The recession may be coming to a close-at least officially. But the effects of that painful period linger on. Supply chain managers need to learn from the lessons of the past as they rebuild the foundation for a brighter future.
With the recession in full swing, 2009 was a wild ride for some companies-and their supply chain managers. In a survey of more than 500 CFOs conducted by Basware in cooperation with Indiana University's Kelley School of Business and the University of Navarra's IESE Business School in Spain, 64 percent cited "reducing direct costs" as their top priority. It was, for many companies and their supply chain managers, the year to stay alive.
Fortunately, while many who are out of work would dispute word that the economy is improving, statistics from monthly reports from the Institute for Supply Management (ISM) have pointed to growth in the non-manufacturing sector, and even stronger growth in manufacturing. Findings like these have prompted many analysts to declare that the economy has not only finally ended its downward slide, but is on the way to recovering.
Recovery or not, one thing remains clear: The corporate world, and by definition the supply chain, has been changed forever. In this article, we discuss key trends that will impact the professional lives of the supply chain manager in 2010. These trends are grouped into four categories: education and professional development; technology; risk management, and global strategies. In each of these areas, the recession's lingering presence is plain-and supply chain managers would do well to heed its lessons. ~ Source: Logistics Management
Tuesday, December 29, 2009
Tuesday, November 24, 2009
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Monday, October 26, 2009
Global logistics: Freight Forwarding in transition
In an otherwise troubled economy, some U.S. shippers are heartened by the fact that the weak dollar has meant more revenue return on exports. Domestic freight forwarders should be happy, too, but in the global arena the fight for middleman “market share” is key.
According to a recent report compiled by Transport Intelligence Ltd. (Ti) – Global Freight Forwarding 2009 – this dynamic sector “is in the eye of a recessionary storm.” Industry analysts examining 2008 and the first half of 2009 market growth rates, note that since the middle of last year there has been a massive reduction in demand for all forwarding services.
“Indeed such has been the magnitude of the fall that it suggests the sector is undergoing a systemic change,” said Ti analyst John Manners-Bell.
Furthermore, notes Manners-Bell, the market environment for freight forwarders is changing quickly, not only in terms of geography and type of business but also the competitive position of industry players.
“There is no doubt that the big forwarders are gradually gaining a greater market share, but in addition to this, the relative competitive position between the forwarders is also being adjusted,” he says.
Which is not an entirely bad thing, if you are among the leaders, said G. Edmond Clark, president & CEO, FedEx Trade Networks.
“Global trade trends continue to point toward a demand for both air and ocean freight forwarding services,” says G. Edmond Clark, president & CEO, FedEx Trade Networks. “Expanding the footprint of FedEx Trade Networks in critical growth markets will enable us to deliver a full-service transportation solution and better serve the global supply chain needs of our customers.”Ranked among the top ten by both Ti and the U.S. consultancy of Armstrong & Associates, Inc., FedEx Trade Networks is a forwarder to watch. Having recently expanded its operations in Beijing, Guangzhou and Shenzhen, China, FedEx Trade Networks is poised to support company’s growing international air freight forwarding operations and provide comprehensive coverage in key Asia-Pacific trade lanes.And this is “forward” thinking according to Manners-Bell, who noted that while the fall in volumes to and from China has been steep, the freight forwarding sector has been restructuring for a rebound.
“There has been an appreciable shift to lower value goods being moved by container ship, while higher value goods make-up a larger proportion of cargo moved by air,” observed Manners-Bell. “It seems that many shippers have taken the view that inventory velocity is not as important as lower transport costs – a situation influenced no doubt by low interest rates.”
Read the rest of the logisticsmgmt.com article here.
According to a recent report compiled by Transport Intelligence Ltd. (Ti) – Global Freight Forwarding 2009 – this dynamic sector “is in the eye of a recessionary storm.” Industry analysts examining 2008 and the first half of 2009 market growth rates, note that since the middle of last year there has been a massive reduction in demand for all forwarding services.
“Indeed such has been the magnitude of the fall that it suggests the sector is undergoing a systemic change,” said Ti analyst John Manners-Bell.
Furthermore, notes Manners-Bell, the market environment for freight forwarders is changing quickly, not only in terms of geography and type of business but also the competitive position of industry players.
“There is no doubt that the big forwarders are gradually gaining a greater market share, but in addition to this, the relative competitive position between the forwarders is also being adjusted,” he says.
Which is not an entirely bad thing, if you are among the leaders, said G. Edmond Clark, president & CEO, FedEx Trade Networks.
“Global trade trends continue to point toward a demand for both air and ocean freight forwarding services,” says G. Edmond Clark, president & CEO, FedEx Trade Networks. “Expanding the footprint of FedEx Trade Networks in critical growth markets will enable us to deliver a full-service transportation solution and better serve the global supply chain needs of our customers.”Ranked among the top ten by both Ti and the U.S. consultancy of Armstrong & Associates, Inc., FedEx Trade Networks is a forwarder to watch. Having recently expanded its operations in Beijing, Guangzhou and Shenzhen, China, FedEx Trade Networks is poised to support company’s growing international air freight forwarding operations and provide comprehensive coverage in key Asia-Pacific trade lanes.And this is “forward” thinking according to Manners-Bell, who noted that while the fall in volumes to and from China has been steep, the freight forwarding sector has been restructuring for a rebound.
“There has been an appreciable shift to lower value goods being moved by container ship, while higher value goods make-up a larger proportion of cargo moved by air,” observed Manners-Bell. “It seems that many shippers have taken the view that inventory velocity is not as important as lower transport costs – a situation influenced no doubt by low interest rates.”
Read the rest of the logisticsmgmt.com article here.
Wednesday, September 23, 2009
New Study Highlights Role of Third-Party Logistics Providers in Helping Shippers Adapt to Economic Challenges
The fourteenth Annual Third Party Logistics (3PL) Study examining the current global market for logistics outsourcing was recently released. The study surveyed shippers and logistics service providers in North America, Europe, Asia Pacific and Latin America. Key findings included:
* The economic downturn has created significant challenges for both shippers and third-party logistics providers (3PLs) – 82% of shippers are employing cost-cutting tactics and 60% are rethinking their supply chains and relationships with 3PLs
* 88% of shippers feel that IT-based logistics services are important, but only 42% are satisfied with the capabilities of their provider – as a result of this IT capability gap, shipper respondents reported a lack of the key performance indicators, alerts and visibility required for an adaptive supply chain and 3PLs reported similar difficulties in getting the data and commitment they need from shippers
* There are significant differences between how 3PLs evaluate their role in the supply chain and how they are viewed by shippers – 59% of shippers feel their use of 3PLs has a positive effect on customer service compared to 88% of 3PL respondents
* Shipper respondents devote an average of between 47% (in North America) and 66% (in Europe) of their total logistics expenditures to outsourcing and this is expected to increase in the next five years.
“Shipper-3PL relationships are being impacted significantly by the prevailing uncertainty and economic volatility in global markets,” said Dr. C. John Langley Jr., Professor of Supply Chain Management, Georgia Institute of Technology. “It is very important for 3PLs to mitigate or reduce any financial risk or service level impact that this may cause.”
Economic uncertainty and the use of 3PLs
Economic volatility has challenged shippers and 3PLs alike to contend with factors such as unpredictable demand, instability in fuel costs and currency valuation, and excess inventory. In response, not only are shippers attempting to cut costs, 77% are also seeking to improve forecasting and inventory management.
Cost reduction and improved reliability in services are the main factors likely to increase shipper respondents’ use of 3PLs. This includes converting fixed to variable costs (59%), expanding to new markets or offering new products (56%), and restructuring the supply chain network to improve financial performance (48%).
Read the rest of the mhia.org article here.
* The economic downturn has created significant challenges for both shippers and third-party logistics providers (3PLs) – 82% of shippers are employing cost-cutting tactics and 60% are rethinking their supply chains and relationships with 3PLs
* 88% of shippers feel that IT-based logistics services are important, but only 42% are satisfied with the capabilities of their provider – as a result of this IT capability gap, shipper respondents reported a lack of the key performance indicators, alerts and visibility required for an adaptive supply chain and 3PLs reported similar difficulties in getting the data and commitment they need from shippers
* There are significant differences between how 3PLs evaluate their role in the supply chain and how they are viewed by shippers – 59% of shippers feel their use of 3PLs has a positive effect on customer service compared to 88% of 3PL respondents
* Shipper respondents devote an average of between 47% (in North America) and 66% (in Europe) of their total logistics expenditures to outsourcing and this is expected to increase in the next five years.
“Shipper-3PL relationships are being impacted significantly by the prevailing uncertainty and economic volatility in global markets,” said Dr. C. John Langley Jr., Professor of Supply Chain Management, Georgia Institute of Technology. “It is very important for 3PLs to mitigate or reduce any financial risk or service level impact that this may cause.”
Economic uncertainty and the use of 3PLs
Economic volatility has challenged shippers and 3PLs alike to contend with factors such as unpredictable demand, instability in fuel costs and currency valuation, and excess inventory. In response, not only are shippers attempting to cut costs, 77% are also seeking to improve forecasting and inventory management.
Cost reduction and improved reliability in services are the main factors likely to increase shipper respondents’ use of 3PLs. This includes converting fixed to variable costs (59%), expanding to new markets or offering new products (56%), and restructuring the supply chain network to improve financial performance (48%).
Read the rest of the mhia.org article here.
Monday, August 24, 2009
Why 3PLs need to build their brand
Over the past several years, the global third party logistics (3PL) industry has changed dramatically. While the demand for 3PL services has grown steadily, the major logistics service providers have expanded their geographical reach and broadened their service offerings. At the same time, the structure of the industry has changed not only through mergers and acquisitions, but also through new market entry by many companies, including some funded by private equity investors. 3PL company reorganizations and name changes have become commonplace.
These changes have fostered a degree of buyer confusion in the marketplace, and many large 3PLs fear a possible “commoditization” of their services in the eyes of those who currently buy their services or are considering doing so. If this is indeed occurring, existing and potential customers will become increasingly indifferent when choosing between logistics service providers. And this, in turn, will intensify the price compression pressures that already plague the 3PL industry.
A key question that needs to be asked here is: What are executives of those 3PL companies doing in response to these market developments? Specifically, what steps have large 3PLs taken in recent years to differentiate their service offerings in the marketplace while strengthening their brands? Further, is there more that those executives should be doing in those areas?
This article addresses the typical steps that companies should take in building, refining, and strengthening their brands—and in particular examines recent attempts by major 3PLs to do so. Branding literature forms the basis for discussion of the general case, and the branding steps taken by large 3PLs were documented through data generated during 2006 and 2007 in surveys of the CEOs of major 3PLs operating in three geographic regions: North America, Europe, and the Asia-Pacific region. (For more on the surveys, see accompanying sidebar). We conclude with suggestions for 3PL industry executives concerning their future branding efforts—and the potential positive implications of these efforts on the buyers of these services.
Read the rest of the scmr.com article here.
These changes have fostered a degree of buyer confusion in the marketplace, and many large 3PLs fear a possible “commoditization” of their services in the eyes of those who currently buy their services or are considering doing so. If this is indeed occurring, existing and potential customers will become increasingly indifferent when choosing between logistics service providers. And this, in turn, will intensify the price compression pressures that already plague the 3PL industry.
A key question that needs to be asked here is: What are executives of those 3PL companies doing in response to these market developments? Specifically, what steps have large 3PLs taken in recent years to differentiate their service offerings in the marketplace while strengthening their brands? Further, is there more that those executives should be doing in those areas?
This article addresses the typical steps that companies should take in building, refining, and strengthening their brands—and in particular examines recent attempts by major 3PLs to do so. Branding literature forms the basis for discussion of the general case, and the branding steps taken by large 3PLs were documented through data generated during 2006 and 2007 in surveys of the CEOs of major 3PLs operating in three geographic regions: North America, Europe, and the Asia-Pacific region. (For more on the surveys, see accompanying sidebar). We conclude with suggestions for 3PL industry executives concerning their future branding efforts—and the potential positive implications of these efforts on the buyers of these services.
Read the rest of the scmr.com article here.
Tuesday, July 28, 2009
Trucking news: ATA reports For-Hire Truck Tonnage Index down 2.4 percent in June
On a year-over-year basis, June 2008 tonnage sank 13.6 percent
After a 3.2 percent up tick in May, the American Trucking Associations (ATA) advanced seasonally adjusted For-Hire Truck Tonnage Index dropped 2.4 percent in June.
This is the third time in the last four months this index has dropped, with April and March down 2.2 percent and 4.5 percent, respectively. At the beginning of the year, the index had a promising start, with a 4.5 percent cumulative gain in January and February. The decline in the advanced seasonally adjusted For-Hire Truck Tonnage Index to 99.8 (2000=100) was not significant enough to completely offset May’s performance, according to the ATA.
Meanwhile, the not seasonally adjusted (NSA) index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, was 107.3 in June. This represents a 5.2 percent improvement from May, and if this trend were to continue it could mean that tonnage is slowly rebounding. Year-over-year NSA index data was not made available by the ATA. The NSA has shown gains the last three months.
As defined by the ATA, the not seasonally-adjusted index is assembled by adding up all the monthly tonnage data reported by the survey respondents (ATA member carriers) for the latest two months. Then a monthly percent change is calculated and then applied to the index number for the first month. Some industry analysts maintain that the not seasonally-adjusted index is more useful, because it is comprised of what truckers actually haul.
Even through the NSA showed a sequential gain, it appears there will be a long way to go before tonnage truly comes back to pre-recession levels. On a year-over-year basis, June 2008 tonnage sank 13.6 percent, which represents the biggest annual decline in this current cycle. May’s year-over-year decline was 11 percent, and April’s was 13.2 percent.
Bob Costello, ATA Chief Economist, said in a statement that it is likely tonnage levels will remain at current levels for the foreseeable future.
Read the rest of the logisticsmgmt.com here.
After a 3.2 percent up tick in May, the American Trucking Associations (ATA) advanced seasonally adjusted For-Hire Truck Tonnage Index dropped 2.4 percent in June.
This is the third time in the last four months this index has dropped, with April and March down 2.2 percent and 4.5 percent, respectively. At the beginning of the year, the index had a promising start, with a 4.5 percent cumulative gain in January and February. The decline in the advanced seasonally adjusted For-Hire Truck Tonnage Index to 99.8 (2000=100) was not significant enough to completely offset May’s performance, according to the ATA.
Meanwhile, the not seasonally adjusted (NSA) index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, was 107.3 in June. This represents a 5.2 percent improvement from May, and if this trend were to continue it could mean that tonnage is slowly rebounding. Year-over-year NSA index data was not made available by the ATA. The NSA has shown gains the last three months.
As defined by the ATA, the not seasonally-adjusted index is assembled by adding up all the monthly tonnage data reported by the survey respondents (ATA member carriers) for the latest two months. Then a monthly percent change is calculated and then applied to the index number for the first month. Some industry analysts maintain that the not seasonally-adjusted index is more useful, because it is comprised of what truckers actually haul.
Even through the NSA showed a sequential gain, it appears there will be a long way to go before tonnage truly comes back to pre-recession levels. On a year-over-year basis, June 2008 tonnage sank 13.6 percent, which represents the biggest annual decline in this current cycle. May’s year-over-year decline was 11 percent, and April’s was 13.2 percent.
Bob Costello, ATA Chief Economist, said in a statement that it is likely tonnage levels will remain at current levels for the foreseeable future.
Read the rest of the logisticsmgmt.com here.
Tuesday, June 23, 2009
Logistics News: U.S. Logistics Costs Drop for First Time in Six Years, Benchmark Report Says
If American transportation and logistics experts got the feeling the past year that the overall U.S. business logistics pie was shrinking, they were correct.
For the first time in six years, total spending on U.S. logistics dropped to $1.3 trillion last year, a decrease of $49 billion from 2007. That’s the gist of the 20th Annual “State of Logistics Report” released by the Council of Supply Chain Management Professionals (CSCMP) on Wednesday.
The annual respected benchmark report revealed the financial damage done to the sector by the ongoing recession. After rising by more than 50 percent the previous five years, business logistics costs fell to 9.4 percent of U.S. Gross Domestic Product last year. That is down from 10.1 percent in 2007. By way of comparison, that figure was 12.3 percent of GDP in 1985.
Transportation costs rose 2 percent, but that was not enough to offset the 13.2 percent decline in inventory carrying costs, primarily due to record-low interest rates last year. Transportation ($872 billion) now accounts for 6.1 percent of nominal GDP while inventory carrying costs ($420 billion) account for 2.9 percent of GDP.
Trucking, which accounts for 78 percent of transport by revenue and half of all business logistics cost, was particularly hard hit, rising just 1.3 percent compared with 4.4 percent for the other modes (rail, barge, air cargo, oil pipelines and forwarders).
For shippers, this has resulted in bargain transport rates, especially in trucking and ocean transport, according to Rosalyn Wilson, the long-time author of the SoL report.
“Abundant capacity, particularly in trucking and ocean shipping, push rates down (last year), often below costs,” Wilson said. “Many companies have not survived the prolonged downturn. Many more will not survive the upcoming months as we continue to ride out the recession.”
As a result of the shakeout—more than 3,000 motor carriers ceased operations last year, taking out approximately 7 percent of truck capacity—supply chains are being redefined and processes changing, Wilson said.
“The industry will emerge more efficient and resilient,” Wilson predicted.
Nevertheless, Wilson added, recovery will be a “longer and more difficult journey” for the logistics industry as it awaits meaningful economic recovery, which, Wilson said, will not come quickly.
“It is becoming more apparent that we will see an end to the decline by the end of this year but not a quick recovery,” she said.
One indicator of that is the sharp, record rise in inventory-to-sales ratios, which Wilson called an “unwelcome sign” of a slow recovery. Even with historic inventory reduction rates, the inventory-to-sales ratio skyrocketed from a low last June of 1.25 to 1.46 by December. That is the swiftest rise in that benchmark since 1982. And Wilson said it occurred across the entire distribution chain—wholesale, manufacturing, and retail.
Read the rest of the Supply Chain Management Review article here.
Friday, May 22, 2009
Third-party logistics/global logistics: A lackluster year for 3PLs, says new Armstrong survey
Dick Armstrong, chairman and CEO of Armstrong & Associates, Inc.--a supply chain market research and consulting firm specializing in 3PL market research--said his most recent survey paints a complex picture.
“After 11 modest months in 2008, third-party logistics revenues dove in December and have remained depressed in 2009,” he said in a statement. “While a few third-party logistics providers (3PLs) could drown, most are treading water and some are swimming strongly.”
Armstrong’s analysis shows gross revenue (turnover) for 3PLs down by 8.8 percent for 2009. Net revenues (gross margins) were less impacted for many non-asset transportation managers and leading value-added warehousing 3PLs.
Expeditors, C.H. Robinson, Kuehne + Nagel and other major transportation managers report net revenues decreased 3 percent to 10 percent. Earnings before interest, tax, depreciation and amortization (EBITDAs) and earnings before interest and tax (EBITs) fell proportionately. Additionally, net revenues are expected to be down another 5 percent this year for the transportation management group.
Read the rest of the article from logisticsmgmt.com here.
Friday, April 24, 2009
Global logistics/supply chain management: Down economy poses fresh challenges for high-tech sourcing
- Interesting article from logisticsmngmt.com
Sourcing from low-wage countries like
“The failure of some suppliers in
Wehlage was among the featured speakers at this week’s “High-Tech Forecasting & Planning Summit,” organized by the London-based IE Group. His presentation mirrored a study done by AMR Research last year, finding that volatile fuel, energy, and commodity prices rank highest in areas of global risk.
“And for high-tech companies requiring more solutions in a down economy, the complexity of reliable sourcing is even more intense,” he said.
The future of forecasting and that of sales and operations planning (S&OP), was also being addressed at this summit. Wehlage noted that in some ways shippers could benefit by one aspect of the recession.
Find the rest of the article here.
Monday, March 23, 2009
What is a Bonded Warehouse?
A Bonded warehouse is a warehouse in which goods on which the duties are unpaid are stored under bond and in the joint custody of the importer, or his agent, and the customs officers.
F.T.Z. + Customs Bonding 
At Port Jersey Logistics, our Foreign Trade Zone and Customs Bonded Warehouses can help you minimize customs duties and gain greater control of your cash flow — even though the FTZ is located in a U.S. Customs Port of Entry.
Whether you simply store or exhibit imported goods in the FTZ or assemble imported and domestic materials there, duties are not assessed until after goods leave the Zone for distribution — allowing you to defer, reduce or even eliminate duties.
At Port Jersey Logistics, our Foreign Trade Zone and Customs Bonded Warehouses can help you minimize customs duties and gain greater control of your cash flow — even though the FTZ is located in a U.S. Customs Port of Entry.Whether you simply store or exhibit imported goods in the FTZ or assemble imported and domestic materials there, duties are not assessed until after goods leave the Zone for distribution — allowing you to defer, reduce or even eliminate duties.
Wednesday, February 18, 2009
About Port Jersey
Combining more than 50 years of 3PL experience with state of the art systems and facilities, Port Jersey Logistics can meet your domestic manufacturer or an international shipper needs. From our strategically situated warehouse locations, we are uniquely equipped to distribute your product throughout the Northeast / East Coast or across the country.
Port Jersey Logistics has the capacity and capabilities to meet your public warehousing and distribution requirements. Also with our on-site rail facilities and proximity to international airports and all major New York/New Jersey Marine Terminals, along with modern equipment and technology, we can easily provide the local and national freight carrier solutions you require.
We combine 50 years of experience with state-of-the-art systems and facilities to meet every customer’s logistical needs. Contact Us today or call our direct line: (609) 860 - 1010 ext. 268.
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