Wednesday, July 05, 2006

GIL's Maritime Logistics Council Is Launched!

The Global Institute’s Maritime Logistics Council, launched in China in April, has held its first meeting in North America. A group of council members presented the ideas behind the initiative during the Eyefortransport Outsourcing Logistics and 3PL Summits held in Atlanta at the end of June.

Chief executive, Kieran Ring, introduced the council to an audience of executives from, mainly, shippers and logistics service providers. He told them that shippers had described the maritime logistics situation as "a black hole". Logistics service providers have always promised end-to-end visibility, but when it came to ports, all visibility seemed to vanish, he said.

He explained that the institute’s search for thought leadership in this area had led it to South China, and to the Yantian International Container Terminals (YICT) operation at the port of Yantian in Shenzhen, run by Hutchison Port Holdings. The business model and the way of working there demonstrated a new way of thinking, Mr Ring said.

The council’s executive director, Wilmer Aguilar, is business development director of YICT. He told the audience in Atlanta that a high level of collaboration with carriers on the ocean side and logistics companies on the land side — with the port operator in the middle — was the key element of his company’s approach. But he made it clear that the overall aim was always to bring benefit to shippers.

One important shipper organisation to achieve accreditation from the institute during the Atlanta event was Home Depot. Its manager for supply chain security and global risk, Ben Cook, took part in the council presentation and explained that better coordination would help companies such as his to increase control of their activities overseas, which would lead to improved lead-times and tighter security.

One senior commentator, Hutchison Port Holdings general manager, John Kok, told the audience that the increased focus on security could deliver a whole series of supply chain benefits.

He explained: "Some people think this is overhyped and that bad things will never happen. But it’s not the thought of a major event — such as a bomb in a container — that keeps us awake at night. If, after a bomb goes off, and the bad guys announce they’ve planted two more somewhere, we have to go and find them.

"There could be 20 million containers in transit. How do you check them all, and how long will it take? The only option politicians feel they have at the moment is to push a big red button to stop everything. That’s what keeps us awake at night, and that’s why we think the maritime supply chain and security are so important."

Mr Kok went on to say that the devices, systems and practices companies will put in place to improve security — even if it’s in response to government mandates — will make it clear what is in a box and if anyone has tampered with it. They will also deliver the supply chain visibility everyone has been striving for. Then, if a terrible event does occur, the whole maritime logistics chain will not grind to a complete halt, or will not freeze up for long.

Home Depot’s Ben Cook agreed, and said his company had already gained unexpected benefits from the increased attention supply chain security is receiving. "It’s helped us tighten down on loss prevention, for example," he said. "We have had some healthy dialogue on supply chain inefficiencies as a bi-product of our people going out to factories for security reasons."

Another new US-based member of the council, Michael Stolarczyk, a senior director at Exel Logistics, said he supported the notion that there was a need to create trust and collaboration right across the supply chain.

This would bring added security, he agreed, but would also offer companies such as his the chance to move goods with greater speed. He said he believed initiatives such as the Maritime Logistics Council offered the industry a good opportunity to start sharing. "We have to communicate and share as an industry," he added, "or we’ll create opportunities that other people will take advantage of."

Another newly accredited company, logistics service provider Hellmann Worldwide, is represented on the council by its Asia-based president for development, Paul Goldsbrough. He said during the session that his company, too, had already found ways of using ports to improve its clients’ supply chains.

The example he offered was of a toy manufacturer that had begun moving products to ports in the US and the UK from China, and then to stores directly from the port of arrival. "In the past, the goods moved first to a distribution centre about 600 kilometres from the port," he said. "Shipping them directly to stores from the port is saving thousands of movements, with a financial saving about £350 each time."

The last member of the council to speak was the chief executive of value-added service provider SgT, Marc Castagnet. His company has carved out a role for itself by offering upstream logistics services such as quality control and lab testing at factories in China (and many other countries), or at ports.

He explained that closer collaboration with ports operators such as YICT had already delivered important benefits for his company. "Yantian is in a free-trade zone," he said. "That means that physically your goods are in China, but virtually they are not."

With up-to-date communications in place, including XML and EDI, he said SgT was able to deliver an important set of services to clients around the world from ports such as Yantian.
YICT’s Wilmer Aguilar concluded that the interface between ports and logistics service providers is still underdeveloped. As a result, client organisations, the shippers, can have a degree of visibility into what is happening, but will typically only find out that their cargo is on the ocean 48 hours after the container ship carrying it has departed.

He said he was in no doubt that initiatives such as the Maritime Logistics Council can provide more visibility, and provide it earlier in the process.


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