AFRICA ... Sourcings Next HOT SPOT

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With more shippers looking at Africa, some transport operators already are getting their services in place

Hans-Ole Madsen says the main requirements for doing business in Africa are patience and commitment. Shipping volume, for now, is just a bonus.

“When you operate in the developing world, it’s unrealistic to think that everything is shiny every day,” said Madsen, vice president of business development for Africa, the Middle East and India for APM Terminals. “We are committed to Africa, and are prepared to sweat it out.”

APM Terminals certainly is expecting shiny days in Africa in the future. The company has spent some $800 million over the past decade to modernize and expand nine container terminals and several inland facilities in eight West African countries, from Liberia in the north to Angola in the south.

That makes the company one of the largest investors among operators in shipping and logistics that are looking at the growing volume of trade out of Africa, listening to comments from shippers about the direction of low-cost manufacturing and setting the groundwork for growth in sourcing of goods beyond raw materials from the continent.

Real growth in manufacturing and container shipping through sub-Saharan Africa would mark a dramatic change in a continent all but written off in much of the developed world because of the seemingly entrenched instability, civil unrest, endemic corruption and unrelenting social problems across Africa’s map.

Yet democratic rule also is spreading across the continent in once-unlikely places such as Rwanda, and that comes as retailers, manufacturers and suppliers are plotting out low-cost factory sources in the coming years. With labor costs in China and other parts of Asia rising, some experts say, more conversations about long-term plans include Africa.

“We’re actually looking at major manufacturing sites in Africa,” Tommy Liu, senior vice president for Greater China at Li & Fung Logistics, told a Journal of Commerce conference on container shipping in Shanghai this summer. “This is the last place you’ll be able to find cheap labor for the next 20 years or so.”

Africa trade with Europe is far greater than it is with the United States and U.S. exports to Africa are nearly three times the volume of imports, based on container shipping volume measured by PIERS, a sister company of The Journal of Commerce.

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Regards,

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand

Analysts, Forwarders Doubt Peak Surcharge Enforcement

 

Carriers expected to hold off for several weeks while they gauge market

Lines will be hard-pressed to enforce peak season surcharges from Aug. 15 on Asia-U.S. lanes, said analysts and forwarders based in Asia.

“I don't think this will happen,” said Paul Tsui, chairman of the Hong Kong Association of Freight Forwarding and Logistics. “Business is very slow at the moment. I think the carriers will make the announcement but still hold off from enforcing (the surcharges) for at least two to three weeks, and wait to see how the market reacts and then decide what to do.”

Janet Lewis, regional head of industrials and shipping research in Asia at Macquarie Capital Securities, said she was “dubious” carriers would be able to enforce an increase amid overcapacity.

“Volumes on both Asia-Europe and trans-Pacific are up year-on-year and are likely to remain well ahead of last year's levels, but vessel supply is up more.”

However, she said the supply-demand balance could level out as the third quarter progressed. “Inventory levels in the U.S. are very low and there are indications that shipments will be strong in September/October,” Lewis said.

The Transpacific Stabilization Agreement said the peak season surcharge would be introduced from August 15 after a two-month delay.

But analysts said that load factors from Asia's main ports were still poor for carriers. As reported by JOC, the average spot rate for shipping a container from China to the U.S. West Coast is now at its lowest point in 20 months as the impact of excess vessel capacity continues to be felt even as the traditional peak season eastbound peak season looms.

Tsui admitted carriers could see more success with PSS in September but added that “lots of direct customers such as the big multi-nationals have already contracted to avoid PSS, so lines are most likely to target smaller shippers.”

“We will have to wait to see if they’ll even manage to implement a PSS this year at all, they have already reduced sailings and slowed ships, but the market has still not picked up even though volumes higher this year. There is just too much new capacity.”

Customs Reports Progress on ACE

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 Pilot testing of the ocean and rail manifest systems in the U.S. Customs and Border Protection’s Automated Commercial Environment is scheduled to begin early this fall, Cindy Allen, executive director of the ACE business office, said Friday. Allen said that successful performance of the new manifest systems will give Customs the opportunity to turn off the rail and ocean manifest systems in the 1980s-era Automated Commercial System, one of the primary goals in ACE development.

The first phase of testing began in May with 17 ocean carriers, four railroads, a customs brokerage and a service center providing data for testing. Allen said Customs is now inviting more participants for a second phase, which will begin after Aug. 1. Allen said that the pilot test will involve data in “production-level” volumes, or data flow comparable with ACE’s normal processing load. After September, Customs will invite three ports to use ACE for all ocean and rail manifests.

If the manifests pass all tests, Customs will formally accept the software from its prime contractor in January 2012, leading to a shutdown of the ACS manifests in June. Allen said that ACE is making progress in reducing paperwork with the perfection of a document imaging system that allows importers to electronically submit supplementary information to their entries.

Customs is also working on modernization of the Census Bureau Automated Export System, and making it a part of ACE. Allen said Customs is mindful of the need for maintaining the confidentiality of Census data, but it will also give Customs officers the opportunity to operate in a single system.  

Leslie G. Brand III│Supply Chain Solutions, Inc. 

Unintended consequences

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The elimination of required cargo liability insurance by the FMCSA now forces shippers to independently verify the existence of the policy and nature of the coverage held by their carriers. Sound time-consuming? Our transportation law expert offers some practical advice. This year cargo liability insurance and the fact that as of March 21, 2011, motor carriers and surface freight forwarders (other than household goods carriers and household goods freight forwarders) are no longer required to have any cargo liability insurance at all.

 

The unintended consequences for shippers of these changes in the government’s regulatory scheme for motor carriers is that there is no longer a requirement for cargo liability insurance, they will overlook the unintended consequences at their economic peril.

 

To compound the problem, most cargo liability policies will have “endorsements”—the term the insurance industry uses for amendments or addenda to an insurance policy. As an example, “unattended vehicles” are typically covered by a cargo liability insurance policy, but often this coverage is then removed in an endorsement.

 

Conversely, cargo liability insurance policies do not typically cover losses resulting from a “change of temperature,” however an endorsement can add coverage for “breakdown or mechanical failure of a refrigeration unit.”

 

This leads to the third alternative: A telephone call to the agent who issued the policy for the trucker. The telephone call to the insurance agent will often lead, albeit informally, to a verification that there is, indeed, a policy and of the policy limits.

 

The advice for shippers when making the call to the agent is to “ask about what you are shipping.” For example, if you are shipping only lumber, you probably don’t need to worry about an exclusion for damage from rust. Another area of inquiry is the policy definition of “covered property.” For example, coverage for cell phones may not appear in exclusion, but if it is not included in the definition of “covered property” then indeed it will not be covered. 

 

Regards, 

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand 

 

 

Rob Burch Joins Supply Chain Solutions, Inc. as President

Grand Rapids, Michigan – July 13, 2011 - Supply Chain Solutions, Inc. CEO Les Brand and COO Jim Ward today announced the appointment of Robert (Rob) Burch as President of Supply Chain Solutions, Inc. (SCS) and SCS’s affiliated companies.

In making the announcement Mr. Brand said: "I am delighted that Rob is joining Supply Chain Solutions Inc. He is an exceptional executive who knows how to expand the reach and relevance of our strong reputation and our SCS brand. As President, Rob will further advance our position in the industry and accelerate the expansion and innovation of our solutions.”

In all previous senior management positions, Mr. Burch has nurtured and aggressively expanded the organizations experience in private, public and private equity capital structures.  He has developed strong customer relationships to achieve top line growth for targeted products and customers.

Mr. Burch said: "I am honored to join Supply Chain Solutions Inc. SCS has a strong culture of excellence and leadership, and I look forward to working with the great team there to continue moving the company forward. It is a great privilege to rekindle my relationships in West Michigan and I look forward to expanding our relationship throughout SCS’s marketplace.

While CEO of Berkline LLC Mr. Burch oversaw all aspects of the business excluding capital formation. Prior to joining Berkline Mr. Burch spent 3.5 years as EVP of Operations at Simmons Bedding Company where he lead the a lean transformation in manufacturing and logistic operations and in management systems.   Prior to Simmons Mr. Burch spent 26 years with Steelcase and held a variety of senior management positions. 

Mr. Burch holds a CPIM certificate with the American Production and Inventory Control Society.  He has held board positions with the Tauber Institute for Global Operations, the Association for Manufacturing Excellence and Independent Bank of West Michigan.

Mr. Burch graduated with a BBA from the University of Michigan, Ann Arbor, Michigan

 

 

Regards, 

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand 

 

 

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Spot Market Truckload Rates Up 4.5 Percent

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Sequential increase tracks 7 percent drop in dry van capacity, says TransCore

Spot market truckload rates rose 4.5 percent in June from May, according to TransCore Freight Solutions, as truckload capacity dropped 7 percent. The company’s van freight indicators for June show the load-to-truck ratio declining 21 percent from May, while spot market freight availability rose 13 percent. TransCore’s spot market data reflects reports of a stronger shipping month in June, with some shippers accelerating shipments in early June to secure capacity.

The Cass Freight Index for U.S. shipping reached its highest level in three years in June, growing 4.9 percent from May. Shipments on TransCore’s DAT network of load boards typically peak in June, the company said. There were 3.8 loads per truck available in June. Year-over-year, dry van shipments were up 26 percent in June. However, spot market truck capacity was up only 19 percent from a year ago, lagging demand.  Spot market dry van rates were up 3.8 percent year-over-year last month. The national average linehaul rate for dry vans dipped in the first week of July but remained above May levels, according to TransCore’s Truckload Rate Index.

Load volume declined 1.9 percent week-over-week for dry vans in the week ending July 7, the load board operator and transportation technology company said.

Regards,

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand

How can QR codes help your business.. just scan to find out..

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If you’re not yet familiar with QR codes, they’re similar to the barcodes used by retailers to track inventory and price products at the point of sale. The key difference between the two is the amount of data they can hold or share.

Bar codes are linear one-dimensional codes and can only hold up to 20 numerical digits, whereas QR codes are two-dimensional (2D) matrix barcodes that can hold thousands of alphanumeric characters of information. Their ability to hold more information and their ease of use makes them practical for small businesses.

When you scan or read a QR code with your iPhone, Android or other camera-enabled Smartphone, you can link to digital content on the web; activate a number of phone functions including email, IM and SMS; and connect the mobile device to a web browser.

Any of these desired functions are easily achieved by properly creating your QR code.  It’s a simple process of entering the appropriate data into the QR code generator, described below, and it all takes just a few minutes.

The ability of QR codes to connect people with each other and to multimedia digital content is very useful for businesses and consumers alike.

 

Regards, 

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand 

 

 

Supply Chain Execution.. Focus on the following!

Faced with increasing pressure to cut costs, companies have re-examined how they source, store and deliver their products. To survive, a business’s ability to manage it’s supply chain must be exceptional.

Remember to…

1) Use a proven template. This is not to say that all supply chains should be approached with a ‘cookie cutter’ model. Rather, use the best practices as a foundation and then customize them to meet each specific logistics. 

 

2) Build upon deep expertise. Master distribution management, transportation management, cross-docking, network design and the unique aspects of customer requirements, drivers of profitability, challenges and trends for your industry segment.

 

3) Apply lean processes. In a lean culture, logistics teams can identify and eliminate waste in every process that occurs as an order is fulfilled. Lean tools, such as visual cues, problem solving jackets, and root cause analysis, result in shortened lead times, built-in quality and continuous improvement.

 

4) Make continuous improvement. Ongoing, incremental improvements – both small and large in scope – add up to a significant edge. An important tool for continuous improvement is Value Stream Mapping, which can be created for many aspects of the supply chain such as detailed workflow management, warehouse productivity, route optimization and total landed costs.

Regards,

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand

Supply Chains Face Increased Attacks

Report says shipping hubs, gateways at greater risk for cyber hacker, pirate, terrorist attacks

Global supply chains face increased cyber, hacker, pirate and terrorist attacks over the next 20 years with key shipping hubs and transport gateways most at risk, a report today said.

There is a 56 percent probability of attacks on transport chains according to 80 executives surveyed by PwC, a consultancy.

The executives, from 25 countries, said they are even more concerned with hacker attacks affecting their supply chains than they are with actual physical attacks.

“Logistics, as driver of globalization, will become the focus of [cyber attacks] in the years to come,” according to the report “Transportation & Logistics 2030 – Securing the supply chain.”

”A hacker could infiltrate the flight control system, for example, and randomly let airplanes fall from the sky. Or re-set the tracks in rail traffic and let trains crash.”

The supply chain has become much more complex and more accident-sensitive in recent years, said Klaus-Dieter Ruske, partner and Global Transportation and Logistics leader at PwC.

“Today 90 percent of the worldwide trading volume is concentrating on about 39 gateway regions.”

“If only a single one of these hubs fails, the economic consequences could be enormous after just a short period of time, and affect most economies around the globe,” Ruske said.

The world’s largest gateway is the Hong Kong-Shenzhen region, which handles 14.8 percent of the world’s ocean container and air cargo traffic.

Highly frequented shipping “chokepoints” with only one narrow transport link such as the Strait of Hormuz, and the Suez and Panama canals are potential targets too, according to Ruske.

Egypt already loses more than $640 million a year because shipping companies avoid the piracy-threatened Gulf of Aden and the Suez Canal.

Transport and logistics companies’ expenditure on security will rise in response to the heightened threat of attacks. “Capital investment on security, also on security of IT systems, will be one of the most important cost drivers of the logistics industry.”

Regards,

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand

The Catch-22 of Supply Chain Risk Management

The ultimate point of supply chain management is to help companies be cost competitive while maintaining the bare minimum of inventory consistent with achieving a targeted service level. Global outsourcing, reducing the number of suppliers you do business with, and using optimized planning to reduce inventory are common techniques companies use to accomplish a cost-effective supply chain.

But all of these things that make for a lean and mean supply chain can also cause a supply chain to become brittle and break in the face of disasters. Toyota, for example, is facing a large drop in market share because of the Japan earthquake.

Supply chain risk management says that you can avoid this outcome by having redundant factory lines in different geographic locations, using multiple suppliers, and carrying more inventory in locations around the world. These actions, of course, are the very opposite of what it takes to be a low-cost supply chain.

This double bind is most acute for companies that compete mainly on price rather than service or product attributes. If these companies practice the prescribed risk management practices, they might find themselves losing a little market share year after year to competitors that don’t engage in supply chain risk management. Eventually, the company becomes an afterthought in the market.

On the other hand, if a company runs a brittle, low-cost supply chain, the company may gain a little market share year after year until a disaster occurs. The firm then experiences a huge drop in market share all at once.

Now there are risk management practices that any company can adopt that do not fall into the category of a double bind. For example, a firm can do contingency planning upfront on who will do what when a facility goes down. The company can look for components widely used across its products that would put significant revenues at risk if the supplier of that component was to experience difficulties; for these components, the company should look at dual sourcing.

And companies can have preset playbooks in place for disasters that are more likely to occur. JDA (an ARC client) is doing product development in this area. For example, many retailers know that hurricanes are apt to strike the Gulf region every year during certain months. These retailers also know what products would be in demand when a hurricane hits, so they could carefully track hurricane forecasts and move the necessary inventory forward to key DCs before a hurricane strikes.

But for companies that differentiate mainly on price, the core practices associated with supply chain risk management will continue to represent a Catch-22.

Regards,

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand