Friday, October 31, 2014

BLUE OCEAN SUPPLY CHAIN IS GLOBAL WITH MULTICHANNEL RETAILING

Blue ocean strategy with supply chain management is global with multichannel and ecommerce for retailers.  How many will compete in the blue ocean, and how many will try to compete in the red ocean where everyone else is?

Will stores merely become showrooms?



According to Capgemini’s most recent research (based on more than 18,000 digital shoppers from 18 countries), 48 per

cent of respondents agreed that stores will likely become showrooms instead of places of transactions in the future.

While technology is heavily converging and influencing consumers’ shopping behaviour, physical store retailers should

be relieved that 72 per cent of shoppers surveyed do not assume that stores will disappear any time soon.

In the high-growth markets, namely Brazil, China, India, Mexico and Russia, the report has identified the digitally

indifferent shoppers (23 per cent), who prefer physical stores; the interactive digital shoppers, a vast majority of 50 per

cent, who are ready to embrace new technologies when making purchases; and the technophile shoppers (27 per cent),

who are tech-savvy, but like flexibility and control.

SUPPLY CHAIN RISK EXAMPLE

From tweet by Olaf Merk--

Global commodity flows, key nodes and political hotspots


Embedded image permalink

Thursday, October 30, 2014

CHINA CUSTOMS

China Customs Clarifies Requirements for Inbound/Outbound Transport and Manifest

Friday, October 31, 2014
Sandler, Travis & Rosenberg Trade Report
The General Administration of Customs of China has issued an announcement that clarifies the procedures it uses to supervise inbound and outbound cargo transportation and manifests. According to Harry Zhang, vice president of China customs consulting and compliance for Sandler, Travis & Rosenberg Ltd., this announcement includes more detailed requirements that took effect Oct. 15 and is designed to standardize across China the work of local customs offices and companies concerning two previous GACC orders (172 and 196) on this issue with respect to document requests, data management, deadlines, etc.
Highlights of the announcement include the following.
- Electronic manifest data for inbound and outbound shipments and the goods carried therein must be accurately transmitted to GACC within the prescribed time limit and in accordance with relevant filing specifications.
- Data errors in such transmissions may be corrected before the deadline for transmitting the original manifest unless the owner of the goods has completed customs declaration formalities.
- Paper or electronic versions of the overall or separate bills of lading must be prepared before an import or export shipment and all electronic data (including for separate bills of lading) must be transmitted to GACC within the specified time limit. If there are no separate bills, the information for all goods must be provided under an overall bill of lading through the manifest management system's “commodity description” data entry and then transmitted to GACC.
- Customs declarers must ensure that each declaration form has one corresponding bill of lading. When one batch of goods cannot be cleared in one declaration form, the declarer may apply to the onsite customs unit to split the overall bill of lading.
- When exporting non-containerized goods based on a weight certificate, the goods handler must transmit the electronic data handling report to GACC based on the weight certificates issued by state-authorized inspection agencies.
- The manifest transmitter must transmit electronic data regarding the allocation of empty inbound and outbound containers. When the empty containers are not actually loaded or unloaded as per the transmitted data, the transmitter must alter the electronic data with GACC.
- When a registered company needs to revise its registration information it must submit the Registration Alteration Sheet within 10 working days of the associated change.
- When a company fails to transmit electronic data for vehicles and manifests GACC will impose a penalty on it in accordance with the China Customs Regulations on Administrative Penalty.
- GACC will conduct field inspections of inbound and outbound vehicles and the goods carried therein and the companies involved must cooperate with those inspections.
- Data may be transmitted through the China E-Port platform.

INDIA & E-COMMERCE

India's delivery men offer prize investment as billions pour into e-commerce

MUMBAI/BANGALORE Thu Oct 30, 2014 3:05am IST

Employees of Snapdeal, an Indian online retailer, sort out delivery packages inside their company fulfilment centre in Mumbai October 22, 2014. REUTERS/Shailesh Andrade
Employees of Snapdeal, an Indian online retailer, sort out delivery packages inside their company fulfilment centre in Mumbai October 22, 2014.
Credit: Reuters/Shailesh Andrade

Stocks

Softbank Corp
9984.T
¥7,740
+231.00+3.08%
10/30/2014
Amazon.com Inc
AMZN.O
$297.44
+3.32+1.13%
21:46:00 IDT
Transport Corporation of India Ltd
TCIL.NS
Rs229.55
+8.80+3.99%
15:48:00 IDT
MUMBAI/BANGALORE (Reuters) - From Japan's richest man to Jeff Bezos, everyone wants a piece of India's booming online retail sector. For those without billions to pump into the tightly held firms who dominate e-commerce, the best bet may be the delivery men.On Tuesday, SoftBank Corp (9984.T) Chief Executive Masayoshi Son joined Bezos's Amazon.com Inc (AMZN.O) in pledging heavy investment in an e-commerce industry worth $10 billion and seen quadrupling in five years. Son's gambit: a stake in Snapdeal, India's third-biggest online marketplace.
Yet the little-known firms that deliver goods ordered online are already raking in rocketing earnings from e-commerce in a country with the world's third-biggest Internet user base, and they're listed. Shares in companies like Transport Corp of India (TCIL.NS) and Gati Ltd (GATI.NS) have surged more than three-quarters this year as industry watchers seek a chance to invest.
"When you see the limitless growth in the e-commerce sector, you do want to get involved," said Eric Mookherjee, a Paris-based fund manager at Shanti India, whose holdings include Transport Corp. "The next Alibaba (BABA.N) or Tencent (0700.HK) can be created in a country whose population is roughly similar to China. You will get that in India."
Finance house Nomura estimated in a research note in July that India's e-commerce industry could more than quadruple to $43 billion over the next five years, driven by online retail.
Pledging to invest $10 billion in India in the next 10 years, SoftBank's Son on Tuesday said Snapdeal has the potential to become India's Alibaba, the recently listed Chinese e-commerce giant. Son is well placed to know: his fast-growing Japanese telecom and media empire is the biggest Alibaba investor.

DELIVERY OUTSOURCING A MUST
Son's move comes after India's two biggest online retailers, the home-grown startup Flipkart.com, and Amazon's India business, began spending billions of dollars to secure a bigger share of the market. Though India's Internet population is huge, e-commerce infrastructure remains relatively under-developed and ripe for huge growth.
The forecasts for future expansion, and a key role in it for third-party delivery firms, have helped push the more than $50 billion Indian logistics sector, including Gati and Transport Corp, about 80 percent higher so far this year. That makes it the fifth-best performing major industry in India by the Thomson Reuters ‎StarMine classification.
Earnings are also ramping up. Net income of Blue Dart Express (BLDT.NS) and Transport Corp is expected to jump by 37 percent and 24 percent in this fiscal year respectively, according to Thomson Reuters' SmartEstimates, which place an emphasis on recent forecasts by top-rated analysts.
In comparison, net profit of companies in the Bombay Stock Exchange's main 30-share index .BSESN is expected to rise just 15 percent on average.
As the market surges, competition for customers among e-commerce firms will see them seek to cut delivery times and expand into smaller cities. While Amazon and Snapdeal use both in-house logistics networks and external service providers, new services will see them relying increasingly on outsourcing.
"Amazon is today advertising 24-hour delivery and that's where people like us come in," said Areef Patel, executive vice-chairman of Patel Integrated Logistics Ltd (PATL.NS), which serves Amazon India. The 24-hour delivery offer applies only to select postal codes and is not available across the country.
"We are looking to get e-commerce market share today because that's the flavour of the day," he said. Patel said his firm aims to increase the portion of revenue it generates from e-commerce companies to 20-25 percent within two to three years from just 5 percent currently.
With more than 45 percent of Amazon's orders in India coming from outside the top eight cities in the country, the company is looking to work with more logistics partners, Amazon India said.
"The biggest advantage of working with specialist logistics firms is the wide reach that they provide," said Ashish Chitravanshi, vice-president of operations at Snapdeal, speaking before the SoftBank investment was announced.

MEGA-SHIPS & MEGA-ALLIANCES

Who pays for the ‘disadvantages of scale’ from mega-vessels and mega-alliances?

By Rainbow Nelson in Cartagena
10.29.2014 · Posted in Loadstar posts, Sea FavoriteLoadingAdd to favorites
APM Terminals' new facility in Santos allows for bigger ships, but delays have lengthened
APM Terminals' new facility in Santos allows for bigger ships, but delays have lengthened
The quantum leap in container vessel sizes over the last decade has left the logistics industry searching for answers about who really wins with the introduction of mega-vessels, mega-alliances and their much-lauded economies of scale.
As the supply chain is being re-shaped to accommodate 18,000teu vessels and the world’s largest shipping lines stretch, the paradigm of what is considered “normal” on every trade lane, port operators and shippers are set to feel the pressure and pick up the cheque for a new set of “disadvantages of scale” being faced throughout the supply chain, delegates heard at the recent TOC Americas conference in Cartagena.
Shippers, port operators and industry observers were perplexed by moves by the world’s largest shipping lines to pull up the drawbridge to new entrants to one of the world’s most confounding and consistently unprofitable industries.
“Economies of scale are beneficial for some actors but it creates a whole array of other problems for others,” said Dr Jean-Paul Rodrigues, head of global studies and geography at Hofstra University. “Economies of scale work well for the shipping companies but the bigger the ships the less flexibility you have in terms of port calls, so that is an issue and this has put pressure on the ports,” he says.
Ports in particular are feeling the pressure to embark on expansion plans that will only benefit a select handful on trades dominated by the new mega-vessels.
“The Panama Canal rationale has been a kind of ‘clear and present danger’ scenario for ports on the US east coast – ‘if we don’t invest we are screwed’ – but what is going to break the economies of scale is supply chains,” said Dr Rodrigues.
Liner economies of scale were also likely to lead to increased friction with shippers looking for lower costs and more direct services, which are being driven out of the system with the arrival of bigger ships and bigger alliances, he said.
“Supply chain managers are going to be more and more annoyed, as you will have two issues: less frequency and more volume. And more cargo on big ships raises insurance issues,” he added.
Shippers were concerned that the rise of mega-alliances seeking to drive costs down through network rationalisation would have a negative impact on their efforts to get products to market swiftly. Large perishable exporters were particularly concerned that transit times would become an issue of getting produce to market.
“The concern is that you need to add in transhipment, and if cargo is going from one vessel to another it takes time, there is no way to eliminate that. That is going to increase transit times, which, with slow-steaming, are already a concern,” said Allison Nowlin, in charge of international logistics at JBS USA, the North American arm of the world’s largest frozen meat shipper.
Other shippers – only now becoming accustomed to longer transit times as a result of slow-steaming – would only accept delays, and the added inventory required, in return for greater transparency and real-time information on the whereabouts of shipments. The issue of increased transhipment has accentuated the issue of tracking goods in transit.
“Customers are becoming far more demanding. Predictability and reliability are major concerns,” said Richard Jordan, regional head of logistics in the Americas for Panalpina.
“If we use hubs, it’s not so much a matter of ‘how much it is going to cost?’; it is more a matter of ‘where are my goods?; when will they be there?; when can I get my hands on them?’” he added.
The emergence of mega-alliances as a response to the continuing decline in rates was placing carriers on a path to conflict with their customers if service levels also decline, according to one of Chile’s most important shippers.
Any reduction in direct transit options and an increase in transhipment could prove counter-productive to the region’s trades, according to Mario Aguilera, logistics manager for CPMC, the largest forest products exporter in Chile.
“If the mega-alliances are not a move towards improvement, then it will go very quickly from a mega-alliance to a mega-disaster,” he said.
Less frequency, fewer direct services and more transhipment in the region were what shipping lines had to careful of, according to Poul Hestbaek, Hamburg Sud’s senior vice-president for Latin America West Coast & Caribbean.
“As you increase the size, then suddenly you are seeing half the frequencies. Fruit exporters will tell you that they need the frequency; they need to be re-loading every day, so it’s going to be very interesting to see how we will increase the utilisation rates,” he said.
He forecast that, despite the obvious attractions of implementing hub and spoke systems to increase utilisation rates on the largest ships, shipping lines would probably be forced to listen to shippers’ clamouring for direct calls, and create parallel services that connect key markets with direct services.
However, lines were growing concerned about the diminishing returns on their investments in regional ports.
“We need to look at crane density and less wasted time. On average, there is six hours of wasted time per port call: waiting for the pilot; 20 minutes of gangway; inefficiencies that we can’t afford any longer,” Mr Hestbaek said.
The strain is already being seen in Brazil, where the introduction of 8,200teu vessels, coupled with the doubling of berth capacity in Santos, the region’s largest port, had so far not had the desired effect in terms of reducing vessel waiting times.
Emerson Buarque, Gulftainer’s managing director in Brazil, said waiting times had increased by 31% in 2014, with container vessels now waiting on average up to 15 hours to berth in Brazilian ports.
And the widening of the Panama Canal – set to introduce vessels of up to 12,500teu – is only set to exacerbate the problem in the region’s under-equipped ports.

Wednesday, October 29, 2014

AMAZON AS 3PL

Tom Craig of LTD raised the idea of Amazon as a 3PL approximately 2 years agon on LinkedIn.

Logistics CSCMP Supply Chain Quarterly

Is Amazon a 3PL?

As Amazon expands into logistics services, the giant retailer is taking on more of the characteristics of a third-party logistics (3PL) company. How might that shape the industry's competitive landscape?
Amazon.com has come a long way since its founder and chief executive officer, Jeff Bezos, envisioned the company as a virtual bookstore. It has evolved into an online retail giant that generated US $74.45 billion in revenues in 2013, much of that coming from its support of more than two million companies that used Amazon to sell their products online and distribute them to customers. Under the company's various programs, Amazon not only provides its customers with a means of advertising and selling their products, but also offers to store those products in its fulfillment centers; pick, pack, and ship them; and provide customer service, including handling returns.
In the process of developing its network to support those services, Amazon has built out an infrastructure that by one recent account now includes 145 warehouses around the world (84 in the United States, four in Canada, 29 in Europe, 15 in China, 10 in Japan, and seven in India), which collectively account for more than 40 million square feet of space. Amazon has also has made substantial investments in material handling systems, including the acquisition of Kiva Systems for $775 million in 2012.1 Kiva, now a wholly owned subsidiary of Amazon, designs robots, software, workstations, and other hardware that has been used in the distribution facilities of companies such as Staples, Office Depot, and The Gap. The systems produced by Kiva are expected to be an integral part of the distribution network now being developed by Amazon. Amazon has also made major investments in cloud computing. At the same time, the company has been developing transportation capabilities to support its Amazon Fresh same-day grocery business.
Much of Amazon's recent growth has been fueled by its Amazon Prime program and Amazon Supply operations. Amazon Prime, which offers "free" two-day delivery to its more than 27 million subscribers for US $99 dollars per year, doesn't come close to recovering Amazon's related transportation costs, but on average Amazon Prime customers buy twice as much merchandise per year as do other customers. 2 Amazon Supply, which provides a marketplace for thousands of industrial suppliers, represents a major move by the retailer into the business-to-business space. Amazon advertises it as offering 750,000 "essential" products for business and industry, with free two-day shipping for orders of US $50 or more and a 365-day return policy. Amazon's increasing presence in this industrial space poses a real threat to incumbents such as W.W. Grainger and Fastenal.
While Amazon's reach into both retail and industrial markets continues to expand, profits reported by the company have been meager or, as was the case in 2013, nonexistent.3 Regardless, Bezos has been able to convince the investment community that his ventures into a wide range of industries and markets, from diapers to delivery drones to space shuttles, ultimately will be rewarded with substantial profits.
Where is all of this leading? What does Amazon want to be when it "grows up"? Bezos has often been quoted as saying that he's not sure that retailing will be the company's core business in the future. If it isn't, what is it likely to be? If one examines the distribution network the company has developed, the services it provides to affiliates that sell their products through Amazon, and its recent actual and rumored moves into transportation, then it's logical to raise the question of whether Amazon is likely to become a major third-party logistics service provider (3PL). In fact, it could be argued that the company already is a 3PL.
With those questions in mind, the authors, who conduct annual surveys of the chief executives (CEOs) of many of the world's largest 3PLs, decided to ask executives who participated in this year's surveys about Amazon's effect on the field of supply chain management, its impact on the 3PL industry to date, and the nature of the competitive threat that Amazon might pose to 3PLs in the future. Their responses to those questions are discussed below.
Amazon as a game changer
First, we asked the CEOs if they believed that Amazon has had a significant effect on the field of supply chain management. Twenty of the 25 CEOs surveyed said yes. They identified a number of ways the company has had an impact, but most frequently cited the role Amazon's high-speed delivery programs has played in raising customers' service-level expectations. Three CEOs mentioned Amazon's introduction of same-day delivery. Its free, two-day Amazon Prime shipping program was mentioned by another CEO, as was the "power" of free home delivery. Respondents also noted that these programs have had a significant impact on traditional logistics integrators, such as UPS, FedEx, and DHL, because Amazon's push toward next-day standard and same-day expedited service levels is reducing the use of expedited transportation services like air freight.
Amazon's e-commerce fulfillment services were cited as a "game changer" by several CEOs; they were also mentioned as a major reason for the establishment of the many online "stores" that rely upon those services to meet their customers' needs. That expansion has subsequently led to a greater demand for e-fulfillment services. Amazon was also credited with demonstrating the power of bringing a broad range of supply chain resources under one platform, and as such was mentioned as the "obvious choice" for many new, small-scale online retailers that do not have the resources to manage fulfillment. Respondents also noted the increased interest among traditional retailers in developing omnichannel strategies to compete with Amazon as it takes a steadily increasing share of the market from brick-and mortar stores.
The CEOs offered some other interesting observations. Some said that Amazon is driving 3PLs to develop new short- and long-term plans to support online retailers with business-to-consumer and business-to-business solutions. Others noted that Amazon's aggressive infrastructure expansion has affected real estate values and labor markets, particularly when it opens a new facility. Respondents also mentioned the company's success in increasing shipment visibility, as well as its ability to reduce the service areas covered by individual distribution centers while at the same time increasing shipment velocity to customers.
Not all of the comments were complimentary. One CEO said that Amazon has substantial market clout, but it "wields it so violently that it is not a customer of choice or a desired client." Another suggested that the company "kills firms with low prices."
The impact to date on 3PLs
In today's business world a company may simultaneously be another's competitor, customer, and supplier. With that in mind, we asked the 3PL CEOs if their companies provide logistics services to Amazon, and nine of them said that Amazon is one of their customers. Those nine were then asked to identify the services they provide, which included the following: distribution, value-added warehousing, transportation services, bulky-goods fulfillment, and import/export services.
One respondent described a rather interesting relationship between Amazon and his company. Amazon employees are working in some of that 3PL's distribution centers to support some of the 3PL's customers that do business with Amazon. This relationship is similar to several others that Amazon has with key customers, including Procter and Gamble and Georgia-Pacific.4 In those cases, the retailer positions its own employees in the customers' distribution centers to manage the distribution of the products those companies sell through Amazon.
The 3PL CEOs were then asked whether Amazon has had any specific impact on the 3PL industry to date, and 10 said that it had. When asked to specify what that impact has been, most were unwilling to share that information for competitive reasons.
Those who were willing to share their thoughts identified several competitive impacts. Many retail startups are relying upon Amazon to handle warehousing, inventory management, and fulfillment for them. Without Amazon, the CEOs said, those activities would likely be managed by a 3PL. Some respondents noted that Amazon provides 3PLs' existing customers with an alternative channel to reach both business-to-business and business-to-consumer markets. Moreover, Amazon is driving change in supply chain and logistics practices, and its initiatives in those areas often force 3PLs to rethink their own service offerings, the CEOs suggested. And finally, Amazon's huge shipment volumes and the demands it places on parcel-delivery companies like UPS and FedEx, particularly during the holidays, often limit shipping and delivery capacity and cause delays for 3PLs seeking to use similar services during the same periods.
A potential competitive threat
Those surveyed were also asked whether they consider Amazon to be a 3PL. Only six CEOs said yes, and all six indicated that their companies currently compete with Amazon in various aspects of their business. Those include managed transportation, managing the tactical side of operating a supply chain on behalf of customers, and distribution of products to end customers on behalf of clients. One said, "They are facilitating supply chain services on behalf of customers, hence I classify them as a 3PL." Among those who did not classify Amazon as a 3PL were three CEOs who called it a 4PL (fourth-party logistics company), a "retailer first," and an "industry disrupter."
Seventeen of the twenty-five CEOs surveyed indicated that they believe Amazon is a potential competitor for 3PLs on a much larger scale. They see that potential competition in six specific areas.
First, with the continued expansion of the company's warehousing, distribution services, order fulfillment, and transportation services, Amazon might become a formidable competitor by offering shippers a broad range of services that 3PLs already provide. As one CEO wrote, "Amazon developed a substantial infrastructure to support the sale of books, DVDs, and music that now only require digital distribution. They need to do something with that infrastructure." Second, Amazon's existing platforms support the entrance of many new shippers into the marketplace, and the company can easily capture those new shippers' demand for services. Third, an Amazon trucking fleet that supports not only its own same-day delivery service but also (potentially) that of other companies would pose a serious competitive threat to 3PLs whose primary market niche is transportation. Fourth, Amazon's expansion into the business-to-business space through Amazon Supply could take many industrial customers away from 3PLs. Fifth, Amazon might leverage its investment in cloud technology to become a clearinghouse for a steadily increasing share of e-commerce business. And finally, Amazon could be in the process of making a committed move into third-party logistics. One respondent suggested that Amazon's core competencies appear to be shifting to those of a traditional 3PL in such areas as order management, inventory control, delivery, and billing. More importantly, as another suggested, Amazon could spin off its logistics function as a 3PL serving clients in a variety of industries.
The big question
Based upon our survey results, it is clear that the CEOs of 25 of the largest 3PLs in the industry believe that Amazon has already had a significant impact on the field of supply chain management. Nearly one-quarter of those 3PLs currently provide logistics services to Amazon. While acknowledging the retailer's disruptive impact on the field and its expansion of supply chain and logistics activities, only six of the 3PL executives consider Amazon to already be a 3PL, but 17 of them see the online retailer as a potential competitive threat.
In the opinion of the authors, in many situations Amazon already acts as a third-party logistics service provider. The company has an enormous fulfillment and distribution infrastructure in place that provides its customers with a full range of logistics services, including order management, warehousing, inventory management, fulfillment, distribution, and returns management. Smaller companies can rely upon Amazon to provide a virtual supply chain for them. The actions Amazon has taken to develop its own transportation capabilities may be a forerunner of a move into the realm of for-hire transportation in selected markets. At the same time, Amazon Supply has now targeted the business-to-business market in an aggressive, strategic move that is likely to pull customers away from traditional 3PLs.
The big question is, what are Amazon's plans in this regard? Does the company want to become a major player in third-party logistics? It certainly has an infrastructure that would support such a move. It has also developed a solid reputation as an innovative company that regularly delivers on its ever-expanding and aggressive marketplace promises.
As for Amazon's competitive threat to existing 3PLs, those companies would be well advised to prepare for the possibility that Amazon will make a major push into their industry. As noted earlier, Jeff Bezos has often been quoted as saying that he is not sure whether retailing will continue to be Amazon's core business. If it's not retailing, then it may well be the logistics service industry.
What makes the threat even more significant is that Amazon continues to avoid pressure from the investment community about earnings, which have been minimal to this point. That, coupled with investors' tolerance for Amazon's continued involvement in diverse activities ranging from diapers to drones, would seem to give Bezos the freedom to pursue acquisitions in the 3PL space if he were so inclined. If he decided to move in that direction, Amazon could—through a series of strategic acquisitions and business alliances—very quickly become an important player in the 3PL industry. We have seen this happen before, when similar moves were orchestrated by private equity companies, such as when Apollo Capital built CEVA Logistics.
Of course, becoming a major player doesn't necessarily guarantee success in what is already a highly competitive industry. Nevertheless, 3PLs' contingency plans should reflect the potential entry of Amazon into the industry and its use of pricing as a means of attracting market share. Its past history of setting prices with limited concern for costs suggests that it could pose a real, destabilizing threat to an industry that already suffers from price compression.
Obviously, Amazon may decide not to go in that direction. Recently there have been signs that Amazon's investors are becoming impatient and are looking for increased profits. Those pressures may force the company into a less-aggressive expansion posture—something that would be seen as good news in the 3PL community.

BLUE OCEAN STRATEGY USING SUPPLY CHAIN MANAGEMENT FOR RETAILERS & MANUFACTURERS

Too many manufacturers, wholesalers, and retailers are doing the same old thing when it comes to supply chain management.  As a result, these firms compete on price.  They have to because the businesses lack competitive differentiation that new supply chain management with its service provides.  Companies basically do the same things.  They have created a de facto world of commoditization.  All this means missed sales and reduced margins.  Why do this?  One answer is they are afraid to change.

You can easily tell these firms.  They think of ecommerce as shipping orders via UPS and similar firms.  They have much money tied up in inventory—and many are products which do not sell or are out-dated.  They rationalize about the low cost of capital to explain inventory levels.  But they had the same problem when interest rates were higher.  Yet with all the inventory, they struggle to deliver orders, complete, and on-time. 

The blue ocean supply chain reinvents supply chain management and—

*is designed from the customer back through the company and to suppliers. That provides way to incorporate service. It is not based on just picking and shipping orders from their facilities.

*is segmented to tailor and provide best service to key sectors.  That is contrary to the monolithic supply chain now used.

*is built on integrated process throughout the entire supply chain.  This is different from trying to cobble dysfunctional company activities together.

*includes high-level, integrated technology that provides visibility across the supply chain, uses RFID at the item level, and works on all devices.  It is more than WMS and using carrier track-and-trace information.

*uses logistics service providers that complement innovative supply chain service.  It is about performance, not low price bids. 

The new supply chain enables a firm to be more responsive to customers. It compresses time. All of it builds brand and creates competitive advantage and value to customers.  Innovative supply chains support blue ocean business strategies for global e-commerce and multichannel sales.  All of this means increased revenue and profits.     



Where are you on the blue ocean supply chain for your industry and market—innovator, early majority, or laggard?

 

Tuesday, October 28, 2014

U.S. IMPORTERS SELF-ASSESSMENT PILOT PROGRAM

New Periodic Consolidated Correction Feature for Importer Self-Assessment Participants

Wednesday, October 29, 2014
Sandler, Travis & Rosenberg Trade Report
U.S. Customs and Border Protection has recently launched a limited pilot program allowing for wholesale entry corrections on a periodic basis. The Periodic Consolidated Correction pilot is currently available only to Importer Self-Assessment certified importers within the electronics Center of Excellence and Expertise. The pilot appears to have received a mixed reaction, with some support from importers but disapproval by customs brokers as well as CBP’s ACE office.
“One big reason some companies are not allowing their customs brokers to file entries in the Automated Commercial Environment is the lack of an option for correcting multiple entries at one time, similar to the current quarterly post-entry amendment,” said Sandler, Travis & Rosenberg consultant Tom Gould. “Additionally some companies are not switching to ACE because they file their own PEAs and don’t want to pay their brokers to file post-summary corrections. The PCC is meant to alleviate some of these concerns by allowing ISA importers in the electronics CEE to file a PCC directly with CBP (that is, without having to go through the broker) and correct multiple entries at one time.”
Pilot participants will initiate the PCC via submission of the following to the electronics CEE email inbox or the Document Imaging System. (CBP notes that importers of record will be required to file separate PCCs for each IOR number covered by the CEE.)
- a cover letter including reason for submission, date range of covered entries, amounts paid via PCC for duty, taxes, fees and interest, declaration of waiver regarding refunds, importer of record name/number, and a statement of waiver of any claim for refund, via drawback, reconciliation or protest/petition, of the additional monies after PCC approval
- a spreadsheet containing the importer name/number, calendar year, entry number, liquidation date, country of origin, tariff number, applicable correction (additional value, new tariff number, etc.), duty rate, duty change, harbor maintenance fee change, merchandise processing fee change, and totals
CBP states that PCC filings are only acceptable as a form of tendering payment to CBP. Refunds can only be considered on an entry-by-entry basis and should be filed separately from a PCC by filing a PEA, PSC or protest.
CBP states that pilot participants should see a significant reduction in the amount of time and resources dedicated to resolving wholesale entry corrections as well as a more collaborative approach with the electronics CEE. In addition, CBP anticipates benefits for itself such as increased accuracy of entry data, more timely payments, and a reduction in the administrative burden of processing several reconciliation entries, liquidated damages and penalties.

ECOMMERCE & NEW SUPPLY CHAIN

Amazon is about the new supply chain for ecommerce.  This article does not recognize that and presents the usual online and bricks and mortar comments.

http://www.cnbc.com/id/102118950


MONOLITHIC SUPPLY CHAIN & SEGEMENTATION

Supply chain segmentation is a great way to break the monolithic supply chain that impedes effective supply chain management.
http://www.ltdmgmt.com/segmentation-guide.php


Monday, October 27, 2014

U.S.-CHINA TRADE MEETING

U.S., China to Hold Annual Trade Meeting Dec. 16-18 in Chicago

Tuesday, October 28, 2014
Sandler, Travis & Rosenberg Trade Report
The U.S. and China will have a full plate of trade-related issues to discuss at the 25th meeting of the Joint Commission on Commerce and Trade, which will be held Dec. 16-18 in Chicago. This annual meeting will review progress made by working groups that meet throughout the year to address topics such as intellectual property rights, agriculture, pharmaceuticals and medical devices, information technology, and travel and tourism.
A joint press release from the Office of the U.S. Trade Representative and the Commerce Department states that at the last JCCT meeting, held in Beijing on Dec. 19-20, 2013, “significant progress” was made on issues such as protection and enforcement against theft of trade secrets, government procurement, market access for U.S. testing and certification companies, and market access for U.S. beef.

E-COMMERCE FOR B2B & SUPPLY CHAINS

There is--and has been--opportunity for e-commerce B2B. The underlying issue is how they will manage the orders--with the same tired supply chain practices as always?  Or with the new supply chain?

October 20, 2014, 2:57 PM

B2B pros look to invest more in e-commerce platforms

Content management and mobile technology are also priorities, according to a Forrester Research survey.
Lead Photo

E-commerce platform work stands as one of the top technology investment priorities in 2015 for business-to-business professionals, Forrester Research Inc. says. It bases that finding on a survey of 75 B2B online professionals conducted during the second quarter of 2014, the Forrester Research/Internet Retailer Q2 2014 Global B2B Sell-Side Survey, and cited by Forrester analyst Andy Hoar in a recent webinar hosted by Internet Retailer.
E-commerce platform technology, cited by 61% of respondents, tied with web content management tools as a top investment target. Other areas cited by survey respondents include: order management, financial reporting and other back-end integration tasks, 56%; mobile sites and apps, 52%; product content management tools, 40%; and multichannel integration, 36%.
By way of comparison, an exclusive Internet Retailer magazine story from July found that 61.6% of respondents put e-commerce platform at the top of the technology investment lists, good enough for first place there. That survey included responses from e-commerce executives whose customers are consumers as well as businesses.
The October report from Forrester, the “2nd Annual B2B Sell-Side Survey,” also finds that 67% of the B2B respondents anticipate increasing technology budgets over the next year and only 2% expect decreases. That compares with 86.6% who said the same in the Internet Retailer survey.
The recent Forrester report also finds that B2B professionals expect their companies to earmark about 8% of online sales to technology needs.

PERFECT SUPPLY CHAIN

Imagine you could design your own supply chain for the company.  Forget being stuck with what you have.  Think of it.  For starters--
*Begins from customer and is designed back from there, through the company and to suppliers--not the usual designed from the company out to customers and suppliers
*Built on high level, integrated, horizontal process
*Includes elevated, integrated technology that leaves no blind spots, handles multiple formats from different sources, uses RFID, and works on all devices
*Is segmented, not the standard monolithic supply chain
*Is agile and handles multi-channel demands, especially the "immediate" customer needs with e-commerce
*Has flat organization to complement all this; the centuries old silos are gone
*Outsourcing is about service to support the supply chain
*Compresses time--and with that, inventory

What else would you include?





GLOBAL CONTAINER DEMAND

Drewry: Global demand container demand up 5.5% in 2015

While the industry could earn $5 billion this year, some carriers will continue to see losses.

Drewry forecasts global demand to grow 5.5% next year. The London-based maritime research and consulting company Drewry said it expects global demand for container shipping to grow about 5.5 percent next year, noting the demand has been stronger this year than forecast earlier.
With higher freight rates on some trades and many carriers driving down costs, Neil Dekker, director of container research at Drewry, said the industry could earn as much as $5 billion this year.
Dekker made his remarks during a webinar last week, highlighting some findings of the company’s recent Container Forecaster report.
“Although to be fair, a lot of the carriers will still be in the red by the end of this year, a lot of carriers are still having problems. And a lot of that profit will really come to some of the market leaders, Maersk in particular and CMA CGM,” he said.
Drewry expects a recovery for the container industry in 2017, but cautioned that will come about not as a result of matching supply and demand, but by adapting to change and reducing costs.
Drewry believes demand this year has grown about 5.2 percent, compared to projections in February and March of about 4.5 percent.
On the Asia to North America trade route, Drewry said volumes have increased significantly since the second quarter and are up through the end of August by 6.5 percent, year-over-year, and in Asia to North Europe trade up about 8.8 percent in the same period.
Dekker said the growth on the Asia-North America trade is up partly because many big shippers have moved cargo significantly earlier because of concerns about a potential work stoppage during the negotiations for a new labor contract between the International Longshore and Warehouse Union and employers.
Trade growth has been very good in the intra-Asia trade, which Dekker said encompasses some 100 routes and is the largest trade region in the world. He said on the trade between China and Southeast Asia, for example, trade is growing at double digit rates. On the other hand, he said volume on routes such as Europe to the East Coast of South America, Asia to the East Coast of South America and trade routes to South Africa have underperformed.
Longer term, Drewry is forecasting annual volume growth of 5-6 percent over the next five years, though it will vary from region to region.
Dekker said the industry will continue to see large amounts of capacity added, including 53 ultra large containerships (ULCS) delivered in 2015 and 45 ULCS to be delivered in 2016. Drewry defines ULCS as those having more than 10,000 TEUs, but he notes many of the ships are much larger, carrying more 13,000-18,000 TEUs.
And more of these big ships may be coming. Dekker said executives at G6 carriers have indicated they may order ULCS and Maersk alone, has indicated it has plans to order about new ships — as much as 425,000 TEUs. If those ships are going to begin coming on line in 2017, “it’s likely the first tranche of those ships will be ordered in the near future.”
There are about 100 ships that are shy of ULCS size, but still very large with about 8,000-10,000 TEU capacity. As the ULCS enter the Asia-Europe trade routes, many of these 8,000-10,000 TEU ships are being redeployed on trades to the U.S. West Coast or the U.S. East Coast via the Suez Canal as well as on the Far East to Middle East trade.
Dekker said that year-to-date average spot freight rates have been higher this year on the Asia-North Europe ($2,488 per FEU versus $2,098 per FEU) and Asia-Mediterranean ($2,892 per FEU versus $2,171 per FEU) trade lanes, but lower on the route from Asia to the U.S. West Coast ($1,932 per FEU versus $2,084 per FEU).
Philip Damas, director of Drewry Supply Chain Advisors, noted, however, that most cargo moves not at spot rates, but under rates negotiated with contracts. Drewry has recently begun offering a service, its “Benchmarking Club,” where it benchmarks contract freight rates for shippers so they can see if they are overpaying when compared to their peers
Drewry found that contract freight rates on major East-West routes fell an average of 6 percent between March and July.
Damas attributed this, in part, to renewal of transpacific contracts at lower cost. He said in some cases, carriers are reducing their own costs and passing on those savings to shippers. He also noted that some shippers are centralizing and running the tenders better, thereby obtaining better rates.
Damas said freight forwarders are gaining market share at the expense of carriers in many markets.
“This is not necessarily because they offer lower rates, but because we hear from the shippers that when they require documentation support or help with bookings or help with supply chain management the freight forwarders offer a much wider range of services," he said.
He also said in some cases large and medium shippers can go direct to the carriers and negotiate lower freight rates, but then “ask the forwarder to provide supplementary services like documentation. So you get the best of both worlds — a direct contract with your carrier and you get support from the forwarders. So we are seeing more companies doing that, having this type of dual arrangement.”

BANKS, TRADE & SUPPLY CHAINS

Banks Trade & Supply Chain Business Under Silent Attack David Gustin - October 21, 2014 4:24 AMCategories: Technology & Platforms | 


      Why banks should care about new models of open account trade credit? Banks have developed trade and supply chain finance capabilities to service the open account trade flow. For the most part, the success here has been limited, as banks typically serve only one side of the transaction and have limited structured data outside of purchase order and invoice data. As Jason Busch commented recently, “A new era of capabilities brought forth by the rise of purchase-to-pay (P2P), order-to-cash (O2C), e-invoicing and supplier/business networks combined with third-party capital sources is challenging the existing bank ecosystem in the trade financing area.” Jason called it the comet coming. Much of what the banks have done is little more than offer PO and invoice matching services, sometimes automated and sometimes manual. These have led to various receivable and payable offerings. Much of this started back in the late 90s, when TradeCard burst onto the scene with a SaaS collaborated model for international purchase to pay (note TradeCard was merged into GT Nexus by their common private equity partner in 2013). Banks scrambled to catch up, and either built PO – invoice matching capabilities themselves, or used vendors. Most notable was S1 (since acquired by ACI Worldwide) and CGI. CGI offers a SaaS solution to banks called Trade360, and claims 20 out of 50 of their products are oriented towards open account. It is attempting to help banks move beyond traditional products to support a range of seller and buyer centric solutions, including pre-export financing, receivables finance, receivables management and a supplier portal for sellers to participate in approved payable finance programs with their buyers. Other vendors selling solutions to banks to do this include Misys, China Systems, Surecomp, Temenos, and a few other regional players. Both Union Bank and ANZ are now making integrated receivables available to corporate sellers. Integrated receivables enables corporate sellers to reduce the time and effort involved in reconciling payments to invoices by enabling a bank to automatically match consolidated incoming payments to invoice data provided by customers. Union Bank has started a pilot project with integrated receivables and plans to use it across its geographic footprint in the US. But banks only see content from one side of the relationship. This is a big problem, as networks have a major advantage here with both buyer and seller data. Banks may claim to offer buyers a portal to capture purchase orders and invoices, but they do not have the sophisticated structured data that can match against agreements and POs, invoices, etc. The other challenge is that many of the larger corporates on the payable side have already moved to some e-invoicing or e-procurement application with some of the leading vendors like Basware, Taulia, Ariba, etc. Recent announcements from the likes of Exxon (Basware), GE (Tungsten), and Siemens (Tungsten) to automate transactions for their global business and suppliers has proved this out. So where does that leave the banks? Where banks may have a fighting chance is with the middle market, where the banks combination of relationship lending, invoice automation, cash management, payment, and finance enables middle market customers to use just one vendor for this functionality. - See more at: http://spendmatters.com/tfmatters/banks-trade-supply-chain-business-under-silent-attack/#sthash.sbLVcnWa.dpuf

FINANCING SUPPLY CHAINS

Financing Future Supply Chains

- October 22, 2014 4:01 AM
Categories: |
Banks have gaps in their supply chain finance product portfolios and are not lending to certain segments of the market (e.g. SMEs). Banks complain of reduced loan demand, but that is only coming from sectors that they are still open to finance.
With the rise of platform providers that augment information to enable transfer of assets, what will the market look like in 5 years?
Vendors sell accounting and integration software to banks to facilitate factoring, trade finance, forfeiting, asset based lending, invoice discounting and other techniques. But these solutions only see content from one side of the relationship.
The new platform providers like Basware, Taulia, Tungsten, Nipendo, Ariba and others have a major advantage here with both buyer and seller data.
- See more at: http://spendmatters.com/tfmatters/financing-future-supply-chains/#sthash.pAXaBSQh.dpuf

Sunday, October 26, 2014

GREAT HARVARD BUSINESS REVIEW ARTICLE

There are supply chain implications.  For example, the new supply chain complements the after-sales service.

How Smart, Connected Products Are Transforming Competition

at http://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition/ar/1

Saturday, October 25, 2014

INVENTORY

On both the macro and micro level, too many companies have inventory problems. I am not sure the right technology and process would change the bad practices.

They play the cycle counting game, yet look at the reality.  Incorrect inventory. Customer service errors.  Unnecessary safety stock.  Out-of-date/unsellable product that is not written off and disposed of.  Instead it clutters warehouse space and adds to the warehousing picking time and operating costs.

 And yet these firms talk about the low cost of capital and how the extra (unnecessary) inventory is not a problem   And Einstein laughs at their inventory insanity.
 
 

GRIs

Weekly GRI roundup

GRIs provided for MOL, NYK, Hapag Lloyd, COSCO, CMA CGM, Maersk, Evergreen and UASC.

The Shanghai Containerized Freight Index (SCFI) closed Oct. 24 at 967.31 points, up 4.59 points from the previous week.

MOL. An intermodal door delivery surcharge will be applied to all cargo shipped on a store-door-delivery basis from Asia to the United States on Nov. 19. The surcharge will be $90 for 20-foot containers, $100 for 40-foot containers, $115 for 40-foot high-cube containers, and $125 for 45-foot high-cube containers.

NYK. An ECA regulation surcharge will be applied to all cargo on Jan. 1. Not all the trade lanes’ surcharge rates have been decided. The rest are as follows: Transatlantic/U.S. West Coast cargo will be $75 per TEU, Transatlantic/U.S. East Coast cargo will be $30 per TEU, Asia-to-Europe cargo will be $25 per TEU, North America to South and/or Central America west coast will be $5 per TEU, North America to South and/or Central America will be $30 per TEU and Asia to Hawaii will be $40 per TEU.

Hapag-Lloyd. Rates will increase on cargo from the Indian Subcontinent and Middle East to the United States and Canada on Nov. 20. Rates will increase $160 per 20-foot container, $200 per 40-foot standard, high-cube and reefer containers. Hapag-Lloyd defines the Indian Subcontinent ports as Nhava Sheva, Mundra, Pakistan, Chennai, Tuticorin, Cochin, Mangalore, Goa, Haldia, Kolkata, Bangladesh and Sri Lanka while Middle East ports include United Arab Emirates, Qatar, Bahrain, Oman, Kuwait, Saudi Arabia and Jordan.
Rates will increase on all cargo from East Asia to Caribbean, East Coast Central America and Panama on Nov. 15. Rates will increase $700 per 20-foot container and $1,000 per 40-foot container.
The carrier’s rates will increase on cargo from East Asia to Mexico, South and Central America’s west coast on Nov. 15. Rates will increase $500 per TEU.
Rates will increase on all dry, reefer, flat rack and open-top containers from East Asia to the United States and Canada on Nov. 15. Rates will increase $510 per 20-foot container, $600 per 40-foot standard container, $675 per 40-foot high-cube container and $760 per 45-foot container. Hapag-Lloyd defines East Asia countries as Japan, Korea, Taiwan, Hong Kong, China, Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia, Singapore, Brunei, Indonesia, the Philippines and Russian Pacific Coast provinces.

COSCO. Rates will increase on all dry and reefer cargo from Far East and Indian Subcontinent to United States and Canada on Nov. 15. Rates will increase $480 per 20-foot container, $600 per 40-foot standard container, $675 per high-cube container and $760 per 45-foot container. COSCO defines the following countries in the Far East and Indian Subcontinent as Bangladesh, Brunei, Burma, Cambodia, Hong Kong, Macao, China, Taiwan, India, Indonesia, Japan, Korea, Malaysia, Pakistan, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.

CMA CGM. A terminal handling charge will be immediately applied to all cargo discharging in Mogadishu, Somalia. Charges will be $400 for 20-foot containers and $600 for 40-foot containers.

Maersk Line. Rates will increase on all cargo from Far East Asia to United States and Canada on Nov. 15. Rates will increase $540 per 20-foot container, $600 per 40-foot standard container, $675 per 40-foot high-cube container, $760 per 45-foot container and $675 per 40-foot high-cube container.
Rates will increase on all dry cargo from Middle East, India and Pakistan to United States and Canada on Nov. 20. Rates will increase $150 per 20-foot container, $200 per 40-foot standard container, $225 per high-cube container and $250 per 45-foot container.
Rates will increase on dry cargo from Israel to United States on Nov. 15. Rates will increase $200 per 20-foot container, and $300 per 40-foot standard, high-cube and 45-foot containers.

Evergreen. Rates will increase on cargo from Far East, South Africa and Middle East to United States and Puerto Rico on Nov. 15. Excluding India, Sri Lanka, Pakistan and Bangladesh, rates will increase $480 per 20-foot container, $600 per 40-foot standard container, $675 per 40-foot high-cube and reefer containers, $760 per 45-foot high-cube container.
For cargo from India, Sri Lanka, Pakistan and Bangladesh to the United States and Puerto Rico, rates will increase $480 per 20-foot container, $600 per 40-foot container, $675 per 40-foot high-cube container and $760 per 45-foot high-cube container.
Rates will increase on cargo from Far East, South Africa and Middle East to Canada on Nov. 15. Rates will increase $480 per 20-foot container, $600 per 40-foot standard container, $675 per 40-foot high-cube and reefer containers, $760 per 45-foot high-cube container.
Rates will increase on cargo from Far East, South Africa and Middle East to Canada on Nov. 15. Excluding India, Sri Lanka, Pakistan and Bangladesh, rates will increase $480 per 20-foot container, $600 per 40-foot standard container, $675 per 40-foot high-cube and reefer containers, $760 per 45-foot high-cube container.
For cargo from India, Sri Lanka, Pakistan and Bangladesh to the Canada, rates will increase $480 per 20-foot container, $600 per 40-foot container, $675 per 40-foot high-cube and reefer containers, and $760 per 45-foot high-cube container.

UASC. UASC has released a November document announcing a number of increases on many of its trade lanes and services that is provided in the link.

Friday, October 24, 2014

VOLUMETRIC PRICING BY UPS & FED EX FOR ECOMMERCE & SUPPLY CHAINS

What will UPS and FedEx implementing volumetric pricing do to ecommerce and to supply chains? Big issues ahead! 


RETAILERS AND THE NEW SUPPLY CHAIN

Many retailers do not understand the new supply chain--as this article shows.


Free Shipping Is Going to Cost You More

Many Retailers Raise the Minimum Purchase Needed to Qualify


If you think free shipping is actually free, think again. WSJ's Laura Stevens explains the inner workings of how free shipping really works. Photo: Getty
Free shipping is getting more expensive.
Retailers including Amazon.com Inc., Best Buy Co. and Gap Inc. are boosting the amount online shoppers must spend to qualify for free shipping, hoping to cover the growing cost of providing the perk.
On average, a customer now has to spend $82 on merchandise to qualify for free shipping, based on July data from 113 major retailers—up from $76 the same month a year earlier, according to StellaService Inc., which collects data about online shopping.
Amazon raised its free-shipping minimum to $35 from $25 late last year. And in March, the e-commerce giant increased the fee for its Prime membership, which allows for unlimited free two-day shipping, to $99 from its original price of $79.
ENLARGE
In May, Best Buy said it successfully increased its shipping minimum to $35 from $25 after realizing the free-shipping offer enticed customers to buy more to qualify.
“Free shipping is not free. Somebody is paying for it,” says Bala Ganesh, retail segment marketing director at United Parcel Service Inc.
Chains have been seeking to dial back the cost of a perk they had used aggressively to encourage shoppers to use their websites. It is a sign that e-commerce has matured from a budding growth area into a core business that has to stand on its own. Wal-Mart Stores Inc., for instance, disclosed for the first time last week that its online business posts an operating loss that it hopes to reverse later this decade.
Free shipping is not free. Somebody is paying for it
—Bala Ganesh, UPS
Last year Amazon spent about $6.64 billion on shipping, but brought in only about $3.1 billion in payments for shipping. An Amazon spokeswoman said the company ships more than twice as many items with Prime versus its free-shipping option.
Only a small group of retailers still offer no-minimum free shipping, with Amazon’s Zappos, Nordstrom Co. and L.L. Bean among them.
The changes also reflect greater efforts by carriers like UPS and FedEx Corp. to cover their own costs, including adjustments to start pricing packages by size as well as weight.
Free shipping was supposed to be a temporary enticement in the early days of e-commerce, but customers came to expect it, and even demand it. In a recent survey of 5,800 U.S. online shoppers, fully half said they have abandoned an order if they didn’t qualify for free shipping, according to comScore Inc., a data tracking firm that conducted the study for UPS.
Nearly 90% of retailers offer some sort of free shipping option, compared with about 65% two years ago, according to William Blair analyst Mark Miller.
One difference now, though, is that retailers are using the perk as leverage. Free shipping is so important that 93% of online shoppers said they have taken extra actions to qualify, like adding extra items to their shopping cart or opting for a slower method of delivery, according to the comScore survey.
 
Free shipping remains a go-to promotional gimmick. On Tuesday Target Corp. announced a holiday special, dropping shipping fees for all online orders from Oct. 22 through Dec. 20. Normally about two-thirds of all Target.com orders ship free, either because shoppers meet a $50 free-shipping threshold or pay using their Target-branded debit or credit cards.
Free shipping without a minimum purchase can quickly get expensive for a business, as it encourages customers to buy cheap convenience items online one at a time, retailers and shipping industry officials say. A pack of toilet paper, for instance, could cost more to ship than to purchase.
While most retailers dare not eliminate free shipping, many are having some success getting shoppers to at least pack more into each order. Shoppers spent an average $124 in September when they got the benefit, 35% more than those that paid separate shipping fees, according to according to Slice Intelligence, a subsidiary of e-commerce company Rakuten.
“I almost always add something to my basket if it means getting free shipping,” says Jim Hassee, 60 years old, of Greenwood, Ind. To qualify for free shipping, he recently bought more than $45 of coffee from Keurig.com even though he needed only a single box.