Tag Archive: ports

The Sheer Relevance & Impact of Transportation (A Billion Here, a Billion There)

November 24th, 2018

Recently, I attended Mobility 21, the Southern California transportation coalition, and it reminded me of the sheer relevance of transportation.  No manufacturer can operate without transportation: distributors are out of business without trucks dropping off and picking up, healthcare would stop functioning and our frequent Amazon orders would be a thing of the past.  In essence, everything would come to a grinding halt!     

Certainly, trucks are what we typically think about when it comes to transportation.  They account for $722 billion in freight flows with Canada and Mexico, for example. Whereas rail still accounts for $174 billion (not pocket change).  The ports are our gateway to the rest of the world (and the Los Angeles ports alone bring in 40% of the U.S. volume). Air carries an impressive number of packages especially with the rise of e-commerce. UPS and FedEx are expanding at amazing rates, especially at Ontario airport, the hub of e-commerce activity.  For example, during the 2017 peak season, this region of UPS alone processed 13.1 million packages!

At Mobility 21, there were some interesting statistics throw out:

  • AAA has 60,000 service calls per day
  • Transportation has a $700 billion dollar economic impact on Southern California and accounts for 1/3 of the jobs in Southern CA!  
  • 350 billion miles each year are driven in California
  • The number of trucks is expected to go from 1.8 trillion to 3.9+ trillion by 2045
  • And the list goes on….

What Should We Consider and/or What Impacts Could Arise?
At a minimum, why not take a step back to think about your transportation network?  What does it look like? How do you receive materials and products? Do you use the ports?  Air? Rail? Undoubtedly, you use trucks! How expansive is your network? Are there many players involved?  Since it could cause your operations to cease, it makes sense to find out!

Next, think about what you’d like your transportation network to deliver.  Do your customers expect rapid deliveries and “above and beyond” service? If so, who is your partner in ensuring this occurs?  

Your transportation partners are your last face to your customer. And, in today’s marketplace, there is a significant demand and challenges your transportation partners must navigate.  If you plan to be successful, you must stay on top of your transportation network and partners. Are you attractive to them? Perhaps we better think about that further….



E-Commerce Drives Industrial Space to New Heights

June 21st, 2018

Supply Chain Briefing

According to the Journal of Commerce, e-commerce is driving industrial space rents to new heights.  Our clients are definitely experiencing the same dilemma! There has been a 12.1% increase in rental rates since 2017, and the L.A. / Long Beach area has the lowest vacancy rate in the U.S. of 1.2%.  Ridiculously, the average price in L.A. was 60%+ higher than the U.S. average in the first quarter! And, stranger yet, e-commerce is driving class B space (not as desirable) to be snatched up. It is becoming the new class A!  Even Class C (even less desirable) is starting to sell like hotcakes.

Are you prepared for these Amazonian type disruptions?

 

What Should We Consider and/or What Impacts Could Arise?
First, are you thinking about the disruptors most likely to impact you?  For example, almost every manufacturer and distributor is certainly impacted by Amazon’s rapid delivery expectation.  Have you thought about what your customers expect from you? How about what is required to satisfy – or delight – them?  Undoubtedly, the bar has been raised.

Speed is a more apparent Amazon-related outcome.  Don’t stop there. In order to support rapid deliveries, what will be needed now?  Six months from now? A year from now? Currently, it has made proximity to the ports and customers of utmost importance.  What other impacts have arisen? In this case, e-commerce has changed our shipping and transportation expectations dramatically and permanently – we expect to receive only exactly what we need (whether 1 box or 1 piece) when we need it.  

This has created the need for e-commerce fulfillment operations.  Where would you prefer to locate your operation? Most likely as close to customers and your supply base as possible.  In this case, it means rates are going through the roof – if you can even get them. What can you do to proactively set up your supply chain to support these likely impacts?  And, are you building these estimates into your projections? How will you make effective decisions – can you bring your suppply chain into the process further?

Don’t delay any further….

 



TPP is Dead …. How Will it Affect Our Ports?

January 24th, 2017

On Trump’s first full day in office, he backed out of TPP, as expected — and promised. The concept behind this Trans-Pacific Partnership was to deepen economic ties among countries that border the Pacific Ocean. Will this have an effect on trade?

At the same time, I just so happened to go on a tour of LA Port on Friday (see my APICS colleagues pictured below as we sail past a container ship). Southern California’s ports bring in 40% of U.S. imports, and so we are the “big daddy” of the ports. Thus, any trade changes will affect our ports in some way. The question is how…..

Southern California ports

 

What Should We Consider and/or What Impacts Could Arise?

Certainly, since the ports and trade are tied together, it makes sense that some sort of change will occur; however, I don’t think it will be noteworthy. Since the Southern CA ports are able to accept big ships (which isn’t that common) and they are located in a prime spot for trade, the impact will not be substantial near-term.

Of course, the prices and tariffs will be impacted; however, for commodity items, it will still make sense to bring them in from lower labor cost countries. For non-commodity items, we’ll see a resurgence of manufacturing and automation/use of technology take place in North America. We will need to be more nimble and agile — including our “big daddy” ports if we wish to be competitive.

Are you prepared to leverage additional technology to remain competitive? And do you know how your partners will be impacted? If you are not incorporating those likely impacts into your strategy, you will be left in the dust for those who are thinking ahead.

 



Logistics, Logistics and Logistics

January 2nd, 2017

supply chain

I took the APICS CLTD (certified in logistics, transportation and distribution) exam yesterday (and passed!); therefore, I have been knee deep in logistics topics this week. Who knew logistics was such a BIG topic? Well, we have been excited at APICS-IE to start teaching this certification class as it is critical to manufacturing, distribution and transportation success. Since taking on CLTD, we have noticed an increased interest from people like the Wall Street Journal and, of course, the proactive supply chain professionals in Southern CA! If you don’t have the right product, at the right place, at the right time, in the right condition at the right cost etc., etc., your business will lose profits and potentially customers — quite a big deal!

cltd

Did you know Southern CA is #1 in NOT only manufacturing but also logistics in the U.S.? Are you thinking about logistics or does it just “happen”?

One tip to implement this week:

As I said, logistics is a large topic. There are 4 LARGE books for the CLTD exam. How about starting by taking an assessment of your area (such as Southern CA) or your company? Find out how important logistics is to your area and your company. It certainly HAS to be related if you move anything anywhere, have inventory, etc. And, if you live in an area like Southern CA, it is vital to your life. Logistics is cornerstone to the economy and has global implications. Certainly the LA and Long Beach ports are the BIG daddy of all ports. The #2 port is a FAR smaller second in comparison. We have massive distribution centers, and manufacturing is nothing to blink about as #1! Imagine the opportunities.

Have you noticed how often paying attention can go a long way to starting progress?

Looking for more ideas to keep your supply chain connected? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”