Tag Archives: transportation

Quote

New paper published on Standards and carrier differentiation

My colleagues Chris Clott, Rob Cannizzaro and I just published a paper in the Journal of Shipping and Trade.  In it we propose a new standard called ServiceTerms for classifying container cargo on six ACTION dimensions which are relevant to downstream supply chain service and performance (and to some extent upstream actions).  The six dimensions are

  • Accessorial
  • Customer Service
  • Transport
  • Inventory
  • Orders and paperwork
  • None of the above.

ServiceTerms would function something like INCOTERMS in supply chain contracts. They would provide a standard which every participant in the supply chain– ocean, rail and truck carriers, port terminals, warehousing, drayage, distribution, and so on– would know about in advance and determine how they were going to handle the goods to meet the standard.   The standard includes a specification of limits on the time spent in each step of the journey, based on the total length in time committed to.  These time standards would allow each of the actors to plan their operations to meet their time requirement.  Aiming  for the standard would coordinate the supply chain actors with only limited need for them to work together except on the handoffs. (And these are typically between just two adjacent players in the network.)  The actors in the chain would be enabled to innovate their own individual  techniques to meet their goals.

Like INCOTERMS there would be no specific penalties for failure.  However, there would be measurement and reporting of performance (time in service) at each stage of the end-to-end delivery.  Individual contracts could provide penalties, negotiated by the participants;  everyone involved could keep track of whether a participant was doing his or her bit to meet the standard; or whether some were agreeing to a standard with less than total commitment to making it happen for individual cargoes.

Alliances have been touted as supply chain improvements because they coordinate a few ocean carriers on legs of a journey. But supply chain thinking tells us what matters is the overall source to destination performance, and that requires more involvement, particularly from downstream players such as rail, barge, truck, warehouse, and “last mile”.  To improve their abysmal service performance, alliances have to find ways of coordinating the entire delivery process.  A standard for the process that shippers, handlers,  and carriers can agree and coordinate on is a central element.

We see alliances as entities capable of incubating the ServiceTerms standards, much as the International Chamber of Commerce does for INCOTERMS.   ServiceTerms could then be included in a standard contract for delivery. The specifics of the ServiceTerms  standard should be negotiated during the incubation process; and the process should allow for individual variations by contract, much as INCOTERMS do.

If the majority of cargo went according to the standard, all the supply chain players would work together to make sure the overall term was met.  That should improve everyone’s focus on the goal of making customer service a standard rather than an exception in the container business.

 

 

   via Standard setting and carrier differentiation at seaports | SpringerLink

Cite this article as:

Clott, C.B., Hartman, B.C. & Cannizzaro, R. J. shipp. trd. (2018) 3: 9. https://doi.org/10.1186/s41072-018-0035-0

A pdf of the article is available here.

Bigger ships, bigger ports an opening for 3PLs

This story indicates that 3PLs will provide the supply chain wisdom the ocean carriers and port operators  refuse to take on.  Look for more and more profitable intermediaries, rather than fewer, in ocean supply chains. They are not likely to be supplanted by blockchain systems.

By Gavin van Marle in Singapore 25/04/2018

logo  via Bigger ships and bigger ports an opening for 3PLs to revolutionise supply chains – The Loadstar

Alternative to risky IT investment for maritime firms

Here’s a great idea: why don’t we simply buy a 3PL?  It is a lot easier than developing all that wretched software ourselves!  Seriously, why isn’t consolidation of 3PLs and maritime firms a good way to extend services beyond the port and put them under the control of someone we can trust to (more or less) handle the movements the way we want?   It is a time-honored way to gain capabilities we do not have without doing the work of creating a new business.  Sure there can be some coordination issues, but are they as bad as Maersk has coordinating with IBM on their blockchain system?

Remember that providing coordination and visibility of information is mostly what blockchain accomplishes, and the jury is out on whether it can be made competitive with existing types of databases (which may also need improvement, to be sure).  And any of these systems is “permissioned” in blockchain lingo– there is a governor who is empowered to make decisions about who is allowed to use it.  None of them is truly decentralized for governance, as the Bitcoin advocates would have you believe; in that world, the miners (of whom there are now about 6 with a 75% share of all blocks mined) can exercise control whenever they want.

It comes down to trust. Who do we trust?  Central banks, or a bunch of miners?  Or are we happy enough trusting Maersk, or CMA-CGM and Ceva, or some other 3PL with our cargo, and prefer to argue with them over damaged or misplaced cargoes, rather than debate with some Ethereum sites about these issues?

I’m not sure how it will come out, but I don’t think it will be all one way or the other.

 
By 

 

logo  via CMA CGM’s swoop to take nearly 25% of CEVA is ‘a banker’s dream’ – The Loadstar

 

See also: CMA CGM will buy 25% stake in CEVA logistics, By April 20, 018