Top 3 issues for BCOs heading to TPM 2019
Well, it wasn’t going to be on my top three, but given our recent experience in North America, perhaps we should all be factoring weather volatility and extremes in to our logistics plans for the coming year?
Here are three challenges that we see for shippers heading into the Trans-Pacific Maritime Conference, March 3-6 in Long Beach, Calif.
Volatility, in many forms, will be top-of-mind for hundreds of attendees at TPM 2019. Throughout 2018, we saw unusual pre-peak shipping volumes in ocean freight, as supply chains rushed to bring in goods from China ahead of new U.S. tariffs that took effect in the second half of the year. We’ve dodged the tariff bullet yet again this week, with the President’s delay of trade penalties originally set to become active on March 1. Last year’s push to accelerate inventory ahead of traditional schedules caused disarray with ocean carriers facing unexpected vessel imbalances, with too many ships headed out of Asia and not enough headed back. Capacity abruptly tightened, containers were rolled, spot rates surged and special fees popped up to guarantee space on a ship. Non-vessel operating carriers (NVOs) stepped in to save the day for many shippers, demonstrating again the value of including global logistics service providers as part of your extended supply chain strategies for risk management and end-to-end transportation services.
Finding new cost savings opportunities
Reducing cost remains a constant in every logistics professional’s job description, even when the enterprise claims to be focused on new customer-centric business strategies. It’s great that your company plans to use supply chain operations to ‘delight the customer,’ but coming off a year that saw almost half of North American companies spending 5% or more of sales on domestic transportation alone, driving down total freight spend moves up in priority once again. If we are to believe that domestic truckload capacity is now constrained at a structural level and not just a cyclical one, and that increasing rates should be baked in to spending plans, where will the supply chain organization find new savings opportunities to offset those higher costs?
Perhaps 2019 is the year that companies reexamine their supply networks and transport strategies to identify and address decision-making silos and systemic inefficiencies. Instead of focusing on stuffing containers maximally and then deconsolidating those goods at inland facilities in to multiple outbound truck shipments, how much cost could you drive out by consolidating orders at origin with an eye to final inland destination, bypassing the need for deconsolidation on most loads? Our customers tell us they are finding millions of dollars in savings opportunity by reworking inbound supply processes.
Building stronger partnerships
Lastly, beneficial cargo owners (BCOs) must consider their partner relationships, both with carriers and with forwarders. It’s time-honored tradition to play carriers off against each other in negotiations when pricing power sits with the shipper. Those tough negotiations and rock-bottom rates didn’t help you get trucks to pick up your freight or guarantee space for your container during the heat of the capacity crunch last year, did they? Perhaps you started to read some of those media articles about how to become a ‘shipper of choice’? If geopolitics, industry consolidation, fickle consumers and extreme weather are conspiring to make 2019 even more ‘interesting’ than last year, what partnerships will you be able to rely on to help your supply chain navigate the stormy waters? Do you have the hard data to objectively compare performance across carriers and 3PLs to identify your strongest partners? Are you playing a ‘long game’ or focused on short-term numbers?
TPM in Long Beach will see these issues, and many more, discussed in general sessions, in private meeting rooms and over business dinners. We’ll see you there!
- Supply Chain
- Food & Beverage
- High Tech & Electronics
- Industrial Machinery & Equipment
- Industrial Manufacturing
- Oil and Gas/Energy
- Infor SCM
- Supply Chain Visibility
- Transportation Management
- North America