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Trends in Third Party Logistics – Hayes H. Howard, American Shipper.

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Presentation on theme: "Trends in Third Party Logistics – Hayes H. Howard, American Shipper."— Presentation transcript:

1 Trends in Third Party Logistics – Hayes H. Howard, American Shipper

2 Trends in Third Party Logistics Concept – Hayes H. Howard, American Shipper Asset Heavy Provider Asset Light Provider Shipper: out sources logistics management Shipper: in-house logistics management

3 Trends in Third Party Logistics Threads What are we looking for in a relationship? How to achieve inventory management and control? Visibility Integration – Hayes H. Howard, American Shipper

4 Trends in Third Party Logistics Speakers Michael Connor - Logistics Sr. Manager, World Wide Procurement, Dell, Inc., Klaus Schnede - Manager, Marine Procurement, Eastman Chemical Co. Edward Zaninelli - Vice President Transpacific Westbound Trade, OOCL Jeffery G. Lee - Managing Director - North America, Vanguard Logistics – Hayes H. Howard, American Shipper

5 Trends in Third Party Logistics Participation & Questions You are a key member of the panel!

6 Trends in Third Party Logistics Thank You First up Michael Connor, Dell, Inc. – Hayes H. Howard, American Shipper

7 Trends in Third Party Logistics – Michael Connor, Dell, Inc. - How did it start and why? What are we looking for in the relationship? - Acquire the business - Maintain the business - Grow the business

8 Trends in Third Party Logistics – Michael Connor, Dell, Inc. 19992000 Future Limited Structure Supplier Free for All Improved Structure Suppliers Picked from 8 Providers Consolidate volume To optimize Air spend - regional 2000-2007 Consolidate volume to optimize ocean spend - regional Consoli- date whse 3PLs Standardize T & Cs globally Dell DSI 35 Dell DSI 35 Dell DSI <.5 Dell DSI <.5 Sup DSI 0 Sup DSI 0 Sup DSI 11.7 Sup DSI 11.7 Core global Providers IDd drive efficiencies And visibility Globalize volume to optimize trans spend JIT-D HOW? WHY?

9 Trends in Third Party Logistics – Michael Connor, Dell, Inc. Acquire the business: - Demonstrate the value of your core competency - Partner to develop the business case - Integrity must be obvious - Show global scalability - Demonstrate financial strength

10 Trends in Third Party Logistics Maintain the business: - Maintain service levels - Your IT must scale ahead of customer - Partner in Project Management - Show global scalability - Drive Financial Acumen to the lowest levels – Michael Connor, Dell, Inc. Be Willing to Walk Away!

11 Trends in Third Party Logistics Grow the business: - Service both ends of the supply chain - Expand in the right areas – you have a core competency too! - Grow globally ahead of customer - Be willing to partner with other 3PLs to service the customer - Be Ready! – Michael Connor, Dell, Inc.

12 Trends in Third Party Logistics Wrap-Up: - Everyone knows the game – act like it and put it on the table - You are better positioned to manage the logistics – your actions must prove it - Executive Alignment is a must to grow - Be Prepared ahead of your customer – thats what we really want – Michael Connor, Dell, Inc.

13 Trends in Third Party Logistics Thank You Next Up Klaus Schnede, Eastman Chemical – Michael Conner, Dell, Inc.

14 Trends in Third Party Logistics Klaus Schnede May 2007 – Klaus Schnede, Eastman Chemical

15 Trends in Third Party Logistics Trends in Third Party Logistics – Revising Logistics Trend…..? Table of Contents 1. Introduction 2. Cendian Corp. – History 3. Eastman Today – - Forwarder Relationship - Controls back in-house - Inventory Control and Management - Security and Compliance 4. Conclusion – Klaus Schnede, Eastman Chemical

16 Trends in Third Party Logistics 2. Cendian Corp. - History NVO/3PL Founded in 2000 as ShipChem Started as Eastman's domestic and international logistics arm/network Focused on the chemical market 2003 expanded into other chemical customers as 3PL Not able to meet profitability goals Off the shelf IT-Systems not fully capable to support the business Dissolved in 2005 – Klaus Schnede, Eastman Chemical

17 Trends in Third Party Logistics Eastman Today - Forwarder Relationships Using three Forwarders for our business today; set up by destination region Mostly used for documentation Some bookings are still made with the Forwarders; most bookings are through INTTRA Letter of credit support Destination customs clearance and warehousing – Klaus Schnede, Eastman Chemical

18 Trends in Third Party Logistics Controls back in-house Eastman rehired most of the operations Cendian employees A handful of Cendian procurement professionals were hired by Eastman Total control of all domestic and international transportation is back in-house Vendors are being measured and held accountable Freight is being negotiated by Eastman – Klaus Schnede, Eastman Chemical

19 Trends in Third Party Logistics Inventory Control and Management Performed by Eastman, in-house Warehouse and Container Management Performed by 3PLs Dedicated Container Truck Fleet Management Outsourced today – Klaus Schnede, Eastman Chemical

20 Trends in Third Party Logistics Security and Compliance Handled in-house Only working with certified vendors on a global basis Member of American Chemistry Council and a preference for Responsible Care® carriers Only use C-TPAT certified carriers Chemtec for hazmat response – Klaus Schnede, Eastman Chemical

21 Trends in Third Party Logistics 4. Conclusion – The Future…..? Eastman's Logistics seeks smart sourced solutions in the future. Outsourcing decisions will be made selectively on tactical functions that can be done better by 3PLs. Core functions however, such as Strategy, Procurement and Management will not be outsourced. – Klaus Schnede, Eastman Chemical

22 Trends in Third Party Logistics Thank You – Klaus Schnede, Eastman Chemical Next Up Edward Zaninelli, OOCL

23 Trends in Third Party Logistics South Carolina International Trade Conference Edward Zaninelli OOCL USA – Edward Zaninelli, OOCL

24 Trends in Third Party Logistics TRANS-PACIFIC 18 million TEU 10.4 % Growth ASIA-EUROPE 12.2 million TEU 10.9% Growth TRANS-ATLANTIC 5.4 million TEU 5.3% Growth INTRA-ASIA 33 million TEU (including Australia, Indian Subcontinent and Middle East) 12 % Growth Source: Drewry Consultants, 2005 OTHER TRADES North-South 19.2 million TEU Intra-Regional 16.1 million TEU Global Container Trade Perspective – Edward Zaninelli, OOCL

25 Trends in Third Party Logistics – Edward Zaninelli, OOCL

26 Trends in Third Party Logistics – Edward Zaninelli, OOCL

27 Trends in Third Party Logistics U.S. Liner Shipping Landscape New mega ships increase trade capacity Global trade growth outpaces infrastructure including ports, railroads, terminals, trucking and warehouses. Cross-industry collaboration synchronizes transport activities to improve efficiency and service quality Trade imbalance: imports approach 3 x export volume Export becomes a cost recovery business model Terminal, transportation and fuel cost increases affect carrier profitability, products and services – Edward Zaninelli, OOCL

28 Trends in Third Party Logistics

29 Round Trip unit income under pressure Source: Drewry – Edward Zaninelli, OOCL

30 Trends in Third Party Logistics Where do the Carriers Stand Profits have been compressed by internal and external forces Fuel costs, environmental challenges, limits to NAT Infrastructure and more Some Carriers trying to make the jump from liner mentality to logistics management Historical results of the carrier/3PL is mixed or clouded Major challenge to be a multi carrier 3PL when you are a carrier – Edward Zaninelli, OOCL

31 Trends in Third Party Logistics Carrier Trends in Logistics Inclusion of the entire sales force in the logistics strategy, does this work? Can liner sales sell logistics? Will the trend continue? Most carriers opening up 3PL shops, but many are on a small scale Two largest carrier 3PL groups may not be profitable or are marginal – Edward Zaninelli, OOCL

32 Trends in Third Party Logistics Carrier Logistics/Asset Owners/Closing Remarks Do we do it for the money? Do we do it for the tie in? How do Asset owners see 3PL opportunities How does an Asset owner compete with non Asset owner logistics Theres money in logistics management Can Carriers access logistical dollars to compete with non Asset owners for profit??? – Edward Zaninelli, OOCL

33 Trends in Third Party Logistics Thank You Next Up Jeffery G. Lee, Vanguard Logistics – Edward Zaninelli, OOCL

34 Trends in Third Party Logistics Logistics: Warehouse to Boardroom

35 Trends in Third Party Logistics Examine your supply chain

36 Trends in Third Party Logistics Trend behind the trend Shoes: $0.34 of $45 TV: $12.50 of $2000 Motorcycle $90 of $11,000

37 Trends in Third Party Logistics Challenges Inefficient sourcing due to lack of cost info Higher inventories or lost sales High cost of expedited freight High overhead cost managing logistics functions Inbound lead time variability Reactive rather than proactive management Disconnect between various transport modes

38 Trends in Third Party Logistics Needs and Solutions Reliability Overall Cost reduction End to end Visibility Speed/ Tighter controls Flexibility Global Coverage Predictability Optimization/Data warehousing Deeper integration

39 Trends in Third Party Logistics Industry Response Visibility Predictability Scope

40 Trends in Third Party Logistics Thank You Next Up You! – Jeffery G. Lee, Vanguard Logistics

41 Trends in Third Party Logistics Questions


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