The Top 5 Threats to Delivering the Intermodal Promise – Part Four

25 10 2011

By Cento Sharp, Cento Sharp Consulting

Cento Sharp#3 – Lack of End to End Supply Chain Integration

Supply Chain Management 101. A supply chain requires a minimum of three entities; a supplier, a producer and a consumer and each must share information and exchange currency in order for the supply chain to work.

How simple is that?  Why isn’t every supply chain completely automated if it is that simple?

As common practice indicates, the minimum of three entities in a supply chain is just a basic tenet of supply chain management and holds true as theory only. In reality, supply chains are often both explicit and implicit to their participants and are highly complex spatial algorithms.

Let us momentarily ignore the obvious technology and orchestration issues with integration between suppliers, manufacturers, logistics providers, wholesalers, retailers, and the like. These are the explicit supply chain nodes that we know requires constant integration efforts in order manufacture freight and transport it from point A to point B at a profit.

Let us look at a less obvious and oftentimes hidden detractor of end to end supply chain integration. This hidden detractor is what makes end to end supply chain integration impossible for some organisations.

Transportation providers are the most egregious offenders of this principle, which is…

Supply chain companies that don’t realise they are supply chain companies.

Using transportation providers as an example; companies must see themselves as a part of their customer’s supply chains; as key enablers and an optimisation tool for their customers. Many transportation organisations do not operate in this manner; the keyword is “operate”. The operations mentality of “find more freight”, “book more freight”, “move more freight” reduces the level of intimacy needed between transportation providers and their customers in order to create a fully integrated supply chain.

These transportation providers see their role as more transactional instead of strategic, which causes distance and a lack of trust between customers and suppliers.

With a lack of trust and relational distance between just two of the three supply chain entities comes EDI messages that require constant manual fixes, web portals that add more work for the customer and irate phone calls to customer service for status updates on the most rudimentary of tasks.

End to end supply chain integration starts with all participants in the supply chain first realising that they are a supply chain company, regardless of their size, service offering or role.

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SHIPPING CONTAINERS 2.0…THE NEXT GENERATION

24 10 2011

By Jonathan Ferrini, Founder and CEO of Ferrini Corporation

In this blog, Jonathan Ferrini explains why the collapsible container could be the future of container shipping.

The Problem:

According to Drewry Shipping Consultants, $31.5 billion is spent annually on repositioning empty containers. Recent news reports and practical applications have shown that there are container shortages developing. It is becoming too expensive to move empty containers to where they are needed. The shipping industry is also under significant environmental and political pressure to decrease its carbon footprint and infrastructure costs. Transporting a single empty container on a truck, train, or vessel is a waste of fuel, labour hours, and equipment wear and tear. Furthermore, current containers create bottlenecks at both loading/unloading and inspection points as they can only be accessed through one door.

The Solution: Create a smarter container!

So what is the future? I believe it lies in the creation of a collapsible container. Its development would permit three collapsed containers to be placed within the footprint of one standard container. Current containers are capable of being stacked 9 containers high. A collapsible container could permit stacking of 27 containers.

The collapsible container would enable the trucking, shipping and rail industry to move three collapsed containers on the back of a truck, ship or rail car in the same footprint where they are currently able to move only one. It is estimated that 50% of the life of a container is spent empty, so the result would be significant savings in fuel, labour and container yard rents.

In addition, a collapsible container would have access points from doors at both ends of the container, the roof, and the side panels, and would be capable of complete disassembly into six components consisting of two doors, roof, floor, and two side panels permitting assembly where needed and easy replacement of damaged components. There could be significant financial savings in repositioning costs per container per round trip with a potential $18.6 billion worldwide savings from a 3:1 consolidation. By collapsing the container, you can place more containers within the footprint of a standard container, decreasing the container yard space required to store containers and reducing rents paid.

There have been few significant changes to the staple of international shipping since the shipping container was invented in 1955 by Malcolm McLean. The collapsible container should be the next stage in the evolution of container shipping. According to Len R. Hering, RADM, US Navy (ret) a collapsible container “represents a new and innovative approach to one of the most challenging problems faced by military logisticians both at sea, in the air and ashore. It will allow the Commander the flexibility to maximise space and adjust operations knowing the shipping container can be collapsed, stacked and reused at a third of the footprint and half the weight. It can save time, money and brings options to the war fighting space that today are simply not possible.”

Benefits:

The collapsible container can be a potential enhancement to the ever shrinking profit margins encountered by transportation firms, container owners, lessors, a valuable solution to Homeland Security and green initiative programs of governments. Bottlenecks at unloading/loading/inspections points are minimised with multiple entry points from two doors at both ends of the container in addition to the roof and side panels. The end users of a collapsible container such as large retailers and manufacturers reliant on rapid movement through inspection/customs and loading/unloading of their merchandise will find valuable savings in both time and manpower.





The Top 5 Threats to Delivering the Intermodal Promise – Part Three

11 10 2011

By Cento Sharp, Cento Sharp Consulting

Cento Sharp#2 – Poor Development of Transportation Infrastructure

The transportation infrastructure aspect of the global supply chain is undoubtedly the most difficult aspect to improve. Significant infrastructure improvements cost countries billions of dollars. The improvements to waterways, railroads and highways must be planned, initiated and approved by government stakeholders as well as leaders in the business community.

What makes transportation infrastructure projects difficult to obtain approval is the inability of one or two single entities to profit quickly from their implementation. Infrastructure is a commitment to improving the overall community in which the businesses and corporations operate. When a coastal trade lane becomes capable of handling more raw tonnage in terms of freight imported and exported, it often takes years and sometimes decades to realise the financial benefits.

Across the globe:

  • India plans $7 billion in ports investment – estimated by 2017 to build seven new ports and triple merchandise exports
  • Marseille plans huge shift to rail – estimated in 10-15 years with rail shipments expected to double
  • President Obama pledges $50 billion for failing United States transport infrastructure – immediate start includes highways, railroads, airports and seaports
  • Bulgaria freight privatisation moves forward – more rail flexibility desired by splitting BDZ Passenger Services from BDZ Freight Services through privatisation of the organisation

As each of these stories indicates, the ongoing battle with infrastructure improvements is the global supply chain’s most ominous challenge. The long time to recoup the benefits of infrastructure investments and the massive business and political commitment required to ensure the success of these types of projects will keep expansion slow, but steady.





Now is the ideal time to solve logistic bottlenecks in Europe’s transport system

28 09 2011

By Franco Castagnetti, President of the TIGER Project

We are committed to achieving a more sustainable and compe

titive cargo mobility system in Europe and in my opinion the reduced traffic flow caused by the poor global economy provides an ideal window to implement improvements.

This will in turn create a more competitive environment in European industry and lead to increased freight mobility. So, we are urging organisations to improve the areas which will directly impact the efficiency of the logistics network throughout Europe – and there is actually no better time to do this than when traffic levels are at comparatively low ebb. If we act during the downturn, we can help inoculate infrastructure from some of the issues which prove so problematic during peek periods.

The TIGER Project is charged with identifying and solving port congestion in Europe. One of the primary causes of the congestion is the disconnect between the advanced state of maritime freight transport and the antiquated road and rail networks which the ports rely on to transport goods once they have been processed.

The introduction of new giant container vessels, capable of carrying huge amounts of cargo, unimaginable only a few years ago, has forced ports to invest heavily in upgrading their facilities to handle increased volume. Unfortunately, the road and rail networks responsible for moving this traffic, once it has arrived, have remained largely underdeveloped.

Logistics service providers, transport companies and intermodal operators are now demanding an overhaul of the current railway networks in order to solve this problem. As a result, we have identified a number of areas which we believe should be improved to ease future congestion issues and at Intermodal Europe, in Hamburg on 30 November 2011, logistics professionals are invited to discuss our findings which include:

  • The need for infrastructure investments to reduce already existing bottle necks.

New mega hubs, dry ports and freight villages are being built where concentrations of transport activities are developing in Europe. The TIGER project is relying on hinterland dry ports capable of handling the large quantities of cargo processed by the maritime industry. These dry ports will be positioned nearer to the final customers, reducing the distance to be covered by road, making the whole transport chain more sustainable and environmentally friendly. Significant investment in major port developments will help support these measures and existing projects, such as the Rivalta Terminal in Genoa Port, the mega hub Lehrte near Hannover, and the Munich Riem project in Hamburg and Bremerhaven, will all play crucial roles in easing congestion

  • The introduction of longer, faster and heavier trains.

Rail corridors in Europe are constantly congested due to the fact that they are used by both passengers and freight. Major infrastructure works on new rail lines are not realistic, due to budget constraints and the lengthy installation time involved, but increasing capacity is necessary to improve the movement of European cargo. The most effective way to produce additional capacity at lower costs is to maximise the amount of cargo transported using existing resources. By doubling the length of the existing trains, it has been calculated that a saving of up to 50% could be achieved, with only relatively small investments to the infrastructure in signaling, braking, and rolling stock required. These trains can become operational on a regular basis from ports to dry ports, and will lead to hubs and freight villages providing better service at considerably lower costs.

  • New technologies applied to both equipment and management systems.

Dry ports, hubs and freight villages should be constructed in close proximity to densely populated areas, making it simpler for logistics chains to access the final consumer market. By so doing, the last miles can be completed by more innovative means of transportation, including light cargo trains and hybrid or electric vehicles.

Mr Castagnetti will be revealing more details on the project’s findings at a free to attend conference session, hosted at Intermodal Europe 2011, the world’s leading event for container transport and logistics across the road rail and sea, which takes place in Hamburg on 29 November – 1 December 2011. 





The Top 5 Threats to Delivering the Intermodal Promise – Part 2

13 09 2011

By Cento Sharp, Cento Sharp Consulting

Cento Sharp#1 – Lack of Technological Innovation

As today’s supply chains become more complex, so have our information technology systems and paper-based processes. The requirement for collaboration among geographically dispersed trading partners, local governments and customs agencies will continue to choke productivity out of our global supply chains if the speed of supply chain technology is not put into overdrive.

In this week’s blog we examine the technology-based issues that the global supply chain faces. We take a look at this area because it is the obvious area of concern that the industry has already taken aim at.

The Chief Executive Officer of Maersk, Eivind Kolding, has received plenty of praise and scrutiny for his visionary call for improved technology and integration among transportation carriers and his or her customers.

http://www.joc.com/container-shipping/changes-asked-maersk-ceo-will-take-years

There is no shortage of technology vendors, platforms and systems in the supply chain. There are Transportation Management Systems, Enterprise Resource Planning Systems, Manufacturing Execution Systems, Labour Management Systems and the list goes on and on and on. With so many technology vendors and so many IT systems, why is the global supply chain so inefficient and more complex for smaller shippers than ever before?

Supply chain

The answer is simple. Technology management without business process management is useless. The way the information technology and project management industries evolved help tell the story. In the late 1990s, project management was considered a quality that every business manager had. This was absurd, as most companies soon realised! As more disruptive technologies such as the internet and EDI (electronic data interchange) evolved and invaded corporations, business managers were continually exposed for their inability to manage ambiguous initiatives, goals and tight budgets. The most egregious offense by middle managers was their inability to motivate and engage resources that did not report to them on the corporate food chain.

So, technological innovation may look very robust in the global supply chain because there are hundreds of vendors and systems to match, but there is one fatal flaw that our industry has yet to address. Business process management is the missing link.

Yes, there are large organisations that have fully adopted six sigma and lean operations, but 98% of supply chain organisations are outliers with far less formal operations. Smaller shippers, freight forwarders, trucking companies and manufacturers either do not fully understand the benefits of business process management or believe in its long-term benefits.

Until the major industry players focus less on forcing their smaller trading partners to comply with their advanced technologies and focus more on helping them to improve their operations, the global supply chain will continue to hobble on.





Sluggish growth means companies are finding innovate ways to cut supply chain costs

12 09 2011

By Allan and Sarah Klinge, Klinge Corporation

At the end of 2010, business leaders around the world agreed that the intermodal industry was showing signs of recovery. Nine months into 2011, this once positive outlook has turned to a feeling of uncertainty.

The Japanese earthquake and tsunami, the fall of consumer confidence worldwide, the decline of the US dollar and the recent US hurricane have only made recovery for the intermodal industry more sluggish. It comes as no surprise that companies around the world are making a concerted effort to cut costs to counter the lackluster performance of the world economy. One such change is that pharmaceutical companies, who traditionally transport cargo by air, are shifting to transport by container ship as an easy way to reduce costs.

Klinge Corp

Merchandise in this industry is among the most expensive retail items in the global marketplace, and as such, accurate temperature control is of the utmost importance. In the past, the challenge with sea freight has been its ability to provide reliable temperature control containers that give ultimate peace of mind when transporting medical products worth hundreds of thousands of dollars. Today, due to technological developments, pharmaceutical brands and manufacturers are able to significantly reduce their costs by transporting goods by container ship rather than expensive air cargo.

Another area where innovation is required to reduce transportation costs is the seafood industry. A recent study, financed by The Danish Food Industry Agency, subsection of The Ministry of Food, Agriculture and Fisheries, indicated that a significant increase in the quality of frozen fish and shellfish can be achieved by blast freezing fish to an ultra-low temperature directly after being caught and then later utilising a controlled thawing process. As taste and colouration of deeply frozen seafood has been shown to match that of fresh seafood, this means that fisheries, food processing companies and logistics providers across the globe are turning to freezing equipment instead of air-shipping fresh seafood. And with CNN reporting that seafood consumption is at an all time high, possible savings for companies transporting products by containership are enormous and represent a large potential market.

Today, refrigerated containers have become so reliable that they are being used by large chemical companies to transport dangerous organic peroxides and self-reactive substances that could actually explode if not maintained at the correct temperature. Similar equipment has also been used to transport millions of dollars of ice core samples from Antarctica, across the equator, and through the Southwestern U.S. to the laboratory for analysis.

Uncertainty in the global economy is forcing companies to embrace innovative cost savings measures. Fortunately, this means more and more businesses worldwide are taking a closer look at alternative methods of transport as a way of moving their goods, which is presenting a number of opportunities for logistics providers. The economic downturn has created a number of issues across the globe, but it has also brought a number of opportunities.





The Top 5 Threats to Delivering the Intermodal Promise: Part One

6 09 2011

By Cento Sharp, Cento Sharp Consulting

Cento SharpThe supply chain has indeed become global, but with this new global expansion comes a host of pitfalls and detractors that could stop the ultimate delivery of the intermodal promise dead in its tracks.

I am delighted to have been invited to write for this brand new blog and over the coming weeks I will expose five threats, their significance to supply chain service delivery and what global organisations can do to shore up their operations to guard against these potential issues.

So, what are these threats?

1) Lack of Technological Innovation

As today’s supply chains become more complex, so have our information technology systems and paper-based processes. The requirement for collaboration among geographically dispersed trading partners, local governments and customs agencies will continue to choke productivity out of our global supply chains if the speed of supply chain technology is not put into overdrive.

2) Poor Development of Transportation Infrastructure

Without transportation there is no such thing as freight. Freight is not created until transportation acts upon it. With only a small portion of the world possessing a multimodal transportation network robust enough to support global logistics and distribution strategies, intermodal organisations will struggle to grow as planned.

3) Lack of End to End Supply Chain Integration

In terms of global operations, complete end to end supply chain integration is merely a myth. Imagine 30 glorious castles, each with their own kings (C-Level Executives), queens (Senior Managers), guards (Regulatory and Compliance) and royal families (Investors and Stakeholders) dependent upon each other, but each with its own desire for ruling the world as they see it. The sooner supply chain managers, intermodal carriers and corporate strategists realise that the risks and rewards of global distribution must be shared equally, the easier highly collaborative linkages will be to obtain.

4) Inability to Meet or Exceed Customer Service Levels

There is a belief that customers are demanding that product be delivered more quickly and at a reduced cost than ever before. This is only partially true.

Customers are simply fed up with the unpredictable performance of their supply chain service providers even though their orders are not becoming more complex. The continual mismanagement of the multi’s (multiple modes); road, rail, ocean, and air by their logistics service providers contribute to this frustration felt by customers. Predictability in terms of landed costs, requested delivery date, order accuracy and quality are the same as they were a decade of ago. Customers are not demanding cheaper, faster and better supply chains; they are simply demanding that there be no surprises.

5) No Long Term Plan for Environmental Sustainability

We are presently in the age of ‘Sustainability’ as a buzzword. Green supply chain initiatives are often fodder for annual corporate marketing campaigns. Until environmental sustainability is required to be put into measureable terms, corporations will be allowed to abuse the true essence of sustainability.

Over the next few weeks I will expand on each of these areas in detail. If you have any questions please do not hesitate to get in touch with me via email – centosharp@gmail.com