Friday, October 27, 2006

Only the Dutch Could Create a "Living Beer Lab!"

“Living Beer Lab” for shipping

"Where's my beer?"

When most ask that question, it’s about which coaster it’s parked on.

At Heineken, it's serious business. The brewer is collaborating on a project, the “Beer Living Lab,” with IBM, the liner company Safmarine, the University of Amsterdam and customs in the United States, the United Kingdom and the Netherlands.

The new project will track cargo container shipments of Heineken beer from Europe to the United States using satellite and cellular technology.

IBM said the goal is to test technology that will provide real-time visibility and interoperability through an advanced wireless sensor platform. Rather than build and maintain a large central database with huge amounts of information, distributed data sources are linked, allowing data to be shared in real time between Heineken, Safmarine and customs in the three countries.

Safmarine will ship 10 containers of Heineken beer from locations in both Netherlands and England, through their customs authorities, to the Heineken U.S. distribution center. The University of Amsterdam will coordinate the project and provide best practices documentation to share across the European Union.

When IBM first announced its Secure Trade Lane initiative last year a key component was to be a container security device that could provide updated information on possible tampering or intrusion. IBM's release talks about a wireless sensor platform but doesn't specifically indicate if this includes intrusion detectors and alarms.

IBM also had stated its intention to conduct a major test with 1,000 loaded containers in the Spring 2006.

IBM said that according to the Organization for Economic Cooperation and Development, more than 30 different documents are associated with one single container crossing a border, which equals roughly five billion documents annually.

"The goal is to create paperless documentation through better system interoperability, resulting in faster deliveries and reduced costs for international trade," IBM said.

Many shippers would raise a glass to that. You know its Friday, so I think I just might do that myself! Have Great weekend!

Tuesday, October 24, 2006

TMS Technology Is Being Embraced By Shippers!

Shippers see need to upgrade technology for managing transportation

There is widespread concern by shippers that their current technology for managing transportation will not meet future needs.

That is one of the conclusions of a study of 173 manufacturers, distributors and retailers by the Aberdeen Group of Boston.

"Transportation management is moving out of the shadows and into a strategic role in driving supply chain excellence," the report says. "In recognition of this, most companies are actively reevaluating their transportation management processes, organizational structure, and technology."

The report contends that companies that are "best in class in transportation management have been able to decrease their total freight budget over the past two years (discounting changes in sales volume)" and that by comparison, 82 percent of all respondents saw their freight costs stagnate or increase.

Other key findings by the study:

Domestic outbound transportation no longer dominates the transportation agenda. Inbound freight and international shipments are gaining focus.

Four times more firms are planning to adopt commercial transportation management applications than build systems in-house.

Nine out of 10 companies are concerned that their current transportation technology will not meet their future needs.

The share of respondents providing other departments with online transportation cost and status information has jumped to 54 percent from 31 percent in Aberdeen's 2004 study.

"Best in class" companies are twice as likely to do daily score-carding of transportation performance and share tactical capacity forecasts with carriers; they also control a greater share of inbound freight.

Wednesday, October 18, 2006

Do you trust antitrust, like I do?

U.S. liner carrier antitrust immunity up for debate...again!

Among transportation and shipper lobbyists, and even some in the trade media, the debate of whether to retain or repeal liner carrier antitrust immunity was once jokingly referred to as a rite of spring.

Arguments on both side of the debate often in various congressional hearing rooms were strong, but nothing changed. Antitrust immunity, although more limited then under the 1984 Shipping Act, remains in place within the industry through the 1998 Ocean Shipping Reform Act (ORSA).

However, since the European Union Competitiveness Council's recent adoption of the European Commission's proposal to repeal Regulation 4056/86, which allows carrier groups to set common freight rates and cooperate on capacity, the arguments for retaining and supporting antitrust immunity for liner carriers in the U.S. trades may deteriorate.

This afternoon a federal commission will hear the pros and cons for retaining and abolishing carrier antitrust immunity from a panel of industry, government and legal experts.

From written testimony pre-submitted to the Antitrust Modernization Commission, the liner carriers and container terminal operators -- represented namely by the World Shipping Council and the American Association of Port Authorities -- are expected to argue that antitrust immunity helps them jointly discuss asset management to provide efficient services to shippers.
"The vast majority of all cargo arrives on time and without damage," said Stanley Sher, an attorney representing the World Shipping Council, citing the benefits of antitrust immunity. "Capacity shortages are exceedingly rare. Even in times of peak demand, there is enough vessel capacity that cargo does not get left behind."

"The ability of ports to meet collectively to address these challenges, with antitrust immunity under the Shipping Act, is extremely important," said Jean Godwin, AAPA's executive vice president and general counsel. "Ports and marine terminal operators effectively coordinate on a variety of important issues, ranging from clean air initiatives to labor allocation to the collection of fees to fund security enhancements."

In testimony, Federal Maritime Commission Chairman Steven Blust said antitrust immunity is "mitigated by several realities," including the rise of confidential service contracting, competition, public availability of agreements filed to the FMC, and agency enforcement.
However, among the five-person FMC commission, there's dissent about whether to retain antitrust immunity for liner carriers. FMC Commissioner Joseph Brennan told the Antitrust Modernization Committee that "Congress should repeal antitrust immunity with respect to rate-setting and rate discussions by ocean common carriers."

Brennan said this protection should be retained for information exchanges and space-sharing among ocean common carriers as they pertain to "enhancing efficiency." He also believes Congress should retain limited antitrust immunity for marine terminal operators.

Representatives for the American Bar Association, American Trucking Associations, and National Customs Brokers and Forwarders Association are expected to argue against the need for antitrust immunity.

"Despite a body of theoretical support for the exemption predating OSRA, the empirical evidence concerning the deregulatory experience suggest that the (liner carrier) industry does not need horizontal collusion to perform, and that its performance indeed has been better in its deregulated state," said Donald Klawiter, chairman of the ABA's Section of Antitrust Law, in his written testimony.

"Moreover, the collusive conduct still permitted under the exemption continues to harm shippers and consumers, and no evidence exists of any pro-competitive upside other than the policy arguments used for years to defend the system before deregulation," Klawiter added.

"Unfortunately, it has become all too common for the equipment providers and particularly the foreign-owned ocean carriers to make decisions that are beneficial to their operations but otherwise often add significant and unexpected costs to an intermodal shipment and the trucker, as underscored by the almost uniform increases in container related fees, per diem and reduction in terminal storage-dwell times, etc., that have been instituted across the nation's intermodal network," said Greg Stefflre, chief executive of Rail Delivery Services, on behalf of the ATA's Intermodal Motor Carriers Conference.

The NCBFAA cited a case of antitrust immunity abuse by the liner carriers against non-vessel-operating common carriers in the transpacific trade in 2002. If antitrust immunity is retained, Edward Greenberg, the NCBFAA's transportation counsel, said the FMC must have "more personnel, a larger budget and the tools necessary to be proactive and actually monitor whether parties operating pursuant to approved agreements are engaged in market-distorting behavior."
The Antitrust Modernization Commission also invited Fabrizia Benini, the EC's directorate general of the Competition Commission, to discuss the EC's recent decision to abolish liner carrier antitrust immunity.

Shippers, represented through the National Industrial Transportation League, expressed disappointment with not being included to speak on the panel, but issued a prepared statement.
"Despite the benefits that have resulted from OSRA the carriers continue to hang on to the vestiges of the past by engaging in collective discussion of supply and demand in the U.S. trades via discussion agreements," said Peter Gatti, executive vice president for the NIT League.
"Therefore the league believes it is appropriate for the U.S. government in consultation with the maritime industry to undertake a review of the antitrust immunity granted under the Shipping Act."
Well, well what do you think? I get tired of this debate...but I guess someone has to keep the carriers honest...somewhat!

Monday, October 16, 2006

DHL to pay $150 million for 49% of Polar Air...brrrrrrrrr!

DHL and Atlas Air Worldwide Holdings Inc. have signed an agreement that will give the German express package delivery and logistics giant a 49 percent shareholding in Polar Air Cargo as well as increased air freight capacity in the transpacific market for the next 20 years.

Under terms of the agreement, DHL will pay $150 million, in staggered cash payments ending November 2008, for the 49 percent equity stake in Polar, including a 25 percent voting interest. In addition, DHL will enter into a 20-year block space agreement with Polar to obtain guaranteed capacity on routes to major Asian destinations.

Polar will continue to operate as an independent company with no integration with DHL or any of its units.

"This key strategic partnership ensures we can meet the rapidly rising demand for air cargo capacities between the U.S. and Asian destinations," said John Mullen, chief executive officer of DHL's express division.

"The transpacific route is one of the most rapidly growing and competitive trade lanes globally and adding capacity through an even stronger presence in the U.S. is a crucial factor in supporting our dynamic Asian business. Polar is the ideal partner to achieve that. Our long-term partnership will benefit both companies and enhance competition in the express delivery sector of the air cargo market," Mullen said.

"Our strategy has been to maximize the value and potential of our scheduled-service business, and this transaction accomplishes that goal," said William J. Flynn, president and chief executive officer of AAWH.

"DHL's investment and the long-term commercial agreement will markedly strengthen our scheduled-service business, and will enhance our ability to provide customers with superior service in key international markets. Further, it provides our company with a significant increase in our cash liquidity and a very attractive long-term revenue stream," Flynn said.

Pending all regulatory approvals, the transaction is expected to be completed either by the end of this year or the start of 2007.

Thursday, October 12, 2006

You can pick your friends, you can pick your...Why this is all about picking operations!

Companies often think their picking operation is efficient as long as products roll out on time and customers are happy. But most picking operations in warehouses across America could use a re-organization, and its all about the process you know...and training, and people, and systems!

1. Profile your orders. Your most popular SKUs likely change with the seasons, so re-slot your warehouse to accommodate your business model, and review the setup at least once a year. This ensures that your "A" SKUs are in the correct storage media and physical location, reducing unnecessary travel for your order pickers. Agood WMS should have a dynamic "slotting" tool within its platform.

2. Analyze your current picking methodology. Make sure your picking methodology suits your organization. Whether you choose single order, multi-order, batch picking with a single picker, or zone picking, the correct picking methodology is critical for optimizing productivity. Hey, you can always ask Exel to analyze it!

3. Use software to sequence orders. Sequencing your orders by pick path, and batching together single lines, same-zone orders, and difficult picks -- such as non-conveyable picks -- saves tremendous time on the DC floor. Software can help organize the workflow, and optimize system performance.

4. Create a warehouse within a warehouse. You can gain tremendous efficiency by grouping together the 20 percent of your SKUs that complete 80 percent of your orders. This cuts down on travel time for your pickers. Be sure, however, that the 80/20 area or zone is properly designed to accommodate high-volume activity. You know, this is kind of old fashion this day and age of the Long may not have the ability to utilize the 80/20 rule...cause you may be selling "few of many," instead of "many of few!"

5. Evaluate your storage equipment to ensure proper application. Placing slow-moving, low-cube items in bin shelving, and fast-moving items in carton/pallet flow -- or other appropriate storage options -- improves storage density and picker productivity. This also allows you to better utilize the DC's cube. Seasonality, promos can mess with this be aware.

6. Create "wheelhouse" zones in your picking area. You can increase picking productivity and improve order picker ergonomics by slotting your fastest-moving SKUs in the waist-to-shoulder or "wheelhouse" area of your storage media.

7. Designate only two or three standard shipping cartons. With only two or three boxes to choose from -- plus a few custom sizes if necessary -- pickers will put orders together faster. Cutting down on sizes optimizes freight expenses and reduces corrugated spend. It also makes it easier to support a pick-path methodology.

8. Consider automation. Order pickers spend about 60 percent of their time walking product or moving product around. Consider an automated solution, such as conveyance, to reduce their extensive travel time. Multi-level pick towers could also save travel time...

9. Understand your technology options. Plenty of options are available to increase efficiency -- including bar codes, RF, pick-to-label, pick-to-light, and voice-activated technologies. These technologies are designed to provide different levels of increased picking productivity and improved accuracy.

10. Implement an incentive program for pickers. Incentive programs can be extremely valuable to an organization. To ensure your program is effective, you must guarantee that productivity measurements are accurate, fair, and equitable. Use the KPI's to drive productivity.
Lastly, outsource with a 3PL...we got all of the above covered and more...its just a phone call away!

Friday, October 06, 2006

UPS Supply Chain Solutions Advises RIF

UPS supply chain operation braces for staff cuts!

UPS Supply Chain solutions plans to reduce headcount to make the operation more nimble, according to news report published today in the WSJ. The newspaper reported UPS would not reveal how many staff would be affected, but said some would be reassigned to other parts of the company or let go. The changes are expected to take place before the end of the year.

The word on the street is that the number is close 1000 people. I like the use of the word "nimble" in this press release. The knock on UPS is that they consistently deploy highly manual solutions for their clients, with little or now automation. Essentially, this makes them nimble and flexible. However, the concept of operations and solution does not equate to robust growth or have the ability to create additional velocity in the supply chain due to limitations within the four walls. Hence my take is this...
UPS is soft right now, they are losing customers in the solutions' market...and are essentially just letting staff go due to customer loses. This is proactive...lets see what the future holds.

Sunday, October 01, 2006

On hiatus...take notice!

This says it all...I will be checking back in with you all very soon. Take care!