SHIPPING TO CANADA? HERE ARE SOME COMMON PROBLEMS AND THEIR SOLUTIONS. P.12
HOW DUTIES AND TAXES CAN IMPACT THE CUSTOMER EXPERIENCE IN UNEXPECTED WAYS. P.14
WILL OCEAN FREIGHT FORWARDING BE PART OF YOUR SHIPMENT STRATEGY SOONER THAN EXPECTED? P.20
QUICK TIPS TO OPTIMIZING YOUR INTERNATIONAL SUPPLY CHAIN. P.26
CONTENTS /// Volume 24 | Issue 6
12 14 24 26 28 06 EDITOR’S NOTE Our Inter-connected World By Amanda Armendariz
08 A LOOK AT THE EXPONENTIAL GROWTH OF INTERNATIONAL SHIPMENTS View on Website
12 SHIPPING TO CANADA: COMMON ERRORS, COMPLAINTS, AND RECONCILIATIONS
16 THE STATE OF THE INDUSTRY View on Website
20 COULD OCEAN FREIGHT FORWARDING BE ON THE HORIZON?
View on Website
While it may not be part of your shipment operation’s day-to-day activities yet, there is a distinct possibility that could change in the near future. By Pravakar Thapa
View on Website
Canada is often one of the first destination countries when shippers start sending internationally. Here’s how to make the experience as seamless as possible. By Carl Hutchinson
24 INNOVATION SPANS THE GLOBAL MARKETPLACE View on Website
14 DDP VS. DDU: WHAT’S THE DIFFERENCE? View on Website
When it comes to Delivered Duty Paid (DDP) and Delivered Duty Unpaid (DDU), here are some factors to keep in mind. By Michael J. Ryan
What does the future hold for international shipping? These survey results from Morgan Stanley could give us some insight.
A look at some of the latest developments in the international e-commerce space. By Kathleen J. Siviter
4 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
26 INTERNATIONAL SHIPPING, CROSS-BORDER, AND FULFILLMENT: WHAT YOU NEED TO KNOW View on Website
By Krish Iyer
28 CURRENT TRANS-PACIFIC CONTRACT RATES: TIME IS RUNNING OUT View on Website
Here are the best questions to ask to ensure that your 2018/2019 contract negotiations are a success. By Henry Gorski
APPLICATION ARTICLES 07 Choosing the Right International View on Website
Shipping Solution Amine Khechfé
PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITOR AMANDA ARMENDARIZ [ email@example.com ]
EDITORIAL DIRECTOR ALLISON LLOYD
PARCEL PARCEL (ISSN 1081-4035) is published 6 times a year by RB Publishing Inc. All material in this magazine is copyrighted 2017 Â© by RB Publishing Inc. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, RB Publishing Inc. or its staff becomes the property of RB Publishing, Inc. The articles in this magazine represent the views of the authors and not those of RB Publishing Inc. or PARCEL. RB Publishing Inc. and/or PARCEL expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine.
[ firstname.lastname@example.org ]
EDITORIAL INTERNS CATHERINE SBEGLIA KRISTYN SOMMERS AUDIENCE DEVELOPMENT MANAGER RACHEL CHAPMAN [ email@example.com ]
CREATIVE DIRECTOR KELLI COOKE ADVERTISING KEN WADDELL (o) 608.442.5064 (m) 608.235.2212 [ firstname.lastname@example.org ]
SUBSCRIPTIONS: Free to qualified recipients: $12 per year to all others in the United States. Subscription rate for Canada or Mexico is $35 for one year and for elsewhere outside of the United States is $55. Back-issue rate is $5. Send subscriptions or change of address to: PARCEL, P.O. Box 259098 Madison WI 53725-9098 Allow six weeks for new subscriptions or address changes. REPRINTS: For high-quality reprints, please contact our exclusive reprint provider, ReprintPros, 949.702.5390, www.ReprintPros.com.
P.O. Box 259098 Madison WI 53725-9098 p: 608.241.8777 f: 608.241.8666 PARCELindustry.com
OUR INTER-CONNECTED WORLD By Amanda Armendariz
e hope you enjoy this inaugural international issue of PARCEL. While global shipping is something we try to cover in almost every issue, we realized in the last year that since this is an explosive segment of the small-shipment sector that shows no signs of slowing down any time soon, there was simply too much information to contain within a regular issue. We therefore wanted to dedicate an entire issue to the ins and outs, the must-dos and please-don’ts, and the ultimate tips and tricks to making your foray into the international arena a success. International commerce has naturally been a central part of human activity, in some form, for thousands of
6 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
years (at a much slower pace, of course!) But what a long way we have come from the days when traders would be gone for months in order to gather the goods they would then bring back to their home marketplaces and sell! Now domestic delivery is almost instantaneous (and even two-day delivery seems too slow for many people), and despite the logistical differences of delivering internationally, many buyers have these same expectations for international orders. So what’s a shipper to do? The answer to that question is obviously dependent on your situation — what you are shipping, where you are shipping to, and whether or not you have overseas fulfillment partners (just to name a few considerations). But there are some general steps that all shippers can take as they dip their toes into the global waters, and we hope that this inaugural international issue of PARCEL has provided that for you. Please don’t hesitate to drop me a line at email@example.com to tell me what you think of our issue and if there is anything specific you’d like to see covered. After all, international e-commerce will only continue to grow, and we’re dedicated to providing the most up-to-date information to shippers as they navigate this sphere. As always, thanks for reading PARCEL.
Here are some of the most-read articles on our site in recent weeks. If you haven’t already checked them out, you might want to — there is some great information in there!
The 2018 FedEx Rate Increase: A Deeper Dive By Dave Sullivan
Seven Ways Dimensioning Can Save Your Parcel Operations Money By Omar Dajani
A Look at UPS Rate Guide Updates and the Parcel Landscape By Andrew Brueckner
Choosing the Right International Shipping Solution More and more e-commerce businesses like yours are looking for ways to expand internationally. That’s not surprising. Worldwide B2C e-commerce sales are targeted to hit $2.4 trillion by 2018, and many of those international buyers are looking for just what you’re selling. If you’ve done your research, you know that there are countless things to consider before selling to international consumers. One of the biggest challenges of selling internationally? Getting the item to the buyer. The high cost of shipping, the endless and often confusing documentation, risk of loss or damage, and lack of visibility mean that shipping packages internationally can seem like more trouble than it’s worth. But, it doesn’t have to be. What to Look for in an International Shipping Solution First, be sure that your solution makes international shipping cost-effective, efficient, and worth the effort of setting up your business to sell globally by providing the following: 1. Low rates: Sounds obvious, but unless you’re selling highvalue items, shipping individual packages to international locations can be cost-prohibitive. In order to complete, you need cost savings beyond regular PC Postage discounts. 2. Visibility/tracking: Thirty-one countries make up about 97% of all international purchases from US e-commerce businesses. These international buyers expect to be able to track their purchase from the moment it leaves your warehouse to the time it arrives at their door. 3. Ease-of-use: One of the most difficult parts of international shipping is choosing the correct forms to complete (there are multiple versions of customs forms) and knowing that you filled them out correctly. Choosing the wrong form, or filling it out incorrectly or incompletely, can result in
delivery delays and/or extra fees. Your shipping solution should automate the documentation process so you don’t need to worry about choosing the right form or submitting it with missing information. 4. Protection against loss or damage: E-commerce businesses often feel that purchasing insurance is a waste of money. And, typically, parcel insurance only covers the cost of the item, not the cost to ship it to the buyer (which can sometimes be more than the cost of the item itself). You should look for a shipping solution that provides at least a minimal amount of free coverage, but also look for one that covers the shipping costs should the item be lost or damaged. 5. Convenient pick-up scheduling: Carrier pick-up services typically run on their own schedules, rather than yours. And, many charge you for using their pick-up service. Be sure you choose a service that allows you to schedule a pick up during a time that is convenient for you — and one that doesn’t charge you for it. Check Out GlobalPost If you are looking for an international e-commerce shipping service that provides all of these benefits and more, you need to check out GlobalPost. In addition to all of the benefits listed above, GlobalPost provides extra services like: dedicated, expert technical support 24/7; $100 in free coverage, plus reimbursement of the shipping costs; automated customs forms and documentation; free end-of-day pick up service for businesses shipping 10 or more packages per day; and little to no disruption to your current shipping processes. GlobalPost is available through some of the most popular shipping platforms including ADSI, ShipStation, DigitalShipper, and many more. To learn more about GlobalPost and to see if it can help with your international shipping strategy, go to www.goglobalpost.com or call 888.899.1255.
Amine Khechfé Chief Strategy Officer, Stamps.com and co-founder, Endicia 650.321.2640 firstname.lastname@example.org
A LOOK AT THE EXPONENTIAL GROWTH OF INTERNATIONAL SHIPMENTS
n its second annual Parcel Shipping Index, Pitney Bowes announced a 48% increase in global parcel volume over the last two years. Parcel volume has grown from 44 billion parcels in 2014 to 65 billion in 2016, and the increase in growth shows no signs of slowing down, with the index estimating parcel growth will continue to rise at a rate of 17-28% each year between 2017 and 2021.
The index measures parcel volume and spend for business-to-business, business-to-consumer, consumer-to-business, and consumer-consigned shipments with weight up to 70 pounds (31.5 kg), across 13 major markets, including: Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Norway, Sweden, the United Kingdom, and the United States. China, a new addition to this year’s index and by far the largest market
8 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
examined, grew parcel volume by 52% in one year, increasing from 21 billion parcels in 2015 to 31 billion in 2016. But, even when excluding China’s prolific volumes, the index forecasts a strong and accelerating pace of growth in parcels throughout the world. On average, the other 12 major markets studied have grown 4.3% annually since 2012 and are projected to grow 4.5%-5.4% annually through 2021.
The United States (at 13 billion) and Japan (at nine billion) were also among the largest markets by parcel volume. In terms of investment, the United States ranked highest, spending $96 billion on parcel shipments, followed by China at $60 billion and Japan at $22 billion. “The continued rise of e-commerce globally is keeping the parcel shipping market strong through 2021 as consumers are increasingly looking to online shopping for convenience, price, and availability of products from around the world,” said Lila Snyder, executive vice president and president, Global Ecommerce, Pitney Bowes. “As consumer
expectations continue to rise, shipping technology and service providers will need to help retailers and marketplaces meet those demands.” Results from the index point to rapid growth and last-mile delivery challenges — when a parcel is transported from a hub to the end-user — as driving innovation across markets. New trends and emerging technologies — such as parcel lockers, crowd-shipping, on-demand delivery services, evening and weekend delivery, and drones — are impacting the customer shipping experience by shortening delivery times, lowering delivery costs, and adding flexibility.
“Managing the growing demands and navigating the evolving landscape of parcel shipping can be complicated for organizations of all sizes, from large enterprises to small businesses,” said Mark Shearer, executive vice president and president, Global SMB Solutions, Pitney Bowes. “Digital transformation of a company’s shipping workflow — like the integration of SaaS-based multi-carrier platforms — can help to better enable carrier, timing, and cost efficiencies for companies, as well as improve customer experiences through the addition of tracking capabilities, simplifying and streamlining processes for both senders and recipients.”
The Breakdown: 48% INCREASE
China annual growth of
Parcel volume overall grew from 44 billion parcels in 2014 to 65 billion in 2016 — a 48% increase.
China is the world leader in parcel volume, revealing an annual growth of 52%, increasing from 21 billion parcels in 2015 to 31 billion in 2016. The United States follows China as the second largest market in parcel volume (with 13 billion).
$96 Billion Despite China's lead in parcel volume, the United States is the world leader in parcel spend, recording a $96 billion investment in parcel shipments, followed by China at $60 billion.
€3.3 billion New trends and emerging technologies are impacting customer shipping experience by reducing delivery time, lowering cost, and adding flexibility.
Germany is the largest European parcel market in both volume and spend, with parcel spend increasing by six percent to €14 billion in 2016, and parcel volume increasing by 6.7% to 3.3 billion in 2016.
INTERNATIONAL SUPPLY CHAIN - FALL 2017 PARCELindustry.com 9
United States continues to lead the world in parcel spend Americas (Brazil, Canada, United States)
8.2% VOLUME INCREASE
IN SPEND WITH $95.8B
Of the 13 countries analyzed, the United States remains the largest market in terms of spend, recording $95.8 billion in 2016. Parcel volume also increased by 8.2% year-overyear, up from 12 billion parcels in 2015 to 13 billion parcels in 2016.
INCREASE IN SPEND
The annual parcel shipping market in Brazil grew by 13% in spend from 2015 to R$11.6 billion in 2016 and nine percent in volume, up from 558 million parcels in 2015 to 609 million in 2016.
4.4% VOLUME INCREASE
INCREASE IN SPEND
In Canada, annual parcel spend increased by 2.6%, up from $7.1 billion CAD in 2015 to $7.3 billion CAD in 2016. Volume also grew by 4.4% from 2015 to 597 million parcels in 2016.
Germany is the largest European parcel market in both volume and spend Europe (France, Germany, Italy, Norway, Sweden, United Kingdom)
INCREASE IN SPEND
INCREASE IN SPEND
Germany is the largest European parcel market — in terms of both volume and spend. Parcel spend increased by six percent to €14 billion in 2016. Similarly, parcel volume increased by 6.7% to 3.3 billion in 2016. Of note, business to consumer shipments represented 58% of all parcels in Germany in 2016.
In 2016, the parcel shipping market in France grew by three percent in spend to €10 billion, and four percent in volume to 1.6 billion.
10 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
10% VOLUME INCREASE
INCREASE IN SPEND
With a 2014-2016 compound annual growth rate (CAGR) of 12%, Italy is among the top three fastest growing markets by volume in the index. From 2015-2016, parcel volume increased by 10% to 801 million parcels, and spend increased by three percent to reach €5 billion in 2016.
INCREASE IN SPEND
INCREASE IN SPEND
INCREASE IN SPEND
The parcel shipping market in Norway increased by four percent in spend to 6.3 billion kr, and by six percent in volume to 38 million in 2016.
In Sweden, parcel spend grew by six percent to 4.4 billion kr, and volume grew by nine percent to 108 million in 2016.
In the United Kingdom, parcel spend increased by eight percent to £9.7 billion, and volume increased by 12% to 2.5 billion in 2016.
Australia experiences double-digit growth in parcel volume (year-over-year) Asia Pacific (Australia, China, India, Japan)
Parcel volume in India grew by 22% to 412 million in 2016, and spend increased in 2016 by five percent to reach ₹115 billion.
13% VOLUME INCREASE
22% VOLUME INCREASE
INCREASE IN SPEND
In Australia, the parcel market experienced double-digit growth in parcel volume, increasing in 2016 by 13% to 794 million, and parcel spend grew by four percent to reach AU$9 billion in 2016.
INCREASE IN SPEND
52% VOLUME INCREASE
INCREASE IN SPEND
INCREASE IN SPEND
From 2015 to 2016, the parcel shipping market in China grew by 52% in volume to reach 31 billion parcels shipped, and 45% in spend to reach ¥400.5 billion.
Japan showed a three percent growth in parcel volume and two percent growth in parcel spend from 2015 to 2016, reaching 9.4 billion and ¥2,401 billion respectively. INTERNATIONAL SUPPLY CHAIN - FALL 2017 PARCELindustry.com 11
SHIPPING TO CANADA: COMMON ERRORS, COMPLAINTS, AND RECONCILIATIONS Canada is often one of the first destination countries when shippers start sending internationally. Here’s how to make the experience as seamless as possible.
large number of shippers, whether new or experienced, encounter unnecessary headaches when shipping small parcel to Canada. These headaches often translate into increased rates of customer complaints (compared to domestic shipping) over things such as delays, inconvenience upon delivery, high costs, or a combination of issues. This is especially true for shippers in the B2C market. Yet many of these headaches can
BY CARL HUTCHINSON
be avoided by understanding ways to work with the carriers to make Canadian shipments more efficient, which creates a much-improved experience for customers, and, in turn, leads to increased sales. COMPLAINT #1: SHIPPING DELAYS We’ll start with the number-one driver of Canadian customer complaints in the small-parcel shipping environment (FedEx/UPS): shipping delays. There are many reasons why a shipment gets
12 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
delayed in transit across the border. Is this simply part of doing business in Canada? Sometimes. Other times, delays are 100% avoidable. Here are two major causes of delays that can be avoided by understanding a few basic guidelines. DECLARATION OF BROKER When sending a shipment via FedEx or UPS, most shippers assume that the carrier will automatically be responsible for clearing the shipment through customs. Canadian law, however, states that the importer has the right to declare the broker for shipments they receive. If the importer declares a broker other than
the carrier, it may cause an unnecessary delay because the carrier will have to provide paperwork to the broker and wait for notice that the broker has completed the necessary clearance. Many receivers, particularly end consumers, do not realize that this decision may have a negative impact on the time they receive their shipment. Shippers can help avoid this type of delay in one of two ways: 1. They can encourage their customers to declare the carrier being used (FedEx or UPS) as the broker. 2. The shipper can become the importer of record — discussed further below — and declare the carrier as the broker. By declaring the carrier as the broker, delays are avoided because shippers eliminate the administrative step of awaiting a transfer of information from the carrier to a third-party broker. SHIPPER FAILS TO PROVIDE PROPER CLASSIFICATION CODES ON THE COMMERCIAL INVOICE To receive customs clearance, the broker must classify all goods crossing the border. The classification determines whether or not duties and/or taxes are due and, if so, for what amount. If goods have not already been classified with accurate tariff codes on the invoice, then the broker must research and make a determination of the appropriate code, which can take time and result in delays. Shippers can avoid this type of delay by listing accurate classification codes for their products on the commercial invoice attached to each shipment. If a shipper does not know the proper codes for their goods, he or she can consult a licensed customs broker. In other cases, shippers can work with their carrier reps to provide detailed descriptions of their goods, at which point the carrier rep forwards to the carrier’s brokerage division to help with classification. COMPLAINT #2: DELIVERY INCONVENIENCE Another big cause of customer complaints — particularly in the B2C market
— is inconvenience upon delivery, which is mainly about payment for duties and taxes at the time of delivery. Parcel carriers will typically pay the duties and taxes when a shipment is processed through brokerage and then collect the money due from the receiver. Many consumers do not realize this will be the case, and even if they do, they may not have the appropriate amount when the delivery driver brings the shipment to their door with a cash on delivery (C.O.D.) amount due. One of the best ways to avoid this type of customer complaint is for the shipper to become the official importer of record. This can be accomplished by registering as a non-resident importer, often referred to as an NRI, with Revenue Canada. When shippers establish themselves as “importers” in Canada, duties and taxes can then be billed to the shipper and shipments will not have any amount due from the receiver upon delivery. As an added benefit, the shipper — as the official importer — is the one to declare the broker for all shipments helping avoid delays as discussed above. The shipper must determine whether the benefits to their customers is worth having duties and taxes billed to them (the shipper), and then determine how they will reconcile that with their customers, e.g. should shippers build these costs into their charges? The major carriers can help shippers with this process, if desired. SHIPPER CONSIDERATIONS WITH REGARDS TO COSTS When evaluating cost of shipments to Canada, there are a few things a shipper should consider. Shipping via air versus ground: For air shipments to Canada, the parcel carriers do not charge a separate fee for brokerage of the shipment. The cost of brokerage is included in the freight rates, if the carrier is declared as the broker. However, this is not the case for ground shipments where carriers charge separate brokerage fees for clearance of shipments (please note that duties and taxes are governmental charges and are not the same as brokerage fees.
Brokerage fees refer to costs associated with brokering the shipment, i.e. entry preparation fees, disbursement fees, etc.). To make an accurate value comparison between ground and air, shippers must evaluate total cost for each type of shipment considering, among other things, the following: For ground shipments, total cost (freight plus brokerage fees) must be determined and compared against the freight rate for air services Discounts on the freight rates for air services are usually much higher than those for ground Time-in-transit difference Depending on the shipment characteristics, there are situations where cost differences between air and ground are small and worth the cost for the improvement in time in transit. Reducing brokerage cost when shipping ground: Typical brokerage fees associated with ground shipments normally include a “disbursement” fee for the carrier paying the duties and taxes and recovering that amount later. If the shipper is established as an NRI, they can work with the carrier and, many times, eliminate or reduce this fee by establishing electronic transfer of funds or a deposit. CONCLUSION Shipping to Canada certainly presents new challenges compared to domestic shipping. However, by understanding the rules and guidelines, shippers can absolve many of the inconveniences and customer complaints that arise in the ship-to-Canada arena.
Carl Hutchinson is Chief Operating Officer at iDrive Logistics, where he has helped shippers address their shipping challenges for the past 10 years. Prior to iDrive, Carl spent more than 20 years at UPS where he helped shippers with international products and later managed corporate international pricing and cost modeling. Carl can be reached at 678.294.5724 or email@example.com.
INTERNATIONAL SUPPLY CHAIN - FALL 2017 PARCELindustry.com 13
DDP VS. DDU: WHAT’S THE DIFFERENCE? When it comes to Delivered Duty Paid (DDP) and Delivered Duty Unpaid (DDU), here are some factors to keep in mind.
By Michael J. Ryan
14 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
hipping internationally is a pain in the neck but very valuable to our future growth.” This is a common theme that most CEOs share about their global growth. There are many areas that need to be reviewed and established in developing an effective global program, but let's focus on the commercial terms and how they can impact a merchant’s business. Let’s start with the basics. The B2B merchants have traditionally relied on a Delivered Duty Unpaid (DDU) model because of the nature of the products’ classification and the value of the products. Many of the express providers have streamlined this process by establishing local relationships with the buyers. This can be achieved because there are regular shipments coming into the same consignee, which helps in the
customs clearance process. In the B2C world, there are many buyers, and they do not have regular purchases of the same product or the same supplier (merchant). This creates uniqueness in the customs clearance process. Let’s take a look at this in more detail. As the “Amazon effect” has re-set the bar for domestic shipments in the US, most consumers want their purchases quickly and cheaply. This expectation has permeated into the cross-border business. The challenge is that the seller and buyer are thousands of miles away from each other and in different countries. In addition to a geographic challenge, each country in the world has its own commodity restrictions, value limitations, and quantity guidelines. These factors can change weekly, daily, and even hourly. Let’s look at the impact of the trade terms as they affect the customer experience (CX).
DDU (DELIVERED DUTY UNPAID) This is the most widely used way of shipping an order to a customer, but there are pros and cons to this in the B2C arena. This term shifts most of the risk for duty and taxes to the buyer. However, since consumers like to get their order “fast and cheap,” this term will slow down the delivery process — not exactly a good thing when it comes to customer satisfaction. Most private carriers will require that the duty and taxes be paid before they make delivery. Some carriers are better than others, but the process is slowed down in the consumer’s response to the carrier. Once a consumer is on record with the carrier, they can set up a process to automate this over time, but it is very difficult when there are so many different consignees involved. However, in this situation, various postal solutions may work better for low-value items that the local postal authority may not want to spend resources to collect the small amounts of duties and taxes on. Also, many countries set a de minimis value amount, which means the shipments are exempt from duties and taxes. As an example, Canada’s de minimis amount is $20, while Australia’s is $750. This is where the merchant needs to do their research on each country they ship to and understand local value rules. For high-value shipments, the term of DDU is usually a better way to ship. DDP (DELIVERED DUTY PAID) As merchants are looking for an improved customer experience on cross-border orders, many are changing their terms to DDP. This allows consumers to have a “frictionless” delivery of their order. However, the merchant will bear the risk of collecting the correct amount for duty and taxes upfront. In e-commerce models where there are limited SKUs, this model may work well. However, if there are many SKUs, then this could become a major task for any organization. The challenge here is that countries change their commod-
ity rules and regulations on a regular basis. There are some excellent global trade organizations that can minimize this impact with their trade knowledge and technology. Your shipping partner may be a great source of information to manage this, too. Some of the express carriers offer this service but have a fee for the service, which could cut into your margins. Many of the parcel consolidation companies highly promote this service because it streamlines the delivery process. The advantage in a postal mode is that there is a low application of duties and taxes for low-value shipments. The DDP term is a great way to keep the consumer happy, but it comes with an elevated risk of not collecting the correct amount up front. EXPRESS SERVICE VS. POSTAL SOLUTION There is no question that an express option will provide the fastest transit. However, be aware of the “hurry up and wait” syndrome. If you get it to a country in one to two days but it sits in customs for 10 days, you will have a very unhappy customer. Again, do your research on each country and ascertain which service method is the best for each. This could be a matrix of choices that may reflect the best of both worlds based on the guidelines for each country. The value of the item will often drive this decision process. Usually, the higher the value, the more likely that an express service will be the better choice for speed and security. Duty and tax rates can come into play to if speed of delivery is not important. As you can see, there is no cookie-cutter solution in the cross-border arena. It is critical to research your products going into each country and establish your shipping business rules accordingly.
Michael J. Ryan is the Executive Vice President at Preferred Parcel Solutions and has over 25 years of experience in the parcel industry. He can be reached at 708.224.1498 or michael. firstname.lastname@example.org.
INTERNATIONAL SUPPLY CHAIN - FALL 2017 PARCELindustry.com 15
THE STATE OF THE INDUSTRY What does the future hold for international shipping? These results could give us some insight.
s always, we are thankful that Morgan Stanley allows us to share these results with our readers, as they provide a benchmark of where the industry is and where it is heading. We’ve pulled out the most relevant international statistics (although we did leave in some stats regarding domestic shipments so you can see how the two compare), but if you’re interested in the full survey results, which are far too numerous to include here, you can visit PARCELindustry.com/ MorganStanleyOctober2017. SOME HIGHLIGHTS FROM THE MOST RECENT RESULTS INCLUDE: 1. Ground and international volume growth outlook decline; slight increase in air 2. Shippers anticipate approximately a two percent average parcel base rate increase over next six months for air, ground, and international 3. Shippers’ expectations for B2C as a percentage of total parcel shipment increase from prior survey
Volume Trends by Product: Volume Growth Expectations Over the Next Six Months vs. Last Year
Volume Growth Skew — All Shippers: Volume Growth Expectations Over the Next Six Months vs. Same Period Last Year
Parcel Volume Outlook Over the Next Six Months Percentage of Shippers Expecting Air to:
Percentage of Shippers Expecting Ground to:
Percentage of Shippers Expecting International to:
Parcel Spend Outlook Over the Next Six Months Percentage of Shippers Expecting International to:
You can access the survey results in their entirety by visiting PARCELindustry.com/
Volume Growth Outlook by Industry Air — Average Volume Change by Industry
Ground — Average Volume Change by Industry
International — Average Volume Change by Industry
INTERNATIONAL SUPPLY CHAIN - FALL 2017 PARCELindustry.com 17
Volume Growth Outlook by Listed Primary Carrier Air — Average Volume Change by Primary Carrier
Ground — Average Volume Change by Primary Carrier
YoY Change in B2C as a Percentage of Total The portion of respondents who think that there will be no change in the B2C arena has decreased fairly substantially compared to the June survey results.
Percentage of Respondents Switching Primary Carriers Over the Past Six Months All shipment modes have seen a decrease in the percentage of respondents switching carriers compared to the prior survey results. 18 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
International — Average Volume Change by Primary Carrier
International Switching: Reasons for Switch and Primary Carrier Reason for Switching Primary Carriers
Dollar-weighted Market Share
Average Base Rate Expectations Over the Next Six Months vs. Last Year
Parcel Pricing Outlook Over the Next Six Months: Percentage of Shippers Expecting International to:
Base Rate Growth Expectations Over the Next Six Months vs. Same Period Last Year
INTERNATIONAL SUPPLY CHAIN - FALL 2017 ï€´ PARCELindustry.com 19
COULD INTERNATIONAL FREIGHT FORWARDING BE ON THE HORIZON? While it may not be part of your shipment operation’s day-to-day activities yet, there is a distinct possibility that could change in the near future.
fter years of experiencing Amazon’s profound effect on everything from its delivery times to shipping prices, it was probably a relief to many parcel and fulfillment professionals to see a different part of the supply chain on the hot seat when the company unveiled plans to become an ocean freight forwarder last fall. Don’t enjoy the schadenfreude too long — because even though international freight forwarding activity may not be an essential part of your company’s day-to-day DNA yet, many signs point to the possibility that it could be soon.
According to a 2016 Pitney Bowes study, two-thirds of e-commerce shoppers now engage in “cross-border” shopping, and more than half do so at least once a month. And a recent WCA World study suggests that approximately 20% of international freight forwarding traffic will come from e-commerce shipments by 2020. With that in mind, PARCEL media recently sat down with Pro Thapa of APL Logistics, whose company is one of the world’s largest international freight forwarders and non-vessel operating common carriers (NVOCCs), to get an update on what this latest area of Amazon’s focus
20 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
is all about — and what it might mean for your own company’s supply chain in the not-too-distant future.
WHAT IS AN OCEAN FREIGHT FORWARDER? An ocean freight forwarder is a company that’s responsible for arranging and overseeing the particulars of overseas transits, including transits that are multimodal, for another company. It’s a go-between specialist that essentially handles all practical and legal issues so that companies don’t have to perform these services or develop international
import/export expertise for particular geographies themselves. An air freight forwarder does the same thing except it serves as an intermediary between companies and international air carriers rather than ocean carriers.
WHAT KINDS OF SERVICES DO OCEAN OR AIR FREIGHT FORWARDERS PROVIDE? It runs the gamut, depending on the forwarder. But, at the very least, it includes: negotiating with carriers, booking transits, creating or providing a bill of lading/airway bill (depending
on whether you’re operating as a freight forwarder or NVOCC), arranging for the safe loading and unloading of cargo, ensuring that shippers have proper cargo insurance, taking care of relevant documentation (such as certificates of origin and export packing lists) and ensuring payment of all the necessary fees, duties, and taxes in the proper international currencies.
THAT’S A PRETTY ROBUST LIST OF SERVICES! And it’s just the tip of the iceberg for some. Larger freight forwarders will
also offer additional services, such as warehousing, cargo consolidation, origin logistics (including value-added services like pick-and-pack, product labeling, and minor assembly), advising shippers on how to properly pack and label their goods for international shipping, customs brokerage, transloading, and various kinds of freight optimization.
WHAT DOES THE TERM NVOCC MEAN, AND HOW DOES IT RELATE TO FREIGHT FORWARDING? A freight forwarder and a non-vessel
INTERNATIONAL SUPPLY CHAIN - FALL 2017 PARCELindustry.com 21
operating common carrier perform many similar functions, and a company can serve as both. The primary difference is that, legally speaking, an NVOCC is considered a carrier as well as a freight forwarder (even though it doesn’t actually own or operate any vessels or planes) and, hence, it can offer shippers a few more conveniences and efficiencies, especially in terms of contracts. It has its own standing bill of lading or house airway bill, and when shippers work with it they get to use that bill of lading or house airway bill as if it were their own. So, if a company works with a freight forwarder for its international shipments, it still needs to have a bill of lading or house airway bill created as part of the process, whereas if it uses an NVOCC for freight forwarding, that step has already been taken care of. Either way, companies are leveraging high-quality outside expertise to help facilitate their international shipments.
DOES A COMPANY HAVE TO WORK WITH AN INTERNATIONAL FREIGHT FORWARDER OR NVOCC IN ORDER TO EFFICIENTLY SHIP ITS GOODS INTERNATIONALLY? It’s not a requirement, but it is a very common practice. In fact, even 10 years ago, companies that worked with ocean freight forwarders/NVOCCs accounted for about 75% of all less-than-container load revenues, while companies that worked with air freight forwarders/ NVOCCs accounted for about 90% of all international air shipments.
WHY ARE THESE NUMBERS SO HIGH? The typical international transit involves numerous hand-offs, carriers, modes, rules, regulations, and the like. And that’s a difficult set of challenges and requirements for any company
to understand and stay on top of — especially if its supply chain involves multiple origins and/or destinations. A good freight forwarder or NVOCC can make dealing with all of these components considerably easier. In fact, it can remove having to worry about these moving parts from the equation altogether. Working with freight forwarders or NVOCCs can also offer cost savings or increased efficiency because most are highly experienced, high-volume international shippers. As a result, they’re usually able to negotiate better rates and services than companies could get on their own and quite often provide clients with opportunities to consolidate their cargo with other shippers’ cargo to create larger, more economical container loads. A lot of forwarders and NVOCCs also have well-established global footprints with numerous facilities that companies can leverage for additional efficiencies. Freight forwarders and NVOCCs often have access to some of the best shipping capacity, too. Many of them have longstanding agreements or contracts with carriers that guarantee first dibs on prime vessels, planes, sailings, and lanes. That can be a huge advantage during peak season or when a lane is in especially high demand.
WHAT ARE SOME OTHER IMPORTANT INTERNATIONAL SHIPMENT FACTORS THAT DESERVE TO BE WEIGHED? Shippers need to determine how confident they are in their own ability to accurately vet and select the right carriers. Service capabilities, transit times, and reliability can vary significantly from carrier to carrier and lane to lane — and companies need to be sure they have a good understanding of all of that before deciding to forgo a freight forwarder’s or NVOCC’s help.
22 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
They also need to weigh the pros and cons of relying on their own land transportation connections and capabilities for the first and final miles of their international transits. Ocean shipping has a lot of reliability gaps, and while it’s not possible to control certain performance factors (like how fast a vessel will actually move), a well-connected, multi-faceted freight forwarder or NVOCC can help companies offset a lot of the related volatility via the other alliances, facilities, products, or transportation solutions it offers. For example, one offering is time-definite ocean shipping with a guaranteed delivery date that enables shippers to cut several days off the average door-to-door ocean transit by ensuring that their goods are loaded onto vessels last, offloaded first, and immediately transferred onto trucks for transportation to their final destination. None of these things changed how quickly companies’ goods traveled while they were on the water. But it still made a substantial difference in terms of their shipments’ overall speed and reliability.
HOW TO FIND THE RIGHT FREIGHT FORWARDER OR NVOCC? Finding a good freight forwarder or NVOCC is much like finding the right third-party logistics provider (3PL) or combination of 3PLs. Among other things, you’ll want to look for a good track record in the markets you’re shipping from or to, as well as expertise in handling the kinds of products or raw materials your company specializes in. Other key things to consider include the array of services and technologies provided and how many ports each of your potential freight forwarders routinely service. And, as always, ensure you have a good cultural alignment between your organization and theirs.
BECAUSE OF THE OVERALL DEPRESSED FUEL RATE, EXCESS CARRIER CAPACITY, AND THE ADVENT OF NEW TECHNOLOGIES, IS THE ROLE OF THE FREIGHT FORWARDER CHANGING? Their role is definitely changing. Even though international shipping is a complex business with numerous moving parts, today’s companies are looking to freight forwarders and NVOCCs to bring more than just basic product movement and import/export skills to the table. They’re looking for more flexible service combinations like air-sea or sea-air. They’re asking for more sophisticated visibility and optimization tools that can work with advanced international shipping algorithms. They’re wanting their
forwarders and NVOCCs to provide them with more flexible, customized supply chain solutions, and they’re expecting them to be partners and problem-solvers rather than “just” international transportation agents.
WHAT DOES THIS MEAN FOR THE TYPICAL PARCEL SHIPPER? Amazon’s decision to become a freight forwarder should serve as a wake-up call that international shipping proficiency is likely to become an increasingly pivotal part of omnichannel shipping success — and that it’s never too early to begin thinking about the best way your company can build or improve upon its international transportation processes.
The bad news is it won’t be smooth sailing all the way because that’s just not the nature of the beast. But, the good news is, no company has to navigate these international waters alone.
Pravakar “Pro” Thapa is Guaranteed Services Product Manager and Network Operations Manager with APL Logistics, a supply chain specialist in the retail, consumer, automotive, and industrial sectors. In addition to serving as a freight forwarder and NVOCC, the company operates a full spectrum of end-to-end supply chain services, operates a global network covering all major markets, and is backed by a multinational workforce of about 7,700 people. APL Logistics is a member of Kintetsu World Express group, a global logistics services provider.
INTERNATIONAL SUPPLY CHAIN - FALL 2017 PARCELindustry.com 23
INNOVATION SPANS THE GLOBAL MARKETPLACE A look at some of the latest developments in the international e-commerce space.
o one can dispute the massive impact the internet has had on the continuing growth of e-commerce and connecting buyers and sellers across country borders. But for start-up businesses wanting to cross borders with their products, services, or solutions, digital connectivity is not always enough. This is especially true if you are a start-up with an idea, service, or solution that you want to test out in another country. How do you get things off the ground?
POSTS AROUND THE GLOBE ARE NURTURING INNOVATION In its 2016 study, “The New Delivery Reality,” Accenture reported that in 2013, venture capital funding in supply chain and logistics start-ups was $266 million, but in the first quarter of 2016, it jumped to $1.75 billion. This is just one statistic that brings clarity to just how much innovation and disruption is going on in our global postal-parcel-delivery-logistics ecosystem. As more innovative players and start-ups take interest in our ecosystem, posts and others with a huge interest in this space are noticing and reacting in positive ways.
24 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
In the past few years, a host of innovation incubators and services have cropped up within the industry, many offered by postal services or operators themselves as they see the value of encouraging innovation and helping startups succeed, both within their home country and in other countries. SwissPost, renowned for its support of innovation, has its PostVentures program where it continually “seeks out fresh ideas to help drive forward its range of products and services in strategic business development areas.” It enters into partnerships with entrepreneurs and helps them implement interesting
By Kathleen J. Siviter
projects. As part of PostVenture17, participants receive support from Swiss Post experts and the ZHAW’s Center for Innovation & Entrepreneurship (CIE), as well as start-up funding for the development and validation of the most promising business ideas. Swiss Post also routinely offers “pitching days” where startups can present their business ideas to specialists. Canada Post recognizes and encourages innovators through its eCommerce Innovation Awards, with specific competition categories such as “most disruptive start-up” and “small” categories for retailers and pure plays. Awards to winners include free shipping amounts with Canada Post as well as promotional activity packages to advertise and support winners’ business growth. LaPoste runs “Start’inPost,” a start-up accelerator program to help connect start-ups and members of its group to accelerate commercialization of innovative services. In a two-step process, start-ups pilot their products/services with an operational sponsor in the LaPoste group for three months, then may receive a commercial partnership and follow-up
by the Start’inPost team for another nine months, and, for the most promising, the group also invests capital. Poste Italiane has long been collaborating with universities, the Public Administration, and private entities. In its relations with the world of academia in particular, the company pursues excellence by participating in national-level applied research and experimentation projects on specific themes. These are just a few examples of how posts themselves are supporting innovation. There are also larger innovation programs within and across countries, which are not specific to our industry, such as the European Commission’s Innovation Union program — part of its Europe 2020 initiative — and seed accelerator groups such as Y Combinator in the US. And, of course, major carriers/delivery services such as UPS also have strategies around innovation. UPS has its Strategic Enterprise Fund (SEF) program, a private equity strategic investment arm of UPS that is a corporate venture capital group focusing on developing critical partnerships and acquiring knowledge returns from investments in information technology companies and emerging market-spaces. START-UP INNOVATION JURY Another great example of how the industry is helping start-ups break down cross-border “walls” and get global exposure is the Start-Up Innovation Jury (http://www.postexpo.com/innovation_jury.php), staged by the Postal Innovation Platform (PIP) and Post-Expo, with support from US-based PostalVision. The first of its kind in the global postal-parcel-logistics-delivery ecosystem, the Start-Up Innovation Jury put out a call for start-ups around the world interested in competing in the event. With minimal marketing and exposure, over 45 startups from a long list of countries entered the competition. During the Innovation Jury process, the start-ups presented their products/ solutions that represented a “unique value proposition with potential to change the postal and logistics market or even create a new market.” A group
of 12 start-ups were selected as finalists and allowed to present their products/ solutions to an esteemed jury at the recent Post-Expo 2017 event held in Geneva September 26-29, 2017. Finalists heralded from a wide variety of countries, including the US, United Kingdom, France, the Netherlands, India, Germany, Switzerland, and Hong Kong. The winning start-up receives substantial visibility through industry publications, as well as the opportunity to present their product/solution to experts at Swiss Post, known for its support of innovation. The types of products/solutions offered by the start-ups in the competition ranged from autonomous drone solutions, to shipping and returns solutions, tracking and security solutions, to crowd-share delivery solutions. The beauty of the Innovation Jury competition was providing these startups with an affordable process to obtain global exposure for their ideas. Just like posts in different countries today are collaborating and sharing ideas across borders, this kind of global competition is founded on the same principle — what works in one place may also work in another, and let’s not reinvent the wheel. It is likely that more of these kinds of innovation jury events are coming in the postal industry’s global ecosystem in an effort to share ideas across borders and help support start-ups with products/solutions that are viable for multiple countries. A US-based start-up competition through PostalVision coming in 2018 is likely to continue the trend of breaking down borders for entrepreneurs.
Kathleen J. Siviter is president of Postal Consulting Services Inc. (PCSi) and has over 30 years’ experience in the postal industry, having worked for the U.S. Postal Service and Association for Postal Commerce (PostCom). She also serves as the Director, Community & Brand Development, for PostalVision 2020 (http://www.postalvision2020.com), an initiative designed to engage stakeholders in discussions about the future of the American postal system.
INTERNATIONAL SUPPLY CHAIN - FALL 2017 PARCELindustry.com 25
INTERNATIONAL SHIPPING, CROSS-BORDER, AND FULFILLMENT: WHAT YOU NEED TO KNOW BY KRISH IYER
To read Krish’s previous article on the subject, please visit PARCELindustry.com/crossborder 26 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
does pose a few unique considerations that are distinct from cross-border Itself. When determining which strategy is optimal, ask yourself these questions: WHY DO I THINK MY PRODUCTS WILL BE A GOOD CANDIDATE FOR EXPORT SHIPPING BY USE OF A FULFILLMENT PROVIDER? Simply put, there are two main reasons why a customer will shop abroad: a. The product is not available in their home market. b. The product is cheaper or of higher quality abroad. From a cross-border perspective, knowing the markets you wish to open for exportation from becomes critical. Many factors will go into this decision-making, including whether the product itself can be sold in a destination market, the potential of the product being sold in a destination market cannibalizing existing sales, and if there is even demand for the product in the destination market. With more than 78% of the global B2C e-commerce market outside of North America (according to PayPal, 2016), this becomes an issue of great importance.
he process of finding a cross-border provider is an important consideration for B2B and B2C shippers in the US and globally. New considerations, however, have come up recently with the concept of international fulfillment. Fulfillment is defined here as, “the tendering of some or all aspects of inventory, storage, picking, packaging, and final transportation of products to the end recipient.” As e-commerce grows, fulfillment has become an attractive option for shippers. With that said, international fulfillment
DO I EXPORT FROM THE US OR FULFILL FROM A WAREHOUSE IN ANOTHER MARKET? The cost of exporting from the US has been an issue that has vexed shippers for many years. In the age of e-commerce and free shipping, this issue becomes more important. Finding a fulfillment partner who can then source the inventory in bulk in a destination market then becomes a source of cost savings and efficiency. Some key questions an e-commerce shipper, in particular, should consider when examining international fulfillment options include: a. Does my fulfillment provider have experience in shipping e-commerce products to these markets?
b. Who will complete the international paperwork and what is the limit of liability if something goes wrong? Finding a fulfillment partner experienced with international shipping is important, especially when one considers how often shipments can potentially be held up in customs due to insufficient paperwork or information. Knowing what the partner’s experience is with customs paperwork — and how they remedy potential delays — becomes a key component of partner selection. HOW DO RETURNS FACTOR INTO THE STRATEGY? Ah, yes, returns — a topic that vexes shippers in the US but can have serious cost consequences globally as well. This is the single biggest area where a fulfillment provider might have advantages, as they might be able to help in one of three ways: Enabling returns in bulk back to the US. Having an in-country liquidation partner. Having relationships with local in-market parcel providers who can help reduce costs. CONCLUSION International shipping is complex, and a fulfillment partner can reduce the anxieties associated with those complexities. Finding the right partner, however, involves a keen understanding of your product and the destination markets in question, as well as how the fulfillment partner will attend to your specific needs.
Krish Iyer is Director, Strategic Alliances, ShipStation. An expert in cross-border e-commerce, international fulﬁllment, and supply chain technology, he has more than 16 years of industry experience with FedEx, Pitney Bowes, Neopost, and ShipStation.
INTERNATIONAL SUPPLY CHAIN - FALL 2017 PARCELindustry.com 27
CURRENT TRANSPACIFIC CONTRACT RATES: TIME IS RUNNING OUT Here are the best questions to ask to ensure that your 2018/2019 contract negotiations are a success.
e are halfway through the 2017/2018 trans-Pacific contract season, and it’s time to start asking some serious questions regarding your contract rates to guarantee successful 2018/2019 contract negotiations. 1. Am I on track to meet volume commitments this year? 2. Are my carriers performing at their peak? 3. What peak season issues could I potentially run into? 4. How do my contract rates compare to the market rates? 5. Should I outsource for my tender next year? 6. If so, what type of company should I consider?
Shippers and carriers alike need to be prepared for significant competition. They need to be aware of new capacity and the balance of supply and demand that hasn’t been factored in, in addition to how the market will affect contract rates. In addition, there is still a large amount of new vessel supply that is expected to make its way into the market over the next two years, and, with the alliance reshuffling being triggered by last year’s carrier consolidation, we can expect that changes are going to happen.
and vessel optimization. The better the forecast, the more a carrier will enjoy doing business with you time and time again. Increase communication with your carrier throughout the year regarding volume forecast changes. You will see a better mutual understanding and improved efficiencies.
AM I ON TRACK TO MEET VOLUME COMMITMENTS THIS YEAR?
Carriers typically look for shippers who can provide a good forecast of volumes throughout the year to assist with planning of both equipment availability
28 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
TIP: You should at a minimum conduct quarterly review discussion with your carriers to ensure continued understanding of each other’s needs and requirements.
ARE MY CARRIERS PERFORMING AT THEIR PEAK?
In addition to reviewing changes in sourcing that may affect the way you fulfill your volume commitments during these quarterly meetings with
By Henry Gorski
carriers, these discussions also provide a great opportunity to review a carrier’s performance against any specific key performance indicators (KPIs) that you may have in place. KPIs are vital when reviewing performance and managing your carrier base. Looking at each step in the process, from container release in Asia to the on-time arrivals at a port of discharge, reviewing vessel delays, and more should form part of the carrier’s KPIs.
WHAT PEAK SEASON ISSUES COULD WE POTENTIALLY RUN INTO?
It may be a little late to look at peak season performance now; however, you can learn from any issues that happened this year and use that knowledge to limit issues next year. Typical issues include: short-shipments and rollovers caused by a vessel departing without loading
all containers (during peak season, this does not happen very often); a vessel was overbooked and higher-paying containers were loaded in place of lower contract freight; or weather-related vessel departures from ports. Traditionally, contracting applies no surcharge during the peak season; however, what if your supply chain experiences disruptions such as outages? For example, if your current carriers are sea freight, be prepared that your best — although expensive — option is going to be air freight. In that case, it may be worthwhile to offer a surcharge during the peak to ensure you containers are loaded on board. TIP: Be prepared to rethink your strategy at any moment.
HOW DO MY CONTRACT RATES COMPARE TO THE MARKET?
SHOULD I OUTSOURCE FOR MY TENDER NEXT YEAR?
Compare your rates to the market’s — using the Shanghai index or Drewry’s — and examine how the spot market rates compare to your contract. You should then be able to see where your rates land and determine if you have over- or under-paid compared to the market level. When looking at competitive rates for the volume of cargo being shipped, benchmarking is an ideal guide. The results, however, will depend on whom you ask and what type of data they use to provide the results.
If you decided to outsource, be aware that many companies claim they
INTERNATIONAL SUPPLY CHAIN - FALL 2017 PARCELindustry.com 29
landscape is starting to look different for next year’s tender round. With fewer carriers and only three main alliances, there will be a limited amount of space for independent carriers. That’s why it’s important to base your carrier decision on your needs communicated and not necessarily a history or perceived value a carrier may bring. It’s always good to be a big fish in a small pond; however, the trans-Pacific is a very big pond.
can provide direct rate comparisons, but steer towards companies that can provide both a benchmark and tender alternative to obtain rates on your behalf. Why can a company offering tendering services get better rates than a direct shipper? The answer is relatively simple.
It’s always good to be a big fish in a small pond; however, the trans-Pacific is a very big pond. These companies specialize in performing tender exercises for their customers on a regular basis, which then gives them access to market-level
data, applicable to carriers. This process helps keep carriers from providing uncompetitive rates, knowing that the tendering company has already gathered information on their pricing models while the rates themselves remain confidential. It ensures shippers are always receiving competitive rates. Therefore, the results of using an outsourced tender ensures a reduced cost and considerable amount of time saved for the company achieving a painless tender as well as achieving a great result for your company. You can confidently walk away knowing that your rates are competitive with others in the market.
WHO SHOULD I CONSIDER FOR MY TENDER FOR NEXT YEAR?
With numerous changes made this year to trans-Pacific partnership agreements, specifically in alliance membership, as well as the consolidation of carriers, the
30 PARCELindustry.com INTERNATIONAL SUPPLY CHAIN - FALL 2017
Over the next year, anticipate larger vessels arriving on the trade, with more ultra-large container vessels being deployed on the Asia-to-Europe trade lane. Vessels with 20,000 and 21,500 20-foot equivalent units (TEUs) are being introduced to the trade, displacing vessels in the 8,000 to 14,000 TEUs. This additional capacity, which will without a doubt carry over to the Pacific Trade lane, and the ambition of at least one independent carrier to double their current service offering, will ruffle some feathers in the industry. With additional capacity and the balance of supply and demand, we can learn from history that the pendulum may swing back into the shipper’s favor. Remember, there are only a few months to go before the negotiations commence. Be prepared and use this time wisely to build up your relationships with the carriers and become aware of new alternatives.
Henry Gorski is the Ocean Category Manager for enVista. He has spent the last 30 years working in international supply chain management for companies including Evergreen Marine Corporation, Orient Overseas Container Line (OOCL Logistics), and Mediterranean Shipping Company. Throughout his supply chain career, Gorski has been responsible for the start-up of Evergreen’s Round the World container service in the United Kingdom and played a major role in the establishment of EVA Airways.
ARE YOUR COLLEAGUES There are undoubtedly people in your organization who need this information as much as you do. So if they are not already a subscriber, have them sign up for a FREE subscription today!
PARCEL Fall 2017