—less moving in, more moving out. staff; today, the Internet and email make international communication all but transparent. Second, the language barrier has been broken—UPC coding has become, in effect, the international language of business. Finally, container shipping—particularly when tied to intermodal rail and trucking—has brought huge reductions in the cost of moving things from one place to another. With the elimination of these barriers to entry, virtually any company can afford the ante required to be an international player. Globalization, several point out, affects the smaller and medium-sized enterprises whether they know it or not. Jeffrey Heller, Norfolk Southern railroad’s assistant vice president for marketing and international, points to three trends in the ﬂow of trade that are having huge impacts—narrowly, on local and regional trucking ﬁrms; broadly, on everybody else. First, freight is entering differently. For years, Heller says, 70 percent of the freight reaching Norfolk Southern did so through a West Coast port. During the ﬁrst quarter of 2008—and for the ﬁrst time—more freight entered the system through the East Coast, much of it container trafﬁc from Asia moving through the Panama Canal. Second, freight is being moved differently. At one time, freight moving inland from East Coast ports was primarily carried by short-haul trucking ﬁrms. Now, with rising diesel costs, railroads like Norfolk Southern are moving it closer to its ﬁnal destination. In consequence, he says, large trucking ﬁrms are increasingly looking to intermodal rather than short-haul movement. Third, the ﬂow of freight has reversed direction. With the weaker U.S. dollar, importing is down; exports are up. Indeed, even though the nation’s bill for imported oil has risen greatly, the overall U.S. trade deﬁcit has remained OCTOBER 2008 40 WORLD TRADE

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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