Today's Intermodal Mix: Anything But Dry
If you answered "trains," you're in good company. But you're also missing the boat.
"The boom in overseas manufacturing has catapulted many North American companies into a far heavier reliance on ocean transportation - and to a form of intermodalism that routinely mixes water and land transportation," said Rick Underwood of APL Logistics. As a result, shippers have entered a whole new era of logistics complexity.
"When you add ocean transportation's long distances, multiple countries, and international waters to a supply chain, longer lead times are inevitable - and so is the possibility that shippers will face hot competition for the transportation lanes and carriers serving the most popular ports," Underwood says. "Coupled with all the challenges facing U.S. infrastructure and rail service, it really is a whole new ball game."
In light of that, Underwood recommends the following logistics strategies for companies interested in making the best of this international, intermodal reality:
• Transloading: If your company is bringing in goods from overseas, pay close attention to the transfer from ocean to land, because it represents a prime opportunity to create transportation efficiencies. By transloading - unloading goods from ocean containers and then reloading them into inland trailers - you can generally fit the contents of three standard ocean containers (which measure 40 feet) into two standard domestic trailers (which measure 53 feet). As a result, you can book and pay for two inland shipments instead of three.
• Port Diversification: Few things are more frustrating than finding out that the vessel carrying your goods has arrived but can't be unloaded because it's waiting for a berth, or drayage operators are stuck in a long line at the harbor gate. This happened quite often at some of our nation's busiest ports a few years ago, and it's not pessimistic to say that it could happen again given the current state of U.S. infrastructure and growing cargo volumes. While Southern California's busy ports have traditionally been the most logical point of entry for goods manufactured in Asia, there are times when employing a wider variety of U.S. ports - including less busy East Coast ports - might enable you to meet your speed-to-market goals more effectively.
• Deconsolidation: When it comes to transloading, there's no rule that requires companies to place all of an ocean container's contents into the same trailer or to send all of the trailers to same place. Many companies use transloading as an opportunity to separate their ocean containers' contents into several trailers bound for several different destinations. The beauty of this practice, known as deconsolidation, is that companies can make more current decisions about which of their distribution centers or retail outlets should receive incoming ocean product - doing it when goods are near the U.S. port of entry rather than having to decide several weeks ahead of time when containers are being loaded in Europe or Asia. As a result, companies don't have to work as hard to forecast - or hedge their bets by having too much extra inventory.
• Warehousing: Delivery certainty is a moving concept for many U.S. shippers, especially during peak seasons. For this reason, many companies now elect to bring some of their goods into the United States earlier than anticipated, using warehouses to store them until they're needed. Some call this "safety stock." Others consider it "thinking ahead" - especially when substantial shipping delays could result in lower profit margins due to penalties and lost sales.
• Premium transportation: Air cargo costs considerably more than land transportation, but there are times when the extra expense is more than offset by the benefits of keeping production lines moving or maintaining positive customer relationships. Stay apprised of your inventory carrying costs - and the opportunity cost of a late delivery - so you'll know when it makes good business sense to make this mode part of your transportation mix. Or - if you value speed but have not budgeted for air cargo - consider using a guaranteed ocean-to-truck expedited service that can significantly reduce transit time. While not as fast as air, it costs about 75 percent less, and it's still considerably faster than standard ocean shipping.
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