Intermodal University What, Why, Where and When?
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Intermodal University Transloading: REPRODUCTION What, Why, WhereOR and When? Monday, September 16th Long Beach Convention Center Room 204 DUPLICATION FOR NOT Our Guests Facilitator: • Jeff Brashares, Dean of Intermodal University Senior Vice President, Sales & National Accounts, SunteckTTS REPRODUCTION OR Speaker: • Ted Prince, Chief Operating Officer & Co-Founder Tiger Cool Express DUPLICATION FOR NOT Today’s Agenda Transportation and Logistics 101 • What are shippers looking to do? REPRODUCTION History 101 OR • How did methods change – and why? Economics 101 • What are the economicDUPLICATION drivers today? FOR NOT 3 Transportation and Logistics 101 • What is transportation’s role? REPRODUCTION OR Supply chain management Logistics Logistics Inbound Materials Physical Supply chain DUPLICATION logistics management distribution management Materials Information Finances FOR NOT 4 Shipper Choices • What is my goal? – What am I optimizing? – What should “total landed cost” include? Transportation Customs andREPRODUCTION Overhead and Risk and Purchase Price Inventory Costs and Logistics Import Administration Compliance OR •Foreign inland •Price paid to •Cycle stock •Tariff rate •Sourcing staff •Compliance •Line haul seller •Safety stock •Merchandise •Due diligence costs •U.S. inland •INCOTERMS •Inventory in- processing •Relationship (technology, •Accessorials •Payment terms transit •Local [port] building/travel staff, other) •Insurance •Exchange rates •Cost of stock- charges •Learning curve •C-TPAT program costs •Packaging over time out •Broker fee •Less: Duty •Cost of Drawback potential risk of damage to DUPLICATION reputation FOR NOT 5 Transportation Movement Deconstructed • From Asia sourcing to DC delivery • Not looking at ultimate store delivery REPRODUCTION OR Factory Ocean DC Pickup Transit Delivery DUPLICATION FOR NOT 6 What (and Where) is Transloading? Asia Ocean US DC Factory Transport Asia Asia Ocean REPRODUCTION US DC Factory Transload TransportOR Asia Ocean US US DC Factory Transport Transload Asia Ocean US Asia DUPLICATION US DC Factory Transload Transport Transload FOR NOT 7 History 101 -- How Did We Get to Today? • Many drivers in the past – which continue today REPRODUCTION OR Deregulation Globalization DUPLICATION Supply Chain Technology FOR Management NOT 8 A Brief History Transloading • Historical drivers and change REPRODUCTION 1968 1979 1985 OR1995 2007 2017 DUPLICATION FOR NOT 9 A Quick Lesson in Ocean Freight Terms Movement Bill of Lading Terms Land-Bridge Port • T&E through overland substitution (e.g., Tokyo- •Service begins or ends at a port •Customer performs delivery (aka “OCP: Overland Seattle-Newark-Rotterdam) CommonREPRODUCTION Point”) Mini-Land-Bridge (MLB) ORCY (Container Yard) •Service begins or ends at a facility (e.g., rail ramp, CY, • Rail substitution to a port (e.g., Keelung-Los etc.) Angeles-Houston; or, Hong Kong-Seattle- Baltimore) Door Micro-Land-Bridge (IPI) •Service begins or ends at customer facility (aka carrier haulage) • Delivery to any inland point (e.g., BusanDUPLICATION – Dallas) CFS (Container Freight Station) • Inland Point Intermodal FOR •LCL shipment begins or ends at groupage facility NOT 10 Ocean Participants Ocean Carrier • Issues B/L to their customer for transportation Freight Forwarder • Travel agent for shipper REPRODUCTION • B/L is from ocean carrier OR NVOCC • Issues B/L to their customer • Purchases transportation from ocean carrier • May be independent or owned by ocean carrier Consolidator DUPLICATION • Aggregates or disaggregates LCL into container-load • May be agent of ocean carrier,FOR or freight forwarder, or NVOCC NOT 11 Importing 1968 (CFS – Port) Cargo Boxcar Containers Containers Goods Factory in stuffed at transit to loaded in discharged transloaded Hong Kong Hong Kong Midwest Hong Kong in Oakland in Oakland CFS and East REPRODUCTION OR Deregulation Globalization Technology Supply Chain Management •Rail, truck and ocean •Early offshoring in 4 Tigers •Containerization comes to •West Coast transload regulated under public (Japan, Korea,DUPLICATION Taiwan and Asia •Purchasing to final market tariffs Hong Kong) •Inland by boxcar and truck •Consolidators and freight forwarders emerge FOR NOT 12 Importing 1979 (CFS – MLB) Cargo Containers Containers Goods MLB Factory in stuffed at loaded in discharged moved by Drayage to Hong Kong Hong Kong Hong Kong in Oakland rail to NJ Northeast CFS REPRODUCTION OR Supply Chain Deregulation Globalization Technology Management • Intermodal deregulated • APL establishesDUPLICATION Liner • 2800 TEU Vessels and • Static POs issued to final but joint tariffs remain Train for MLB service via liner train DC with FMC and ICC USWC to USEC FOR NOT 13 Importing 1985 (CFS – MLB) Cargo Containers Containers Goods MLB Factory in stuffed at discharged loaded in moved by Drayage to China Hong Kong in San Hong Kong rail to NJ Northeast CFS Pedro REPRODUCTION OR Deregulation Globalization Technology Supply Chain Management • Rail (fully) and ocean • West coast service expands • 3500 TEU vessels • Static POs issued to final DC (partially) deregulated • San PedroDUPLICATION surpasses Oakland • Doublestack [No Change] • Ocean conferences still in • Plaza Accord • Intermodal mechanization • NVOCCs proliferate after place 1984 Shipping Act FOR NOT 14 Importing 1995 (Port – IPI Door) Goods moved Cargo loaded Containers Containers by rail to IPI/Storedoor at factory in loaded in discharged in myriad delivery to DC China China San Pedro destinations REPRODUCTION OR Deregulation Globalization Technology Supply Chain Management • Rail (fully) and ocean (partially) • China WTO admission • 4800 TEU vessels • Static POs issued to final DC [No deregulated • Port development in China • 53-foot domestic containerization Change] • Delivery CY%DUPLICATION grows • Bar scanning available • Consolidator sell visibility instead • Direct service to USWC from PRD • PO tracking of capacity • Ocean carriers vertically FORintegrated NOT 15 Importing 2007 (Port – Group 4 Door) Goods moved Containers Storedoor Cargo loaded at Containers by rail and discharged in delivery to DC factory in China loaded in China truck to myriad San Pedro for transloading destinations REPRODUCTION OR Supply Chain Deregulation Globalization Technology DUPLICATION Management • China factory scale • 8000 TEU vessels • Inventory velocity • Point-of-sale scanning FOR NOT 16 Importing 2017 (Port – Local Door) Goods moved Containers Storedoor Cargo loaded at Containers by rail and discharged in delivery to DC factory in China loaded in China truck to myriad multiple ports for transloading destinations REPRODUCTION OR Supply Chain Deregulation Globalization Technology Management • IndustrialDUPLICATION real estate • 15000+ TEU vessels • “Four corners” • Ocean 53 • Increase in FOR eCommerce NOT 17 Economics 101 Slow steaming (for Midwest) • USEC = USWC + 7-10 days Consumer caution REPRODUCTION • Transloading reduces required safetyOR stocks and inventory risk Carbon footprint • More DCs (placed closer together) increases safety stock requirements Total landed costs DUPLICATION • The customer’s “invisible hand” FOR NOT 18 Economics of Inventory • Inventory is not uniform … Safety • Inventory required to prevent stock-outs Cycle arising from supply • Inventory required for and/or demand errors DC to meet expected REPRODUCTION Pipeline demand • Inventory required to • Risk: demand forecast meet expected time error OR from order to DC arrival • Risk: supply forecast error • … and importers have many challenges Sales data is real-time Vendor-managed How to compress Inventory is expensive – how to manage inventory only pushes action-reaction time? (Cost ≈ 20%) inventory problemDUPLICATION to supplier FOR NOT 19 Transloading Mitigates Economic Risk (1) • Demand error increases exponentially with time – Transloading mitigates that risk – Safety stock reduced accordingly PO Issued for TotalREPRODUCTIONSKU assigned to Final Quantity Container Stuffed at Factory 100-200 days priorOR 60 Days from DC Stuffed at Asia CFS 100-200 days prior 30 Days from DC Transloaded 100-200 days prior 5 Days from DC Asia CFS is Factory stuffing 36x riskier is 144x riskier DUPLICATION FOR NOT 20 Transloading Mitigates Economic Risk (2) • Transloading also reduces pipeline time – Last-on and first-off vessel – Faster rail transit (50 mph vs. 35 mph) Block 1 Block 2 Block 3 Intact Movement via Los Angeles Chicago REPRODUCTIONNew York Memphis Origin Cutoff SAT (1) SAT (1) SAT (1) Destination Discharge SUN (16)OR MON (17) TUE (18) Rail Arrival SAT (22) MON (24) TUE (25) Available MON (24) MON (24) TUE (25) Block 1 Block 2 Block 3 Transloading in Los Angeles Chicago New York Memphis Origin Cutoff SUN (1) SUN (1) SUN (1) Destination Discharge SUN (15) SUN (15) SUN (15) Rail Arrival DUPLICATIONFRI (20) MON (23) FRI (20) Available FRI (20) MON (23) FRI (20) Transit ImprovementFOR 4 Days 1 Day 5 Days NOT 21 Transloading Mitigates Economic Risk (3) • Inventory to Sales Ratio supports transloading trend REPRODUCTION OR DUPLICATION FOR http://research.stlouisfed.org/fred2/graph/?id=ISRATIO NOT 22 Transloading Mitigates Economic Risk (4) • Transloading gateways must provide economies of scope and scale – and infrastructure New Score Chicago Dallas Houston Memphis Atlanta Toronto York (3/1/0) LA/LB 19 REPRODUCTION Prince Rupert 11 OR PDX, SEA, TAC 10 VCR 9 Lazaro Cardenas 3 NY/NJ 4 Savannah DUPLICATION 4 Lazaro Cardenas 3 Prince Rupert FOR 0 NOT 23 REPRODUCTION © 2019 Intermodal Association of North America. This presentation was produced for the use of IANA members and may not be reproduced, re-distributed or passed to any other person or published in whole or in part for any purpose without the prior consent of IANA. IANA, 11785 Beltsville Drive, Calverton,OR MD 20705-4048. DUPLICATION FOR NOT .