Parcel - June 2008 - (Page 24)

tiveness has been challenged by a rising Euro. If the US dollar continues to depreciate against the Chinese yuan, this could begin to tilt the balance in favor of sourcing from domestic US companies. Higher fuel costs are driving freight rates higher and proﬁtability lower Fuel cost has increased by 15%, and steel cost has increased dramatically over the last several years, both of which have affected ocean shipping rates. If current trends continue, the cost of shipping could begin to make Chinese goods less attractive to American and Western importers. “The delta is no longer as advantageous,” observes the Supply Chain Manager for an US importer. More companies are dual-sourcing to ensure continuity of supply 9/11 caused many companies to design resilient supply chains that would survive a terrorist attack. This led to the use of deliberate redundancy in the form of dual-sourcing — using suppliers on both sides of the Paciﬁc instead of being dependent on an overseas supply line. The dockworkers’ strike in 2002 reinforced the use of multiple ports to safeguard supply in the face of possible port shutdowns, and the memory of that strike was recently reawakened with the threat of an ILWU strike. Dual-sourcing dampens the economic effect of off-shoring. Asian environmental and social regulations are increasing offshore costs Several regulatory and social changes that are underway are increasing the cost of off-shored goods and services. Environmental concerns and regulatory measures could increase Asian costs and reduce the gap. If China and other nations take air pollution more seriously, the “free ride” that manufacturers are currently getting may end up costing money. That money would further reduce the differential between Chinese and Western delivered costs. Whether it comes from factories or from transportation, pollution controls could affect the overall competitiveness of Chinese goods. One interviewee living in China adds “a CO2 emissions and future introductions of emission quotas may become signiﬁcant. I don’t believe shipping things back and forth across the world will be feasible in the long run. Sooner or later reality will catch up with us, and I wouldn’t be surprised if in the future there will be a reversal in trends, with some manufacturing being moved back to the West.” All parties in the supply chain need to understand the economics of the Asian Sourcing Boom (the subject of another one of Boston Logistics’ annual studies) in order to make wise plans and investments. Our infrastructure adequacy, cost-competitiveness and supply continuity depend on an accurate reading of these tea leaves. David Jacoby is President of Boston Logistics, a supply chain research ﬁrm that specializes in offering global industry analyses, commodity forecasts and strategic consulting services. To contact David or the ﬁrm, please call 781-250-8150, e-mail info@bostonlogistics.com or visit Boston Logistics online at www.bostonlogistics.com. ■ 24 May 2008 www.PARCELindustry.com http://www.greenmountainconsulting.com http://www.greenmountainconsulting.com http://www.bostonlogistics.com http://www.PARCELindustry.com

Table of Contents Feed for the Digital Edition of Parcel - June 2008

Parcel - June 2008 Contents Editor's Note What Would Augello Say? Success Means Never Being Satisfied Moving from Manual to Automated Fulfillment Regional Carriers Move to the Forefront Understanding Warehouse Management Systems Negotiating Carrier Contracts It’s All About the Data! How Long Will The East-West Trade Imbalance Last? Educate the Shipper, or Fix the Software? Product Profile On the Mark New Products & Services Advertiser Index Wrap Up

Parcel - June 2008

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