Thursday, April 30, 2015


Many of the companies with the best supply chains have a center of excellence. If your firm is looking to create one, here is a guide. Depending on your supply chain effectiveness, then scan be a transformation effort or a continuation to having a top world supply chain program.
The CoE concept is not fixed. A company can design, build, and operate as they believe would be most beneficial. To that extent, LTD Management offers the following—
  • What is the mission and purpose of the group and of each project they undertake? What are the goals? What value and benefits will it generate for the company and for the supply chain group? These are perhaps the first questions that should be addressed. The answers should be clear and understood by everyone. Will it focus on best practices as is sometimes done with a CoE? Or will it go further and work to take supply chain management to a higher level? We support both, with emphasis on taking SCM to a higher level.
  • Across the organization, a CoE can blend the best of "corporate" and "local" thinking and operations, improve tactical alignment, share resources, advance integrated supply chain process and integrated supply chain technololgies, break down functional and organization barriers/silos,and increase agility.
Underlying the Center of Excellence is cross cultural collaboration. This is fundamental to both the supply chain and the company. It is important across the regions and divisions.

There is much complexity with the company-wide supply chain that creates significant opportunities. Examples are risk and sustainability.

There is also the potential of using the new supply chain management for the company's blue ocean strategy. This could address opportunities such as B2B and B2C global ecommerce and multichannel sales. Elevated, integrated technology and process and time compression are examples of sub-projects that would go with these.
  • What is the structure? Will it be a corporate effort that presents its work to others? Or will it be a collective, collaborative effort? We believe it should be a blended endeavor of corporate and regional people. Depending on the project, there should be internal and external stakeholders and outsiders who can present objective comments to guide the effort. Blending is important for team involvement and for implementation--so that the work of the group is adopted throughout the company and is not viewed as a dictate by an authoritative body. Various online technologies and collaborative tools should enable this approach. Depending on the respective projects, the leader of the particular work should rotate through key parts of the supply chain organization, both corporate and regional. The size of a team should not be so large as to make it impotent for the work and decision-making required.
  • Where should it start? How does it identify and select projects? Various groups within the company likely have their own ideas of what projects the CoE should work on. Another approach is to do a holistic analysis of the global supply chain. Core components to the assessment are—
  • Process
  • Technology
  • Organization
  • Product flows
  • Information flows
  • Best practices
  • Key performance measures
  • Capacity, utilization, and scalability of supply chain
  • Financial flows
  • Costs
The results should be used to guide possible projects.

Project results and performance are important to validating and increasing support for the center of excellence.


And the chaos story turns another page--

US east coast the next killing field for ocean carriers, as rates continue to fall?

By Mike Wackett
04.30.2015 · Posted in Loadstar posts, Sea FavoriteLoadingAdd to favorites
Spot freight rates between Asia at US east coast ports fell another $39 per 40ft in the past week, to $3,605, some 30% below their February peak.
And transport consultant Alphaliner said it expected the decline to continue, given the influx of new capacity in the coming weeks.
According to Alphaliner, six new strings are stemmed to be added to the Asia US east coast (USEC) route by the end of next month – an estimated extra 26,800 teu of slots a week.
The new services go via the Panama Canal, with the exception of Zim’s Seven Star Express (westbound via the Suez Canal), taking the weekly carrier offering up to around 125,000 teu by the end of May.
However, Alphaliner estimates that the weekly demand will stand at only 100,000-110,000 teu and said freight rates would come under further pressure and dip below $3,000 per 40ft in a relatively short period of time.
The carriers have reacted to increased demands from shippers to the US to avoid congestion-strained US west coast ports and word on the street suggests some cargo will continue to be routed via the east coast, despite the existence of a new five-year labour agreement and a significant easing of terminal congestion.
However, notwithstanding the moral message coming from some shippers of avoiding putting too many eggs in the Pacific ports basket, it remains to be seen how long in practice the cargo routing diversion will continue.
According to Alphaliner data, volumes processed at the 11 main USEC ports increased by 26% in the first quarter of the year, compared with the same period of 2014; the growth coming at the expense of USWC ports, where volumes declined by 6% in the first three months.
“As port operations in the USWC gradually return to normal, part of the gains at USEC ports could return to the west coast, which could worsen the oversupply on the all-water route in the coming months,” said Alphaliner.
It is not difficult to understand the attraction for carriers of filling their ships with more cargo on the headhaul Asia-USEC route, given that spot rates still command around a 100% premium on the USWC market, despite the accelerating downward pressure.
Indeed, the strategy of the restructured Zim line is to ‘follow the sun’ where the best rates are, and the Israeli carrier will no doubt have enjoyed a positive first quarter, assisted considerably by its ad-hoc sailings to the USEC when the Pacific ports were in the grip of the labour contract crisis.
Alphaliner notes that the raft of planned new services between Asia and the USEC will include newcomer Hamburg Sud, which will become a vessel provider on the Vespucci/APNE service operated with CMA CGM.
In a press conference last week to accompany Hamburg Sud’s annual operation report, the German carrier’s chairman, Dr Ottmar Gast, acknowledged that the company must reduce its dependence on north-south trades, especially in South America where freight rates have been hit by the cascading of larger tonnage from east-west routes.

Wednesday, April 29, 2015


Predictive analytics are often used in supply chain risk projects.  Daniel Kahneman (Nobel Prize winner) in "Thinking, Fast and Slow", seems to take the view that--in unpredictable environments, complex statistical algorithms often add little or no value over simple equally weighted formulas based on existing statistics or common sense.

Domain expertise is important for supply chain risk identification, validation, and assessment.  



I see Amazon as the leader in driving Immediacy in e-commerce.  E-commerce is the growth part of multichannel/ omnichannel.  Too many others are doing little or nothing to compete head-on with Amazon or to develop their own niches. Amazon has competitive differentiation--and are adding to it globally.  Drones in US and UK  3D Printing Truck Delivery.  Same day delivery in Madrid.  Variation of Click & Collect in India.  Delivery to trunks of Audi cars.  Amazon uses Blue Ocean Supply Chain Management.

Amazon and Ebay – showing their age?
27/Apr/2015 by Cathy Roberson

Among the pioneers of the dot com revolution, Amazon and Ebay have innovated and expanded to keep up with the ever changing global environment. But has it been enough? Are these two e-commerce titans able to take on the growing number of start-ups as well as the omni-channel strategy adopted by brick and mortars?
Each announced their quarterly earnings last week and both achieved positive gains in net sales/revenue. For Amazon, net sales increased 15% to $22.7bn with net losses of $57m compared to $108m for first quarter 2014. Obviously the growing number of fulfilment centres and additional labour are weighing on fulfilment costs, which increased 19.1% to $2.8bn. Meanwhile shipping costs remain high increasing 26% over first quarter of 2014 to $2.3bn. However, increasing the cost of its Prime membership helped the company grow revenue received from shipping 53% to $1.3bn for the quarter.
By reporting region, North America net sales increased 24% and represents 59% of overall net sales, up from 55% for same period in 2014. International net sales declined 2% and its share of overall net sales fell from 40% in first quarter 2014 to 34% first quarter 2015.
For eBay, net revenue increased 4% to $4.5bn. The growth was led primarily by its payments division, up 14% to $2.1bn. Its logistics/e-commerce enabler division, eBay Enterprise, noted a 7% gain to $288m but its mainstay, marketplace division, witnessed a 4% decline to $2.1bn. In its press release, eBay noted this division’s gross merchandise volume (GMV) declined 2%, with the “strengthening dollar significantly impacting results”. In the US, GMV was up 2%, while International volume was down by 4%.
While no size fits all, it is interesting to see the strategy each has pursued over the past twenty years. Through the years, both companies have moved beyond selling goods to consumers. eBay has acquired PayPal and GSI Commerce, which helps to extend its reach into electronic payments and logistics services respectively. Meanwhile Amazon has expanded its fulfilment centres closer and closer to the end customer while devising ways to reduce its shipping costs, including taking some of the delivery on its own.
As a result, these two e-commerce companies now look and behave more as logistics companies versus e-retailers twenty years ago. But the strategies moving ahead now seem to be differing. Last fall, eBay announced plans to spin off PayPal and is studying “strategic options” which include the possibility of selling off its Enterprise division. As such, the company looks to be moving away from its logistics businesses and returning to its roots to focus on its Marketplace division. Perhaps eBay is looking to take a similar approach as Alibaba with its marketplace groups by partnering with logistics and transportation providers.
Meanwhile Amazon is moving further and further into the realm of logistics. In its recent quarterly earnings announcement, it noted its Amazon Web Services was now a $5bn division and growing rapidly. In fact, it was the fastest growing division for the quarter in terms of net sales growing 49%. According to the Washington Post, Amazon Web Services provides the computing power to start-ups and companies such as Netflix and Airbnb. Furthermore, the newspaper notes Amazon Web Services is the largest provider of cloud infrastructure and services to the US government, including to the Central Intelligence Agency and the Pentagon. In total, it has 1,500 government clients globally. Amazon also has a government-only cloud for storing sensitive data.
Twenty years into the e-commerce revolution and Amazon and eBay are still evolving. Perhaps a bit grey around the edges now, Amazon will certainly continue to keep analysts and industries on their toes while eBay will be one to watch to see if their current strategy was indeed the right move in this global business.


Container lines, it is about customers and their supply chains. What service are you selling? Who are you selling it to?

Poor information flow from carriers worse than blanked sailings, say angry shippers

By Mike Wackett
04.29.2015 · Posted in Loadstar posts, Sea FavoriteLoadingAdd to favorites
APL container
Shippers and forwarders are becoming increasingly concerned at the threat to their supply chains from confused messages coming from some container lines over revised ETAs of their goods.
They blame strategy of ocean carriers to blank sailings with little or no notice.
Carriers on the Asia-North Europe tradelane, for example, have axed several sailings scheduled for this month and next in a desperate attempt to arrest the decline of spot rates – now at all-time lows of less than $300 per teu.
The carriers also hope that removing as much as 25,000 slots a week will help support proposed general rate increases (GRI) stemmed for 1 May, so far ranging from $800 to $1,300 per teu. However, the embattled container lines would no doubt be content in the present climate to achieve 50% of their ambitious ask.
Touring the buzzing stands of the 2015 Multimodal show at the NEC in Birmingham yesterday, it was not hard to find shippers prepared to express their anger at the worsening service levels of the major container lines.
Some were prepared to go as far as to blame the restructured alliances for the chaos on the Asia-North European route. One UK forwarder told The Loadstar that, in his opinion, the standard of service had deteriorated considerably since January when the new groupings were launched.
He said: “We are getting a confused message from our nominated carriers, and sometimes we even read this [blanked sailings] in the press first!”
The problems stem from the loose arrangements of the vessel-sharing alliances, compared with those of the old-style conferences, whereby member lines are obliged to make their own schedule change announcements.
The Loadstar receives copies of many customer advisories from carriers, or their regional offices, but apparently not always from all of the member lines of the particular alliance. The customer is therefore left to use a process of elimination to determine from the advisory of another member carrier that his shipment has been affected by a cancelled sailing.
However, in fairness to the carriers, the importance of speedy co-ordination and prompt notice to shippers was a key feature of the ill-fated P3 alliance grouping of Maersk, MSC and CMA CGM, when the lines decided on an autonomous tonnage centre based in Southampton. But that fell foul of Chinese regulators, who regarded the tonnage centre as evidence of a merger.
Subsequently, we see schedule change advisory notices from Maersk Line and CMA CGM, but often nothing at all from member partners of their respective 2M and Ocean Three alliances, and in many cases nothing is published on company websites, which in today’s internet world should be the font of all knowledge.
Ocean carriers looking for a USP to set themselves apart from their freight rate-discounting rivals could do worse than take a root and branch review of their levels of communication and smarten up their websites.

Tuesday, April 28, 2015


With the constant chasing of low freight rates for international container shipments, have shippers lost control of their supply chains?  Has the loss of control increased inventories, meant less liquidity, and negatively impacted customer service?


Monday, April 27, 2015


What are forwarders & 3PLs doing because of the slowdown in China factory output?


Drivers strike at Ports of Los Angeles, Long Beach

The truck drivers are targeting four companies for now, but may expand the strike, according to Teamsters spokeswoman Barb Maynard.

   Drivers who work for drayage companies serving the ports of Los Angeles and Long Beach went on strike Monday morning.
   Teamsters spokeswoman Barb Maynard said the drivers are specifically striking Pacific 9 Transportation, Intermodal Bridge Transport, Pacer Cartage, and Pacer subsidiary Harbor Rail Transport.
   In a breaking development, the Port Division of the Teamsters and another drayage company, Green Fleet Systems, siad they have "entered into a comprehensive labor peace agreement designed to ensure that Green Fleet’s drivers have an opportunity to exercise their rights under the National Labor Relations Act and, if they choose, to select an exclusive representative for purpose of collective bargaining."
   The agreement avoids a possible strike against Green fleet and "allows for the orderly conduct of business and insures that Green Fleet’s loyal customers will continue to receive their deliveries timely and without interruption,” the Teamsters said.
   Drivers from those companies voted on Saturday to go on strike against the companies, which collectively employ around 500 drivers in total. Maynard said she expects hundreds to participate in the action and that drivers from other companies could join the strikes.
   The Teamsters have long asserted that drayage drivers at some companies are being misclassified as independent contractors.
   Maynard said picket lines would be put up at the offices of the companies, and that drivers would also do “ambulatory picketing” at marine terminals, rail yards and customer warehouses where they do not set up actual picket lines, but picket individual trucks as they arrive at those locations. “It’s an important nuance because that makes it a legal picket,” she said.
   Customer warehouses as far east as Mira Loma and as far south as the U.S. Mexico border will be targeted.
   The truckers are accusing their employers of wage theft by illegally misclassifying workers as independent contractors, and say they want to be classified as employees with the right to union representation.
   Drivers are also planning a march on Wednesday in downtown Los Angeles to a Union Pacific Railyard.
   Drivers seem well aware of the havoc a strike could cause at the nation's two largest ports, noting a "crippling slowdown in early 2015 sent shock waves through the U.S. economy" when the International Longshore and Warehouse Union and employers were at loggerheads over a new contract that is still pending ratification from ILWU membership.
   The group Justice for Port Truck Drivers said of the strike, "Since drivers last struck in November 2014, the U.S. Department of Labor has also come down on the truckers' side. In addition to the California courts and the State of California, the DOL has ruled that port drivers at Shippers Transport Express must be reclassified as employees rather than 'independent contractors.' The Shippers drivers’ victory has inspired other misclassified drivers to escalate their demands to be recognized as employees and end the wage theft. In their fight to hold onto an illegal business model, company owners are continuing to harass, intimidate, and coerce drivers."
   The group has also launched a national petition asking Los Angeles Mayor Eric Garcetti and Long Beach Mayor Robert Garcia to "ban lawbreaking for profit from the ports."
   Art Wong, a spokesman for the Port of Long Beach, said the port would monitor the strike in order to ensure safety and make sure drivers who want to access the terminals can do so.
   Weston LaBar, executive director of the Harbor Trucking Association, a group that represents drayage companies in Southern California, said of the announcement, "We are not surprised that the Teamsters are looking to picket. What I am surprised of is the timing of it. The ports are working diligently to dig out from the backlog due to congestion, which was compounded by labor issues. I believe now is a horrible time to introduce any slow-downs to the supply chain.
   "Is it really in the best interest of port drivers to stage labor rallies with Teamsters from ports that are already stealing our cargo?" LaBar asked. "This is certainly not in the best interest of our supply chain or the Ports of Los Angeles and Long Beach. Maybe this is just my thinking, but if they want to be a part of the real solution perhaps they should suspend these efforts until we get closer to a normal flow of cargo in the San Pedro Bay. We don't want to put any more jobs in our region in jeopardy."
   “I think it is absolutely ridiculous. I understand their issues, but this puts another black eye on the ports of LA and Long Beach and does not help rebuild the trust in the ports. All these kinds of issues continue to have impact on the reliability and predictability of the ports,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation.

Sunday, April 26, 2015


The Immediacy of E-Commerce, the dealings of multichannel / omnichannel, and the driving of immediacy over industries, markets, and the globe have elevated from the issue of inventory velocity to InventoryVelocity2




Gloom in factories

Friday, April 24, 2015

Chinese factory activity contracted to its lowest level in a year this month while euro zone private sector growth was weaker than forecast on slowing new orders in the region, surveys showed.
The flash HSBC/Markit purchasing managers' index in China fell to 49.2, below the 50-point level that separates growth from contraction, suggesting economic conditions are still deteriorating despite increasingly aggressive policy easing by Beijing.After a brief rebound in February, the index has been back in negative territory for two months.The sharp fall in employment seen in March moderated and export orders rose for the first time in three months, but most news was bad.

New orders declined further to a one-year low of 49.2 from March's final reading of 49.8.Input and output prices fell at faster rates, pointing to intensifying deflationary pressures.Meanwhile, Markit's composite flash purchasing managers' index for the euro zone, seen as a good growth indicator, fell to 53.5, dragged down largely by faltering activity in France.REUTERS


Coming container line bankruptcies. Why should anyone invest more capital? Poor investment with little or no return. 

Add in the chaos for rate chasing OTIs, freight forwarders, 3PLs, and BCOs and supply chains.

Saturday, April 25, 2015


Think about these questions with Global Food Supply Chain Risk--

        What do INCOTERMS have to do with risk?

       What do INCOTERMS have to do with chain of custody?

       What does having so many supply chain participants do to risk?

       What do so many participants have to do with chain of custody?

What does Chain of Custody have to do with Risk? 

LTD Management knows supply chain risk, especially global food supply chain risk.  

Our supply chain risk model, methodology, and domain expertise are unique and 


Friday, April 24, 2015


LTD Management understands the issues with managing global cold chain logistics / supply chain management.  And its place in supply chain risk for select products.


Red Ocean supply chains lack differentiation, let alone competitive differentiation.

Hello Blue Ocean Strategy Using New Supply Chain Management.



Honesty from a major shipper--John Deere--aka, a customer, on container line alliances. 

John Deere blames carrier alliances for ‘unpleasant’ supply chain headaches

By Gavin van Marle in Singapore
04.22.2015 · Posted in Loadstar posts, Sea, Supply chain FavoriteLoadingAdd to favorites
John Deere's supply chain
Major shippers remain sceptical about the benefits conferred by the development of larger shipping alliances, delegates at this week’s TOC Container Supply China event in Singapore were told.
David Panjwani, global logistics director for US machinery manufacturer John Deere said that the emergence of four large east-west shipping alliances, combined with the introduction of larger vessels and deteriorating schedule reliability levels had caused a series of problems in the company’s supply chain that impacted its customers.
“Do the larger alliances and vessels cause more headaches for shippers? In a word, yes,” he said.
While lines have claimed that combining networks through alliances structures have led to a greater choice of port calls for shippers, Mr Panjwani argued that the net effect was longer service lead times.
“We assume that there will be more port calls per string, and more slow steaming, which both extend shipping times, and there are continued challenges with service interruptions.
“We don’t have a lot of exciting things to say in terms of reliability of shipping products – if anything, it’s the opposite. I was in Australia last week and it was a very unpleasant experience, because we are continuing to fail to meet our customers’ delivery dates,” he said.
While he agreed that “on paper” having multiple carriers combining their respective networks appeared to be a better product, he argued that the alliance concept had been around since the 1970s, but now that there are only four of them, “we have concerns about what this will look like in the long term”.
He said: “Take 2M for example – it’s about putting our best carrier with our worst, in terms of reliability.
“We have existing letters of credit and customer service requirements that have to be met so we have a lot of concerns,” he explained, and argued that outright merger and acquisition would lead to better service quality than the looser alliance arrangement.
As a result of the service disruptions, John Deere has had little option but to increase the lead times it quotes to buyers of its equipment because of the variability in transit times.
“And that is not good for us in terms of the return on our assets,” he added.
Responding to the accusation that by forcing freight rates down and playing the spot market, many shippers had been the architects of their own downfall, Mr Panjwani said that John Deere’s container supply chain was so important to the company’s financial success that it had entered into contracts of almost unprecedented lengths with some of its carriers.
“We struck a three-year deal with fixed rates that are reviewed annually according to a rate index, and adjusted depending on how the spot market behaves, because we have to keep our production lines running,” he said, adding that this approach was vindicated during the recent congestion crisis on the US west coast.
“We have thousands of containers coming out of Japan to the US and we think that because of this strategy and our relationship with the carriers that we were able to get our boxes on the ships and through the ports when other shippers had a lot of problems.”


Container freight rates continue decline

Rates are falling on major trade routes to Europe, U.S., according to the latest figures from the Shanghai Shipping Exchange.

   Spot rates for moving containerized cargo fell again this week, according to estimates published by the Shanghai Shipping Exchange.
   Panelists from liner companies and shipping lines estimate that spot rates to develop the Shanghai Containerized Freight Index.
   Components of the SCFI show rates fell on all four of the major routes from China.
   From Shanghai to Northwest Europe ports, rates dropped $50 to $349 per TEU, and to the Mediterranean they were down $64 to $476.
   To the U.S., the spot rate to the U.S. West Coast was down $27 to $1,596 per FEU (40 foot container) and to the U.S. East Coast down $57 to $3,644.


Hong Kong loses out to Singapore in race to develop Asian shipping hub

OOCL chief says city has failed in bid to develop region's most comprehensive maritime cluster

PUBLISHED : Thursday, 23 April, 2015, 9:45pm
UPDATED : Friday, 24 April, 2015, 12:28am
Recommended by
Hong Kong has lost out to Singapore in the race to develop Asia's most comprehensive hub for shipping and related businesses, a leading figure in the city's shipping industry said yesterday.
"In the context of [fostering] a maritime cluster, Hong Kong is no longer able to compete," Tung Chee-chen, chairman of Orient Overseas Container Line, told an industry conference in Singapore. Tung was referring to efforts by Hong Kong to leverage the city's strengths in financial services and shipping support services to shore up the once-dominant maritime business.
With Hong Kong's port caught in a pincer action from rivals on the mainland and in Singapore, the promotion of a maritime cluster - drawing in sectors such as financing, brokering and legal services - has been touted as a way to counter a slump in container traffic.
Tung said the Hong Kong government was doing its job promoting the city's advantages, but this approach differed from that of Singapore, which targeted key companies. "For example, Singapore has targeted many Norwegian companies, convincing them to set up offices in Singapore. With word of mouth, more Norwegian companies flocked in," Tung told business and government figures in the Singapore Maritime Lecture, an anchor event in the city state's annual Singapore Maritime Week.
Tung added that Singapore gained a head start after the signing of the Sino-British Joint Declaration in 1984. "At a time when Hong Kong was surrounded by uncertainties, Singapore attracted many companies," he said.
The efforts by Hong Kong and Singapore to promote maritime clusters, under the shadow of the rise of the mainland's ports, aim to exploit not only the cities' financial services clout, but also their legal system strengths and absence of capital controls.
Tung also admitted that he had been struck by Singapore's forward-thinking in expanding its port infrastructure.
"I'm very impressed with the building of the port in the way that Singapore anticipated future growth. No other countries or ports in the world are contemplating similar investment. Singapore is pulling away from all its competitors," Tung said.
The Lion City, home to the world's second-busiest container port after Shanghai, is spending S$3.5billion (HK$20 billion) to expand capacity at its Pasir Panjang Terminal by half, or 50 million 20-foot equivalent units, by 2020.
"Hong Kong cannot compete because we have a different land policy. In that respect, we're a bit detached from reality in the sense that we cannot do the things we want to," Tung told the South China Morning Post on the sidelines of the conference.
Hong Kong, once the world's busiest container port, has slipped down the rankings, trailing Shenzhen in fourth place last year.

Thursday, April 23, 2015


Car boot delivery trial for Amazon, Audi and DHL

Amazon, DHL and Audi are to trial a service that allows car owners to use their vehicles as mobile delivery addresses for parcel shipment.

The trial, which will take place in Germany, follows several months of development. The order is placed on, and the parcel is transported by DHL and delivered to the boot of an Audi.
Using a smart phone app, the DHL delivery agent receives the exact location of the car as well as access to the vehicle’s boot. After the delivery men have placed the item in the boot and closed its door, the car is then locked automatically. DHL receives confirmation via the app and the car owner is informed of via email.
Jürgen Gerdes, Board Member for the Post – eCommerce – Parcel division at Deutsche Post DHL Group, said: “This pilot project for car trunk delivery for private customers is unique in the German parcel industry; it demonstrates once again our market and innovation leadership as well as our commitment to parcel delivery services tailored more and more to the individual needs of our customers.”
The three firms plan to conduct their joint pilot project over the course of several months in the greater Munich area, during time which selected customers will have the chance to test the service. Audi will register customers taking part in the early stage of the pilot.


Import Compliance for Small Business: Protecting Your Company on a Budget

Friday, April 24, 2015
Sandler, Travis & Rosenberg Trade Report
[Editor’s note: This article originally appeared in the April 23, 2015, issue of The Manzella Report and is reprinted here with permission.]
by Larry T. Ordet
Small and medium-sized businesses that import into the U.S. are under the same obligation to comply with complex laws and regulations as large multinational corporations. Get something wrong and your company could face costly delays and margin-killing penalties. Corporate officers and executives could even be held personally liable for import-related mistakes. Thankfully, implementing compliance measures is easier and less costly than many small business owners and managers realize.
Why Care About Compliance
The Customs Modernization Act of 1993 firmly established the responsibility of all importers, large and small, to exercise reasonable care in filing customs entries for imported goods. There are a number of components to meeting this requirement. Importers must know and follow the applicable customs laws and regulations, which can be a challenge given their volume and complexity as well the proliferation of often inconsistent interpretive rulings from U.S. Customs and Border Protection. Importers must know the proper description, use, composition and origin of the goods they bring in as well as the terms of their transactions.
Reasonable care also means establishing policies and procedures that foster a culture of compliance and ensure the prompt reporting and remedying of violations. While customs brokers and other third parties may be able to offer guidance, it’s still the importer that is ultimately responsible under the law for ensuring compliance.
Failure to meet this responsibility can have consequences ranging from mild to severe. An inadvertent misclassification could result in nothing more than a higher duty bill. If an error is judged to be negligent or fraudulent, however, the importer could find itself hit with civil or criminal penalties, which for a small business could be a major hit to profitability. CBP can also seize a shipment, preventing goods from reaching customers in time, and may exercise heightened scrutiny that could cause major headaches for the importer.
Recent enforcement trends raise the stakes even higher. A federal court recently held that liability for corporate misconduct can be imputed to a wide range of company officers and employees, raising the very real possibility of personal liability for sizeable monetary penalties. An upsurge in False Claims Act cases filed by whistleblowers for customs violations opens importers to additional penalties outside those directly associated with the violations.
Establishing a Compliance Program
The landscape for establishing and maintaining compliance is not as complex or costly as you might think. There are a number of tools and practices that small businesses can use to boost their compliance and avoid or minimize sanctions. The trick is knowing the system and learning to leverage the tools that are available to you.
For example, obtaining a binding ruling from CBP can help define a product’s classification, value, origin or eligibility for trade preferences. Once you have a ruling, you can rest assured that the related information you provide to the government is accurate and penalty-proof.
Performing regular internal evaluations of your import operations can help identify problems early so you can remedy them yourself and, in some situations, self-report them to CBP as a protection (or limitation) against penalties. Setting down internal controls and procedures in an easy-to-follow manual will demonstrate a commitment to compliance and help guide employees in how to respond to CBP and other government agency inquiries and notices, as well as help your company operate in a more efficient and compliant manner overall.
When necessary, you can take advantage of the provisions of the Small Business Regulatory Enforcement Fairness Act, which requires each federal agency to establish policies to provide for the reduction and (as appropriate) waiver of civil penalties for statutory and regulatory violations by small businesses. Requirements are exacting and rules must be followed, but understanding your rights in seeking relief under the SBREFA so you can act quickly should the need arise can make all the difference to a small business operation.


Global Shippers Forum, BIMCO unveil standard container contract

Product is aimed at small and medium sized shippers.

   Global Shippers Forum has joined forces with the Baltic International Maritime Council Organization to launch a standardized container shipping contract.
   GSF said in a statement the BIMCO/GSF Standard Container Contract is "the world’s first standardized contract terms and conditions for use in container shipping markets worldwide" and the result of discussions between GSF and BIMCO over a two year period with shipper and carrier representatives in a joint group.
   Because NIT League is a member of the GSF, "we were involved in providing a US perspective and congratulate BIMCO and the Global Shippers Forum for their collaborative success on producing this model contract," said Donald Pisano, president of American Coffee Corp. and chairman of the NIT League's Ocean Transportation Committee. "I believe it will benefit mostly the smaller to medium sized shippers but am sure even larger shippers will be interested in reviewing the terms and conditions."
   GSF has also provided clause-by-clause analysis of the terms and conditions, and legal guidance on the standard terms and conditions in the contract.
   "Container shipping is characterized by a small number of very large shippers with high shipment demands, many of whom have individualized service contract arrangements, but the majority of small to medium sized shippers who transportation needs range from relatively modest cargo movements to significant numbers of containers haven’t been able to negotiate firm contractual agreements – until now,” said Chris Welsh, the secretary-general of the GSF.
   Welsh said "the contract is free of charge and available to everyone. All we ask is for shippers to register with us, so we can keep track of potential users."

Wednesday, April 22, 2015


Inventory optimization and lean inventory both lack reality for firms that globally source.



Distribution Centers are not retirement homes for old inventory.


Tuesday, April 21, 2015


Transpacific carrier rate goal may be 'a bridge too far'

London-based shipping industry consultant Drewry questions whether carriers will be able to charge $2,000 per FEU on eastbound boxes.

Drewry questions whether carriers will be able to charge $2,000 per FEU on eastbound boxes.   Drewry, the London-based shipping consultant, is questioning whether ocean liner companies will be able to obtain the minimum freight rates they are seeking in the transpacific trade.
   While the US economy is “still on course to generate moderate growth in the headhaul trade” for transpacific container carriers this year, ship utilization on services to the West Coast of North America fell from 81 percent in December to 73 percent in February in the eastbound direction, according to the latest issue of Drewry’s Container Insight Weekly. Westbound from West Coast ports to Asia, utilization was 39 percent in February and has only registered above 40 percent in one of the past six months.
   Drewry noted the 15 container carriers that belong to the Transpacific Stabilization Agreement set a minimum contract price at $2,000 per FEU on container cargo going to West Coast ports.
   “That would entail achieving an increase of some $400 over the current average BCO rate, and with prevailing spot rates at $1,600 this would appear to be a bridge too far for the carriers,” said Drewry.
   The consultants speculate, “The pain of losing so much money from the West Coast port congestion is for the shipping lines now receding, and so too with it is the impetus to secure the minimum income levels prescribed for this year’s new BCO contracts.”
   However, TSA said in January its members "report consistently full sailings into the Pacific Northwest and via all-water Panama and Suez routes to the U.S. East and Gulf Coasts, as well as 95 percent utilization or better through California ports hardest hit by congestion. This suggests an overall strong market apart from recent cargo diversion trends, and is consistent with broader indicators of economic growth affecting the Asia-U.S. trade over 2014."
   Drewry said WCNA shipments dropped 22 percent year-over-year in January, but increased 2.6 percent February.
   Just last week, the port of Los Angeles said its volumes in March were 17.3 percent higher than in March last year and the Port of Long Beach said its volumes were up 32 percent for the same period.
   Congestion at West Coast ports and labor-management turmoil during the negotiations for a new contract for the International Longshore and Warehouse Union affected the trade between Asia and the U.S. so that in the first two months of the year, “WCNA demand retreated by 12 percent compared to a 15 percent gain in movements to ECNA and a 5 percent dip in overall Asia-North America volumes. West Coast performance was blighted by an 18 percent fall in US imports while loads bound for Canada and Mexico climbed 13 percent and 22 percent respectively,” said Drewry.

Monday, April 20, 2015


Asean economic growth 'to outdo EU'

  • 20 April 2015
  • From the section Business
Leading business figures at a panel in the 2015 World Economic Forum in Jakarta
The 2015 World Economic Forum in Jakarta is putting the spotlight on South East Asia's largest economies
The 10-member Association of South East Asian Nations (Asean) will surpass the EU in growth once its economies have been integrated, the World Economic Forum in Jakarta has heard.
Malaysia's international trade and industry minister, Mustapa Mohamed, told the forum that in the next decade, Asean would grow by 5% a year.
Meanwhile, the EU would grow less than 2% a year, he said.
As a result, Asean would overtake it in 10 to 15 years' time.
The bloc is being touted as the world's seventh largest economy once it is unified.
It had a combined gross domestic product (GDP) of more than $2.4tn (£1.6tn) in 2013, according to consultancy AT Kearney.
That compares with 13tn euros (£9.4tn) for the EU in the same period.
But with a population of more than 600 million, Mr Mohamed said, the region's youthful population gave it a significant edge over Europe's ageing one.
"What we need to do in Asean is to grow much faster, so we get there much faster, we overtake faster," he said.
His comparisons to the EU stopped there, as he reiterated that the Asean bloc would not have a single monetary policy or central bank, unlike its European counterpart.

Will AEC work?

The Asean Economic Community (AEC) is expected to be formed by the end of this year, with the aim of creating a single market for the free flow of goods, services, investment and labour.
But debate over whether it can be a "true" economic community has been a key topic at this year's forum, with regional country and business leaders weighing in.
Malaysian budget airline AirAsia's chief executive, Tony Fernandes, told participants at the WEF that by the end of 2015, integration would not solve all of the region's issues, but it would have created a platform.
"It will simplify business, it will raise standards and it will bring prosperity," he said. "If there is a true economic community, everyone benefits."
But not everyone was optimistic that the benefits would be spread as evenly.
Soon Ghee Chua, managing partner for South East Asia at AT Kearney, said the wide disparity among some of the countries in the group would challenge integration plans.
"You have some of the richest and some of the poorest countries in the world in Asean," he said, with wealthy Singapore alongside Cambodia and Laos.
"The challenges will be around getting the smaller companies and citizens of Asean excited about it and educated on what are the opportunities that are available."
Most people were not very familiar with what Asean integration was all about, he added, saying the education process needed to happen soon.


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Asia – N Europe carriers must consider ‘nuclear option’ of big ship lay-ups

By Mike Wackett
04.20.2015 · Posted in Loadstar posts, Sea FavoriteLoadingAdd to favorites
sea freight rates
If ocean carriers plying the Asia – North Europe trade lane cannot reverse the tide of falling sea freight spot rates by their strategy of blanking sailings to underpin general rate increases, then the only option remaining is to take the drastic and unpalatable step of laying-up of ships, suggests a leading transport consultant.
In its Container Insight Weekly, Drewry estimates that based on a healthy load factor of 90% even the newbuild 19,000 teu ships would operate in the red if filled exclusively with spot cargo, and smaller vessels would of course lose significantly more, given their higher unit costs.
Drewry calculates that all 85 of the 13,000 teu workhorses currently deployed on the Asia – North Europe trade could potentially be losing money on each voyage, even if they are operating at an impossible 100% utilisation level.
Drewry’s assumptions are based on its World Container Index (WCI) spot rate reading of $966 per 40’ as at 16 April – which has no fallen for 11 consecutive weeks to its lowest point since December 2011.
Moreover, given the decline of the rival Shanghai Containerized Freight Index (SCFI) to $399 per teu as of last Friday, the WCI is certain to have fallen further in the interim and reports suggest that rates of $350 per teu or less are being offered in the Asian export market.
The fuel cost part of Drewry’s calculation is based on a level of $319 per ton – an essential part of the equation for carriers endeavouring to reduce operating costs at a faster rate than falling freight rates.
The price of oil and consequentially the cost of bunker fuel has started to inch up in the past week, and this morning Rotterdam-sourced IFO 380 HFO ticked up by another $7 per ton to $324.
Fortunately carriers do not generally have to rely entirely on spot cargo to fill their ships, with – in an ideal scenario – as much cargo as possible coming from their annual contract business, and the necessary evil of spot cargo used for top-up only.
However, as Drewry points out, the carriers “risk the wrath of their BCO customers that have signed contracts at higher rates”.
This will become a big issue if spot rates remain at the current levels for a prolonged period and carriers could come under intense pressure to renegotiate the deals to better reflect the market.
The raft of blanked sailings from Asia announced by carriers over the next few weeks is not a long-term solution to the excess capacity problem, argued Drewry.
It said the tactic would only temporarily lift load factors – which anecdotal reports suggest have plunged to below 70% in the past week.
Pushing through GRIs with carriers scratching around for cargo is a nigh-impossible task and the embarrassing failure to implement, let alone sustain increases in March and April, is testament to this.
“A prolonged spot rate downturn will force carriers to consider the nuclear option of laying up ships,” said Drewry.