Logistics Changing Course
You are great at project management. Purchasing, manufacturing, design, projects, plant relocations, installations are your core business. You are an expert at synchronizing your activities to deliver your project on time and on budget.
Suddenly, with Covid19, your freight budgets are out the window! You are seeing as much as 150% increases in logistics.
Ironically, you are not paying more money for better service. Quite the contrary. You are fighting hard to secure the capacity, the speed, and the reliability that you need. And, let’s not forget the time that you spend, trying to communicate with all parties concerned (often, with fewer people to do the work.)
So, what do you do? How do you find better solutions to help you succeed in this new altered state? Here are some thoughts on how to more effectively manage your logistics.
THE PRICE REALLY IS THE PRICE
We are not saying you should not touch base with people you trust to verify market numbers. But, no company really has a better deal. The days of wheeling and dealing for the price have been replaced by wheeling and dealing for space. For more informations, see our most recent article: MARKET OVERVIEW: Shipping Lines are at Capacity
The carriers have one thing in mind – maximizing profit in this unique market. For context, remember that you are competing with an estimated 500,000 US importers, including FEMA, to import your goods.
FOCUS ON "SERVICE" FORWARDERS
Use a logistics company with a strong customer service model. Price-driven companies are a completely different culture. They lack credibility with ocean and air carriers and trucking companies to get the job done, and their infrastructure is not service-oriented or staffed to be as responsive and detailed as you need.
It is also important that your provider has industry-savvy account managers, who can answer questions quickly and expertly about air, ocean, truck, warehouse, ground services. Leading logistics personnel can “answer with substance,” quickly and with clear guidance.
MITIGATE COST BY CHANGING ROUTINGS
To limit cost exposure, if possible, stay away from California. One exception, using containers that move thru LA via stack train services is fine. You can use intermodal stack train services to anywhere in Central US and East Coast. Another good option is to route through ocean/rail via Seattle/Tacoma. In our opinion, San Francisco is not a great option due to port rotations and other infra-structure reasoning.
Or, if the product can stand the transit, route via the east coast via Panama Canal on what is know as all-water. By the way, it does help to see and understand the services that you are using. Ships run on very precise schedules. Leading companies like JMC provide detailed but easy-to-understand routings and guidelines, saving you time AND emails. See the video below as an example.
CONSIDER CHANGING THE TERMS OF SALE
Companies like Wal*Mart, Apple, and Amazon, buy ex-works for a reason. It’s a smart way to go. When you buy the goods ex-factory vs. delivered, you are in control of the costs and the service. You know the status of your shipment earlier; there are more options available; and you are more agile and responsive for your project & customer.
Also, for the most part, EXW is less expensive. EXW allows you to avoid tax on transportation and provides you better options to truly fit the price to the need. Changing the terms may or may not work for you, but it is probably worth a discussion. Contact JMC for more information.
Hopefully, the ideas above can provide you with some ammo to assess where you are and what you are doing in this new logistics environment. After all, you are great at project management, and adapting is what you do.