Press Releases

Transport Experts Call For New Generation Of Ocean Cargo Services

Fast track needed to avoid congestion, cut transit times, improve reliability

ARLINGTON, VA - Feb. 09, 2007 - Two freight transport experts today called for the creation of “fast track” ocean cargo services that can provide shippers reliable and timely delivery of Asian imports. Brian Clancy and David Hoppin of Arlington-based MergeGlobal issued a research paper concluding that innovative concepts are needed to take the variability out of international supply chains and ease the pain caused by a congested U.S. freight transport system.

Their 16-page report, “Coping With Uncertainty,” urges transportation providers to use existing technology and business models to create faster, more reliable ocean transportation products – especially in the Less Than Containerload (LCL) market.   

“Why not create a ‘fast track’ for LCL shipments that receive expedited processing at both the load and discharge ports, and then are injected directly into an LTL network for delivery to consignees?” asked Clancy and Hoppin, managing directors at the transportation and logistics consultancy.

Their research project was sponsored by supply chain services provider APL Logistics and Con-way Freight, (NYSE:CNW), the less-than-truckload freight delivery company. The two firms launched OceanGuaranteed in 2006, a day-definite guaranteed LCL product for shipments from Asia to the U.S.

In their report, Clancy and Hoppin identified three primary concerns for shippers managing international supply chains:

• Controlling total distribution cost, which is the sum of transport and inventory-carrying costs;
• Minimizing transit time variability; and
• Coping with a network of U.S. ports, railways and highways that is nearing capacity.

The research paper identified transit time variability as one of the “hidden costs” of international supply chains. Unexpectedly late product deliveries can result in lost sales and inventory write-downs, said the paper’s authors – costs that may not always be readily identified. Focusing on a total distribution cost framework can help shippers uncover and manage hidden costs, thereby improving margins.

To counteract longer transits and transit time variability, shippers are increasingly forced to carry higher levels of costly “safety stock,” the researchers said, or turn to airfreight. The air option is quick and reliable, they pointed out, but 7 to 10 times more expensive than ocean transportation.

Clancy and Hoppin recommended a “marriage” of an ocean carrier’s ships and terminals with a large LTL carrier’s dedicated fleet and distribution network to offer relatively fast, reliable service from origin ports in China to consignee doors in the U.S.  The researchers said such a partnership could minimize international supply chain disruption through closer carrier integration. 
According to Clancy and Hoppin, a recent survey indicates that shippers value reliability more than price when it comes to ocean transportation. They added, however, that conventional ocean LCL service is widely perceived to be the least reliable cargo option. That’s why they called for “fast track” LCL shipments.

“Such a service could shave multiple days from average port-to-door transit times,” the researchers said, “and if operated to a rigid schedule, could offer guaranteed delivery on the promised day, thereby reducing safety stocks and enabling much more cost-effective control of inventory and warehouse labor management.”

Clancy and Hoppin said such a service would be priced higher than traditional ocean LCL products but could reduce a shipper’s total distribution cost by reducing inventory-related expenses and other expenses associated with transit delays and the multiple “hand-offs” that occur with traditional LCL products.

For a copy of the report “Coping with Uncertainty,” visit the News section of www.apllogistics.com, or the Con-way web site at www.con-way.com/ocean.

About Con-way Freight Con-way Freight is a transportation and services company that provides day-definite less-than-truckload freight delivery services for commercial and industrial businesses in the United States, Canada, Puerto Rico and Mexico. All Con-way Freight operating components are ISO certified for 9001 and 14001, C-TPAT/PIP, ACE and CSA certified and FAST highway carriers. Con-way Freight is a subsidiary of San Mateo, California-based Con-way Inc. (NYSE: CNW), a $4.2 billion freight transportation, logistics, supply chain management and trailer manufacturing company. Further information about Con-way Freight and additional press releases are available via the Internet at www.con-way.com

About APL Logistics APL Logistics provides international, integrated supply chain services in more than 50 countries, including both origin and destination services such as freight consolidation, warehousing and distribution management. It uses innovative IT for maximum supply chain visibility and control. APL Logistics is a unit of Singapore-based Neptune Orient Lines (NOL), a global cargo transportation and logistics company. APL Logistics Web site . . . www.apllogistics.com

About MergeGlobal MergeGlobal provides financial and strategic consulting services for clients in the global travel, transport and logistics industries. It has completed more than 200 engagements for clients in North America, Europe, Asia and Latin America.  MergeGlobal Web site: www.mergeglobal.com

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