Global Logistics and Supply Chain Strategies - July 2008 - (Page 14)

impact of an increase in service for one product on overall inventory levels. Or, conversely, how much the company stands to save by cutting back slightly on service in one particular area. Johnston cites Heinz as one company with a formal program for strategic network optimization, by which it can determine precisely how much capacity it needs at each plant and distribution center, to meet customer needs with maximum efficiency. This concern with process integration is still relatively new among most companies, he says, but it promises to have a big impact on decisions regarding the purchase and deployment of supply chain software. For the moment, he adds, only a handful of companies are taking demand intelligence gathered at the point of sale, and making use of it all the way up the supply chain. Such a practice requires better integration of multiple software applications than currently exists in most organizations. The development of service-oriented architecture (SOA) can help, but that capability is still three years away “in terms of true adoption,” Johnston says. Visit www.jda.com. Trans-Pacific Carriers Reinstate Floating Fuel Surcharges; Shippers Prepare to Shoulder Burden Service contracts between ocean carriers and shippers in the trans-Pacific trades are seeing the restoration of floating bunker fuel surcharges, adjusted monthly in line with global price fluctuations. And that is likely to result in even higher overall rates for shippers. Members of the trans-Pacific discussion agreements in both directions have succeeded in building those fuel surcharges into most contracts—90 percent, in the case of eastbound. According to the Transpacific Stabilization Agreement (TSA), which covers the eastbound trade, the result is “significant increases in the portion of the full, published surcharge level collection.” TSA chairman Ronald D. Widdows, whose day job is chief executive officer of APL Ltd., noted that fuel prices are approaching $600 per ton, having more than doubled since the first quarter of 2007. The carriers have managed to bump up the base rate for moving containers as well, with overall revenue increases of between $400 and $600 per 40-foot box. TSA members will be looking for even greater rate increases in 2009, said executive administrator Brian Conrad. Over on the westbound side, where U.S. exporters to Asia stand to benefit from a weak dollar, member lines of the Westbound Transpacific Stabilization Agreement (WTSA) have announced similar floating bunker surcharges and higher overall rates. Expect further increases in that trade, too, WTSA said. According to Conrad, who serves double duty as executive administrator of that group, carriers in many cases are still not recovering their pre-2007 base cost of operations, let alone the recent rise in fuel and other expense. Visit www.tsa.org and www.wtsa.org. Economy Sinks, But Airfreight Demand Is Poised to Soar, According to OAG The global airfreight industry is poised to provide some “light at the end of the tunnel” for those worried about higher fuel prices and economic uncertainty. That, at least, is the scenario offered by OAG Analytical Services, part of the Official Airline Guide. In a report on airfreight demand for 2008-2017, OAG predicts an annual growth rate of 5.6 percent by the year 2011, following the end of the near-term slowdown. What’s bad for some sectors, apparently, is good for airfreight. Tighter security regulations, soaring fuel costs, volatile currency exchange rates and the price of new environmental initiatives all promise to have a negative impact on most businesses. But OAG sees those very same trends, coupled with the liberalization of air rights between the U.S. and points in China and the European Union, as “creating a growing demand for freighter aircraft.” Growth will be particularly strong in the international airfreight market, averaging 6.1 percent annually during the 10-year forecast period. “The rising cost of operations will force the industry to make tough decisions that will impact airfreight capacity on a global level,” said Tulinda Larsen, managing director of OAG Analytical Services. Visit www.oag.com. 16 JULY 2008 http://www.jda.com http://www.tsa.org http://www.wtsa.org http://www.oag.com

Table of Contents Feed for the Digital Edition of Global Logistics and Supply Chain Strategies - July 2008

Global Logistics and Supply Chain Strategies - July 2008 Contents Editorial GL&SCS Exclusive Fastforward Up Front Introduction Menlo Worldwide & Electrolux PathGuide Technologies & Tile City Servigistics & Juniper Networks Transplace & Rock-Tenn ClearOrbit & Blue Bell Creameries Cadec Global & Northwest Food Products Transportation CaseStack & Greystar Products NGC & Parigi Group Supply Chain Consultants & Constar TransGroup Worldwide & Surgiquip Terra Technology & Campbell Soup Baxter Planning Systems & SGI Cadre Technologies & Kansas City SmartPort TransportGistics & FMC Technologies DSC Logistics & Tree of Life FORTE & Vera Bradley Penske Logistics & Eaton Cardinal Logistics & Weyerhaeuser JPMorgan & Black & Decker Opinion Opinion Industry Voices

Global Logistics and Supply Chain Strategies - July 2008

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