2013 tlc conference: import/export best practices april 22, 2013 san diego ca
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by Jerrod Slaughter, Corporate Transportation Manager. 2013 TLC Conference: Import/Export Best practices April 22, 2013 San Diego CA. International: What’s the big deal?. What does a shipper really want? Simple … Reliability Flexibility Market competitive rate. - PowerPoint PPT PresentationTRANSCRIPT
2013 TLC CONFERENCE:IMPORT/EXPORT BEST PRACTICES
APRIL 22, 2013SAN DIEGO CA
by Jerrod Slaughter, Corporate Transportation Manager
INTERNATIONAL: WHAT’S THE BIG DEAL?
What does a shipper really want?
Simple …1.Reliability2.Flexibility3.Market competitive
rate
SHIPPER PERSPECTIVE - PLAN A STRATEGY!!
“Best Practices” • O
n Boarding
• KPI / Evaluation
Understanding Ocean …
WHAT ARE THE BASICS?
OCEAN: IMPORTANT FOR A SHIPPER
Rates
CY, IPI,
Door?
Surcharges
Bunker (Fuel)
Peak Season (PSS)
General Rate
Increase (GRI)
MQC Volum
e
Detention
Demurrage
KPI and Space Guaran
tees
Container Rates Type of delivery is needed Container Size Container Routing
Essential Accessorial Terms Surcharges Bunker (Fuel) Peak Season Surcharge (PSS) General Rate Increase (GRI)
Essential Service Terms Space Guarantees Minimum Quantity
Commitment (MQC) Detention & Demurrage Delay In Transit (DIT)
Performance levels / KPI Bookings Transit times
RATES: DEFINE SERVICES NEEDED
What type of delivery is needed? Container Yard (CY) Inland Port Intact (IPI) Store Door Delivery (SDD)
Container Size 20 FT (TEU), 40 FT (FEU), 40 FT High Cube and 45 FT
Routing All Water Service (AWS) Landbridge (Not through Panama Canal)
Rates
ESSENTIAL ACCESSORIAL TERMS Surcharges
Advance Manifest Fee (AMS) Chassis Usage Surcharge (CUS) Document Fee (DOC) Terminal Handling Fee (THC) War Risk Surcharge (WRS) Etc. (See 40+ other terms)
Bunker (Fuel) Floating schedule
Peak Season (PSS) Typically June 1st through October 31st
General Rate Increase (GRI) / Rate Restoration (RRI) Any time based on Carrier / Alliance
ESSENTIAL SERVICE TERMS Space Guarantees
Hong Kong to Los Angeles – X FEU? Minimum Quantity Commitment (MQC)
How many FEU’s a year? What is the right number?
Detention (out gate)& Demurrage (in gate at Port) Agreed days known as “Free Time” Days (calendar or working)
Delay In Transit (DIT) Key Performance Indicator (KPI)
Booking acceptance Service Strings / Port to Port On-Time
“BEST PRACTICE”: GET A BOILERPLATE
If you don’t have contracts today or do find undesirable terms then evolve …
One step at a time! Partner with internal Legal Counsel Seek help on “boilerplate” by mode Include terms with Request For Quotations (RFQ) How will incumbents react? Don’t surprise your
vendors. Discuss with internal stakeholders. Understand that
terms can cause lengthy negotiations and potentially impact rates.
Careful not to overbuy!
Best Practice
!
Add terms
to RFQ’s
Understand Ocean Line vs. NVOCC
WHAT ARE THE OPTIONS?
OCEAN: LINE VS. NVOCC
OCEAN LINE (DIRECT BCO) NVOCCNON VESSEL OPERATING COMMON CARRIER
The Positive Direct relationship with Line Leverage MQC FEU volumes directly to
secure terms/rate/service Assigned allocation can lead to
consistent service string transit time Strong long term partnerships can assist
during industry challenges
The Challenge More complex i.e. FMC requirements Provide forecast of trade lane volumes Manage MQC volumes Resources and bench strength to
manage multiple Ocean carriers Challenging to make changes
The Positive Flexibility with little to no commitment Less complex to manage
No FMC required for shipper No MQC requirement No long term commitment
Ability to chase rate Much closer to the market rates
The Challenge Subject to volatility of market Susceptible to surcharge
GRI / RRI PSS
No direct relationship with Ocean carrier Possible less predictable transit times
Selecting an International Partner …
VENDOR MANAGEMENT
“BEST PRACTICE” TO MANAGE INTERNATIONAL
Define Supply Chain Strategy & Needs Request for Quote (RFQ)
Know the Market Document shipper characteristics Identify and include Stakeholders Define service expectations Boilerplate Stakeholders provide suggested carrier RFQ pool Container Rate and Surcharge template Understand service string and transit offering Cost Analysis on 80%-95% volume lanes Selection
On Boarding Performance Evaluation
“BEST PRACTICE” ON BOARDING Operational readiness
Define “Who’s who” Detailed Standard Operating Procedure
(SOP) Escalation path
Limited volume at startup Slowly turn on the Valve!
Deming Wheel approach Plan, Do, Check, Act
SHIPPER NEEDS TO BE A PARTNER Shipper provided FEU forecast by lane
Best practice: 3 month rolling forecast Keep it simple!
Communicate Origin Performance Is cargo getting booked and COB as
expected? Any rolls, delays, etc.? Be engaged and ask for feedback
“BEST PRACTICE” BUSINESS REVIEW KPI agreement Reporting requirements Quarterly or Bi-annual business review Measure transit expect vs. actual Cargo Claims Billing Issues Service Review
Booking performance Space guarantees Transit time metrics
OCEAN KPI’S Relevant field definitions: Target Transit Time: transit time expectation per lane from contract
negotiations. Transit Time for 95% Of Shipments: Denotes the transit time by lane (or
carrier) for which 95% of shipments were equal to or less than. On-Time %: Percentage of shipments per lane (or carrier) that were
equal to or less than the target transit time. % Within +/- 1 Day of Target: Percentage of shipments per lane (or
carrier) that were within one day of targeted transit time. The higher the percentage, the more consistent the transit times are.
Transit Time Range (Days): This the range in days between shortest transit time and longest transit time per lane or carrier.
Avg Variance (Actual vs Target): Per lane or carrier, this is the average variance in days between actual transit time and target transit time. The lower the number, the more consistent the transit times are.
CARRIER Origin - Destination
Total Shipments Per Carrier
Target Transit Time
Transit Time for 95% Of Shipments
On-Time %
% Within +/- 1 Day of Target
Transit Time Range (Days)
Avg Variance: Target vs Actual
AA ShipsHAIPHONG – LOS ANGELES, CA 219 16 22 77% 69% 20 3
HAIPHONG - Zeebruggee 181 29 34 36% 31% 30 4
HO CHI MINH CITY – LOS ANGELES, CA 720 20 19 100% 18% 19 3
OCEAN KPI’S – QUICK EXAMPLE
International Air Freight Forwarding
IMPORTANT TERMS AND STRATEGY
CONTRACTING FOR AIR FREIGHT: WHAT IS IMPORTANT?
Rates by route Port-Door, Port-Port, etc.
Recommend add gateway to door as option Add Service levels that fit your need – Exp, Std, Def Add tier level weight break
Know your sweet spots!! Include transit days by service by lane Define service commitments Define Fuel surcharge Peak Season ?? Liability and cargo claims
FORWARDER DIFFERENTIALS Full service forwarder vs. niche regional forwarder
Carrier service area Forwarders usually handle all major lanes
A full service forwarder may compliment a Shippers needs as supply chain becomes more complex
Don’t underestimate the value of regional niche forwarders Experts in specific geographies
Forwarders seek different freight mixes to support trade lane Rates and very drastically between competing forwarders Shop around for best rate
INTERNATIONAL – ITS AN ADVENTURE