Opinion: International Sourcing: What’s In It for You?

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B>By Ken Chay

I>Marketing Director

PL Logistics

Two shoe salesmen traveled to a new land. Upon discovering that the natives didn’t wear shoes, one called his manager to request a ticket home because there was no market. The other called his manager to ask for additional shipments because the market was untapped.

This is analogous to the current seismic change in manufacturing that is affecting us all. How we respond to it is completely a matter of perspective.

As more companies begin to manufacture goods in Asia, there are considerably fewer domestic plants with which one can do business.

However, that doesn’t mean you should start reading the want ads in China.

Even though America’s sourcing may be shifting, its domestic demand patterns are very much intact. The need for qualified transportation and logistics professionals to satisfy those needs is stronger than ever.

In fact, I believe that globalization will make the role of trucking even more essential, provided you’re willing to acknowledge and work within the parameters of a few key shifts.

The first shift is to busier ports. Just as important, the transportation lanes between ports and key U.S. markets are increasingly crucial.

This is true not just on the West Coast, where ports handled the equivalent of 17 million 20-foot cargo containers in 2003 and Long Beach, Calif., had 12% growth. It is also the case on the East Coast.

It is becoming more attractive to ship to the Eastern Seaboard as West Coast capacity becomes increasingly congested and the competition for transportation services out of western ports becomes more heated.

There are some eastbound transportation lanes where rail providers have been feeling the strain of the increased import activity. That explains why more than half of the eastbound U.S. trains are more than 24 hours late.

Granted, using East Coast ports will add anywhere from nine to 14 days to an Asia-U.S. transit. However, if a company has a large concentration of its customers based near the East Coast, it often makes more sense from an economic and service standpoint to bring goods in over there. It can sometimes be worth the longer trip through the Panama Canal to avoid some of the growing west-to-east land bottlenecks across North America.

Transportation providers would be smart to pay close attention to the opportunity to improve services in those lanes. They would also be well advised not to ignore the importance of lanes to and from America’s ports.

As a country with more than a billion residents and a growing job base, China has a growing potential for consumption, too. U.S. exports to China are on the rise.

Shift No. 2 concerns the growing importance of freight management as a part of the U.S. logistics equation.

In a white paper my company published with Drewry Shipping Consultants last year, we looked at the cost of trying to get Chinese goods off U.S. docks and into the supply chain here in a timely and efficient manner. One of my colleagues compared it to threading 100 fibers through a single needle before they once again spread out.

Expect to see a growing emphasis on freight management. Some of its capabilities, such as optimization, are already popular for helping companies consolidate and convert more of their less-than-truckload shipments to truckload lots. However, the ability to find and negotiate with reliable carriers in an expedient manner should make it a more significant part of many companies’ logistics arsenals.

The final shift is one that is not unique to the logistics industry. The increased emphasis on security since Sept. 11, 2001, is not a trend or fad. Everyone is painfully aware of the fact that containers, trucks and other transportation equipment are potentially vulnerable to terrorism.

Even though you may feel like international logistics professionals are primarily responsible for supply chain security, you cannot assume that any logistics facility, truck or train is secure merely because it’s on U.S. soil — especially not if it’s handling goods that have been imported.

As a result, all of us in U.S. logistics must be increasingly vigilant and mindful of the fact that keeping inventory secure is now part of our job description.

The poet John Donne observed that “no man is an island.” That’s especially true of any man or woman involved in logistics today. Whether we’re located in the heartland or on a coast, supply chain activities going on across the globe do have an impact on how we operate — not only today but well into the future.

While international business is more competitive than ever, there’s still a world of opportunity because companies need more help then ever to keep their supply chains running smoothly. It’s all a matter of perspective.

APL Logistics is a provider of global supply chain management services with U.S. headquarters in Oakland, Calif. It is a subsidiary of Neptune Orient Lines, Singapore.

This story appeared in the April 12 edition of Transport Topics. Subscribe today.