MergeGlobal: Fast-track ocean services offer reliability to shippers
Analysts at the consulting firm MergeGlobal have issued a report calling for the creation of 'fast-track' ocean cargo services that can provide shippers reliable and timely delivery of Asian imports.
Brian Clancy and David Hoppin, managing directors at Arlington, Va.-based MergeGlobal, urge transportation providers to use existing technology and business models to create faster, more reliable ocean transportation products — especially in the less-than-containerload market.
'Why not create a 'fast track' for LCL shipments that receive expedited processing at both the load and discharge ports, and then are injected directly into an LTL (less-than-truckload) network for delivery to consignees?' Clancy and Hoppin, wrote in their report.
The research project was sponsored by APL Logistics and Con-way Freight, which last year jointly launched OceanGuaranteed, a day-definite guaranteed LCL product for shipments from Asia to the United States.
In the report, Clancy and Hoppin identified three primary concerns for shippers managing international supply chains:
* Controlling total distribution cost, which is the sum of transport and inventory-carrying cost.
* Minimizing transit time variability.
* Coping with a network of U.S. ports, railways and highways that is nearing capacity.
The paper identified transit time variability as one of the 'hidden costs' of international supply chains. Unexpectedly late product deliveries can result in lost sales and inventory write-downs, said the paper's authors. To counteract longer transits and transit time variability, shippers are increasingly forced to carry higher levels of costly 'safety stock' or turn to air freight. The air option is quick and reliable, but seven to 10 times more expensive than ocean transportation.
Clancy and Hoppin recommended a 'marriage' of an ocean carrier's ships and terminals with a large LTL carrier's dedicated fleet and distribution network to offer relatively fast, reliable service from origin ports in China to consignee doors in the United States. The researchers said such a partnership could minimize international supply chain disruption through closer carrier integration.
According to Clancy and Hoppin, a recent survey indicates that shippers value reliability more than price when it comes to ocean transportation. They added, however, that conventional ocean LCL service is widely perceived to be the least reliable cargo option. That's why they called for fast-track LCL shipments.
The report, 'Coping with Uncertainty,' is available at https://www.apllogistics.com and https://www.con-way.com/ocean.
MergeGlobal: Fast-track ocean services offer reliability to shippers
