logisticsmgmt.com TMS:Building Get a on 3PL board dream 41 house 30 FreightWireless claims mobility: in plain English 46 Outside the four walls 34 Lift truck lifespans 50 Take caution in Latin America 40 SPECIAL TECHNOLOGY WEBCAST Order fulfi llment: Locke Supply SeptemberJanuary 2014 2014 ® May 31, 2:00 p.m. EDT lockslogisticsmgmt.com/2012tech it down 44 KICKER 2014 HeadlineMasters of® Logistics Who will win transportation’s

TUG OF WAR? Page 24

+ MASTERS OF LOGISTICS WEBCAST September 25, 2:00 p.m. EDT logisticsmgmt.com/2014masters

KICKERSPECIAL REPORT: TOP 25 FREIGHT FORWARDERS HeadlineLeaders prepare XXS for demand surge 55S KICKERSPECIAL REPORT: SUPPLY CHAIN SOFTWARE HeadlineIn search ofXXS supply chain execution convergence 62S THE

THE

Skill is delivering the experience of Will is having the big game trained drivers on big TVs. who care enough to set them up in time for kickoff.

When a large electronics manufacturer experienced super-sized demand, they demanded more from us. And we were happy to help. Our white glove and fi nal mile service goes beyond dependable delivery. We’ll train our drivers to act as an extension of your company, even setting up equipment on arrival. Find out what our white glove and fi nal mile service can do for you at abf.com. Or call 1-800-753-2079 for a quote.

© 2014 ArcBest Corporation. All rights reserved. All service marks featured in this advertisement are the property of ArcBest Corporation and its subsidiaries. Get your daily fix of industry news on logisticsmgmt.com management

UPDATE AN EXECUTIVE SUMMARY OF INDUSTRY NEWS

Tough times continue for USPS. The United Average deal value in the second quarter––at $393 States Postal Service (USPS) had a net loss of $2 million––was down compared to the first quarter billion for the fiscal third quarter, compared to a $740 average of $427 million and the second quarter million net loss for the fiscal third quarter last year. 2013 average of $425 million. PwC said “mega However, quarterly operating revenue saw a gain at deals,” which it defines as deals valued at $1 billion $16.5 billion, up 2 percent annually. The USPS has or more, were low in the second quarter and served now suffered a loss in 21 of the last 23 quarters, a as a driver for lower overall deal value. stretch going back nearly six years. Even with the slight increase in operating revenue, things remain Education continues to pay in logistics muddled for the service. It remains hamstrung by its and supply chain. As we discover every year in retiree health benefits prefunding payments, which Logistics Management’s Salary Survey, education it’s been unable to meet due to a lack of capital. pays. Further evidence of this has just emerged in According to USPS CFO Joseph Corbett, the service a new report by research giant Gartner on univer- continues to ask Congress to draft and sign legisla- sity undergraduate supply chain programs. Key tion into law that would not only reduce the pay- among the findings is that the relevance these ments, but also develop a smarter delivery schedule, programs have to modern supply chain organiza- help it gain greater control over its personnel and tions has improved markedly through a combina- benefit costs, and add more flexibility in pricing and tion of applied course work and more frequent products to provide the necessary cash flow. work experience. Furthermore, a combination of program scope, internship, and co-op participa- Rate hike ahoy. Member container shipping tion differentiates a school’s position relative to lines in the Transpacific Stabilization Agreement other programs. The report also noted that supply (TSA) proposed an across-the board general rate chain undergraduate placement rates are between increase (GRI) of at least $600 per 40-foot container 85 percent to 100 percent. And in many cases, to all destinations, effective September 1. Carriers graduates are accepting higher starting salaries had filed increases in their individual tariffs in late than finance and accounting majors. Gartner July and subsequently began notifying shippers advises employers to work with a select set of uni- directly. TSA lines said that the planned GRI follows versity partners to build programs that start with strong cargo demand and high vessel utilization lev- internships and naturally develop into entry-level els in recent months, which forward bookings sug- on-ramps to secure strong talent. gest will continue through September. With equip- ment, inland transport, and other cargo handling YRC narrows quarterly loss. YRC World- costs rising steadily, carriers see higher baseline wide, whose regional and long-haul units provide rates going into 2015 as essential to maintaining the second-largest LTL capacity in the trucking adequate service levels over time. “In most route industry, narrowed its second-quarter loss to $4.9 segments they are operating at or near full capacity million on $1.32 billion in revenue, compared with with little room for error in managing assets,” said a $15.1 million loss on $1.24 billion revenue in the TSA executive administrator Brian Conrad. “So this same quarter a year ago. YRC has lost in excess increase is needed as a cushion to cover costs and of $2.6 billion in the last six years and is trying to assure service choice and reliability.” get out from underneath debt service in excess of $1.2 billion. Its earnings before interest, debt, Transportation and logistics deals see gains. and amortization (EBITDA) were $63 million for the Merger and acquisition in the transportation and second quarter of 2014, as compared to adjusted logistics sectors saw decent gains in the second EBITDA of $74.1 million for the second quarter quarter of 2014. In that period, PwC said that there of 2013. YRC Freight experienced a 5.6 percent were 51 transportation and logistics transactions increase in operating revenue, despite a half work valued at $50 million or more for a total of $20 bil- day less as compared to the second quarter of lion—which was ahead of the 38 deals for a cumu- 2013, according to YRC Worldwide CEO James lative $16.2 billion recorded during the first quarter. Continued, page 2

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 1 Get your daily fix of industry news on logisticsmgmt.com

management

UPDATE AN EXECUTIVE SUMMARY OF INDUSTRY NEWS

Welch. The additional revenue is due to increased Matson’s President and CEO Matt Cox said that volumes as well as a slight gain in revenue per hun- these benefits were offset by lower Hawaii container dredweight, he said. volume, increased vessel operating expenses stem- ming from vessel relief activities, and increased ter- Air cargo bumps up in June. The Interna- minal handling expenses. “Our operating platform tional Air Transport Association (IATA) released continues to generate significant cash flow that data for global airfreight markets for June 2014 positions us well to fund our fleet renewal program, showing 2.3 percent growth in demand over June undertake new growth opportunities, and grow our 2013. That is slower than the 4.9 percent growth dividend incrementally,” said Cox. “As we look to reported for May. Nevertheless, overall growth for the balance of 2014, we expect overall results to the first six months of 2014 stands at 4.1 percent exceed the results achieved in the second half of compared to the same period in 2013—much 2013.” Matson’s logistics arm expects the second stronger than the 1.4 percent increase reported for operating income to be near or slightly higher than the full-year 2013 over 2012 levels. The strength- comparable 2013 levels. ened growth has been underpinned by improving global trade and stronger business activity over Evergreen Boston bound. As part of the new the past year. “At the half-way point of the year, service linking North Asia and the U. S. East Coast, it’s clear that overall cargo demand is much stron- Evergreen Line’s containership Ital Lunare made ger than in 2013,” said Tony Tyler, IATA’s director its first ever direct call into the Port of Boston for general and CEO. “Carriers in Asia Pacific and the the ocean carrier in August as part of the CKYH Middle East have been the biggest beneficiaries of partner agreement. The weekly service also calls the improved market conditions. Europe is doing at the U. S. ports of New York and Norfolk and reasonably well, albeit still in recovery mode. The travels through the Panama Canal making calls at weak spot is the Americas.” the Asian ports of Qingdao, Shanghai, and Ningbo. The Evergreen Line ship has a 5,086 twenty-foot Time to “man up” on the high seas. The equivalent units capacity and was built in 2007. An current shortage of officer corps seafarers is fore- Evergreen spokesperson noted that with distribu- cast to worsen and risks impacting carrier profit- tion centers moving into New England, this weekly ability, according to Drewry’s recently published service will help accommodate growing needs for Manning 2014 Annual Report. Owners and manag- direct calls in the burgeoning New England market. ers need seafarers, and they say they need experi- Other members of the joint agreement providing the ence, expertise, and quality. However, they do not all-water service via the Panama Canal are Cosco, have the resources to fund substantial rises in pay. K Line, Hanjin, and Yang Ming. In recent years, owners and managers have been heavily cost-focused, as weak freight rate earnings Regan honored by CSCMP. Mike Regan, chief have yielded poor returns. Manning has become of relationship development at TranzAct Technolo- the natural target for cost cutting, being the single gies and a long time blogger on logisticsmgmt. largest element in ship operating costs, with officer com, is this year’s recipient of the Council of Sup- recruitment being directed towards the lowest cost ply Chain Management Professionals (CSCMP) source. Drewry estimates that the current officer Distinguished Service Award and will be presented supply to be 610,000, representing a shortfall of with the award at the CSCMP Annual Conference 19,000 personnel. This shortfall is forecast to rise to this month in San Antonio, Texas. CSCMP said 21,700 by 2018 given that there will be a require- that this award is bestowed on an individual for ment for an additional 38,500 officers by this time. significant achievements in the logistics and supply chain management professions. “Mike is a cham- Matson reports solid results. Matson, Inc. pion of innovation and creativity, cares deeply about reported another solid quarter benefitting from the people in our profession, and has the ability to higher freight yields in transpacific trade lanes, share his knowledge in ways that positively affect improved lift volumes at their terminals, and con- our community,” said Rick Blasgen, CSCMP’s tinuing improvements in logistics. However, president and chief executive officer.M

2 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM A PROFESSIONAL LOOK THAT PUTS IN OVERTIME.

With a lasting, professional look, Wrangler Workwear always leaves a good impression. But looks aren’t everything. Built for comfort, Wrangler Workwear offers better movement and flexibility in any situation, keeping your team working at the top of their game. LEARN MORE AT WORKHARDSTAYSHARP.COM

Facebook.com/WranglerWorkwear years: that’s 32,850 days of transportation 90 excellence.

But at Saia, our team isn’t looking back — tomorrow.because we’re focused on one day in particular : That’s when, once again, complex technology will yield streamlined LTL solutions. And it’s when our forward-looking approach will still be keeping shippers ahead of the curve. That’s why we innovate every day — because that’s what we deliver tomorrow.

saia.com / 800.765.7242 September 2014 logisticsmgmt.com VOL. 53, NO. 9 CONTENTS

Logistics Management

23RD ANNUAL STUDY OF LOGISTICS AND TRANSPORTATION TRENDS Who’s winning transportation’s tug of war? Results from our annual survey suggest that carriers, driven by 24 a need to maximize profitability, are at a polar opposite with shippers who are focused on reducing costs. This lack of alignment has created a struggle resulting in a loss of focus on the bigger prize—being able to compete supply chain to supply chain.

TRANSPORTATION AND BEST PRACTICES 3PL Management: Building the dream house 30 The continued evolution of “digital supply networks” depends on just how well shippers and their third-party logistics provider partners can work together to take costs out of the system while making improvements in flexibility and speed. Our consulting team offers a high-level blueprint for making it happen. SUPPLY CHAIN & LOGISTICS TECHNOLOGY Mobile Supply Chain: Significant progress, Mobile technology 34 but a long way to go 34 Our top technology analysts give us an in-depth look at the current penetration of wireless and mobility outside of the four walls and offer their outlook on the future of real-time, 24/7 supply chain monitoring. GLOBAL LOGISTICS América Latina: Proceed with caution 40 Economic activity in Latin America and the Caribbean is expected to stay in low gear in 2014, according to the IMF’s latest forecast for the region. Shippers are advised to practice extreme due diligence before entering the marketplace. WAREHOUSE & DC MANAGEMENT Latin America 40 Order Fulfillment: Locke Supply’s path to accurate productivity 44 Faced with booming volumes and subsequent picking challenges, a leading plumbing and heating products distributor integrated voice picking with its warehouse management system (WMS). They’re now fulfilling record volumes more accurately in less time and with fewer people. Here’s how they’re getting it done. SUPPLY CHAIN & LOGISTICS TECHNOLOGY TMS gets more warehouse aware 48 TMS and YMS expand on integration and supply chain visibility capabilities, gaining a better handle on warehouse constraints in the process.

Voice technology 44

Logistics Management® (ISSN 1540-3890) is published monthly by Peerless Media, LLC, a Division of EH Publishing, Inc., 111 Speen St, Suite 200, Framingham, MA 01701. Annual subscription rates for non-qualified subscribers: USA $119, Canada $159, Other International $249. Single copies are available for $20.00. Send all subscription inquiries to Logistics Management, 111 Speen Street, Suite 200, Framingham, MA 01701 USA. Periodicals postage paid at Framingham, MA and additional mailing offices. POSTMASTER: Send address changes to: Logistics Management, PO Box 1496 Framingham MA 01701-1496. Reproduction of this magazine in whole or part without written permission of the publisher is prohibited. All rights reserved. ©2014 Peerless Media, LLC.

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 5 what happens when racetrack meets runway

kalitta air is on the fast track with a new 80,000-

square-foot facility. Inducted into the Motorsports

Hall of Fame in 1992, Connie Kalitta has been synonymous with

speed. Starting a career in transport aviation nearly 50 years ago,

Kalitta has always been about delivering. With a $2 million grant

from the Michigan Economic Development Corporation (MEDC),

Kalitta Air will build an 80,000-square-foot hangar to maintain a

growing delivery fleet and add 200 jobs. “It’s an exciting project

and a good multiplier effect,” said MEDC President and CEO

Mike Finney. Perfect for companies that have a need for speed

in Pure Michigan.

1.888.565.0052 michiganbusiness.org/LM DEPARTMENTS+ONLINE WWW.LOGISTICSMGMT.COM

Logistics Management WEBCAST 1 Management update 23rd Annual Study of Logistics and 9 Viewpoint Transportation Trends Who’s winning transportation’s tug of war? 10 Price trends Thursday, September 25 @ 2:00 p.m. ET 13 News & analysis www.logisticsmgmt.com/2014masters

18 Newsroom notes Results from our 23rd Annual Study of Logistics and Transportation Trends suggest that carriers, driven 20 Moore on pricing by a need to maximize profitability, are at a polar opposite with shippers who are focused on reducing 22 Pearson on excellence their costs. How can carriers and shippers collaborate to put an 72 Pacific Rim report end to transportation’s tug of war? Join Group Editorial Director Michael Levans, Mary Collins Holcomb, Ph.D. of the University of Tennessee, and Karl B. Manrodt, Ph.D. of Georgia Southern University, as they reveal all of the findings of our 23rd Annual Study of Logistics and Transportation Trends. Shippers will learn: • Critical steps carriers and shippers need to take to put an end to the struggle; • The percentage of freight dollars currently spent by mode over the past 12 months; and • What the next era of transportation management will look and act like.

SPECIAL REPORT

SPECIAL REPORT Information Management: In Search of Supply Chain Convergence The supply chain software market is evolving toward platforms that optimize end- to-end processes and juggle constraints at all levels. Here’s how several leading suppliers FREIGHT FORWARDERS are making progress on this Leaders prepare for demand surge vision. Page 62S With most economists forecasting robust growth in U.S. manufacturing, global freight intermediaries must be prepared for a spike in new business— and concurrent expectations for higher levels of performance. Page 55S

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 7 TRANSPORTATION SHOULDN’T BE COMPLICATED.

Track & Claims Trace Management Load Freight Bill Pay Mode Tender & Selection Audit

TRANSPORTATION DOING IT MANAGEMENT Exception Reporting YOURSELF Management & Integration Analytics with TMS Carrier Selection Load Dispatch Delivery

TRANSPORTATION MANAGED MANAGEMENT BY ECHO

Transportation can be challenging for even the most sophisticated shippers. Our proprietary technology and dedicated client service team approach helps to simplify the critical tasks involved in transportation. Echo takes the “complicated” out of transportation management so that you can focus on what you do best.

We Take the “Complicated” Out of Transportation Management™

LTL • Truckload • Intermodal • Expedited Small Parcel • International Air & Ocean

600 W Chicago Ave, Suite 725, Chicago, IL 60654 www.echo.com 800.354.7993 VIEWPOINT

EDITORIAL STAFF Michael A. Levans Group Editorial Director Francis J. Quinn Transportation’s tug of war Editorial Advisor Patrick Burnson the leaves are falling and footballs are shippers trying to reduce their costs while Executive Editor flying, and that means it’s time to share managing increasing demand uncertainty Sarah E. Petrie Managing Editor the findings of Logistics Management’s from all customer levels. Jeff Berman (LM) Annual Study of Logistics and Trans- “In fact, many shippers are asking Group News Editor portation Trends (Masters of Logistics), the for cost reductions at the same time that John Kerr Contributing Editor, Global Logistics clearest picture available of transportation they’re asking for improvements in ser- Bridget McCrea spending across the modes and the most vice,” says Manrodt. “In the trucking mar- Contributing Editor, Technology comprehensive summary of how logistics ketplace, for example, where capacity is Maida Napolitano professionals are managing their opera- tight and carrier costs are increasing due Contributing Editor, Warehousing & DC tions in current business conditions. to factors such as the HOS rule change John D. Schulz Contributing Editor, Transportation First, the LM staff would like to thank and the impact of CSA, a struggle has the 766 domestic and global logistics, ensued to find a collaborative point.” Mike Roach Creative Director transportation, and supply chain manage- But how can two parties collaborate Wendy DelCampo ment professionals who took the time when their business goals are so dispa- Art Director out of their schedules to participate this rate? “The two parties need to find com- year. This is a fairly detailed questionnaire, mon ground,” says Holcomb. “Our analysis COLUMNISTS Derik Andreoli so the fact that we had such a terrific shows that shippers and carriers are aligned Oil + Fuel response tells us that the results are well on two key points. They both believe that a Elizabeth Baatz worth the effort in the eyes of our readers. core carrier relationship adds value to the Price Trends This marks the 23rd year that LM shippers operation and also helps a carrier Mark Pearson Excellence has partnered with Karl Manrodt, Ph.D. achieve their business goals.” Peter Moore and Mary Holcomb, Ph.D. to capture But there’s a rub, adds Holcomb. Pricing the results. Through the pages of LM, “Both feel that shippers rely heavily on online in our Annual Masters of Logistics price when choosing a core carrier—and PEERLESS MEDIA, LLC Brian Ceraolo webcast (September 25), and in a live we know it’s difficult to be innovative and President and Group Publisher session at CSCMP’s annual conference, help achieve your customer’s goals while Kenneth Moyes Holcomb and Manrodt’s presentation being the lowest cost service provider.” President and CEO EH Publishing, Inc. of these results have helped countless Holcomb and Manrodt believe that logistics professionals re-engineer their closing this cost/service gap between ship- EDITORIAL OFFICE operations. And of course, I’d be remiss pers and carriers represents an opportu- 111 Speen Street, Suite 200 Framingham, MA 01701-2000 if we didn’t thank the group of University nity to alter the current struggle. “Instead Phone: 1-800-375-8015 of Tennessee graduate students who have of pulling against each other, carriers and the job of crunching the numbers as well shippers must work on those areas that MAGAZINE SUBSCRIPTIONS Start, renew or update your magazine as our research partners at Con-way Inc. will result in lower operating costs for the subscription at www.logisticsmgmt.com/ and CarrierDirect who have lent intellec- carrier, while providing better service to subscribe. Contact customer service at: tual support in presenting the findings. end customers,” says Holcomb. Web: www.logisticsmgmt.com/subscribe This year’s results paint a dramatic Starting on page 24, our research team Email: [email protected] Phone: 1-800-598-6067 picture of a struggle, a freight transporta- digs into the findings and offers sugges- Mail: Peerless Media tion tug of war as our research team so tions for putting an end to this tug of war. P.O. Box 1496 Framingham, MA 01701 accurately defines it. Our results illustrate that shippers and carriers now have dia- ENEWSLETTER SUBSCRIPTIONS Sign up or manage your FREE metrically opposed business objectives. eNewsletter subscriptions at www.logisticsmgmt.com/enewsletters. At one end of the ponderous rope we find the carrier base looking to maximize REPRINTS For reprints and licensing please profitability while their costs are rising Michael A. Levans, Group Editorial Director contact Tom Wilbur at Wright’s Media, 877-652-5295 ext. 138 or in the midst of a maelstrom of opera- Comments? E-mail me at [email protected]. tional challenges. At the other end, white- [email protected] knuckled and holding on for dear life, are Follow me on Twitter: @MikeLeva

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 9 priceTRENDS Pricing across the transportation modes

5 150 TRUCKING Forecast 4 145 LTL trucking prices accelerated 4.5% in the first seven 3 140 months of 2014 compared to year-ago. At the same time, peerlessmedia.com/datacenter transaction prices were up 1.7% for TL general freight, 2 135 up 1.7% for all special freight and flat for local freight 1 130 trucking services. All told, inflation for the entire truck- 0 125 2012 2013 2014 2015 ing industry clocked in at a 1.7% rate. Meanwhile, cost escalation has been keeping pace with prices thanks to % change (left scale) Index 2010=100 (right scale) upward pressure from driver wages. We estimate that % CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago trucking’s direct labor costs grew 2.9% over the past 12 General freight - local 0.0 0.0 0.0 months. That compares to slower 0.9% labor cost hike TL 0.1 2.6 2.8 in 2013. Looking ahead, LTL prices are expected to rise LTL 0.9 4.5 6.4 4.6% this year and 3.3% next year. Likewise, TL tags are Tanker & other specialized freight 0.2 0.6 1.1 forecast to increase 2.3% and 1.8%.

AIR For timely and accurate 15 180 Forecast insights on markups and 12 178 In the first seven months of this year, average prices for airline services increased 2.4% from year-ago levels. costs in the transportation 9 176 services market, there is Most of that price hike came from passengers’ coach 6 174 no better resource than the seats. For hauling cargo in the belly of planes on sched- 3 172 Negotiators’ Benchmark uled flights U.S. airliners managed to increase those 0 170 Databook from Logistics 2012 2013 2014 2015 prices by only 0.7%. Air cargo chartering companies, on the other hand, hiked their average price tags up Management and ALERTdata. % change (left scale) Index 2010=100 (right scale) com. Updated with the latest 3.7% over the same period of time. After the air cargo statistics every month, there % CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago price escalation rates running as high as 13.7% (March are five U.S. logistics market Air freight on scheduled flights -0.1 0.2 0.6 2012) and 17.2% (December 2008), our price forecast databooks available now: Air freight on chartered flights 0.3 -3.4 2.6 these days appears positively stalled. We continue Domestic air courier 0.0 0.4 5.5 to predict air cargo tags will be up only 1% 2014 and • Truck Transportation International air courier 0.2 0.8 6.3 1.8% in 2015. • Air Transportation • Waterborne WATER 6 182 • Rail Transportation 4 180 Inland waterways freight transportation prices decel- erated 6.6% in the first seven months of 2014 compared • 3PL/Warehousing Services 2 178 to year-ago. Over the same time period, transaction Each Negotiators’ 0 176 prices for transporting on the Great Lakes-St. Lawrence Benchmark Databook has -2 174 Seaway decreased 5.8%. However, for U.S.-owned helpful summary pages and Forecast -4 172 ships operating in deep seas, prices actually increased also reports on detailed cost 2012 2013 2014 2015 5.9%. By the time 2014 closes, we forecast the inflation categories in labor, materials, % change (left scale) Index 2010=100 (right scale) headwinds ahead will cause inland waterways prices fuel, and purchased services. to decrease 5.3%, but at the same time will push deep- Index data and spending % CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago sea prices to increase 5.7%. Consolidating the ups and (per $100 of sales) data Deep sea freight -0.9 -0.1 5.7 downs into a single industry price index leads to a 1.1% provide insights into price/ Coastal & intercoastal freight 1.1 4.5 -4.1 average price increase for 2014 and 1% for 2015. cost escalation and estimated Great Lakes - St. Lawrence Seaway 0.9 0.6 0.8 mark-ups. With 10 years of Inland water freight 2.6 -0.7 -6.2 monthly data, you’ll see long- term trends as well as the 10 190 RAIL Forecast most recent turning points in 8 185 Prices for carload rail transportation service increased prices, costs, and margins. 6 180 2% in the first seven months of 2014 compared to For more information on 4 175 year-ago. Over the same period, prices for intermodal these valuable databooks, rail transportation accelerated at a slightly faster 2.2% 2 170 go to: pace. With carload rail exerting the strongest pull, the 0 165 peerlessmedia.com/ 2012 2013 2014 2015 rail transportation industry overall reported a 2% price datacenter % change (left scale) Index 2010=100 (right scale) hike. Profit margins in the rail transportation industry do not appear in too much danger from a price/cost % CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago perspective. In the first half of the year, we estimate ALERTdata.com Rail freight 0.1 1.2 2.5 that rail industry hard costs (direct materials, fuel, labor, Intermodal 0.1 0.6 2.5 etc.) were up only 1%. The price outlook for rail service ALERTdata.com Carload 0.1 1.4 2.7 continues to show a 2.3% increase in 2014 and 2.6% in 2015. ®

10 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM BUILT ON TRUST.

hen your freight is destined for W somewhere beyond your local carrier’s coverage area, trust is on the line. Local relationships are often the most trusted, and it’s tough to fi nd that kind of trust with the coverage you need.

Until now.

SM Now, you don’t have to think beyond Reaching farther for you. your local relationship no matter where your freight is headed.

Because The Reliance Network is driven by local relationships and fueled by an integrated network of people, assets, and information systems that provides complete North American coverage through a single, trusted source.

Contact your local member carrier or visit TheRelianceNetwork.com and fi nd out how The Reliance Network can reach farther for you.

Proud recipient of the Quest for Quality award in the National LTL category.

Scan to view a short video about TRNet and Toshiba.

TheRelianceNetwork.com SM

Reaching farther for you. Only pay for the speed you need... SM Dynamic Routing!

At Lynden, we understand that plans change but deadlines don’t. That’s why we proudly offer our exclusive Dynamic Routing system. Designed to work around your unique requirements, Dynamic Routing allows you to choose the mode of transportation — air, sea or land — to control the speed of your deliveries so they arrive just as they are needed. With Lynden, you only pay for the speed you need!

www.lynden.com 1-888-596-3361 N E W S analysis

Also: • Could “dim pricing” be the financial savior for the LTL sector? Page 14 • International growth paces Q2 intermodal volumes, reports IANA, Page 16 UPS, FedEx receive more licenses for domestic express package services in China Parcel giants get green light to extend intra-China services to Beijing and other Chinese cities, opening up routes inside the second largest global market.

By Jeff Berman, Group News Editor

FRAMINGHAM, Mass.––In recent China. So, in order for FedEx or UPS to documents, with private carriers years, transportation and logistics titans send an overnight package from Beijing allowed to deliver inbound and out- UPS and FedEx have only been able to Shanghai, they have to fly the pack- bound documents, but not intra-China. to provide domestic delivery service in age on an aircraft that is not theirs. In addition, foreign airlines can’t oper- China on a limited basis. But a recent In October 2009, a new Chinese ate within the country. Reuters report says that’s changing, postal law took effect, which created a With these new licenses, UPS now noting that both companies have now new permitting system for the express has 33 licenses in China, with 14 of obtained licenses from the Chinese sector through the China State Post- them approved by the Chinese gov- government to extend domestic express al Bureau (SPB). This law excluded ernment in May, according to Reuters. package services to Beijing and other non-Chinese from competing in the FedEx received 21 licenses in May and Chinese cities and no longer have to domestic document and letter delivery now again has 58 licenses—the number rely on joint venture partners to deliver market. it had prior to the 2009 China postal packages within China. The China postal law gives China law’s passing. The report added that each license Post a monopoly on letters and In September 2012, the Chinese “permits the holder to operate government granted both B2C [business-to-consumer] companies the green light to domestic express package ser- provide intra-China express vices within a single city and package services and essen- between cities for which a tially re-apply for licenses. license is also held.” With these FedEx was granted rights to licenses, UPS and FedEx have serve eight cities in China: increased access to the second Shanghai; Guangzhou; largest global market behind Shenzhen; Hangzhou; Tian- the U.S. And due largely to jin; Dalian; Zhengzhou; and e-commerce, the Chinese mar- Chengdu. ket is seeing a 60 percent annual FedEx entered the China growth rate in 2014 and could be market in 1984 and provides worth up to $46 billion in 2015, international and domestic based on data from Deloitte. service for shippers doing The reason neither UPS business in China. FedEx nor FedEx has been able to set officials told Logistics Man- up shop in China for domes- agement that it operates as a tic delivery services is that, as wholly-owned enterprise in per Chinese law, non-Chinese China and has direct cus- air providers are only permitted todial control of operations, to fly in and out of China, but allowing for flexibility and not from point-to-point within improved speed-to-market.

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 13 N E W S analysis

FedEx operates more than 225 weekly operates 200 weekly flights connecting aid carriers’ profitability, but might be international flights in and out of China. China to markets around the world. difficult to implement due to the variety The parcel carrier has been operating a Prior to these licenses being granted of shipments that move every day in LTL domestic delivery business in China since in recent years, UPS and FedEx were carriage. receiving an investment certificate from very limited as to what they could do for However, the LTL sector might be ripe the Ministry of Commerce in December movements within China, according to for change simply because of its com- 2006 and a business license for domestic Jerry Hempstead, president of Hemp- position. Unlike the highly fragmented services from the State Administration of stead Consulting, a parcel express truckload sector where the largest carrier Industry and Commerce received at the consultancy. barely has 1 percent market share, the same time. “The Chinese government wanted LTL sector has greater consolidation. In UPS has offered domestic services to Chinese transport companies to grow fact, the top six LTL carriers carry more shippers on a contract basis since 2005. and be able to support the logistics needs than half of the freight. In 2008, it opened a major hub in Shang- of the Chinese and not rely on foreign The problem, as always with all hai in the Shanghai Pudong International firms,” said Hempstead. “As a result, of trucking, is capacity. Lightweight, Airport. In July 2011, the carrier began certain impediments were put on the bulky LTL shipments tend to “cube out” operating flights into Chengdu as part foreign firms to give an advantage to before they “weigh out” in a traditional of an effort to expand its connections their own. These restrictions have now 53-foot trailer that is allowed to carry between Asia, Europe, and the U.S. The been lifted and FedEx and UPS can take 80,000 pounds. Chengdu flights connect Europe and off running. Both firms already have tre- However, right now, there’s little pen- Asia with a total of 24 weekly flights. UPS mendous investments there in hubs, ter- alty for shippers and manufacturers who currently serves 330 cities in China and minals, trucks, and people.” M clumsily package shipments in air-filled boxes that take up excess room in trail- ers. Twenty pounds of toilet paper costs TRANSPORTATION RATES roughly the same to ship whether it’s in a 10-foot by 10-foot by 10-foot box or it’s in Could “dim pricing” be the financial savior a box that’s 25-foot by 25-foot by 25-foot. That could all change if dim pric- for the LTL sector? ing methodologies are instituted by the LTL industry. Any carrier who encoun- FRAMINGHAM, Mass.—Anybody the current weight-based and freight clas- tered, for example, two 10,000-pound who thinks that there’s nothing new sification system is outdated and should shipments of lower classified freight that happening in the $35 billion less-than- be replaced by the dimensional weight filled an entire 28-foot or even a 53-foot truckload (LTL) sector isn’t paying approach that is easier to understand and trailer has long coveted a method to raise attention to undercurrents in the once- easier to automate. the revenue for that shipment—or any staid, regulatory-bound industry. Others agree, to a point. Satish Jin- other shipment that weighed less than 15 LTL carriers are rapidly investing in del, president of LTL analyst firm SJ pounds per cubic foot. on-dock, three-dimensional size mea- Consulting, said that dim pricing could Also, experts say, this pricing revolu- surement capturing machinery tion could be implemented only with the goal of more accurately if virtually the entire $35 billion charging shippers rates based LTL sector moves in lockstep to on the actual dimensions of institute it. Because of antitrust their shipments—rather than laws and other competitive fac- the traditional weight-and- tors, that could be difficult—and distance-based formula that’s might ultimately lead to lawsuits been in effect since the 1930s. by reluctant shippers. The “dim” machines are Chuck Clowdis, the veteran already being tested by indus- trucking research analyst, said try giants FedEx Freight, YRC that truckers have discussed Worldwide, Old Dominion, dimensional LTL pricing for the Saia, and probably many other past 10 years, and maybe lon- carriers in the LTL space. ger. “I recall nearly three decades Joel Clum, president of Car- ago buying tape measures and rier Direct, a trucking consult- training a sales force on how to ing firm, says dimensional pric- attempt a rudimentary estimation ing could soon “revolutionize” of cube and the impact on trailer the LTL sector. He says that space utilized,” Clowdis recalled.

14 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM

N E W S analysis

“Carriers attempted some pricing regula- tional class-rating system. Certainly, the Already, UPS and FedEx are planning tions that raised the rates for any single carriers will be able to charge compensa- widespread use of dim pricing in their shipment taking an entire trailer, but the tory rates on lower classified, lightweight small package units, starting early next problem persisted.” shipments. However, the shipper will year. But whether that system can be The problem is that carriers allowed need to see value in this change, or else expanded to the more staid LTL industry the ubiquitous “freight all kinds” (FAK) he or she will gravitate to one of the LTL is an open question that even industry rating concession surge to rob them of carrier holdouts that can be counted on to leaders can’t answer. one remedy—the true classification buck the new system, say analysts. ––John D. Schulz, Contributing Editor of Class 100+ freight. About a decade ago, trucking consultant Hank Mullen INTERMODAL pushed the dim pricing idea, but couldn’t move it forward. International growth paces Q2 intermodal However, now that “laser-driven dimensioners” have been made afford- volumes, reports IANA able to LTL carriers, the dim pricing idea has gained new traction. CALVERTON, Md.—Intermodal vol- output stands as the highest quarterly inter- “We need to simplify this process,” umes in the second quarter improved modal growth rate since early 2011. And says FedEx Freight CEO Bill Logue. “It’s with the weather, according to the Inter- through the first two quarters of 2014, total not going to happen overnight. Different modal Market Trends & Statistics Report intermodal volumes were up 5.5 percent customers will have different needs. It released by the Intermodal Association compared to the midpoint of 2013, match- will be a long-term, dual type environ- of North America (IANA). ing up with the 5.8 percent annual gain ment, and it will take a long time.” Total intermodal volume movements recorded during the second half of 2013. Shippers, no doubt, will have a major were up 8.2 percent compared to the sec- Unlike many recent quarters, which say in this gravitation away from the tradi- ond quarter of 2013. IANA said this strong have seen domestic containers pacing

WAREHOUSING

We’ll show you the way.

Managing a supply-chain is complex. And your business United Van Lines and Mayfl ower Transit, trusted providers is unique. Let UniGroup Logistics show you the way of reliable specialized transportation and logistics services to a more e cient and customized logistics solution. for over 50 years. Based on a network of 1,300 service UniGroup Logistics may be a new name, but we are centers in 146 countries, we are your single source for a company built on the well-established heritage of customized supply-chain solutions. N E W S analysis

IANA President and CEO only because of things moving early due Joni Casey told Logistics Man- to the West Coast labor talks, but because agement that, in the first quar- the segment is seeing underlying strength,” ter, the winter weather held said FTR Senior Consultant Larry Gross. down volumes, making second “The big story this year is service, or quarter volumes appear higher a lack of service,” said Gross. “Almost than expected on the heels of a everywhere shippers turn, they’re facing stronger overall U.S. economy. capacity difficulties, cost issues, and ser- In the report, IANA said vice problems. If you look at what is going that the growth rate for domes- on at ports right now, it’s just insane how intermodal growth, international contain- tic intermodal appears to be slowing, as bad it is, as things to a large degree are ers led the way in the second quarter, up 9.6 railroads grabbed a bigger share from significantly impaired.” percent. In the report, IANA observed that the highway while trailer to container Gross added that this is not a problem an improving economy is partially responsi- conversion stalled. It also pointed out with an easy “fix” due to chassis-shortage ble for the strong international performance that the domestic container growth rate issues as well as the impact of bigger ships as well as solid volumes at the Port of Los pales compared to a little more than a on terminal operations. “Shippers may be Angeles and the Port of Long Beach—where year ago, when its growth rate was in the considering moving more freight back to imports were cumulatively up 9.8 percent double digits. highways, but intermodal in a sense has annually in the second quarter. “There does seem to be a consistent propped up the volume, because highway The report added that it’s possible that conversion of highway to intermodal, and capacity remains so tight. And because shippers have accelerated imports given with the capacity in over-the-road loads speeds are slower, the domestic container potential West Coast labor issues, which still challenged by driver shortages, this fleet has gotten less productive, which rep- could lessen international volumes in the trend is expected to continue,” said Casey. resents a constraint on capacity,” said Gross. third quarter. “Things are strong in intermodal, not ––Jeff Berman, Group News Editor

TRANSPORTATION DISTRIBUTION

Whether your supply-chain is domestic or international, UniGroup Logistics manages a global network of resources to show you the way to seamless, dependable and e cient solutions.

For more information, call 866-456-9726 or visit us at unigrouplogistics.com/LM. Jeff Berman is Group News Editor for the Supply Chain Group Newsroom Notes publications. If you want to with Jeff Berman contact Jeff with a news tip or idea, please send an e-mail to [email protected].

Fourth and long for federal surface transportation funding

with the nfl season in full swing, it stands to rea- Instead, the bill turns to other potential revenue son that Congress must be replete with football fans, sources, including extending pension smooth- given how it has elected to punt on federal transporta- ing relief that was enacted in 2012 as part of the tion funding yet again as the Senate signed off on a MAP-21 legislation and would allow employers to 10-month bill to keep federal surface transportation continue to use historic interest rate averages to funding intact through May 2015 with a $11 billion calculate their pension contributions; transferring stopgap measure. $1 billion from the Leaking Underground Storage When it comes to this situation, there are a few Fund into the HTF; and requiring the Secretary constants: of Transportation to charge and collect a fee of • The federal gasoline tax, which serves the main .3464 percent ad valoreum on merchandise for- funding mechanism for the Highway Trust Fund mally entered or released into the U.S, raising an (HTF), has not been increased since 1993. estimated $3.5 billion. • There has not been a long-term federal surface Are these measures really going to save the day? It transportation bill since SAFETEA-LU expired in looks like we’ll have to wait and see. The Senate wanted September 2009. a shorter bill through December, with the hope that it • The HTF continues to pay out more than it receives. This latest round of political tension comes at a time • Congress continues to predictably let down its constituents with its petulant “draw when the Department of Transportation has said that, a line in the sand” stances on how to make the beginning on August 1, it would have had to start situation better. cutting payments to state and local governments for So, where does all that leave us? Back to where it started. road and transit projects by as much as 28 percent if The good thing is that federal surface trans- Congress did not take quick action. portation funding remains intact for the next 10 months. The bad thing, of course, is that all the could then begin work on a multi-year bill. The House same challenges pertaining to how to adequately fund balked on that, preferring the 10-month bill to secure surface transportation projects and move forward on a funding into 2015. long-term bill remain where they have been for some- This was essentially premeditated on both sides, time—in a fourth and long situation, with no hope for as The Hill reported prior to the Senate vote that a first down. House Speaker John Boehner (R-Ohio) said that he The bill signed off on by Congress, the Highway “wouldn’t accept the Senate’s changes, and would Transportation and Funding Act of 2014, has lan- simply strip them out and send another bill back to guage pointing out what’s been apparent for a while: the Senate.” The existing HTF system is unsustainable and unable This latest round of political tension comes at a time to meet our nation’s 21st century transportation when the Department of Transportation has said that, needs. It also notes that Congress should enact and beginning on August 1, it would have had to start cutting the President should sign a surface transportation payments to state and local governments for road and reauthorization. transit projects by as much as 28 percent if Congress did This is all good and well, but the fact remains that not take quick action, The Hill report added. the federal gasoline tax has not been increased since This whole thing brings to mind the saying: “It would 1993. That’s a long time, and at the end of the day it’s be funny if it weren’t so sad.” As Congress waits for the unacceptable. The notion of raising the tax and indexing White House to formally sign this bill, fights are being it to inflation, which has been proposed by various non- fought, and turf is being protected in Washington. Mean- Congressional stakeholders, is apparently too reckless while, the game continues to remain deadlocked, and it and a non-starter. Really? always seems to be fourth and long. M

18 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM Our customers say PowerScanTM is the most rugged industrial bar code reader in the world.

www.datalogic.com

The new PowerScan 9500 Series of 2D handheld imagers combine outstanding reading capabilities, state-of-the-art Liquid Lens and cordless communication for unsurpassed performance in rugged industrial environments. Available in corded and cordless versions with Bluetooth® wireless technology or Datalogic Star Cordless SystemTM 2.0. There is also the PowerScan 9500 DPM specifically designed for applications based on codes printed with Direct Part Marking (DPM) technology.

RETAIL MANUFACTURING T & L HEALTHCARE Peter Moore is Adjunct Professor of Supply Chain at the University of Moore on Pricing Denver Daniels School of Business, Program Faculty at the Center for Executive Education at the University of Tennessee, and Adjunct Professor at the University of South Carolina Beaufort. Peter writes from his home in Hilton Head Island, S.C., and can be reached at [email protected].

Big Data and 3PLs

As third party logistics providers (3PLs) work to that we could offer much more by manipulating the raw ramp up services for their customers, one area of focus data we collected and providing valuable information to is information management services. clients that would impact their operations. As one can imagine, the 3PL is in a unique posi- For some customers we provided statistical projec- tion to collect and scrub large volumes of transac- tions regarding transit times, due dates, and car avail- tion information as they execute orders for shippers. ability that enabled customers to reduce their fleets by Until recently, large portions of the 3PL data was ten percent. In turn, we were able to have an impact often not passed on to the shipper nor leveraged for on the customer’s business well beyond the transporta- improvement initiatives, being viewed as more of a tion function as information replaced inventory of very feeder on basic transaction facts to the customer’s expensive assets. own ERP. Historically the shipper’s ERP systems did In one case, a lube oil company began planning their the heavy lifting in managing data, but many data ele- production cycles based upon our reliable information ments were discarded to keep the expense and effort on empty cars, while their customers allowed the ship- involved to a minimum. With the improvements in systems avail- For shippers in the 3PL market, there’s a whole able to 3PLs, coupled with their drive to add new dimension to service that now has to be more value to shippers, they’ve been investing in people, processes, and technologies that can considered. In order to enable cost and service help customers manage the cost and service improvements, shippers will need to utilize the levers of logistics. Today, shippers shopping for detailed information and analysis of the Big Data a 3PL need to ask about their capabilities in managing and leveraging “Big Data.” generated by the logistics functions. Big Data in logistics includes the very detailed information that spring from the order to cash per to schedule the replenishment of stocks—thus cycle. In fact, for many companies, their supply chain enabling further production schedule optimization. generates the majority of the data they have to manage. Our 3PL company benefitted, as we were able to That makes the 3PL a key resource. increase fees 20 percent above the average for fleet The volume of transactions multiplied by the order, management services with no additional labor. How- inventory, dimension, freight, tracking, delivery and ever, we did train our people to be data analysts, and this payment data balloons the data to be managed by logis- investment in our people resulted in a 1,200 percent tics systems. ROI split between our customers our company. Today, we realize the value in mining transactional For shippers in the 3PL market, there’s a whole new data and are increasingly relying on the service provid- dimension to service that now has to be considered. ers to provide clean, complete data sets for transporta- In order to enable cost and service improvements, tion, warehousing, and customs compliance. The lead- shippers will need to utilize the detailed information ing 3PLs have even started to bring additional value by and analysis of the Big Data generated by the logistics employing an analyst that can use data to show patterns functions. that indicate opportunities for the customer to improve Often the company IT function has difficulty under- cost and service. standing and delivering the level of data detail and sys- By way of illustration, when I had a 3PL business tems; however, a 3PL partner with the right tools and one of our services was rail fleet management. While skills can fill this need. Be ready to ask some questions many of our competitors offered aggregation of rail about how your 3PL will add value by analyzing this tracking data to customers on a daily basis, we realized valuable information. M

20 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM At Menlo Logistics, seeing things in a way nobody else does isn’t a coincidence. It’s innovation.

Supply chains are unique for every customer. That’s why we take a fresh look at logistical challenges, creating Lean, customer-focused solutions that offer a new perspective to familiar concerns. We’ve found when you apply creative and intelligent people, processes and ideas to everything you do, remarkable results happen. To learn how Menlo can create a better bottom line for your business, visit menlologistics.com. Mark Pearson is the managing director of Accenture’s Supply Chain Pearson on Excellence Management practice. He has worked in supply chain for more than 20 years and has extensive international experience, particularly in Europe, Asia, and Russia. Based in Munich, Mark can be reached at [email protected] Supply chain risk management: Keys to high ROI

in a very real sense, supply chain management is ment throughout the supply chain organization. about managing risk: anticipating, avoiding, and mini- Develop and nurture supply chain risk management mizing supply chain upheavals caused by weather skills as part of employees’ job descriptions. events, political havoc, technology problems, economic • Deploy analytical tools that help the organization turmoil, market changes, currency swings, supply short- manage risk. ages and labor strife, to name but a few. 2. Centralize the risk management function. Unfortunately, these challenges are becoming more Centralized risk management, in our view, can be a common. In fact, various indices show that volatil- significant advantage because it helps companies plan ity—the result of tumultuous political, environmental, and react to risks in a coordinated and efficient manner. technological, and financial events—is double that of Compared to the survey population as a whole, leaders any point in the past 30 years. are far more likely to have a centralized risk manage- But how adept are companies at supply chain risk ment function that is led by a senior executive who management? Do their risk-minimization initiatives oversees all risk management activities. pay them back, in part or in full? Is there one specific This doesn’t mean that centralization is the only way approach that enjoys a higher than average chance of to go, even though it speaks to the importance of estab- success? In net, how relevant—and reward- ing—is supply chain risk management? To find out, Accenture surveyed more than Various indices show that volatility—the 1,000 senior executives, more than half of whom hold C-level titles such as chief supply result of tumultuous political, environmental, chain officer, chief procurement officer, and technological, and financial events—is double chief operating officer. Roughly 50 percent of that of any point in the past 30 years. respondents’ companies have annual revenue of $5 billion or more. Respondents told us that information technology lishing corporate-level guidelines for risk management and global economic turmoil are the most common and and developing a consistent, enterprise-wide approach. impactful drivers of supply chain risk. And they cited Once a corporate risk management philosophy and quality management, supply chain planning, and talent methodology have been defined, a company could opt and skills optimization as the supply chain areas most to design individual, more-local approaches that reflect vulnerable to risk. the organization’s unique supply chain structure and Virtually every respondent reported that their supply risk profile. chain risk management investments have generated a 3. Make smart and significant risk-manage- positive ROI. But perhaps most notably, the research ment investments. Leaders were nearly three times revealed a small group of leaders that cited supply chain as likely as other respondents to cite plans for boosting risk management ROIs in excess of 100 percent. Here supply chain risk management investment by 20 per- are three behaviors associated with the leaders. cent or more within two years. And it’s pretty clear that 1. Make operations risk management a top some of the most important investments companies can priority. Sixty-one percent of the leaders (compared make are those that enhance visibility. to 37 percent of others) consider supply chain risk Innovations like supply chain control towers and management a strategic imperative. Armed with this demand forecasting factories improve an organization’s perspective, leaders are likely to: ability to collect and analyze data from across the supply • Formalize risk management as a specific topic for chain, thus making it easier to see disruptions coming, discussion in management meetings. plan more effectively, and respond more readily and • Install a risk management officer as part of the appropriately. company’s senior hierarchy. These insights are consistent with findings from • Establish and propagate a culture of risk manage- another Accenture research effort that revealed that

22 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM Pearson on Excellence

Responding companies reported • Develop innovative products and services widely varying returns on their risk with flexible approaches. management investments • Respond flexibly and quickly to last-minute changes. Risk is a significant—even ubiquitous—con- 1% to 25% 39% cern, which is why most any company should consider a formal, individualized approach to 26% to 50% 33% risk identification, avoidance, minimization, and remediation. 51% to 100% 21% At a minimum, that means defining an overall, corporate-level strategy and then determining the More than 100% 7% degree to which execution should be centralized or decentralized. Regardless of what approach is

Source: Accenture taken, visibility will be vital. Organizations can’t see the future, but they can learn to view each of companies perceived as leaders in managing volatility the supply chain’s components and activities in some- and risk often master these four capabilities: thing close to real time. • Capture data across the supply chain and develop Factor in the ability to anticipate problems and pre- actionable insights from it. pare for the unexpected, and you have the rudiments of • Build adaptable structures to respond to changes. a high-ROI supply chain risk management program. M

WE BRING YOU CLOSER TO YOUR CUSTOMERS

In today’s fast moving world, improving the supply chain is the only way to bridge the gap between you and your trading partners. To accomplish this, you will need an innovative team of dedicated professionals with over 30 years of experience in logistics and ocean transportation. You will need more than a positive customer experience. You will need a company committed to improvement and innovation. At Seaboard Marine, your customers are closer because our customers are at the center of everything we do.

NORTH AMERICA CARIBBEAN CENTRAL AMERICA SOUTH AMERICA

HEADQUARTERS Facebook.com/SeaboardMarine 8001 NW 79th Avenue . Miami, FL 33166 Twitter.com/Seaboard_Marine www.seaboardmarine.com P 305.863.4444 . F 305.863.4400 Linkedin.com/company/Seaboard-Marine

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 23 EXCLUSIVE: MASTERS OF LOGISTICS

23rd Annual Study of Logistics and Transportation Trends Who’s winning the

Results from our annual survey suggest that carriers, driven by a need to maximize profitability, are at a polar opposite with shippers who are focused on reducing costs. This lack of alignment has created a struggle that has resulted in a loss of focus on the bigger prize—being able to compete supply chain to supply chain.

BY MARY C. HOLCOMB, PH.D., ASSOCIATE PROFESSOR, UNIVERSITY OF TENNESSEE; KARL B. MANRODT, PH.D., PROFESSOR, GEORGIA SOUTHERN UNIVERSITY

he analogies between the game of “tug of war” and The results of our 23rd Annual Study of Trends and Issues in the current state of freight transportation manage- Transportation and Logistics suggest that the winner in the ment are almost boundless. Increasing transporta- “new normal” business environment will be those companies tion costs driven by a host of factors has now cre- that pull together in order to achieve their opposing objectives. ated a struggle between shippers and carriers as This involves two critical facets: establishing the gaps Teach side seeks to achieve their goals. that exist between current and desired future practice and In fact, the results of the 23rd Annual Study of Trends then mutually deciding upon the priority of actions to close and Issues in Transportation and Logistics neatly define the them. In other words, carriers and shippers that master tussle, where carriers are pulling hard to maximize their the gap will have to determine how they can leverage their profitability while shippers are focused on reducing rising knowledge and expertise to collaborate even when they transportation costs. have conflicting goals. Shippers are being pulled into higher rate territory as carriers deal with the impact of compliance, a driver short- Understanding the current state age, and increased demand—all of which are driving up All the study respondents share a common view of the chal- their costs. And to make the situation worse, constantly lenges presented by the current business environment. The changing customer requests coupled with increasing cost to serve (distribution), inventory management, control, demand uncertainty has created an environment where and labor costs as well as total landed costs are combining the only constant is uncertainty. with the factors previously discussed to force changes in the The Global Recession signaled changes to the operating way companies are managing transportation and logistics parameters of the game that most of us didn’t fully under- activities. stand. It has given temporary advantages to carriers, much It’s now clear that our new world consists of customers like the shippers had in earlier times. Yet, like tug of war, the demanding shorter order fulfillment cycles, white glove ser- game results in one winner and one loser. vice, and integrated omni-channel strategy to support their Is this the game that carriers and shippers should be purchasing expectations. In order to support these cus- playing? Or, should they change the rules of the game and tomer requirements, service levels, and offerings must also work together to solve problems that affect both of them, increase. thereby allowing both to achieve their goals? What would While carriers have the capability to provide the happen if a team was composed of carriers and shippers desired services at the needed level, it often comes at working together to solve their mutual problems rather than a cost that many shippers have difficulty accommodat- competing? ing in the current environment of cost reduction. This

24 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM MASTERS OF LOGISTICS WEBCAST Results of the 23rd Annual Study of Logistics and Transportation Trends September 25, 2:00 p.m. EDT logisticsmgmt.com/2014masters

tug of war?

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 25 EXCLUSIVE: Masters of Logistics

situation sets the stage for a tug of Domestic transportation spend as a war between the two groups in that percent of sales, 2014 versus 2013 shippers need more in terms of ser- vice, but are unwilling—or unable— (Percent of respondents) 26.5%26.5% to obtain the transportation budget to >5% support the additional cost that carri- 30.9%30.9% ers say the increased levels of service 20.6%20.6% ) 4-5% and offerings produce. 12.7%12.7% In fact, many shippers are asking for 11.8%11.8% 3-4% 15.5%15.5% cost reductions at the same time that 23.5%23.5% they’re asking for improvement in ser- 2-3% 25.4%25.4% vice. In a marketplace where capacity Percent of salesPercent

( 17.7%17.7% is tight and carrier costs are increas- 1-2% 12.7%12.7% 2014 ing due to factors such as the hours- 0% 2013 <1% of-service (HOS) rule change and the 2.8%2.8% impact of CSA, a struggle has ensued Source: 23rd Annual Study of Logistics and Transportation Trends to find a collaborative point. (Masters of Logistics) The tug of war atmosphere is made more complicated by the fact that 2. Strategic/core carriers help com- other, carriers and shippers must shippers and carriers have diametri- panies achieve their business goals and work on those areas that will result cally opposite business objectives. The objectives through the transportation in lower operating costs for the car- study results show that the primary services they provide. rier, while providing better service to objective of carriers is profit maximiza- Unfortunately, there is one other end customers. tion while the main goal for shippers is element on which carriers and ship- “This is where strategy really mat- cost reduction. pers had a moderately high level of ters,” notes Tommy Barnes, president How can two parties achieve suc- agreement. Both agree that shippers of Con-way Multimodal, one of this cess and collaborate under these cir- rely heavily on price when choosing a year’s survey analysts. “Companies cumstances? Perhaps the answer is strategic/core carrier. It’s difficult to be have to share their strategic plan in the two parties finding common innovative, strategic, and help achieve with the carriers so that they can bet- ground. Our analysis of this year’s your customer’s goals while being the ter meet the needs of the customer. results shows that shippers and carri- lowest cost service provider. And on the flip side, carriers need to ers are aligned on two key points: This gap between shippers and share their plans as well to make sure 1. Strategic/core carriers add value carriers represents a zone of oppor- that there is alignment. Misalignment to companies through the transporta- tunity to change the current tug of drives up costs and increases the tion services they provide. war. Instead of pulling against each potential for misunderstandings.”

Transportation modal performance, 2014 versus 2013 TL LTL Intermodal Rail Parcel Measure 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 Correct invoice (number of correct 92.5 96.3 94.0 92.0 93.0 95.8 94.8 97.4 93.3 95.6 invoices / total invoices) On time delivery (number of 94.6 93.3 93.2 92.9 92.3 91.6 89.3 92.9 94.5 97.4 deliveries received on time/ total deliveries) Damage (damaged shipments / 2.4 0.3 2.6 1.6 3.5 1.1 4.2 0.5 1.8 1.2 total shipments) Equipment availability (% of your 92.9 87.6 96.5 94.5 92.6 90.1 95.3 95.2 97.3 99.1 requests that can be satisfied with available equipment at the time of your request) Turndown ratio (total shipments 3.7 6.9 1.5 0.8 5.1 3.1 4.2 0.3 1.5 0.6 declined / total shipments offered) Source: 23rd Annual Study of Logistics and Transportation Trends (Masters of Logistics)

26 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM MASTERS OF LOGISTICS WEBCAST Results of the 23rd Annual Study of Logistics and Transportation Trends September 25, 2:00 p.m. EDT logisticsmgmt.com/2014masters

Mind the gap: Differences that matter revealing. TL, LTL, and intermodal itization. The opportunities are found To “mind” means to pay attention or providers showed meaningful declines in the following statements that ship- concentrate on something. For ship- in equipment availability. In the case pers widely agreed with: pers, the primary things that they of TL, this service challenge was also • The process of moving to a new mind are the cost of service and the reflected in the turndown ratio that strategic/core carrier is not quick and resulting service they receive for increased substantially. easy. those expenditures. For the other modes, the turndown • Strategic/core carriers are not the Data from the annual study show ratio declined, which may suggest primary source of innovation in trans- that some substantial shifts in spend- that carriers are doing a better job portation services. ing have occurred since last year. There of managing their available capacity. Our interpretation of the first point were no companies that reported The law of supply and demand sug- is that the relationship investment that transportation expenditures of less gests that this situation will lead to a shipper makes to elevate a carrier to than 1 percent of sales. The results increased cost as each unit of avail- a strategic/core level is intended to be suggest that increasing transportation able capacity becomes more valuable long-term. After being “promoted” to costs have moved this group to the 1 in the marketplace. this level, carriers have the opportunity percent to 2 percent of sales category. to leverage the partnership. Further, companies spending between Mine the gap: Finding “gold” “This is where the long-term view is 4 percent and 5 percent of sales on Results from this year’s annual study so critical,” says Joel Clum, president transportation showed a significant further point out why the tug of war of CarrierDirect, a research partner in increase from the previous year. between shippers and carriers is not a this year’s survey. “Too many times car- While the year-over-year difference winning game plan for either party. riers and shippers have taken a trans- in the >5 percent group points towards It’s clear that both parties agree that actional view of their business. But a shift, further analysis shows that this price is a major factor when choosing this focus will never lead to efficien- difference is not statistically signifi- a strategic/core carrier. Further, they cies and “wins” in the market. A long- term view gets both parties to think Achieving maximum flexibility about sustainable solutions and build- ing mechanisms to adapt to a changing environment.” Increased The ability to leverage the partner- Reduce order Utilize multiple modes operational fulfillment lead times of transportation ship requires a deep understanding flexibility on the part of the carrier of what mat- ters most to their strategic customer Source: 23rd Annual Study of Logistics and Transportation Trends and then meeting or exceeding those (Masters of Logistics) requirements. The penalty for not doing this was also revealed in the cant and this it is due to changes in the agree that many of the transportation study results: the shipper can, and will, size of companies that participated in services provided are highly standard- switch significant volumes of freight to the study. ized, which in turn makes standardiza- other strategic/core carriers. Realistic or not, many shippers expect tion of the processes and procedures The second opportunity area is one that spending more money should result more straightforward. These factors that has risen in importance as trans- in better service—or at a minimum the point to a commoditization of trans- portation costs have increased and the maintenance of current service levels. portation. concept of value-add becomes more The data show mixed performance out- While at first glance commoditiza- widely adopted. In the past, offering comes. Improvements in service were tion of transportation services may a quality service at a reasonable price reported relative to damage, with all seem like a viable avenue for shippers maintained a carrier’s competitiveness modes showing substantial declines in to reduce costs, it may be more costly in the marketplace. Today, shippers damaged shipments. On-time deliv- in the long run as continuous improve- seek transportation partners that can ery for truckload (TL) and intermodal ment and differentiation of service are help them improve the efficiency and declined, with TL reporting the largest needed to compete. For carriers, com- effectiveness of their organizations. drop in on-time delivery year-over-year moditization will likely drive the rela- They require innovative processes with a 1.3 percentage point decline from tionship to a more transactional one that drive down costs and improve 2013. with an emphasis on price. productivity. They expect value-added The data for two service ele- However, the study results also services that will lead to the creation of ments—equipment availability and reveal where opportunity gaps exist to new business opportunities. The study the turndown ratio—are particularly stop the progression towards commod- results indicate that presently strategic/

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 27 MASTERS OF LOGISTICS WEBCAST Results of the 23rd Annual Study of Logistics and Transportation Trends September 25, 2:00 p.m. EDT logisticsmgmt.com/2014masters core carriers are not delivering on this in the planning and implementation ing supply chains on the field. While need. The message to carriers is simple: stage of projects or initiatives to reduce a shipper or carrier might win in the If you don’t want to compete on price, order fulfillment lead times. Based on short term, they neglect to take into you’ll need innovative services and the overall theme of our findings, now account the future consequences of ideas to make your business stand out is the time for strategic carriers to pro- these actions. Further, the current from the competition. vide their input to develop processes business environment makes the exist- The last area for minding the gap and procedures that achieve the maxi- ing atmosphere between carriers and between carriers and shippers involves mum flexibility possible. shippers untenable in the long term if a deeper understanding of where the The data indicate that 46 percent both desire to succeed. two parties need to work together to of the study participants have already Perhaps the most compelling succeed in the marketplace. Study incorporated the use of multiple modes argument for reforming the current participants noted that increasing of transportation to increase opera- relationship between carriers and cost to serve customers, changing tional flexibility. For shippers that are shippers are the answers to the fol- customer requirements, and demand in the planning and implementation lowing questions: Is what we’re doing uncertainties are causing them to stage (34 percent), carrier involvement today actually working? Are we tak- manage transportation and logistics is critical to ensure that transportation ing cost out of the supply chain? Are differently than before. Indeed, these is leveraged to the extent possible to we increasing service levels to our conditions make it essential for com- achieve both parties’ objectives. customers? Do we really understand panies to be able to quickly respond what factors drive our partners in the to change as it occurs. Power to master the gap supply chain? Who will lead the way? Companies have to be flexible in In a tug of war, only one side wins at Even if many of the answers are “yes,” order to take action as necessary. The the expense of the loser. Abraham the fact of the matter is that tomor- study findings indicate two important Lincoln famously noted that “a house row’s innovative solutions require col- areas that companies are working on divided cannot stand.” The internal laborative attention today. to improve operational flexibility that warring, bickering, and contentions of Our customary theme for the need innovative input from their stra- a nation makes it weaker and vulner- annual study has been to focus on tegic carriers—reducing order fulfill- able to external threats. the Masters of Logistics, or those ment lead times and utilizing multiple In the same way, supply chains are logistics operations inside compa- modes of transportation. weakened when its members attempt nies with greater than $3 billion in The study results show that an to gain an advantage over the other, annual sales. The way we define this equal percentage of companies are losing sight of the other compet- group has been evolving over time from the largest revenue companies to those companies that establish Inside the 2014 numbers the bar for leading-edge practice across a number of areas such as his year, 766 domestic and global respondents (53.3 percent) were smaller supply chain visibility, operational logistics, transportation, and supply firms with reported annual revenue less flexibility, and service excellence. T chain professionals participated in than $500 million. The results of this year’s study con- our study that was done in cooperation with Respondent companies represent firm that the size of company does research partners Con-way Multimodal, a broad and diverse set of 15 industry not make an organization a Master of CarrierDirect, and Logistics Management sectors ranging from pharmaceuticals to Logistics. Rather, the findings suggest magazine. We’d also like to thank all of our food. Since the beginning of the study, that the Masters will be those compa- participants for taking the time to offer their the core group of participants has been in nies that use the power of “minding insight on trends and issues relevant to the manufacturing sector—this year they and mining the gap” between the cur- today’s busy logistics professionals. made up 32.8 percent of the total. rent and desired state and then mas- Participants accounted for an esti- Consumer product companies repre- tering how to deliver the best value in mated $19.7 billion in domestic transpor- sent the largest sub-sector of that group the form of service, cost, and innova- tation expenditures and over $11.4 bil- at 11.5 percent. Over the past several tion to the ultimate customer. lion in international transportation. Large years we have strived to increase the Perhaps mastering the gap is a team companies with annual revenue of more participation of transportation provid- effort; or as Ray Kroc used to say: than $3 billion represented 17.3 percent ers in the study in order to more fully “None of us is as good as all of us.” of the study participants. Medium-sized understand this perspective. This year, firms, with between $500 million and that sector comprised 22.6 percent of Mary C. Holcomb, Ph.D., and Karl $3 billion in annual revenue, were 29.4 all participants, enabling us to do some B. Manrodt, Ph.D., are frequent percent of respondents. The majority of comparative group analysis. contributors to LM

28 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM MOL VESSEL ON-TIME PERFORMANCE APR. - JUN. 2014

ASIA-U.S. WEST COAST 98% ASIA-U.S. EAST COAST 58% TRANSATLANTIC 30% ASIA-EUROPE 46% ASIA–EAST COAST SOUTH AMERICA 72% ASIA-MEXICO/WEST COAST SOUTH AMERICA 67% INTRA ASIA 62% TARGET: 100% IN-TERMINAL TRUCK TURN TIME NORTH AMERICA JULY 2014

JACKSONVILLE 16.0 MIN. LOS ANGELES 33.0 MIN. OAKLAND 22.0 MIN. TARGET: <30 MIN. Operations performance you can count on.

Arriving. Reducing. Processing. Improving. MOL is now in the third year of publishing key performance indicators. Numbers can fluctuate for a variety of reasons but we strive to be your partner in performance. Review all of our fresh KPI results at CountOnMOL.com. Transportation Best Practices/Trends

3PL management: Building the dream house

BY BROOKS BENTZ AND BILL KAMMERER, ACCENTURE

nce, in what seems to be a very long time ago, com- as well. “Next week” became “tomorrow,” and customers panies took responsibility for their own logistics, soon came to expect the ability to track the whereabouts from inbound freight to outbound nished prod- of shipments—not just online, but through mobile applica- uct. The concept of an integrated supply chain did tions. If the 3PL was unable to deliver on these expecta- not yet exist. tions, customer satisfaction suffered. OThe move to an integrated supply chain and, later, to the Of course, there are other forces at work in addition too. formation of partnerships with third-party logistics (3PL) pro- Companies have become accustomed to operating in an envi- viders, was a gradual one, spearheaded by the rise of airfreight ronment marked by volatility and uncertainty. Global supply companies such as FedEx and UPS. Over time, companies chains increasingly depend on transportation and logistics in began to see the importance of getting logistics right, especially order to be effective, so the impact of disruptive events is as changes in manufacturing processes stressed “just-in-time” greater than ever. The end result, though, is the same: Logis- delivery and other techniques for freeing up working capital. tics are more important than ever—far too important for a While this was happening, new theories of management 3PL provider to handle without careful strategic and tactical stressed the concept of core competencies and focusing on direction from the company. the activities that were central to the company’s success. With the rapid adaptation of digital technologies, logistics In most cases, those activities did not include logistics. So, is no longer a discrete element in a supply chain made up of the reasoning went, companies should let outside suppliers clearly de ned links. Rather, we see and are helping compa- solve their logistics concerns and concentrate on important nies realize the evolution of what we call the “digital supply net- things, like manufacturing and customer service. work,” where talent, mobility, social media, analytics and Big That concept isn’t working nearly so well anymore. Compa- Data, cloud computing, and physical locations converge to cre- nies have delegated a vast and ever-growing range of responsi- ate digital supply networks that offer four distinct advantages: bilities to 3PL providers, but in doing so they have lost a degree Speed. Companies bene t from enhanced responsiveness of control over what has become one of the most important and proactive prevention; they can spot irregularities and address capabilities in the digital age—the ability to get an item from them long before they become full-blown problems. Resources one place to another in a way that meets customer expectations. are managed on an automated basis, leaving skilled personnel The “meets customer expectations” part is critical. In available to deal with non-routine, “exception” situations. the far distant past, customers really didn’t have expecta- Scalable. In a digital supply network, integration of various tions about logistics. If the product arrived on schedule and elements of the supply chain creates organizational  exibility wasn’t damaged in the process that was satisfactory. and provides the basis for a personalized customer experience. Technology changed all that. With the rise of organizations Intelligent. Analytics based on high-quality data provide such as Amazon.com, logistics became not just a core compe- actionable insights and a strong foundation for innovation. tency, but the core competency for many organizations. Expec- Execution is automated, with uniformly high standards. tations—for both retail and commercial customers—changed, Connected. Organizations have real-time visibility into

30 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM Building the dream house

The continued evolution of “digital supply networks” depends on just how well shippers and their third-party logistics provider partners can work together to take costs out of the system while making improvements in flexibility and speed. Our consulting team offers a high-level blueprint for making it happen.

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 31 Transportation Best Practices/Trends: 3PL Management

Convergence of supply chains even 4PL providers while establish- ing stronger control over every aspect Talent Information of the supply network. One way to do supply Mobility supply Cloud chain chain this is by moving to a “control tower” model, bringing together the capabili- ties required to manage complex, end- Digital technologies to-end supply chain processes. Digital At their most basic level, control Business Supply towers are integrated transactional sys- Network tems, delivering real-time visibility as to what materials are where in relation Supply chains to established schedules. Dashboards monitor progress and monitoring sys- Physical Financial tems generate alarms to trigger rapid Social Analytics/ supply supply media Big data action when problems arise. chain chain At the next level, control towers incorporate advanced analytics to deter- Source: Accenture, 2014 mine the root cause of supply chain issues. They run simulations and “what every stage of the supply process, from costs. Shareholders and management if” scenarios to gauge the impact of inward shipments to customer deliver- look for downward, rather than upward, potential disruptions as well as the fea- ies. Collaboration with other parts of the cost trends. Third, the demarcation line sibility of different approaches—they organization as well as with key outside between physical and digital assets is also analyze risks and the effectiveness suppliers is seamless. blurring. With machines and physical of various responses to such risks. In the digital supply network, 3PL objects communicating with each other, At the highest level, the control tower providers are not going away. If anything, organizations can act more quickly and delivers insights to improve decision- their role becomes even more vital, as more intelligently. Those that fail to making and makes strategy easier to exe- companies seek to take advantage of their adapt will lose competitive ground. cute. This means more than having the unique assets, such as far-flung DCs and Some companies have moved from a company do a better job in meeting key state of the art materials handling sys- 3PL to a so-called 4PL solution, which performance indicators; it means KPIs tems, using them as a shared resource means managing a suite of 3PL ser- are redefined to reflect new capabilities without investing their own capital. The vice providers. In a 4PL environment, and greater growth potential. key question is how to make the 3PL rela- an outside provider takes end-to-end Control towers may require capi- tionship work best for the organization, responsibility, not just for traditional tal expenditures, but the true charm of taking costs out of the system, while mak- logistics functions such as pick, pack, the model is its flexibility: From an in- ing improvements in flexibility and speed. and dispatch and freight billing, but sourced, conventional execution model also for non-traditional activities such to an out-sourced, cloud-based, variable Building the dream house as online ordering—often through a cost model, the options are innumerable In our view, the big problem in the proprietary website. They may even to get to the right solution. relationship between companies and market the company’s products. The transformation from a tradi- their 3PL providers is conceptual, not While the 4PL concept might make tional supply chain to a digital sup- operational. Too many companies say, in sense in some circumstances, finding ply network—one that incorporates effect, we have a problem; here is some a truly “agnostic” 4PL provider—one trusted 3PL and 4PL providers as money; make the problem go away. It’s a with no attachments to, or ownership part of a seamless, collaborative enter- bit like handing a large check to a con- of, transportation or other fixed assets— prise—is not a simple undertaking. tractor and saying, I need a house; here is difficult, and determining where the Companies need a high-level road- is some money; let me know when the company’s responsibilities end and the map to get from their current state to a house is finished. Odds are that the 4PL provider’s begin is not always easy. highly functional digital supply network. homeowner will not be happy with the One of the best approaches: Examine There can be little doubt, however, that final results and neither will the com- the existing supply chain to identify areas supply chain and logistics will become pany that behaves similarly when they of underperformance as well as areas ever more central to corporate strategies, contract with a 3PL provider. with high potential for improvement. so now is the time to plan—and to act— Several forces are converging to high- With priorities identified, the next step is on building that dream house. light the importance of the relationship to make sure that lines of responsibility between companies and 3PL providers. are in place to make the right decisions Brooks Bentz and Bill Kammerer are First, as noted, the buying public and act on them quickly. managing directors for Accenture Strategy, wants and expects high performance. In many cases, companies can gain Operations, and are frequent Second, there is ongoing pressure on the benefits associated with 3PL or contributors to LM

32 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM

Supply Chain & Logistics Technology

Mobile Supply Chain: Significant progress, but a long way to go

Our top technology analysts give us an in-depth look at the current penetration of wireless and mobility outside of the four walls and offer their outlook on the future of real-time, 24/7 supply chain monitoring.

BY BRIDGET MCCREA, CONTRIBUTING EDITOR

s mobile devices and wireless functionality con- some time now,” he adds. “Now, we’re seeing a lot more tinue to penetrate our everyday lives, the same interest from a wide range of companies that want to technologies are having considerable impact on develop massive networks that allow them to sense more the supply chain. Looking specifically at the area activity at multiple nodes within the supply chain.” that stretches from the dock door to the end deliv- Over the next few pages, we’ll round up the latest data Aery point, for example, it’s clear to see that mobile and wire- and insights into the current state of wireless and mobil- less technologies are helping shippers work smarter, better, ity in the supply chain, with an emphasis on what’s tak- and faster in today’s competitive business environment. ing place outside the four walls of the nation’s DCs. Our Driven by trends like omni-channel retailing, an increas- three leading analysts in this space offer their take on the ing demand for real-time supply chain visibility, and the top technology trends and explain just how close we are to technological advancements themselves, the fully mobile mobile-enabled, real-time visibility—that long sought-after supply chain is certainly coming into view. Nirvana of supply chain management. “We’re seeing substantial progress and significant invest- ments being made in this area,” says David Krebs, presi- Coming into sight dent of enterprise mobility and connected devices at VDC With the real-time supply chain within striking distance, Research. And while the concept of using mobility in the Krebs has picked up on an ongoing debate over what type environment outside of the warehouse and distribution cen- of device, level of ruggedization, operating system, and data ter (DC) isn’t new, Krebs says it’s becoming more accessible collection capabilities will best suit shippers’ needs. to a wider range of shippers. Is it, for instance, enough to equip drivers with smart- “Everyone from large couriers like UPS to smaller, spe- phones and related tracking/routing applications, or is cialty logistics organizations have been investing in mobile it wiser to include ruggedized devices whose software devices for proof of delivery, dispatch, and payments for is tightly integrated with the shipper’s home base? And,

34 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM perhaps even more importantly: Do these key elements need to be integrated with each other? “These are all valid questions that everyone is trying to figure out right now,” says Krebs, who defines mobility as a logistics professional’s ability to collect or access data when and where you need it. Backend analytics is another piece of the mobility puz- zle, Krebs says, as logistics platforms, software, and other components undergo significant modernization and trans- late into richer solutions for shippers and their customers. “Real-time visibility isn’t just about knowing where an item is in your supply chain,” Krebs explains, “it’s also about get- ting critical environmental information—such as a tempera- ture readings for items that are on a refrigerated truck— and better managing the chain of custody and avoiding any ‘black holes’ such as security vulnerabilities.” Krebs admits that such supply chain oversight can be compared to a Big Brother mentality, but adds that in today’s business environment, knowing what’s being delivered and when—and in what condition—are all critical knowledge points for shippers. Using a combination of handheld devices and wireless access, knowing exactly what goes on

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 35 Supply Chain & Logistics Technology: Wireless/Mobility Trends while products are on the road, on the own device” programs, that find driv- of at the high-frequency level,” says rails, in the air, or even on the high ers and other workers using their own Reiser. “These [scaled down] telemat- seas, becomes that much easier. phones and tablets to help connect the ics options are less expensive because In terms of the devices themselves, dots across the supply chain. they can be added as applications Krebs is seeing shippers use everything “BYOD is certainly something that to smartphones, which already have from ruggedized handheld devices comes up in conversation, especially built-in GPS.” As a core function, equipped with top-of-the-line data col- with some of the smaller or mid-sized these solutions connect smartphones lection capabilities to smartphone-like organizations that are interested in tak- with onboard computers. And while devices loaded with applications—and ing the approach with their delivery the cheaper versions may lack the everything in between—to improve staffs,” says Krebs. “We’re seeing some functionality required to track long- supply chain visibility. “Even consumer experimentation to that effect, as it haul shipments, they can help add a smartphones, with their integrated presents a potential option for some new level of visibility for local trans- camera technology and increasingly organizations.” portation networks. powerful platforms are influencing the Telematics are also gaining ground expectations of what and how a mobile and presenting potential for shippers. Hurdling the remaining barriers device should operate,” he adds. Defined as the convergence of tele- In assessing the barriers that remain communications and information pro- before all shippers have access to com- Bring your own devices, please cessing, telematics have gotten more plete, mobile-enabled visibility across Getting mobile devices into the hands affordable and are putting more real- the supply chain, Krebs says that bud- of a logistics operation’s on-the-road time information into shippers’ hands getary issues can keep companies from workforce is much easier than it across the supply chain. Clint Reiser, taking the leap. was, say, 10 years ago. There’s a good research analyst with ARC Advisory The hardware and applications are chance that even a small company Group, has seen more vendors offer- just one cost component, Krebs notes, working on a tight budget already has ing telematics solutions that are more with workforce training as well as cre- a team of workers who have purchased affordable and not as fast as their full- ating the underlying infrastructure one or more smartphones or tablets for blown cousins that communicate five necessary for integrating the system personal use. times to 10 times a second. with current solutions also coming into Knowing this, many employers are “The system may communicate play. And while mobility is usually a instituting more BYOD, “bring your once every couple of minutes, instead “Top 5” IT initiative for logistics opera- tions, Krebs says that the budgets ded- icated toward the cause don’t always How much mobility do you really need? reflect that supposed priority level. efore shippers distribute RFPs or cut superfluous and create complications. In terms of the integration challenge, Bchecks to cover the costs of mobile “Clearly you need visibility over your Krebs points to the cloud as one way supply chain technology, Simon Ellis, starting point, the warehouse, and the to make back-end, service-based plat- practice director at IDC Manufacturing ending point, the delivery location, but do forms more available and collaborative Insights, says that they should take a you actually need to know what goes on across a wider swatch of mobile users. step back and figure out what they really between those two locations?” asks Ellis. “The cloud is helping to bring down need to be able to gain mobile-enabled, An ocean journey that takes 10 days, on some of the barriers to achieving real- end-to-end visibility. average, can be planned around fairly time supply chain management and Ellis says shippers need to ask them- easily—with or without minute-by-minute logistics visibility,” says Krebs, who selves: Do you know when your ship- oversight via a mobile device. expects a continued push for this ments are leaving the warehouse? Do “The point is, just because you can supply chain Nirvana over the next you know how they’re being shipped? (If set up a real-time supply chain with 24/7 12 months. “It’s really quite an excit- you’re using UPS or FedEx, for example, visibility of every shipment, doesn’t mean ing time in terms of what we’re seeing then you have access to build-in track- that you should,” says Ellis, who sees the happening in the mobile space as it ing through you provider.) Do you know 24/7 concept being important for many relates to logistics applications.” when the shipments actually arrive at shippers, but not for all. Simon Ellis, practice director at their destination? Are you alerted to any “It’s a matter of figuring out whether IDC Manufacturing Insights, con- problems along the way? you really need to know that a truck is curs, saying that new innovations in Assuming the answer to all of these going 55 miles per hour down highway the space are being driven by a com- questions is “yes,” Ellis says that the 15, or if you can function just fine know- bination of user demands and vendor next question to ask yourself is: Do you ing that it’s on track and one time. Then innovation. And while he sees the use really need any more visibility than that? go from there,” he says. of mobility in the supply chain as more In other words, would more “scans” —Bridget McCrea, of an “evolution versus a revolution,” be helpful, or would they actually be Contributing Editor Ellis sees more and more companies attempting to capture field-based data

36 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM Are my customers shopping online with someone else?

UPS® can help deliver Your customers know exactly providers, you can accelerate what they’re looking for when your e-commerce strategy the integrated online they order online. And they need and stay ahead of your it at exactly the right time. If your customers’ needs. experience your website doesn’t offer features like real-time availability, firm delivery Make Returns Easier customers want. dates and easy returns, they’ll shop with someone who does. Returns policies are an important factor in a customer’s purchase ® 34% of industrial products decision. With UPS Returns buyers have made an online solutions, you can improve purchase outside of their customer satisfaction and your supply base. bottom line through improved tracking, less handling and better Make Buying Easier billing and reconciliation. UPS can help you create a more Get insights into your customers’ competitive customer experience needs with the UPS B2B Purchasing online by helping to integrate Insights study. Download a copy and streamline your inventory, at ups.com/insights. shipping, billing and returns processes. And, with expertise from UPS Ready® Program

Copyright ©2014 United Parcel Service of America, Inc. Supply Chain & Logistics Technology: Wireless/Mobility Trends

“BYOD (bring your own device) is certainly something that comes up in conversation, especially with some of the smaller or mid-sized Pull quote box here organizations that are interested in taking the approach with their delivery staffs. We’re seeing some experimentation to that effect, as it presents a potential option for some organizations.”

— David Krebs, president of enterprise mobility and connected devices, VDC Research

with the help of an automated device. be proactive about integrating data col- supply chain in ways they didn’t ve “In such cases, smartphones, tablets, lection and management capabilities years ago, expectations around vis- and similar devices are increasingly the into their solutions. ibility and performance are not going hardware of choice,” says Ellis, who, Retailers that have honed their to relax,” says Ellis, “they’re going to like Krebs, points to the BYOD move- freight movement processes to the intensify.” That, he concludes, will ment as another key point of progress point of complete ef ciency, for exam- drive motivations both on the part of for mobility in the supply chain. ple, are now trying to eke more sav- the shippers and the logistics software “The whole idea of BYOD is inter- ings through true, real-time, continu- providers. “At the end of the day, the esting and something that in the long ous visibility. According to Ellis, that’s mechanics of achieving this goal will run is going to accelerate adoption,” where the vendors come in. fall more to the latter,” he says. says Ellis. Also moving the adoption “As omni-channel commerce needle right now is a supply chain soft- becomes more and more prevalent, Bridget McCrea is a Contributing ware community that is attempting to and as consumers intrude into the Editor of Logistics Management

Ranked #1 and #2 for Supply Chain Management undergraduate and graduate programs by U.S. News & World Report, Michigan State University now offers seven online master and advanced master certificates in the Supply Chain Management discipline, including the new 100% online Master Certificate in Advanced Procurement Management.

Attend One of the Nation’s Top Business Schools – 100% online!

All courses are offered through the world-renowned Eli Broad College # of Business. You’ll be taught by the same campus-based faculty – but 1 IN with the added convenience of 100% online video-based e-learning. SUPPLY CHAIN MANAGEMENT Enroll in the Top Program in Supply Chain Management! Learn From the Best With Call 855-395-8275 | Visit MSUOnline.com/SCMcerts Master Certificates © 2014 All Rights Reserved. Made Available by University Alliance® The Nation’s Leading Universities Online. | MCID: 29460 100% ONLINE! If you’re in the pizza and pasta business, so are we. We may be in shipping, but your business is our business. From Europe, Asia, Canada, Mexico, Alaska, Hawaii and beyond, our LCL/FCL services and global logistics experience ensure your imports and exports get where they need to go. We deliver promises, in any language. odfl .com/global ®

OD•DOMESTIC OD•EXPEDITED OD•PEOPLE OD•GLOBAL OD•TECHNOLOGY HELPING THE WORLD KEEP PROMISES.®

Old Dominion Freight Line, the Old Dominion logo and Helping The World Keep Promises are service marks or registered service marks of Old Dominion Freight Line, Inc. All other trademarks and service marks identifi ed herein are the intellectual property of their respective owners. © 2014 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved. Global Logistics América Latina: Proceed with Economic activity in Latin America and the Caribbean is expected to stay in low gear in 2014, according to the IMF’s latest forecast for the region. Shippers are advised to practice extreme due diligence before entering the marketplace.

BY PATRICK BURNSON, EXECUTIVE EDITOR

study by the Boston Consulting Group (BCG) ties over the medium- and long-term future. “Deepening the shows that a series of global economic factors regional market would offer additional room for the services over the next few years will cause China to lose sector to grow and diversification to flourish,” says Garcia. part of its cost advantage. The result, according However, transport infrastructure remains deficient, with to BCG, will be the relocation of many industries an urgent need for investment in roads, railways, ports, Ainto Latin American economies that offer new incentives. and airports. Garcia suggests that investing 5.2 percent Many other leading trade analysts agree, but offer certain of regional GDP per year in infrastructure projects would caveats. “Further investment in transport infrastructure—and help Latin America close the infrastructure gap with other better logistics performance in general—is certainly needed in emerging regions and could increase GDP growth by an the region,” says Enrique García, president and CEO of CAF, estimated 2 percentage points per year. the Development Bank of Latin America. “Latin America’s “Much can also be done in the short term to improve the supply chain and production structure is more fragile than that transport of goods and services using existing infrastructure,” of countries comprising the Organization for Economic Coop- Garcia says. “This can be achieved with integrated logistics poli- eration and Development (OECD).” cies, modern storage facilities, efficient customs and certifica- He adds that the share of time-sensitive exports in Latin tion procedures, as well as promoting competition in transport.” America, such as pharmaceuticals, is three times that of the OECD countries. This fact underlines the importance of Brazil’s play improving logistics to strengthen overall economic performance. As host of the World Cup this year, many soccer fans had The Latin American Economic Outlook, a study done by high expectations for Brazil to win it all. But just as the nation the OECD earlier this year, says that technological innova- failed to meet that goal, international logistics giants have also tion and economic diversification will be key to boosting pro- been disappointed in a different score. According to Soren ductivity and potential growth. Latin America’s contribution Karas, vice president and head of group strategy for ocean to global gross domestic product (GDP) growth has remained giant A.P. Møller-Maersk,“significant transport bottlenecks” virtually unchanged—between 7 percent and 9 percent— remain in Brazil and much of the rest of Latin America. since the early 1990s, while that of emerging Asia markets “However, Brazil is one of the most vocal countries about has more than doubled in the same period. the need to overcome these problems to realize its export Many Latin America economies remain heavily focused ambitions and drive continued social progress,” says Karas. on natural resources. In fact, commodities make up 60 per- “To that end, the government is stepping up its investments cent of the region’s goods exports, up from 40 percent at the in infrastructure and is inviting private capital.” beginning to the last decade. One of the key challenges in Brazil is the relatively high cost The OECD report encourages countries to use their natu- of logistics—corresponding to some 15 percent to 18 percent of ral wealth as a foundation for transitioning to production pro- GDP as compared to 8.2 percent in the U.S. According to Karas, cesses that use technology and knowledge. It also advocates reducing these logistics costs would help boost trade. that Latin American economies diversify exports, particularly At the same time, major maritime players are targeting toward the services sector, which offers greater opportuni- the region in an effort to maximize their extra capacity. Last

40 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM year, Maersk Line introduced a new type of container ves- sel to the South American market, the so-called SAMMAX (South America Maximum) vessels. These ships carry 72 percent more containers per vessel compared to Maersk Line’s previous vessels on that trade lane. In spite of their larger size and capacity, the ships have been constructed to pass through shallow waters, which his- torically have limited the benefits of larger ships in Brazil. “The ships have a positive effect on the ports at which they call,” says Karas. “For example, in Brazil’s biggest port, Port Proceed with CAUTION of Santos, their average berth productivity is now 37 percent higher than with the previous Maersk vessels.” According to Karas, this accelerates port turnaround and reduces the overall waiting time for shippers. That has a “trickle- up” effect offering a trade growth potential for the markets the ships connect. In Santos alone, this trade growth potential is estimated to be worth up to $1.4 billion annually without

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 41 Global Logistics: Latin America upgrades to the port. challenges and limitations,” says Rodolfo between 2010 and 2030. The Meso- Meanwhile, Brazil has significant Sabonge, vice president of market american sub-region, understood as social, environmental, and economic research analysis, for the Panama Canal a common economic space, span- reasons for “going coastal.” Today, coastal Authority. “In Central American coun- ning the area between Colombia and shipping only transports cargo volumes tries such as Honduras, for instance, the Mexico, is home to over 200 million corresponding to 4 percent of that moved focus is on developing road infrastruc- people. It lies on a relatively narrow by road transport. Switching freight to ture and north-south connectivity.” strip of land between the Atlantic and coastal shipping would cut road acci- Guatemala is pursuing a grand plan Pacific oceans, making it a global east- dents, road maintenance, medical and for a “Technological Corridor” that west link as well as a north-south trade material costs, as well as emissions. includes a 372-mile highway system, a corridor for people and goods within Maersk estimates that about 2.7 mil- transnational railway for container trans- the hemisphere. At its narrowest junc- lion twenty-foot equivalent units (TEU) port, upgrades of container port termi- tion—connecting different regions and can be moved from trucks to coastal nals on both its coasts, and construction continents—lies the Panama Canal. ships. This may not sound like a lot, but it of hydrocarbon storage facilities. corresponds to an 800 percent growth of Costa Rica’s capital city lies in an Canal expansion on schedule the coastal shipping industry. According agriculturally-rich highland valley Industry-wide consensus is that the Pan- to Karas, this modal split could reduce in the middle of the country. Logis- ama Canal expansion currently under road accidents by approximately 36,000 tics managers there are preparing for way constitutes a paradigm shift for per year at a cost of up to $1.7 billion. expanding light manufacturing activ- world maritime trade. At the very least, ity and government investment in road say experts, it will create greater econo- Multiple models to development development to facilitate exports. mies of scale in sea transport, allowing These indirect, highway-related exter- Colombia, an agricultural power- 12,600 TEU ships to use the new locks. nal costs may at times not receive the house and oil and natural gas exporter, At present, the canal can accommo- desired attention, say analysts for the with decades of experience in light date container vessels of up to 4,400 World Economic Forum. However, manufacturing and a much-improved TEU. The expansion project will be a if they did, the case for countries security situation over the last decade, boon for other sectors indirectly linked expanding coastal shipping appears is expanding its logistical capabilities to Canal traffic, further benefiting from convincing. on both coasts investing in its duty- the many competitive advantages. This “Throughout Latin America, govern- free areas and dredging its ports. includes Panama’s “dollarized” economy, ments and civil society have pursued Looking only at Central America, fiscal incentives, and favorable legal the development of logistics, with the U.S. Census Bureau expects the framework for services industries includ- specific approaches reflecting national population to expand by 25 percent ing merchant marine registry, an interna- tional banking center, and legal services. The Canal is the main driver within Florida’s Latin American rail connection Panama’s logistics cluster, and, in turn epending on who one listens to, the note trade analysts. the cluster strengthens the Canal’s Dexpansion of the Panama Canal is Meanwhile, the opening of FEC’s new position as an optimal transit option. set to be finalized in late 2015 or early intermodal container transfer facility ad- “This cross-sector synergy has a 2016. But even if those deadlines are jacent to Crowley Maritime Corpora- multiplier effect and increases the missed, there’s irrefutable evidence that tion’s Port Everglades terminal is provid- country’s overall competitiveness, as U.S. East Coast ports are preparing for ing shippers with more efficient cargo well as that of other countries in the more business with Latin America. handling and faster deliveries to Puerto region that can use Panama as a hub,” Florida, in particular, is investing heav- Rico and Caribbean ports. says Nelson Cabrera, manager of busi- ily in infrastructure to accommodate that Crowley’s Latin American liner ser- ness development at Lilly and Asso- growth. The Port of Miami recently re- vice will be enhanced further with FEC’s ciates International, a Miami-based ceived its first shipment of Chilean seed double-stack intermodal rail network global freight forwarder. corn, which was delivered to Chicago via as containers will no longer need to be Furthermore, says Cabrera, Panama Florida East Coast Railway (FEC). trucked via interstate highways to and is turning into the main “transport hub” The shipment is part of the port’s from an off-site rail terminal. for the region’s markets as it’s broaden- growing intermodal initiative, matching Additionally, the strategic location of ing a trade corridor that connects exist- products from Latin America to cus- the 43-acre, near-dock station is allow- ing and future consumption centers. tomers from the U.S. Midwest. With re- ing Crowley to handle bigger, heavier “The canal, together with a modern and cent improvements to the on-dock rail break bulk and out-of-gauge cargo more efficient ports system, makes the coun- system, Miami is now able to transfer efficiently and cost effectively because try the ideal place for cargo consolida- South American grain from ship, to rail, of the shorter distance required for tran- tion and distribution,” he says. to market, faster and more efficiently sit to the railhead. than many other ports in the nation, —Patrick Burnson, Executive Editor Patrick Burnson is Executive Editor of Logistics Management

42 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM We do more for… shippers receivers truck drivers industries our community worldwide commerce you.

We do more for you. From the minute you make the first phone call to the time your cargo arrives at its destination, everyone at the North Carolina State Ports Authority is devoted to exceeding your expectations. Need your cargo sorted? Handled to your specifications? Kept at a certain temperature? Custom solutions are no problem here. Not only do we go above and beyond for our customers, we also provide modern conveniences like interactive real-time inventory. For you, that means quality, efficiency, and – ultimately – greater value. www.ncports.com 1-800-334-0682 Discover the North Carolina Ports in Wilmington and Morehead City, plus inland terminals in Charlotte and Greensboro. Warehouse/DC Management Order Fulfillment: Locke Supply’s path to accurate productivity

Faced with booming volumes and subsequent picking challenges, a leading plumbing and heating products distributor integrated voice picking with its warehouse management system (WMS). They’re now fulfilling record volumes more accurately in less time and with fewer people. Here’s how they’re getting it done.

BY ROBERTO MICHEL, CONTRIBUTING EDITOR

he resurgent housing mar- “Our primary concerns were to Picking challenges ket has been a boon to Locke improve picking accuracy, reduce the Locke Supply has grown from a one- Supply, a plumbing, electrical, amount of time it takes to train our store operation founded in 1955 to heating, and cooling products people, and along those lines, reduce a large regional distributor with 166 distributor based in Oklahoma employee turnover,” says Zeller. “There branches serving five states. The DC’s TCity, Okla. But along with growing wasn’t one particular moment that trig- picking takes place during the night demand came escalating challenges in gered the decision to change our sys- shift, with 10,000 to 12,000 order accurately fulfilling orders to its 160- tems, but our sense was that the prob- lines per day. Those orders are picked plus branch stores from its central distri- lems with order accuracy, training, and from an inventory of about 27,000 bution center (DC) in Oklahoma City. turnover were accelerating.” stock keeping units (SKUs) that are The stores serve plumbers, electri- The solution Locke Supply turned to normally on hand at the approximately cians, and other contractors as well was a voice picking solution from Vocol- 300,000 square-foot DC. as consumers across five states. The lect by Honeywell that integrates with its In 2005, the company implemented order mix from the stores is varied, warehouse management system (WMS) the Total Warehouse Logistics (TWL) from small plumbing parts or electri- to provide voice-directed picking. The WMS from Infor to control inventory and cal components to big-ticket items like solution, says Zeller, has fulfilled Locke’s operations at the DC. Prior to the voice water heaters. Unlike a product manu- productivity goals within the DC, and as solution, pickers used radio frequency facturer shipping full pallets or cases a result, is getting positive feedback from (RF) terminals to access pick lists, to a Big Box store, a core challenge at managers at the branches. instructions, and record picking activity. Locke is accurate picking of items in a “Long before the voice system was Picking of smaller items is done on pick-to-pack process so that the stores put in, we encouraged feedback from a mezzanine level where pickers place have what they need. our branches, and we would frequently the items into cardboard boxes and put By late 2012, growing demand hear about problems,” says Zeller. “Now them on a motorized conveyer, which along with the picking challenges after putting in the system, it’s just the then moves the goods down to a pal- were leading to steadily increasing opposite. We’ve received a lot of calls let building where the store shipments problems at the DC, according Larry and e-mails from the branches telling us are staged. Workers using lift trucks Zeller, Locke Supply’s CIO. how great the accuracy has been.” and motorized picking carts pick larger

44 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM “Our primary concerns were to improve picking accuracy, reduce the amount of time it takes to train our people, and along those lines, reduce employee turnover.” —Larry Zeller, CIO

Larry Zeller, CIO (left) and Shane Bruner, application support analyst, Locke Supply

David McNeese/Getty Images

items from other areas of the DC. “It simply takes longer to train pick- on how to correctly use the handheld Accurately and ef ciently execut- ers on that type of system, especially terminals to execute their picks. ing all of this picking activity was chal- if they have no experience with RF lenging with handheld RF terminals, terminals. Not only that, in com- Finding the solution explains Shane Bruner, application parison to voice picking, you always During the time when the problems at support analyst for Locke Supply who have to keep an eye on the device, so the DC were growing, Zeller, Bruner, led the implementation of the voice immediately, the picker’s attention is and another manager for Locke Supply solution. According to Bruner, work- cut in half.” were at an independent conference for ers would have to learn how to scroll Multiple problems arose from these users of Infor’s distribution software through and navigate the terminal user challenges. Order accuracy was esti- when they came across a voice picking interface as well as how to input the mated to be in the 95 percent accuracy solution from Vocollect that integrates correct information to con rm picks. range. Turnover was high—so high with WMS data and uses wearable, “With an RF system, you have a that, at one point, much of the picking RF-enabled hardware. handheld unit that is driven by func- had to be done by temporary workers. Picking information and instruc- tion keys and what can seem at times This left the DC leadership constantly tions are conveyed to the worker via cryptic screen messages,” says Bruner struggling to train temporary workers voice command to guide picking activi-

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 45 Warehouse/DC Management: Order Fulfillment ties. Instead of carrying a handheld across the whole DC at once. Training Zeller likens the leap in training sim- terminal, pickers have a small terminal for a picker was completed in about plicity to getting voice directions from clipped onto a belt and wear a headset three hours—versus the three days it smart phone map app versus trying to that keeps both hands free. previously took to fully train a picker find a location by reading paper maps When Locke Supply’s managers saw using a handheld RF terminal. Bruner and street signs. “Your eyes are free, and the voice solution at the conference, and Zeller attribute the dramatic your hands are free, and you are just fol- and noted that it had the potential improvement in training time to the lowing instructions,” says Zeller. intuitive nature of “With the voice system, you put on the device, you voice commands. Productivity improvements are assigned a zone, and you are off to the races. “It’s more compli- The training ease of voice-directed Everything is voice directed, so it takes much of the cated when you put a picking carries over to operational pro- complication out of it.” device in someone’s ductivity improvements. Rather than hands that they have having to navigate on a screen to see — Shane Bruner, application support analyst to operate them- pick instruction or find where to record selves by punching data, everything is a simple audio to significantly cut training time and in commands and navigating a screen,” instruction or prompt, says Bruner. reduce errors, the decision was quickly says Bruner. “There tends to be this For example, rather than having to reached to deploy the system. immediate sense that they might mess key in the number of items picked for an While integration between the something up in the way they are using order, the voice system says, “pick four” Vocollect system and TWL was a first the device, so they don’t trust their from this location, and the worker con- and took some extra time to set up and abilities with the device. By contrast, firms the pick is fulfilled by responding test, implementation of the voice pick- with the voice system, you put on the “picked four” into the headset. The sys- ing itself was completed in under four device, you are assigned a zone, and tem also uses simple voice commands months, going live in March of 2013. you are off to the races. Everything is to confirm that the picker is in the cor- The solution was rolled out by pick- voice directed, so it takes much of the rect zone and guides the picker to the ing zone, says Bruner, rather than complication out of it.” correct aisle and shelf location.

freight We deliver and full with asset-based brokerage distribution transportation for any shipping transportation solutions… solutions... management and need... services… Creating network optimization value for our services... clients… Warehouse/DC Management: Order Fulfillment

So, instead of scrolling down a system because there was no cross talk- apparent when the picking process screen or using the keypad, the ing. Everyone was focused on interact- was more error prone, says Bruner. picker simply listens for instruc- ing with the voice system, getting a good The ease of training and ease of use tions and verifies by speaking simple pace going, and wanting to move fast.” with the voice system also has helped responses like “ready.” If the user In Zeller’s view, voice-directed pick- to “substantially” improve worker ever wants to double check if the ing helps productivity because it takes retention, says Zeller. Whereas once right item is being picked, the picker away the complication and distrac- it was common to have 60 percent of just calls out “item number” to hear tion of having to manipulate a device. pickers in a zone being temporary help the correct information. “With voice, the pickers are focused on because of the turnover rate, today, the The productivity improvements the task at hand,” he adds. vast majority of picking is handled by have been significant for Locke Sup- full-time staffers. ply, which uses the solution for all of Deeper improvements Best of all, says Zeller, has been the its picking, though not for put away Other improvements attributed to the positive feedback from the branches and replenishment. While picking voice systems, says Bruner, include bet- on improved accuracy. The bottom line large items like water heaters takes ter battery life for the device hardware. is that the company is able to more longer and occurs across all zones, the With the old handhelds, at least one bat- accurately move more orders than ever. average pick rate is now around 200 tery swap was needed per shift, whereas “We’re finding we’re able to fulfill picks per hour, up from around 110 the voice hardware easily lasts an entire this increased volume in less time and picks under the previous process. At shift on the same charge. The wearable with fewer people,” says Zeller. “Given the same time, order accuracy, once hardware also can’t be dropped like a the volume we are now handling, we down near 95 percent, now exceeds 99 handheld, so repair and replacement would probably be in serious trouble percent accuracy. issues effectively have been eliminated. with our DC operations had we not “Overall, we saw our picking rate The greater order accuracy in the implemented this system.” close to double,” says Bruner. “I was pick to pack process also has helped also amazed at how quiet it was in the the warehouse managers identify prob- Roberto Michel is a Contributing warehouse after we first deployed the lems in replenishment that were not Editor to Logistics Management

to meet your diverse providing you requirements… with options… On budget… And on time, all the time. Not a weak link in the chain

Meet some of the thousands of supply chain professionals at UTi with the experience and professionalism to handle any and all of your North America distribution. Our single-source solutions enable you to deliver to your customers while we deliver savings to your bottom line and the assurance that on our team, there’s never a weak link. To nd out more about which UTi Distribution solution best suits your needs, and view our Team UTi videos and visit us at go2uti.com. Transportation Management Systems

TMS gets more warehouse aware

TMS and YMS expand on integration and supply chain visibility capabilities, gaining a better handle on warehouse constraints in the process.

he biggest trend within the transpor- tion points between warehousing, yard, and BY ROBERTO MICHEL, tation management system (TMS) transportation.” CONTRIBUTING EDITOR and yard management system (YMS) Suppliers are focused on making solutions markets is not so much incremental such as TMS more aware of constraints in features within each market, but warehouses and yards, rather than basing Tcapabilities that blend TMS and YMS with transportation plans solely on traditional fac- other supply chain solutions and enhance tors such as freight cost. YMS, meanwhile, visibility in the process. is helping shippers respond to pressures Whether you call it process orchestration from carriers, and also expanding to address or supply chain execution (SCE) visibility the issue of visibility of shipments in transit. or integration, leading software executives and analysts agree that TMS and YMS are Warehouse aware TMS expanding beyond traditional feature sets to The classic problem, says Klappich, is that help users coordinate overall processes. SCE applications are used in a sequential “Warehousing, yard, and transporta- process without the integration needed to tion processes are pretty much connected communicate constraints from one domain at the hip, but today, the systems for these to another. A common scenario, he says, is domains are often still run as independent for orders to come down to a TMS, where processes,” says Dwight Klappich, a research loads, and shipments are optimized based vice president at Gartner. “You can’t achieve on factors like lowest cost freight or quickest all the bene ts if you manage the processes delivery. independently instead of seamlessly. That’s Whether the warehouse or yard can han- why vendors are looking at the intersec- dle those plans in terms of factors such as

48 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM “We go beyond the basics to deliver comprehensive logistics solutions.”

BILL BERG, SENIOR DIRECTOR  DEDICATED OPERATIONS

At Saddle Creek Logistics Services, warehousing and transportation are just the beginning. We offer a wide array of integrated logistics services — cross-docking, product customization, packaging, e-fulfillment and more. Leverage them to help streamline operations, accommodate business fluctuations, and control supply chain costs. We’ll do Whatever It Takes! to help meet your specific goals.

See our integrated logistics solutions in action. >

sclogistics.com | 888-878-1177

Whatever It Takes! Transportation Management Systems available dock doors, labor to pick, more than data integration is needed ing of TMS and WMS, says Markus and labor to load, historically has been between TMS and WMS. JDA is Rosemann, SAP’s vice president of considered a downstream execution working on a “suite strategy” that global solution management for logis- challenge, says Klappich. However, allows users of JDA’s TMS to address tics and order fulfillment. Where suppliers are working toward inte- distribution center constraints. Essen- this integration at one time had to grated platforms that can address key tially, says Brasca, the TMS can model be relayed through SAP’s enterprise constraints from each area. “We have factors such as how many docks there resources planning (ERP) system, SAP opportunities to integrate those areas are at a DC, what type of docks are now offers direct integration between better,” says Klappich. available, and average loading/unload- TMS and WMS processes. For exam- Data-centric integration between ing times. “We have the ability, in the ple, when a shipment is created in software like TMS and warehouse TMS, to model the throughput con- TMS, everything the warehouse needs management systems (WMS) is only to know to prepare surfaces in SAP’s a “stop gap” on the road to a holistic WMS software. “It’s all about creat- platform for execution, according to “Omni-channel distribution is ing real transparency about plans, Mike Mulqueen, a senior director with driving the overall systems and and then coordinating the operations Manhattan Associates. The real trick, data model to be more inventory accordingly,” says Rosemann. he says, is to make TMS aware of con- aware in ways that most So rather than having to deal with straints at the warehouse level, so that companies’ systems have not been different numbering schemes for if, for instance, a palletizer is down, in the past.” loads, orders or shipments, with direct the TMS planning engine or “solver” integration between TMS and WMS, knows that. “I want to make sure that I —Stephan Craig, managing partner, enVista everything related to shipments has can balance my transportation plan so common numbering, and it is vis- my warehouse doesn’t get overloaded,” ible within SAP’s WMS solution. The Mulqueen says. straints of the warehouse,” says Brasca. WMS now also has a “shipping cock- Integration in itself won’t deliver Another trend with TMS, adds pit” user interface to coordinate with this warehouse aware planning, Mul- Brasca, is toward “dynamic and itera- TMS processes and also display met- queen adds. An underlying platform tive” planning where the optimiza- rics. “The cockpit brings all the rel- architecture synchronizes TMS, YMS, tion adjusts to order changes. With evant information into one environ- and WMS activities for Manhattan’s this type of planning engine, he adds, ment,” Rosemann says. users. “The integration platform is the loads aren’t finalized until they have While making TMS solutions foundation you will need, but the end to be executed. “This is particularly more “warehouse aware” is a valid goal is the complete synchronization of important in the omni-channel retail goal, with the trend toward omni- supply chain execution,” he says. environment, where the variability on channel, fulfillment not only origi- Fab Brasca, vice president of global orders is skyrocketing,” he says. nates from DCs, but also from stores logistics for JDA Software, agrees that At SAP, there also is a tighter merg- or suppliers doing drop shipments, according to Stephan Craig, a man- Trading partner network visibility aging partner with enVista. So TMS needs to be more “inventory aware” regardless of where the inventory sits, Craig says. There are technol- ogy developments from suppliers Raw materials Manufacturer Warehouse Customer that should help improve inventory awareness, but some of the fix will Supplier 1Waverly Allentown Customer DC 7016 involve “good old fashioned clean- Cedar Rapids, Waverly, Breinigsville, Virginia ing up” of bad data and processes, Iowa Iowa Pennsylvania he adds. “Omni-channel distribution is driv- Supplier... nAlameda Store 851 ing the overall systems and data model to be more inventory aware in ways Wisconsin Alameda, San Jose, that most companies’ systems have not California California been in the past,” says Craig. Other TMS trends in TMS, says Gary Gross, a vice president with Manu- 3PL Shipper Carrier Driver Supplier Warehouse Spotting Security HighJump Software, are the need for facturer operator service service a TMS that can be used on a global Source: PINC basis, as well as one that allows plan- PINC’s visibility suite aggregates operational data from multiple YMS, and ners to utilize back haul capacity. also takes in real-time sensor and location feeds from trailer journeys. TMS solutions today also need to be

50 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM EXPERIENCE THE POWER OF HYUNDAI

Looking for power? Hyundai machines have more standard features than the competition. That’s the power of comfort, which translates to productive results. Learn more at hceamericas.com. Transportation Information Management adept at parcel shipment tended to rely on human inputs planning and execution. Process flow in system landscape like keyboard updates to a por- Gross also sees the need (Outbound process) tal, or phone calls to communi- for better integration of TMS cate exceptions. “Many compa- with multiple SCE solutions. SAP enterprise resource planning nies are still very dependent on “Many times when we inte- • Customer order paper, or fingers on keyboards, to grate systems for users, it’s • Delivery track progress. If that’s what you a two- or three-way integra- are relying on, you can’t have a tion, not just one system to truly accurate understanding of another,” says Gross. SAP transportation SAP extended what is going on now, and what management warehouse management has transacted in the past,” says Better yard control Yearling. Within the YMS market, Yearling says PINC’s enter- dock scheduling functional- prise visibility solution augments • Transportation planning ity has been drawing more TMS, YMS, and WMS by pro- interest, says Klappich. • Freight order management • Picking viding a real-time view of prog- The driver for this has been • Packing ress and exceptions, and giving pressure from U.S. carri- • Staging managers accurate measures on ers under hours of service Freight settlement • Loading factors like gate velocity, which (HOS) rules to have solid • Goods issue is a measure of how quickly appointment windows at trucks are clearing gates. yards, rather than having to Source: SAP wait to load or unload. Direct integration between SAP’s WMS and TMS Starting upstream Carriers who have to applications provides immediate transparency between Suppliers of SCE software, espe- wait extra time may charge orders generated by TMS and any deviations such as cially those with broader foot- detention fees to the shipper, what is loaded onto trailers as WMS executes. prints in supply and demand which is driving the need for planning, are also looking to tie more YMS and dock scheduling capa- and uses the data for the tracking of SCE solutions into upstream planning. bility. “There is real money to be saved trailer journeys and other execution After all, says JDA’s Brasca, distribution here,” says Klappich. “Companies are processes. orders flow from customer demand, so seeing detention penalties.” According to Matt Yearling, PINC’s ideally, companies should be looking to Greg Braun, senior vice president CEO, shippers can gain a real-time link forecasting, replenishment plan- of sales and marketing with C3 Solu- grasp over logistics based on such sen- ning, and sales and operations planning tions, agrees that there is strong inter- sor feeds, which are an example of with SCE capacity. est in YMS and dock scheduling due Internet of Things (IoT) technology. For example, says Brasca, replenish- to pressure from carriers. It’s even “We’re focused on supply chain execu- ment plans can be “bounced” against driving relatively smaller yards with tion powered by the Internet of Things,” available resources at the TMS and fewer yard drivers or “hustlers” to he says. “Invariably what people are WMS levels to see what is feasible and inquire about YMS. looking for is real-time information on optimal. “This adds a whole other level A YMS, says Braun, gives a com- trailer shipments, not just in their yards to the efficiency of replenishment plan- pany tight, real-time control over yard and facilities, but over the road as well.” ning that most companies can only try activities and assets, such as the num- In a sense, supply chains can be to deal with as a downstream execution ber, location, and type of trailers in viewed as one big yard, says Yearling, issue,” he says. the yard. For example, a YMS enables though with truck routes of several SAP’s Rosemann also sees a need to smoother “drop and hook” activities in hours or more, you don’t need the treat SCE resources in much the same which a carrier’s truck leaves a load pinpoint locating like that within a way that manufacturing operations have and picks up another trailer. “You need YMS. A range of IoT-style feeds might when learning to optimize production more intelligence to manage yard man- be used for tracking goods in transit, capacity—as a network-wide balanc- agement processes today,” he says. from advanced telematics and onboard ing act, rather than one plant at a time. At PINC Solutions, the company communications on newer trucks, “What we’ve learned on the manufac- is applying its experience in real- to simpler feeds based on tracking of turing side 20 years ago is now reach- time locating systems (RTLS) and a driver’s cell phone signal. Yearling ing a point of use in logistics,” he says. yard management to the challenges says PINC has also placed RFID tags “As logistics gets increasingly complex of enterprise-wide logistics visibility. on trailers to enable trailer tracking with smaller shipment sizes and higher In May, PINC announced Enterprise between points in a supply chain. customer expectations around multi- Visibility Suite Version 4, a cloud- The problem with previous gen- channel, it requires a more sophisti- based platform that collects real-time erations of supply chain visibility solu- cated way of planning, scheduling, and data from sensor and data feeds, tions, Yearling contends, is that they assigning resources.” M

52 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM Iyour businessKNOW and shipping schedule. WE KNOW what it takes to get it there next-day.

Holland, the next-day delivery leader, is committed to knowing your business inside out. Winner of the Quest for Quality Award for 29 years running, we deliver the most next-day service lanes in our area – from Chicago to Chattanooga, St. Paul to St. Louis – and annually record one of the lowest claim ratios in the industry. Want to know more? Call 1.866.465.5263 or go to hollandregional.com/nextday today! Copyright ©2014 YRC Worldwide Inc. Copyright ©2014 All lift trucks come with forks. OURS ALSO COME WITH PEOPLE.

® PRODUCTS The best part about a Yale lift truck has legs. That’s because while PRODUCTIVITY our lift trucks are designed with operator comfort and productivity

PEOPLE in mind, they’re also backed by Yale people—people driven by the customers they serve. The result is a bottom-line approach to provide YALE.COM service beyond expectation and support for the long haul. 14YLE8678 A SPECIAL SUPPLEMENT TO:

® FREIGHT FORWARDERS:® Leaders prepare for demand surge With most economists forecasting robust growth in U.S. manufacturing, global freight intermediaries must be prepared for a spike in new business— and concurrent expectations for higher levels of performance.

By Patrick Burnson, Executive Editor

roductivity of U.S. manufacturing means staying in front of the ever- “ e world’s major forwarders are Pfor domestic and global markets evolving supply chain management chal- ahead of the curve on compliance and boomed over the past two quarters, in- lenges and getting ready for advanced technology,” says Armstrong. “ at’s a big creasing at a 3.6 percent annual rate and data, says Brandon Fried, executive reason why they are so successful,” adding up 2.1 percent from mid-year 2013, note director of the Airforwarders Association that this trend will only gain momentum. prominent trade analysts. In the coming (AfA). “Most of our economic indicators Yet, he also notes that the glory days of months, these same analysts believe that suggest sustained growth and consumer international transportation management productivity will be one of the more- spending,” he adds. “And this means (ITM) companies are fading fast. watched global economic statistics. more business and opportunities.” “Because the threshold levels of IT and “ is is not only true for manufac- value-added services capabilities are higher, turers and retailers moving freight, but Top 25 “get it” the big guys will grow at the expense of for freight intermediaries,” says Doug Manufacturers and retailers are also forc- small operators particularly in customs Handler, chief economist for IHS ing forwarders to respond to the new brokerage, transportation management, Global Insight. marketplace by restructuring their lo- and end-to-end service,” says Armstrong. Rob Knigge, the leader of Accenture’s gistics functions. “ ey’re consolidating However, while the Top 25 have  ne- freight and logistics group agrees, noting service providers and functions, sharing tuned their ability to generate volumes that freight forwarding and contract lo- logistics facilities, and centralizing for ocean and air, the industry is chang- gistics continues to be a growth industry management all in an e ort to become ing in ways that puts added pressure based on the uptick in the manufactur- more e cient,” says Evan Armstrong, on gross margins and further challenge ing. “Manufacturers and retailers are president of the leading third-party earnings. “We estimate that the market relying more on freight forwarders to be logistics provider (3PL) consulting  rm will increase 4.5 percent for this year in the managers of their intercontinental Armstrong and Associates. the U.S.,” says Armstrong. “Other ana- supply chains,” he says. “Governments Each year Armstrong’s  rm compiles lysts estimate that ocean freight revenue are more concerned about safety than Logistics Management’s Top 25 Freight For- markets alone will rise by 3 percent to 5 ever before, and are thus demanding warders list for a closer analysis of industry percent. Individual company results are more transparency of information.” trends and how those leading forwarders a mixed bag, however.” For prominent middlemen, that are meeting evolving shipper needs. Underlying this mixed bag for

WWW.LOGISTICSMGMT.COM SEPTEMBER 2014 | LOGISTICS MANAGEMENT 55S Special Report: Top 25 A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

Top 25 Global Freight Forwarders forwarding is the relationship between (Statistical ties in red box) the gross domestic product (GDP) and Gross world trade, adds Armstrong. “World A&A Revenue Ocean Airfreight trade once represented two or three Rank Provider (US$ Millions) TEUs Metric Tons times the GDP,” he says. e last num- 1 DHL Supply Chain & Global Forwarding 31,432 2,807,000 2,215,000 bers I saw showed slippage of the two indices, so now they’re just about equal.” 2 Kuehne + Nagel 22,587 3,578,000 1,134,000 Top-level observations 3 DB Schenker Logistics 19,732 1,891,000 1,092,000 By way of ranking the three leading freight

4 Panalpina World Transport (Holding) Ltd. 7,293 1,495,400 825,100 forwarder players, Armstrong and his sta of analysts provide these anecdotal asides: 5 Sinotrans Ltd. 7,738 8,668,000** 396,100 • DHL Global Forwarding grew through the acquisition of highly 6 Nippon Express Co., Ltd. 17,317 776,576 668,522 respected companies like Danzas. DHL currently has more than 30 global carri- 7 Expeditors International of Washington 6,080 916,168 764,376 er partners with more than 80 contracts on a multitude of trade lanes and more 8 SDV (Bolloré Group) 7,263 790,000 522,000 than 330 gateway facilities. • Kuehne + Nagel has outpaced the 9 CEVA Logistics 8,517 730,750 513,000 volume growth of the market in all its

10 DSV A/S 8,140 772,142 259,365  elds of activity. Sea freight and airfreight business units again led the way. In both Hellmann Worldwide Logistics GmbH 11 3,433 684,156 549,948 areas, high internal productivity and strict & Co. KG cost management compensated. 11 UPS Supply Chain Solutions 5,492 450,000 775,000 • DB Schenker’s German operations, including Europe’s largest rail freight 12 Kintetsu World Express, Inc. (KWE) 2,718 493,000 924,000 and trucking operations, are over 70 percent of total revenues. 13 UTi Worldwide Inc. 4,441 547,000 368,000 For these three leading players in the rankings, “anticipatory logistics” 14 Damco International A/S 3,212 791,535 226,626 has become a new part of their strategic

15 Pantos Logistics Co., Ltd. 2,546 1,753,547 224,865 plans. “ e logistics industry is under- going rapid and profound changes,” says 15 Yusen Logistics Co., Ltd. 4,042 550,000 310,000 Matthias Heutger, DHL’s senior vice president of strategy. “ is is especially 16 C.H. Robinson 12,752 515,000 115,000 true when it comes to multi-channel retailing or predictive purchasing.” 16 Kerry Logistics 2,575 774,000 278,000 Markus Kückelhaus, director of trend research at DHL, maintains that forward- 17 Agility Public Warehousing Company 4,415 420,000 375,000 ers, irrespective of size, will have to prepare for these changes or be left behind. “We 18 Geodis 5,828 420,000 210,000 live in a dynamic and disruptive world,” 18 Toll Holdings Limited 6,266 494,493 104,740 he says. “And forwarders must do their best to anticipate and adjust to it.” 19 Logwin AG 1,620 530,000 143,000 Dr. omas Lieb, chairman of Schenker’s management board, believes 20 NNR Global Logistics 1,745 120,137 252,068 in the power of anticipation, noting that his company has expanded operations 21 Dimerco Express 481 128,000 176,000 in Southeast Asia, the Middle East, and

*Revenues are company reported or Armstrong & Associates, Inc. estimates and have been converted to US$ using the Africa based on that premise. average exchange rate in order to make non-currency related growth comparisons. Freight forwarders are ranked using “In line with our growth strategy, we a combined overall average based on their individual rankings for gross revenue, ocean TEUs and air freight metric tons. **TEUs shown are a combination of freight forwarding, NVOCC, booking agent and custom broker activities. continue to intensify our own presence

56S LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM Don’t worry, we know all the shortcuts Canada is closer than you think because we know all the shortcuts. As the only company that focuses exclusively on shipping to Canada, Purolator has unmatched expertise in crossing the border. And we deliver to more Canadian businesses and customers than any other shipping company in the world. So if you’re considering expanding your business into Canada, then you should be considering Purolator to help get you there. Because Canada shouldn’t feel like a world away.

To find out what makes Purolator a smarter, faster, and easier way to ship to Canada, call 1-888-511-4811 or visit purolatorinternational.com

™ ™ ™ PUROparcel PUROexpress PUROfreight s Air s Ground Supply Chain Services Special Report: Top 25 A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT in interesting markets,” says Global freight forwarding both shipper and forwarder to Lieb. “Freight forwarders market by region devote human resources to manu- need to manage the sale and ally re-keying data in documents, deliverance of a complex or collating spreadsheets from 2013 service that includes more di erent departments or regions. than just the movement of Asia Pacific 32.3% It improves compliance accuracy.” goods, but also emphasizes Europe 31.0% technology, reporting, systems North America 24.5% Globalization to localization? South America 5.2% integration, compliance, In its annual report titled Global Middle East 4.9% risk management, and often Africa 2.1% Freight Forwarding 2014, ana- global coordination.” lysts for London-based Trans- port Intelligence (Ti) maintain Compliance pressure 2017 that some supply chains could remains prevalent Asia Pacific 35.9% undergo a complete circle–from Meanwhile, regulatory agen- Europe 27.6% globalization to localization. cies are bearing down on U.S. North America 23.5% “One thing that’s certain is exporters, says Beth Peterson, South America 5.2% that the global logistics industry president of BPE, Inc., a Middle East 5.2% of the future will be largely unrec- consultancy specializing in Africa 2.5% ognizable from what it is today” import/export operations says report author Michael Nor- and the development of Source: Transport Intelligence dmann, adding that forwarders global supply chain security are also looking at new industry programs. She says that forwarders of all cations to an export program.” opportunities at the same time. “To boost sizes are increasingly challenged to align Virtually every global freight intermedi- airfreight revenue and tonnage, forwarders compliance with logistics operations. ary and shipper would bene t from auto- look to the perishables and pharmaceuti- “All of this means that export teams mation, adds Peterson, but many compa- cals industries. For sea freight, it’s oil and need to be involved early and signi cantly nies still don’t fully recognize the value of gas, retail, and e-commerce.” in discussions about new products, new moving to an automated environment. And while freight forwarders target markets, or acquisitions,” says Peterson. “Perhaps no other aspect of global new markets and industries, economic “Unfortunately, many export compliance trade has more latent value than the forces are underway, favoring a return to teams nd themselves excluded from key automation of compliance processes,” regionalization from that of globalization, strategic considerations, despite the rami - Peterson insists. “It reduces the need for adds Nordmann. So, how will this a ect

U.S. top 5 trade lanes by volume (2013) Air Ocean containerized vessel

Total U.S. Total U.S. ChinaC 1bn ton China 51bn ton imports air imports Germmany 0.3bn ton Germmany 5bn ton by tonnage ocean containerized Japan 0.2bn ton vessel by value South Koorea 5bn ton increased declined 0.1% United Kinggdomg 0.2bn ton Jaapan 5bn toton over 2012 Italy 0.1bn ton 0.3% Inndia 4bn ton over 2012

Total U.S. China 0.3bbn tont Total U.S. China 225bn tont exports GermanyGe m 0.20 2 bnb t tton air exports Jappan 7bn ton ocean containerized by tonnage vessel by value Japan 0.2bn tton SouthS Korea 6bn ton declined increased United Kingdom 0.2bn tton 4.0% Taiwan 5bn ton 2.8% Canada 0.2bn tton over 2012 Brazil 3bn ton over 2012

Source: Transport Intelligence using data from USA Trade Online, U.S. Census Bureau

58S LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM There’s more to saving money than cutting expenses. In fact, spending in the right areas of your your of spending in the right areas In fact, cutting expenses. than money to saving more There’s innovative Integrating line. bottom your impact positively wisely—can done chain—when supply can help chain supply your of services into array broad and a options, alternate freight solutions, logistics costs. unnecessary against safeguard Ideas as Good as Gold accelerateyouradvantage.com

© 2014 C.H. Robinson Worldwide, Inc. All Rights Reserved. www.chrobinson.com Special Report: Top 25 A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

the freight forwarding market? Global freight forwarding Transportation of Vancouver, “It’s still too early to say, Canada.  e ports of Vancou- but solutions such as multi- market growth and forecast ver and Prince Rupert give (€m) modal transportation options North American forwarders 159,668 will likely be one means of some nice ocean freight op- survival,” o ers Nordmann. tions, says Roberson. “And Much of the growth within 127,298 123,107 that keeps Asia in the global North America is from the framework. China maintains U.S., and for Canada and the largest market share in the Mexico, the majority of trade region for freight forwarding, is dependent on this country. with Japan a distant second,”  e North America Free Trade she adds. Agreement (NAFTA) has been Yet even within the Asia hugely successful in fostering Paci c, localization may be more hemispheric commerce, 2012 2013 2017 gaining traction. Ti analysts thanks in large part to inter- Note: The global market size has been restated for previous forecast that slight gains will be modal transport. years because CEE and Russia figures have been restated. noted by 2017 by Indonesia, “Forwarders are helping Source: Transport Intelligence Vietnam, and the Philippines. shippers expand into Mexico “For each of these countries,” to meet the increasing demand for auto- and freight forwarding company. CMG says Roberson, “manufacturing is on the motive parts,” says Cathy Roberson, a Ti has a domestic network of six o ces rise and will increase freight forwarding analyst based in Atlanta. “For example, throughout the country, including Gua- activity.” Kerry Logistics announced the acquisi- dalajara, Queretaro, and Monterrey.” tion of a majority stake in Cargo Master’s Within the same time frame, Kuene + —Patrick Burnson is Executive Editor of Group [CMG], a Mexico-based logistics Nagel acquired Perishables International Logistics Management

Intellect eFreight. Now, it’s personal. Intellect eFreight, your optimal logistics solution, can be Globalized, Regionalized, and now Individually Personalized so you can make it your own.

Q Confi gurable - Fully functional and adaptable to various workfl ows Q Customizable - Designed to be easily tailored to meet specifi c customer needs Q Personalized - Created with the fl exibility to provide a unique personal workstation for each individual operator

Intellect eFreight is the most technically advanced single platform logistics solution with global capabilities for Forwarders/NVOCCs. SaaS or Installed on-premise. Q Single point of entry Q Integrated PO Management Q Air/Ocean/Ground - Import and Export Q Industry leading Customer Portal Q Global network on Oracle Technology Q eCommerce enabled - input / output

For more details, visit us at: www.intellecttech.com 609-454-3170 Ext 226 | [email protected]

A SPECIAL SUPPLEMENT TO:

®

SPECIAL REPORT Information Management: In search of supply chain execution CONVERGENCE The supply chain software market is evolving toward platforms that optimize end-to-end processes and juggle constraints at all levels. Here’s how several leading suppliers are making progress on this vision.

By Roberto Michel, Contributing Editor

ow can an organization have a full range of supply chain planning, or customer service organizations, with each execution (SCE) software at its disposal and still have group having its own specialized system such as a ware- massive execution problems? A likely culprit is the lack house management (WMS) or transportation manage- of integration and the inability of SCE solutions to work ment (TMS) system. Hwell together. While earlier WMS solutions might be good at The inability to orchestrate logistics processes across controlling inventory and moves within the four walls, the supply chain ranks as a top hurdle for companies, they often didn’t synchronize well with TMS. Or a says Dwight Klappich, a vice president at Gartner TMS could devise a low-cost plan, but was blind to Research. In a 2013 survey by Gartner, the inability to constraints in the warehouse. “Companies would have synchronize end-to-end business processes was named specialized systems that would able to locally optimize a as the second biggest obstacle to reaching supply chain domain, but the reality is that when you look at the end- goals. to-end processes, companies continue to have significant Part of the problem stems from the evolution of SCE challenges,” says Klappich. solutions, according to Klappich. Most medium to large A case in point is how a TMS might group three or- enterprises historically were organized by functional ders together to cut logistics costs, without considering domains such as warehouse operations, transportation all tasks surrounding that grouping. For example, the

62S LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM

Special Report A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

Top 20 supply chain management software suppliers No. Supplier 2013 Revenue Web site SCP WMS MES/MRP TMS 1 SAP $2.138 billion www.sap.com x x x x 2 Oracle $1.455 billion www.oracle.com x x x x 3 JDA Software $445 million www.jda.com x x x 4 Manhattan Associates $167 million www.manh.com x x x 5 Epicor $159 million www.epicor.com x x x 6 IBM $154 million www.ibm.com x 7 Descartes Systems Group $121 million www.descartes.com x 8 Infor Global Solutions $99 million www.infor.com x x x x 9 GTNexus $80 million www.gtnexus.com x x 10 Kewill Systems $71 million www.kewill.com x 11 HighJump Software $70 million www.highjumpsoftware.com x x 12 PTC $69 million www.ptc.com x 13 Quintiq $65 million www.quintiq.com x x x 13 Unit4 $65 million www.unit4.com/erp-systems x x 15 IBS $55 million www.ibsus.com x x x x 16 Totvs $51 million www.totvs.com x x x 17 IFS $49 million www.ifsworld.com/en/ x x x x 17 Inspur Genersoft $49 million en.inspur.com x 19 Logility $48 million www.logility.com x x x 20 Kinaxis $45 million www.kinaxis.com x x Source: Gartner warehouse might need to perform kit- however, and is being pursued by organiza- Klappich, starting with a level one of try- ting on one of the orders, so you might tions such as Penske Logistics, a third-party ing to achieve better visibility by rolling up have a carrier arriving for a grouped logistics provider that has used a TMS data into a common analytical system. The shipment at 9 a.m. only to find that all from JDA Software for many years, and second level is tighter transactional orders aren’t ready until mid-afternoon. recently decided to deploy a WMS and integration between SCE applications “These types of problems still happen a labor management system (LMS) from when it comes to basic data or “objects” day in and day out,” says Klappich. JDA. One key benefit of going with one such as orders, customers or inventory The remedy, according to Klappich supplier for multiple applications is that it locations. For the most part, end user or- and some leading SCE vendors, is better simplifies integration, says Tom McKenna, ganizations are “stuck” at level one or two. platforms for orchestrating supply chain senior vice president of engineering and Level three is where previously siloed processes. Gartner terms this concept technology for Penske Logistics. “It just systems still operate independently, but “SCE convergence,” and sees the market smooths the path [for integration] and there is effective bi-directional communi- evolving toward platforms that optimize opens the door for increased customer sav- cation between systems, and activities are end-to-end processes and juggle constraints ings in the long run, and greater efficien- synchronized. This level will depend on at all levels. But Klappich warns that while cies on our part,” McKenna says. suppliers using service-oriented architec- some suppliers are making progress on this tures (SOA) that support consistency for vision, the market as a whole will take time The vision higher-level processes such as order fulfill- to progress to full convergence. The supply chain software market will ment. The fourth and final level, converged Convergence is more than theory, evolve toward convergence in phases, says optimization, would permit simultaneous

64S LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM Connecting the World

In a dynamic world, the only constant is change. Getting the supply chain right becomes the key to growth and success in global markets. Yusen Logistics provides robust solutions to speed your products to market, with unparalleled expertise in high- volume handling and multiple movements on land, sea and air. Find out more at www.us.yusen-logistics.com or by calling us at (800) 414-3895. Special Report A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

optimization across functional domains to point of view is to make the transportation dock scheduling. “Having those levels of create feasible plans that take into account solution ‘warehouse aware’ so that users constraints available within TMS means constraints across all domains. There is start off from the get-go building much that when plans are created, it’s done in a strong bi-directional communication for better plans that account for the constraints warehouse-intelligent fashion,” he says. this level so that an activity in one area can in warehouse execution,” he says. JDA is continuing to make more coordinate activities. Brasca says that even before RedPrairie warehouse constraints part of the TMS At JDA, there has been extensive work and its WMS and other SCE solutions scope by working on a common data to make certain applications, such as TMS became part of JDA, which already had model. In this way, JDA’s TMS has and WMS, plan and execute cohesively, TMS from its acquisition of i2, JDA had insight “into how the warehouse works” says Fabrizio Brasca, vice president of worked to make warehouse constraints so that warehouse personnel aren’t “sent industry strategy for transportation. “Our part of its TMS for purposes such as scurrying” trying to adapt to siloed Establishing a contemporary supply chain Whether it’s a “must have” or “nice to have,” management and execution software applications are the engine driving today’s supply chains. By Bridget McCrea, Contributing Editor he technology that drives today’s organization). “If you’re ultra-small and applications become increasingly more Tsupply chains can be divided into shipping five SKUs out to your custom- important.” two categories: The “must haves” (the ers, then you may not need any technol- Here, two supply chain experts give core technologies that shippers need) ogy at all,” says Steve Banker, direc- their opinions on which applications and the “nice to haves” (those applica- tor of supply chain solutions for ARC should be top-of-mind as you build your tions that are readily available, but not Advisory Group. “As your organization contemporary supply chain, and which always completely necessary for every begins to scale up, however, then the can be saved for a later date. “Must have” “Nice to have” contemporary supply chain technology applications • Warehouse Management System (WMS). “On the fulfill- • Yard Management System (YMS). These systems track ment side, you don’t have to scale up much before you would and report on what goes on outside of the warehouse walls need a light WMS,” says Banker. Such systems lack the labor- and away from the dock doors. At its core, YMS handles the saving features and functions of a full-blown WMS that can scheduling of inbound and outbound freight appointments also handle yard management, third-party billing, and dock while effectively managing yard resources. scheduling, for example, but provide “virtually 100 percent • Labor Management System (LMS). Used to manage accurate inventory counts and get you very close to ‘perfect and track the labor activities for distribution operations, order’ on the warehousing side,” Banker says. LMS typically incorporates real-time interaction with ware- • Transportation Management System (TMS). Once you house systems to report on labor activity—and then com- go beyond parcel shipping, a TMS becomes necessary for pare that activity against historical data and established managing less-than-truckload (LTL) and truckload (TL) options labor standards. “Where you may have been running by and managing other supply chain complexities. TMS helps the seat of your pants, an LMS helps you determine labor companies efficiently, reliably, and cost-effectively move freight levels and the best usage of human resources,” says from origin to destination. Able to handle everything from Eschinger. parcels to bulk commodities, TMS encompasses solutions for • Global Trade Management System (GTM). For manag- moving freight in all modes, including intermodal movements. ing global trade, these systems help shippers gain visibility, • Enterprise Resource Planning (ERP). These systems of collaborate with trading partners, and “get better control record are the backbone of supply chain management and serve over goods in motion as they come into port,” according to as a platform for all of the other applications. Most include ad- Eschinger. vanced planning and scheduling applications, for example, that • Automated Procurement System. Used to manage both help shippers tackle functions like demand planning, inventory direct and indirect spend, platforms like Ariba “automate the planning, and inventory optimization, the latter of which some- process for tendering offers and putting orders out for bid,” times falls into the “nice to have” software category, according to says Eschinger. Chad Eschinger, vice president of research, software and supply chain management for Gartner.

66S LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM It’s nice to be talked about. (here’s what people in the industry are saying...)

Sam’s Club 3PL Partner of the Year PVH Corp. Carrier of the Year Inbound Logistics: G75 Green Supply Chain Partner Global Trade: America’s Leading 3PLs – Technology Armstrong & Associates: Top 50 North American 3PL Inc 5000: Fastest Growing Private Companies Inbound Logistics: Top 100 3PLs Global Trade: Leading 3PLs for Midsize Shippers

Thanks to our customers, business partners, and employees for making this an award-worthy year. Special Report A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

plans, according to Brasca. orchestration solution is unique in that it initiated” or “transportation initiated,” and Penske Logistics, which started the provides a platform for coordinating many which consider constraints across multiple rollout of a WMS in Q1, is optimis- types of systems. He also emphasizes that domains regardless of which solution is tic that this sharing of key constraints the solution is not a raw BPM engine that kicking off the workflow. “When other across domains will bring benefits, ac- needs to be configured by tech experts, but products are being asked to respond to a cording to Eric Hepburn, vice president an application with predefined content workflow, they have to honor their own of distribution center management for and easy-to-use setup tools “that are done capacities and thresholds,” he says. Penske. “In a streamlined world, where in a language that an order fulfillment or Aiding the effectiveness of cross-do- we are managing the transportation, and logistics person understands.” main workflows, says Lamphier, are the we have an understanding of what the At Manhattan Associates, several years years of work Manhattan has put into capacities are within the warehouse, and of work have gone into its Supply Chain creating a set of common business ob- [TMS and WMS] systems are talking Process Platform, a common foundation jects. Creating a common data model is to each other, then the workforce that for optimization and integration for all a significant undertaking that is difficult needs to be there to receive trucks, and its SCE applications, says Eric Lamphier, to accomplish, especially for suppliers do everything surrounding that activity senior director for product management who keep acquiring solutions or haven’t is there and ready,” Hepburn says. with Manhattan. The platform supports committed the development resources For Penske, getting fully onto the new workflows that can be either “warehouse to the effort, he says. “Without that platform will take some time. Today, even within warehouses that use Penske-owned IN CASE YOU MISSED IT: systems, three different WMS systems are 11 th Annual Software Users Survey shows running. But eventually “everything that’s on a Penske solution will be going toward that caution lingers one platform,” Hepburn adds. ccording to the findings of Logis- they were in 2012. tics Management’s 11th Annual When asked why they aren’t using Different methods A Software User Survey published more solutions, respondents largely in our June issue, more shippers are blamed the presence of disparate SCE suppliers tend to emphasize different scrutinizing their investments, mov- systems and integration challenges for technologies in the pursuit of convergence ing forward cautiously, and upgrading curtailing their software investments. goals. Oracle, for instance, offers a logistics existing solutions versus acquiring new Just 26 percent of shippers plan to orchestration solution built on top of its software packages. buy supply chain software in the next business process management (BPM) en- Conducted annually by Peerless 12 months, while 74 percent say their Research Group (PRG), the survey ex- firms have no such intentions. Ware- gine. The solution is called “Oracle Fusion plores intentions of Logistics Manage- house management systems (WMS/46 Distributed Order Orchestration” and ment readers regarding supply chain percent), transportation manage- enables companies to cohesively manage software, the key solutions they’re us- ment systems (TMS/39 percent), and orders across diverse systems, according to ing and considering, and offers insight inventory optimization applications (30 Derek Gittoes, vice president of logistics into how their habits and intentions percent), rank as the top three solu- have changed. tions that the 26 percent are planning to product strategy for Oracle. Shippers may say they’re focused purchase or upgrade. The solution’s scope spans all the way on improving supply chain visibility The national economy may be up to order promising, but also helps or- and avoiding potential disruptions in closely creeping back up to affable chestrate execution solutions such as TMS their end-to-end supply chains, but levels, but that doesn’t mean com- and WMS. “The reason we built a system those efforts have yet to show up in panies’ technology purse strings are their companies’ software acquisition loosening yet. like Distributed Order Orchestration is so strategies. In fact, a common theme across that organizations can have that end-to- More than 50 percent of survey re- this year’s user study is replacing end view of all those steps in the process, spondents say that their use of supply or upgrading what’s already there, and to be able to instruct all those previ- chain software has stayed the same for versus focusing on new and more ously siloed systems to do what they need the last two years, while 45 percent cite innovative investments. This frugal an increase. About 70 percent of firms mindset may give way to different to do in a coordinated way,” Gittoes says. have been using the same software approaches as the economy contin- Oracle has also worked to build packages for the last two years, while ues to improve, but for now it’s the tighter integration between its TMS and 26 percent are now using more than name of the game. WMS solutions, Gittoes says, but the

68S LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM

Special Report A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

common data model, the other building says Markus Rosemann, vice president in-memory data platform, a data man- blocks you put on top of it are hard to of the global solution management team agement foundation that he says handles keep in place,” Lamphier adds. for logistics and order fulfillment at SAP. real-time analytics while simultaneously SCE solutions at SAP also make use The supplier’s most recent set of SCE handling real-time transactions. of a common data model and workflows, solutions also are built on SAP’s HANA According to Rosemann, HANA will spot patterns in SCE processes that can be used to improve planning and adjust execution. “With our HANA platform, we can really support Big Data, recog- nize patterns, and learn,” he says. The Power to Move Your Workplace Rosemann also contends it’s vital to use today’s platforms to improve higher- level processes such as order-to-cash or TURN YOUR WAREHOUSE trade compliance, or to help manage the INTO A POWERHOUSE, complex fulfillment networks that are WITHOUT SOFTWARE OR arising due to the demands of consumer INFRASTRUCTURE CHANGES. digital commerce. “You want to be able to make the [execution] picture more holistic and have all of this information in a common technical platform, but also relate everything back to the overall business processes,” he says.

End goals entice Klappich sees technologies such as workflow and BPM as key to helping fulfill the convergence vision, but he Converting a stationary workplace to a mobile one is the easiest, most warns that such technologies require economical way to increase productivity of your current workers and effort to properly configure to meet the infrastructure. Make your employees’ workplace mobile and free from most pressing needs of a supply chain. stationary power sources and data cabling with a Mobile Workplace System “You’ve got to be careful not to over- by Newcastle Systems. engineer this,” he says. The promise of better integration and Mobile Workplace Systems Enable You To: orchestration of platforms, however, is that • Quickly obtain measurable productivity the managers in the trenches will spend gains without months of planning and less time expediting and fixing flawed implementation plans. As Gittoes sees it, it will make life • Integrate with your current equipment easier because “there will be fewer mis- • Instantly scale your employees’ current matches between what is going on in the operations to handle increased throughput different silos of the organization.” Penkse’s McKenna is enthusiastic about • Streamline processes in shipping/receiving, MOBILE WORKPLACE SYSTEM inventory management and more the possibilities of having WMS, TMS, and LMS working in concert without Learn more at www.newcastlesys.com/powerhouse painstaking integration work. “Where we are headed is exciting because it’s going “We’ve been using our mobile workplace system for over a year and I can’t to make it easier to get systems up and even explain the difference it made in speed and accuracy when scanning/ running, and because we’ll be able to be labeling goods coming in and out of the warehouse. You guys are life much more precise in our planning and savers!” - Newcastle Systems Customer execution,” he says. M

15B Sylvan St.  Middleton, MA  01949  USA  781.935.3450 www.newcastlesys.com ®

Content Licensing for Every Marketing Strategy

Marketing solutions fit for: • Outdoor • Direct Mail • Print Advertising • Tradeshow/POP Displays • Social Media • Radio & Television

Logo Licensing | Reprints | Eprints | Plaques

Leverage branded content from Logistics Management to create a more powerful and sophisticated statement about your product, service, or company in your next marketing campaign. Contact Wright’s Media to find out more about how we can customize your acknowledgements and recognitions to enhance your marketing strategies.

For more information, call Wright’s Media at 877.652.5295 or visit our website at www.wrightsmedia.com Patrick Burnson is Executive Editor of Logistics Management. If you want Pacific Rim Report to contact Patrick with feedback or a By Patrick Burnson story idea, please send an e-mail to [email protected].

Mixed reports on Asia Pacific crime

supply chain security provider Freightwatch Interna- Piracy Reporting Center at the International Maritime tional has released its semi-annual report on cargo theft Bureau (IMB). in the Asia Pacific region for the first half of 2014, which In Southeast Asia, at least six known cases of coastal contains some heartening news for U.S. shippers reliant tankers being hijacked for their cargo of diesel or gas on trucking, warehousing, and retail. oil have been reported since April of this year, sparking In those landside sectors, analysts found a total of fears of a new trend in pirate attacks in the area. Until 53 truck theft incidents for the region so far this year— then, the majority of attacks in the region had been on a decrease from the 115 recorded incidents from the vessels, mainly at anchor, boarded for petty theft. same period in 2013. Furthermore, of the countries IMB Director Pottengal Mukundan calls the recent reporting thefts, only Cambodia, Malaysia, and Viet- increase in the number of successful hijackings “a cause nam experienced an increase from 2013 to 2014. This for concern,” and is advising ocean cargo carriers to main- is an impressive 54 percent drop. tain strict anti-piracy measures in these waters—and to Meanwhile, available data indicates a continued report all attacks and suspicious approaches by small craft. trend of fewer facility burglaries and hijackings in Indonesia accounts for 47 of the reported incidents India, Malaysia, Bangladesh, and the Philippines. At with vessels boarded in 40 reports. The overwhelming the same time, China, Vietnam, Cambodia, and Singapore have more commonly reported incidents of fraudulent activities. The overall In Southeast Asia, at least six known cases of loss value reported for the first half of 2014 coastal tankers being hijacked for their cargo of was $12.66 million—substantially lower than diesel or gas oil have been reported since April the region’s $22.79 million loss value in the first half of 2013. of this year, sparking fears of a new trend in Reported truck hijackings dropped drasti- pirate attacks in the area. cally from the first half of 2013, contributing to the overall decrease in the theft rate for the Asia- number of these incidents are low-level thefts against Pacific region. But the trend of reported incidents has vessels. At Pulau Bintan, 18 incidents were reported, seen a slight shift, as collusion and intrusion became prompting the Indonesian Marine Police to add this the two most commonly reported modus operandi in port to the list of 10 areas where patrols have increased the first half of 2014 at 36 percent and 34 percent of this year. reported incidents. Dryad Maritime, a maritime security consultancy, The report on individual cargo is less encouraging, agrees that Southeast Asia remains the area with the with the region seeing an increase in the value of the highest number of maritime crime incidents. The individual cargo reported stolen, with freight thefts boarding of vessels underway in the area of Singapore worth more than $100,000, up 34 percent from the pre- occur regularly, with 12 such cases now reported dur- vious year. Still, the overall average loss value decreased ing 2014. Nineteen vessels also reported robberies, from $345,417 in the first half of 2013 to $287,911 this attempted robberies, and suspicious approaches in the year, a 17 percent difference. anchorages to the east of the Singapore Strait. To its credit, FreightWatch says that the Asia Pacific Dryad reports that it’s not expecting to see the level region continues to experience “inconsistent and irregu- of maritime crime fall in this region for the remainder lar” reporting, which may result in artificially low num- of the year unless there’s significant investment by local bers of documented incidents. At the same time, the maritime forces in proactively countering this crime. company does not chronicle the loss of life associated Might U.S. shippers consider this be another argu- with cargo theft, but does acknowledge that violence ment for near-shoring? Pacific Rim consultants suggest often occurs when vehicles are hijacked. that indeed, security concerns may be enough of an Far more risk of personal injury or death is evident incentive when all other considerations have been when an ocean cargo vessel is seized, say analysts at the examined. M

72 LOGISTICS MANAGEMENT | SEPTEMBER 2014 WWW.LOGISTICSMGMT.COM supplychain247.com Everything you need, every way you need it. Supply Chain 24/7 is the ultimate online business resource for transportation, distribution, logistics and supply chain professionals. Find everything you need when researching companies, trends, and industries.

Your best business resource for: • News Featured • Best practices companies that are relevant to the • Trends specific topic Search engine • Case studies can search across • White papers content elements and by specific • Webcasts companies • Research • Special reports • Blogs and much much more!

Trending news and features

Visit supplychain247.com. Begin your experience today.