How Terminal Communities Can Accelerate Cargo Flow at Destination
Today, Global Trade is plagued by congestion from origin to destination with no exceptions. This applies to both Ocean and Air Freight. Air Freight is no longer the “release value” in the way that it has traditionally been used, by providing relief in the Ocean Freight sector. Neither can we count on capital investment; new vessels, additional terminal capacity, additional rail capacity, more truckers, more chassis, and larger warehouses are all long-term capital investments that are 18 to 36 months away at best, so we cannot count capital investment to ease the congestion.
The solution is found by improving the processes. We, as an industry, need to find efficiency in our processes so that we can get more throughput from the capital resources that we currently have and rise to the level to meet the demand for transport that the current market has created. That is good news on two counts; volumes are predicted to stay this high for the foreseeable future so there will be profits and, secondly, the solutions are up to us, so the solutions are within our control.
Jon Monroe, of Jon Monroe Consulting, is a veteran leader in the international logistics market. He makes a very astute point in his newsletter on August 25th. Jon separates the “Asset Chain” from the “Supply Chain”. He defines the Asset Chain as “vessels and containers, terminals, railroads, chassis, and first and last mile trucking. Then he states that “These companies are not working well together.”.
Then Jon goes on to define the Supply Chain as the “coordination of the Asset Chain”. The NVOCCs / Forwarders and Customs House Brokers manage the Supply Chain through the coordination of the Asset Providers. This is certainly more true at various stages of the shipment process than at others. The NVOCC / Forwarders and Customs House Brokers are the critical coordinating resource at the beginning and end of the shipment process. These are the critical points in the shipment process where the independent Asset Providers need the most coordination. These Asset Providers range from large railroads to very small owner operators.
Let’s look at the Destination Last Mile process in closer detail. A single operations person needs to coordinate between the railroad or ocean terminal, a trucker, US Customs, the Customs Broker (if they are not the broker), and the receiving warehouse. This process is inefficient with phone calls going back and forth to establish availability and timing of the delivery. This old school, manual process is fine when volumes are much lower and there are ample slots available from all of the Asset Owners, but it becomes a bottleneck when volumes are already overwhelming.
This is where collaboration through technology can be deployed to create a more efficient process. First, the Supply Chain operator’s role needs to be reduced to assignment of roles and responsibilities and then to monitor the overall process. This establishes visibility and assigns authority to each of the vendors / parties to coordinate dates and times for the pickup, delivery, unloading, and empty return. Now, the back-and-forth coordination is directly between the Asset Providers including the importer’s warehouse and no longer a game of “He Said / She Said”.
Terminal Communities are another facet of a Multi-Tenant Transportation Platform. This puts their implementation within the user community’s control rather than everyone having to wait for some other part to implement the community. Terminal Communities can be small and do not need to be universally adopted by the entire terminal district. All that needs to happen is for a group of supply chain and asset chain providers to agree to work together on a single platform to coordinate the last mile delivery. This could be instigated by a large importer, NVOCC, or Customs Broker.
Inland rail terminals and depots are a group of disparate places where freight visibility and coordination are deficient. While the rail terminal congestion in Chicago is a recent example, there are many other points which are also critical to cargo movement, Minneapolis, Kansas City, Dallas and Memphis come to mind. There is no overriding authority to create or implement a community in these areas.
We are now a year into a crisis in global transportation with another year or more forecasted by most experts and transportation executives. It is in times like these when things are not going as we would like them to that we are best able to address changes in the way we do things. This crisis will not get better on its own, but that does not mean that we cannot do anything about it or that we need to wait until others address and fix the situation for us. This is exactly the right time to look at new technologies to help change the way things are done and to work in small increments as a community to make things better.
There will be continued high demand for vessel space but there is no reason that we also must accept without question uncontrolled congestion at destination. We can make changes that will make things better by accelerating the flow of information and the goods that information controls.