Here We Go Again, Or Do We?

Transcription

1 Here We Go Again, Or Do We? A BCO Perspective on Carrier Shipper Relationships Alan Mctaggart, Group Logistics Director

2 Today s Presentation Outline of Techtronic Industries Business (TTI) Techtronic Ocean Freight Programme Conclusions on the Shared Experience 2

3 Techtronic Industries Co. Ltd. POWER EQUIPMENT FLOOR CARE & APPLIANCES A world-class leader in design, manufacturing and marketing of Power Tools, Outdoor Power Equipment, and Floor Care and Appliances for consumers, professional and industrial users. 3

4 Expansion 1986 Revenue US$3M 2011 Revenue US$3.7B 2007 Acquisition SALES (US$m) 3, Acquisition 2003 Acquisition 2, Acquisition Acquisition 2002 Acquisition 1,000 Founded TTI Listed on HKSE

5 Diverse Global Customer Base Mass Merchants / Home Centers Industrial Distributors / Independent Hardware Stores 5

6 Global Presence UNITED STATES Milwaukee Professional Tools Sales & Marketing Research & Development Manufacturing Consumer and Trade Tools Sales & Marketing Research & Development Outdoor Products Sales & Marketing Research & Development Manufacturing Floor Care and Appliances Sales & Marketing Research & Development Manufacturing CANADA Power Equipment, Floor Care and Appliances MEXICO Floor Care and Appliances Manufacturing LATIN AMERICA Power Equipment, Floor Care and Appliances EUROPE Power Equipment, Floor Care and Appliances MIDDLE EAST, AFRICA, INDIAN SUBCONTINENT Power Equipment, Floor Care and Appliances AUSTRALASIA Power Equipment, Floor Care and Appliances ASIA TTI WORLD WIDE HEADQUARTERS Power Equipment, Floor Care and Appliances 6

7 Global Sales and Ocean Freight Volume Sales by Region Sales by Segment North America 72% By Value 15,000 FEUS 60% By Volume Power Equipment 73% By Value 13,000 FEUS 52% By Volume Europe 21% By Value 6,000 FEUS 24% By Volume Rest of the World 7% By Value 4,000 FEUS 16% By Volume Floor Care & Appliances 27% By Value 12,000 FEUS 48% By Volume Ocean Freight Volume 25,000 FEUS Per Year 7

8 Critical Success Factors Innovated Faster than our Competitors Cut costs Faster than our Competitors Improved Quality Faster than our Competitors Partnered with the MOST Demanding and Fastest Growing Customers 8

9 TTI Ocean Logistics Rationalization & Outcome/Experience

10 USA T.P. Ocean Freight Summary Situation OLD - As Was (Late 2006) Consignees Forwarders Shipping Origin Booking Lines Parties Supplier (PRC) A B A A B Power Tool & Outdoor Equipment C D E B C D E F C E E F G H F G D E I J K Outside Suppliers Floor Care & Appliances H I A G H I J K L M N 10

11 USA T.P. Ocean Freight Summary Situation NEW - As Is (Mid 2007) Consignees Customs Broker 1 Origin Booking Parties Shipping Lines 4 1 Supplier (PRC) Power Tool & Outdoor Equipment Floor Care & Appliances C U S T O M S B R O K E R S A B C D A Outside Suppliers 11

12 TTI Group Ocean Freight Project Vital Few Objectives Cost reduction Access to Economies of Scale Process Improvements Service Level Improvements Consolidate Information System Supplier Management 12

13 TTI Ocean Freight Offer and Expectations TTI OFFERS Regular, Year Long, High Volume Support and Contract Fulfilled MQC Commitment Reasonable Volume Forecast +/-10% (Port Pairs) Immediate Uncomplicated Centralized Decision Making and Communication No Low Season Shopping Opportunity for Long Term Relationship TTI EXPECTATIONS Lower Stable Rates No PSS/GRI Yearly Rates Stable Space Provision Reliable and Predictable Schedules Transparency Measurable Performance (KPIs) Worthwhile High Level Relationship Stable Supply Chain 13

14 The 6 Year Experience +19% Before Currency

15 Logistics Confessions 2007 No Fuel Concession 2009 & 2011 Renegotiated Europe Contract 2008/2009 Christmas and Spring Shopping USA 15

16 TTI Summary of Contracted Carriers Rank Carrier Rank Carrier Rank Carrier Rank Carrier Rank Carrier Rank Carrier 1 A 1 G 1 A 1 J 1 A 1 G 2 B 2 E 2 H 2 D 2 G 2 A 3 C 3 F 3 B 3 A 3 F 3 B 4 D 4 C 4 E 4 B 4 J 4 I 5 D 5 G 5 C 5 B 5 J 6 B 6 D 6 H 6 H 7 A 7 I 7 K 7 M 8 L Ranking trend & Behavior: OPPORTUNITY GREED FEAR COURAGE / STABILITY / STRATEGY 16

17 Prevalent Patterns of Erratic Carrier Behaviour Lack of Self Confidence Lack of Reality Understated Value of Customers & Relationships Confused Strategy/If At All Have you heard? Follow my leader? 5 or 6 GRIs to Europe USD2500 B/E to West Coast!! Not a large impact on the sales price!! BAF destroyed goodwill (TTI Experience) FOB, CIF, NVOs, BCO s; Small, Medium, Large Long Term/Short Term Q3/ Bad NVOs Q3/ Bad BCO s 17

18 Reality and Changes Now and Future Dropping Global Demand Less Peaks and Troughs (Surges) Over Supply of Capacity 13500T./Vessels Ecommerce Capital Supply Squeeze Increasing Industry Price Volatility Complete Transparency 18

19 Visible Improvements Pricing Discipline and Stability Strength of USA Market Clever Disposition of Vessels Recognition of Long Term Relationships 19

20 Suggestions for Moving Forward Index Linked Contracts with BCO s Be Realistic; Resist Science Fiction Have a Strategy and Recognize It Value Long Term Customer Relationship Be Courageous 20

21 The Last Word People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. - Adam Smith, The Wealth of Nations 21

22 THANK YOU