Sailing the Seas of Change

Transcription

1 A BUYER S GUIDE TO Sailing the Seas of Change Powered by 1 powered by CHAINalytics

2 Fact-Based Supply Chain Transformations Years Supply Chain Design Quarters Packaging Optimization Months Logistics Operations Transportation Weeks Planning Horizon Sales & Operations Planning Service Supply Chain What is the best flow path? How much and where should inventory be positioned in the supply chain? Are we balancing supply and demand in the most profitable way? Should our warehousing and material operations be insourced or outsourced? How should we transport product through the supply chain? Can we reduce our transport and logistics costs by improving cube utilization? How well do our current operations mitigate repair and warranty costs? How can we increase visibility to stakeholders? 2 powered by CHAINalytics

3 Some of Our Clients RETAIL FOOD & BEVERAGE HOME/OFFICE NON-DURABLES HOME/OFFICE DURABLES HIGH TECH & TELECOM Packaging Healthcare Automotive & Industrial Chemical/Process LSP OTHER INDUSTRIES SERVED 3 powered by CHAINalytics

4 Chainalytics Overview STOCKHOLM HELSINKI MINNEAPOLIS MILAN ATLANTA BANGALORE SYDNEY BY THE NUMBERS Over 150 FTEs Worldwide Serve 300+ Unique Clients 17 of Gartner s Top 25 Supply Chains 80 Fortune 500 Companies Delivered 500+ Engagements ACCOLADES 2013 Cool Vendor in Supply Chain Services Gartner Great Supply Chain Partner for 10 Years SupplyChainBrain 8 Pros to Know Supply & Demand Chain Executive One of 10 Coolest Supply Chain Boutiques ARC Advisory 4 powered by CHAINalytics

5 Today s Speakers Matthew Harding Chainalytics Edward Howard BlueWater Reporting Kevin Zweier Chainalytics 5 powered by CHAINalytics

6 Agenda Freight Market Intelligence Consortium Uncovering Value in Benchmark Data Taking Action with Analytical Tools BlueWater Reporting Setting the Negotiation Table Summary + Q&A 6 powered by CHAINalytics

7 Ocean Demographics 283MM, 16 Shippers Ocean Transportation Spend by Industry Ocean Company Count by Spend Category 7 powered by CHAINalytics

8 FMIC Ocean Benchmarking Process Shipper Chainalytics Provide Raw Data Template Populate Raw Data Template Submit Data Confirm or Revise Send Validation Report Validate Geography Rates, Fields Create Econometric Models Create Reports & Research Trade/Lane Report Carrier Report Trend Report Leverage Content Populate Portal & Visualization Tools Industry Report Rate Estimator Survey 8 powered by CHAINalytics

9 FMIC Ocean Benchmarking Process Shipper Chainalytics Provide Raw Data Template Populate Raw Data Template Submit Data Confirm or Revise Send Validation Report Validate Geography Rates, Fields Create Econometric Models Create Reports & Research Trade/Lane Report Carrier Report Trend Report Leverage Content Populate Portal & Visualization Tools Industry Report Rate Estimator Survey 9 powered by CHAINalytics

10 Econometric Modeling and Ocean Costs Coefficient Category Model Results for Trade Lane 1: South East Asia to US/Canada Coeffcient Sample Calculation A 40 N dry container from Haiphong-Long Beach-Plainfield (~2073 miles) $1, Default ($70.70) 40 N $ Origin Port (Haiphong) $1,999 Inland Transport (Truck 0.96* 2,072 mi) $3,679 Benchmark Note: Complete list of 93 Subtrade lane variables, Origin/Destination Ports, surface estimators can be found in FMIC_Chainalytics.OceanBenchmarking.pdf Default Equipment Origin Port Destination Port Sub Trade Lanes Destination Long Haul Land Moves (>250 miles) Default - Laem Chabang/Bangkok to LA Long Beach - 40High Dry Container, Contract Carrier $ 1, Equipment - 20N $ (652.96) Equipment - 40N $ (70.70) Equipment- 45H $ Equipment Type - R $ Haiphong_VN Vung Tau_VN Los Angeles/Long Beach/San Pedro Oakland Vietnam_TO_US_Pacific_Northwest Thailand_TO_US_Pacific_Southwest Destination Long Haul Land - US_Pacific_Southwest_TO_CEUS (Use $0.95/mile*2073 miles) $ $ (64.26) - $ $ $ $ 0.96 Shipper Leverage factor - Import Shipper spend adjustment - Import powered by CHAINalytics

11 Maximizing Insight for Internal Communication Shipper Chainalytics Provide Raw Data Template Populate Raw Data Template Submit Data Confirm or Revise Send Validation Report Validate Geography Rates, Fields Create Econometric Models Create Reports & Research Trade/Lane Report Carrier Report Trend Report Leverage Content Populate Portal & Visualization Tools Industry Report Rate Estimator 11 powered by CHAINalytics Survey

12 Maximizing Insights for Internal Communication 1 Address tangential concerns - research and surveys 2 Share consortium procurement strategies Share consortium contractual policies (i.e. fuel, accessorials, etc.) Enable community interactions that drive greater understanding Support point of view with independent third-party perspectives 12 powered by CHAINalytics

13 Spot Poll What level of Asia-Pac GRIs are you expecting in 2014? A. 0% B. 0-5% C. 5-10% D % E. >20% Audience Response 13 powered by CHAINalytics

14 Agenda Freight Market Intelligence Consortium Uncovering Value in Benchmark Data Taking Action with Analytical Tools BlueWater Reporting Setting the Negotiation Table Summary + Q&A 14 powered by CHAINalytics

15 FMIC LTL Benchmarking Process Shipper Chainalytics Provide Raw Data Template Populate Raw Data Template Submit Data Confirm or Revise Send Validation Report Validate Geography Rates, Fields Create Econometric Models Create Reports & Research Trade/Lane Report Carrier Report Trend Report Leverage Content Populate Portal & Visualization Tools Industry Report Rate Estimator Survey 15 powered by CHAINalytics

16 Ocean Market: 10-Year Producer Price Index Trends Source: US Bureau of Labor Statistics 16 powered by CHAINalytics

17 Service and Other Subjective KPIs Aligning Benchmarks to Change Management HIGH Validate & Invest Control & Validate Alignment Control & Validate Alignment Change Strategy LOW Market-Based Cost Benchmarks HIGH 17 powered by CHAINalytics

18 How to Utilize Benchmark Data Recognize natural cost variability Compare to service and other intangibles Assign to business levers Determine appropriate action Below Market Above Market 18 powered by CHAINalytics

19 Demonstrating the Process Carrier Plot Two carriers, same buyer 19 powered by CHAINalytics

20 Service and Other Subjective KPIs Demonstrating the Process Aligning Market Benchmarks to Service HIGH Carrier 10 Carrier 13 LOW Market-Based Cost Benchmarks HIGH 20 powered by CHAINalytics

21 Agenda Freight Market Intelligence Consortium Uncovering Value in Benchmark Data Taking Action with Analytical Tools BlueWater Reporting Setting the Negotiation Table Summary + Q&A 21 powered by CHAINalytics

22 Efficiency in Analytics is Critical Rapid evolution in efficient cloud-based visualization tools is occurring Efficient front-end for large quantities of data Designed to answer questions, not static reporting Transforming the way logisticians approach data and decisions Does not require significant IT costs or resources 22 powered by CHAINalytics

23 Analytical Efficiency: Outliers 23 powered by CHAINalytics

24 Analytical Efficiency: Geography 24 powered by CHAINalytics

25 Punch List for Maximizing Benchmark Value 1 Aggregate market results by carrier and geography 2 Balance results against subjective aspects and service 3 Use latest visualization tools for analytical efficiency 4 Ensure benchmarking insights support communication 5 Focus on differences in your portfolio 25 powered by CHAINalytics

26 Agenda Freight Market Intelligence Consortium Uncovering Value in Benchmark Data Taking Action with Analytical Tools BlueWater Reporting Setting the Negotiation Table Summary + Q&A 26 powered by CHAINalytics

27 What is BlueWater Reporting? Leveraging Data and Intellectual Property to Bring You Customized Solutions BlueWater Reporting is a service of American Shipper and ComPair Data, bringing together the strengths of both. 27

28 BlueWater Reporting Overview Global and comprehensive coverage Analytical data is service based Focus on reliability and data integrity Research driven Historical tracking of services 28

29 BlueWater Reporting Tools Integrate data into systems Web based applications Data Extracts with Excel pivot table analysis Capacity Analytics Transit Analytics Market reports Ad Hoc Reports Global Ocean Carrier Schedules Deployable on all platforms Custom Research 29

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31 BlueWater Reporting ServiceTracker Weekly newsletter Track all significant liner service changes during the week. Special commentary on services, carriers or trades. Changes in BlueWater Reporting applications. ServiceTracker tracks significant changes to global services 31 31

32 World Liner Supply Reports Quarterly Analysis Ship capacity of each alliance, carrier, service and trade route Trade lanes operating between Asia, Europe, North America and South America Analytical assessment of total capacity quarter to quarter Published January, April, July, October. Analytical summary of service changes & fleet changes by trade. The list of services added, withdrawn or restructured. 32

33 Ad Hoc Reports BlueWater Reporting analysts produces up to 20 ad hoc reports a year underlying different aspect of global liner shipping to supplement the regular capacity, trade route and carrier market reports released during the year. These reports often included Excel Pivot tables to allow users to extend the analysis available in the reports. 33

34 Vessel Capacity Skipped Week To Week

35 35 Transpacific All-Water Shift to Suez

36 Transpacific Capacity Management Index 120.0% 115.0% 110.0% 105.0% 100.0% 95.0% 90.0% 36

37 BlueWater Reporting Helps Mitigate Uncertainty 1 Provide visibility to skipped sailings 2 Visibility to how carriers are managing capacity 3 Tools to analyze and understand transit times 4 Provide marketplace analysis 5 Large database of sailing schedules 37 powered by CHAINalytics

38 Agenda Freight Market Intelligence Consortium Uncovering Value in Benchmark Data Taking Action with Analytical Tools BlueWater Reporting Setting the Negotiation Table Summary + Q&A 38 powered by CHAINalytics

39 Set the Table: Pricing Standardization Pricing Fields Origin Door Charges Pricing Key Terms Origin Door Origin Door Origin Port Origin Port Origin Port Destination Door Destination Port Destination Door Destination Port Destination Rail Origin Drayage Pre-Carriage (incl. Fuel) x x x Origin Rail Charge x x x Origin Bill of Lading Fee/Document Fee x x x x x x Export handling x x x AMS Fee x x Paid collect Paid collect Paid collect x Other Origin Door/Port Charges x x x x x x Origin THC Origin THC x x Quote Only Quote Only Quote Only Quote Only Port-Port Charges Base Ocean Freight x x x x x BAF Separate Line Item Separate Line Item Separate Line Item Separate Line Item Separate Line Item CAF (currency adjustment) x x x x x ISPS (security) x x x x x Congestion x x x x x Canal Charge x x x x x Alameda Corridor Charge x x x x x Chassis usage charge x x x x x Aden Gulf surcharge x x x x x Other Security Charges x x x x x Other Port-Port Charges x x x x x Destination THC Destination THC x Quote Only x Quote Only x Destination Rail Charge x x x On-Carriage (incl. Fuel) x x Destination Bill of Lading Fee x x x x x Destination Door Charges Import handling Other Destination Door/Port Charges x x x x x Exclude Export Customs Clearance or Import Customs Clearance in the rates provided. War risk will be a pass through Limit the number of pricing columns/buckets Establish a key so all bids carrier add the same fees 39 powered by CHAINalytics

40 Set the Table: Fuel, Freetime, Contract Contract Shipper contracts are especially important for liabilities - decide whether the contract supersedes the carrier s rules tariff Freetime Establish minimum threshold for detention and demurrage on each lane Fuel Surcharge (Bunker Adjustment) Carrier tables have a great deal of variance - Create a shipper-owned fuel table Set Bunker amount based on regional trade lanes Pick an index at which to measure the change Ex. Bunker World 380 CST, TSA Determine an adjustment threshold on the index that triggers a BAF update Calculate a conversion for the index % change to actual $$$ - Design an equipment conversion Optional $$ per TEU adjustment is based on length of haul < 10 days transit only gets 50% of the bunker adjustment 40 powered by CHAINalytics

41 Going to Market: Request For Pricing Carrier Profiles Understand the alliances and subsequent carriers on your trade lanes Request for Pricing Fields Determine macro regions for grouping G6 Partner # of sailings Transshipment port(s) GRAND ALLIANCE Hapag Lloyd, OOCL, NYK NEW WORLD ALLIANCE APL, Hyundai, MOL Sailing information (i.e. cut, sailing day) Transit time Request UN port location to benchmark Standard deviation on Port-to-Port transit time Establish Detention and Demurrage time P3 Network MAERSK LINE Green MSC CMA-CGM Who is responsible for invoice payment? Are chassis included? CKYH Cosco, Hanjin, K Line, YangMing EVERGREEN LINE 41 powered by CHAINalytics

42 Managing Cost: Getting to the Results Optimization Tools Validate different strategies (e.g., carrier type, regional lane awards) Import and Export balance by facility Understanding the Impacts Outside of Price Can carrier handle all lane capacity? Does carrier meet equipment requirements? Are there Transshipments? Transit time differences Standard deviation on transit times Standard deviation on Port-to-Port transit time Acceptable range is +/- 3 days 20%+ of all lanes fall outside of the deviation 77 % Carrier On-time Reliability 42 powered by CHAINalytics

43 Key Takeaways for Optimizing Ocean Procurement 1 Standardize before going to market 2 Quantify more than cost 3 Understand the market dynamics 43 powered by CHAINalytics

44 Agenda Freight Market Intelligence Consortium Uncovering Value in Benchmark Data Taking Action with Analytical Tools BlueWater Reporting Setting the Negotiation Table Summary + Q&A 44 powered by CHAINalytics

45 Sailing the Seas of Change Requires: 1 Aggregating market results by carrier and geography 2 Balancing costs against subjective aspects and service 3 Using latest visualization tools for analytical efficiency 4 Ensuring benchmarking insights support communication 5 Keeping abreast of changing market dynamics 45 powered by CHAINalytics

46 Thank you for attending A Buyer s Guide to Ocean Sailing the Seas of Change Matthew Harding Principal, FMIC Office: +1 (603) mharding@chainalytics.com Kevin Zweier VP, Transportation Office: +1 (678) kzweier@chainalytics.com Stay connected! Join the Supply Chain Intelligence Network thesupplychaingang 46 powered by CHAINalytics