fbpx
DB Schenker - Now That's Logistics
  • English
    • Español
  • Insights
  • Shipping & Logistics
  • Digitalization
  • Trade
  • Industries
    • Aerospace & Defense
    • Automotive
    • Beverages
    • Chemical
    • Consumer
    • Electronics
    • Fashion & Retail
    • Healthcare & Pharma
    • Industrial
    • Marine Parts
    • Oil & Gas
    • Semi Conductor & Solar
No Result
View All Result
  • Insights
  • Shipping & Logistics
  • Digitalization
  • Trade
  • Industries
    • Aerospace & Defense
    • Automotive
    • Beverages
    • Chemical
    • Consumer
    • Electronics
    • Fashion & Retail
    • Healthcare & Pharma
    • Industrial
    • Marine Parts
    • Oil & Gas
    • Semi Conductor & Solar
No Result
View All Result
DB Schenker - Now That's Logistics
No Result
View All Result
Home Insights

Location, Location, Location

July 30, 2018
How Port Selection is Becoming Critical to Supply Chain Strategy
Share on FacebookShare on Twitter

This post is also available in: Spanish

How Port Selection is Becoming Increasingly Critical to Supply Chain Strategy

Building an efficient supply chain involves a bewildering number of factors. And now with today’s “mega ships” creating their own economies of scale — one that encourages larger shipments to fewer ports — the port(s) you choose to ship your goods to is now more critical than ever. Port selection can play a major role in both how long it takes to get your products to market, and how much it costs.

For major national retailers, port selection has always been a factor. Walmart for example—the world’s largest company by revenue (approx. US$486 billion according to the 2017 Fortune Global 500 list)—is building a $135 million import Distribution Center (DC) in Mobile, Alabama. Why there? The Port of Mobile: a strategically located Gulf Coast port that, thanks to the newly expanded Panama Canal, is helping facilitate greater container shipment volume from Asia. The anticipated demand created by Walmart’s new DC is so great that the port is fast-tracking a $50 million terminal expansion. Mobile’s full-container import volume of 100,309 TEU and 108,433 TEU in exports accounted for a 22.4% year-over-year jump in imports and a 12% rise in exports. Overall traffic climbed 16.8%. For Walmart, the new large DC marks its sixth in the U.S., following centers in Houston, Savannah, Los Angeles-Long Beach, Virginia, and Chicago.

Port of Mobile, Alabama
Port of Mobile, Alabama

“Four Corners” Strategy

While a firm with limited scale might utilize a single import distribution center, Walmart’s focus on multiple strategically located DCs is sometimes referred to as a “four corners” strategy. This draws on the services of four or more import centers, covering both West and East coasts. By expanding the use of cheap ocean transport, this strategy dramatically reduces a firm’s transportation costs (as compared to using a single import center). It’s no wonder that other major retails such as Target, K-Mart, and Home Depot have adopted similar strategies, carefully taking into consideration the location of their DCs and the ports that serve them.

Why port selection is now more important than ever

The importance of port selection in today’s massive product-movement environment can’t be understated. The new mega-ships mentioned at the outset, for example, can cause mega congestion.Automation was supposedto mitigate this. While many automated container terminals do now routinely handle exchanges in excess of 10,000 TEUs at a single port of call, these efficiencies can easily be lost as inland-bound cargo moves from the quay to the intermodal connections.

The Port of Los Angeles-Long Beach, for example — the biggest port in the US — has already experienced a number of these issues. A “maxed out” rail system, the threat of labor disruptions, and traffic mitigation fee hikes have left many clients wondering if it’s such a good idea to “put all their eggs in one basket” and rely so heavily on a single port.

Port of Los Angeles/Long Beach
Port of Los Angeles/Long Beach. Photo: trekandshoot/Shutterstock.com

On the other hand, these same mega ships (again, along with the newly expanded Panama Canal) are starting to make lesser-used ports more attractive, particularly on the East and Gulf Coasts (such as the Port of Mobile). Global competition is forcing changes in how ports and other firms along the international logistics chain conduct business. It’s also becoming easier to account for port selection in the supply chain equation thanks to system innovations along with new technology.

In other words, if you’re favoring a single port due to yesterday’s logistics, or simply out of habit, it’s time to reevaluate the math.

Trucking is Changing, Land Transportation Costs Are Rising

A key factor in the port selection equation is land transportation costs. U.S. shippers are facing unprecedented truck intermodal cost hikes. Rapid economic growth has resulted in bottlenecked supply chains, with a corresponding rise in supply-chain costs, and across-the-board increases in transport rates. These trends are expected to continue into 2019.

The Electronic Logging Device (ELD) mandate is also changing trucking by increasing transit times, further increasing costs. It’s effectively creating a kind of “donut hole” for 450-700 mile distances, causing firms to redraw their trucking service maps. Before ELD, single truck drivers would routinely make 450+ mile trips, being able to unload and return in a single day. With ELD, a trip that distance is pretty much impossible to do in a single day for a single driver. Thus, smaller trucking firms are eschewing such trips for either short- or long-haul freight, leaving intermediate length trips to larger fleets with multiple drivers — who can still turn a profit. ELD limitations are no doubt forcing many shippers to take a more holistic view of land shipping distances and how they use logistics in general.

Perishables, Just-in-Time Products Need Faster Turnarounds 

Another port selection variable is how quickly you need to get your products to market. Some products (like perishables) require quicker turnarounds, and mega ships just don’t fit the bill. SeaLand (part of the Maersk Group) is an example of an intra-Americas regional carrier that’s using smaller vessels to offer a new Gulf-Central America cold cargo-ready service. It’s targeting the growing demand in the U.S. for fresh fruit from Latin America. Services like this are designed to meet strict schedule commitments, even accounting for fog and other delays.  Of course, just-in-time shipping isn’t limited to just perishables; whenever you require a faster ocean turnaround, consider the port.   

How Can Shippers Choose the Best Port?

Clearly, modern supply chain logistics can be tricky! Unless you’re Walmart, choosing a carrier yourself can be problematic, especially since your carrier of choice might not efficiently service the port that might work best for your supply chain. The solution? Third Party Logistics (3PL). A good 3PL provider can route your cargo to the best port, on the best carrier, in the most efficient way possible. A provider like DB Schenker will take into account a matrix of interlocking ocean, land and air variables. Established 3PL providers also work with networks of strategically located, modern distribution centers that can provide Walmart-type advantages, such as fully exploiting pre-negotiated rates.

Even big shippers — those with enough volume to negotiate with a single carrier — can further reduce costs and gain additional benefits by taking advantage a BCO & Global NVO Strategic Alliance. This allows them to use multiple carriers while maintaining the lowest rates possible.

So while larger ships and upgraded ports have created new opportunities on one side of the equation, on the other side are land transportation networks that have struggled to keep up with increased volumes and new regulations. Even small changes along today’s increasingly complex supply chains can cause unexpected ripples that impact a shipper’s bottom line. However, an experienced 3PL provider can help you implement a flexible supply chain strategy that optimizes port selection, as well as contract logistics and a host of other factors, saving you time, money and worry.

Tags: OceanPorts
Next Post
5 Ways to Digitize Your Supply Chain

5 Ways to Digitize Your Supply Chain

RECOMMENDED

Top 15 Ports in The Americas

Top 15 Ports in The Americas

March 16, 2018
Top 15 Ports in the Americas 2019

Top 15 Ports in the Americas 2019

June 24, 2019
The Top Air Cargo Airports in the US

The Top 10 Freight Airports in the US

March 12, 2019
3 Things You Need to Know about Importing Chocolate

Three Things You Need to Know about Importing Chocolate

February 2, 2017

TRENDING

Global Trade Trends for 2023

Global Trade Trends for 2023

January 26, 2023
5 Airfreight Trends to Keep On Your Radar Screen in 2023

5 Airfreight Trends to Keep On Your Radar Screen in 2023

December 27, 2022
The Port of Vancouver — What Drives Canada’s Busiest Gateway

The Port of Vancouver — What Drives Canada’s Busiest Gateway

December 13, 2018
The Top 10 Freight Airports in Latin America

The Top 10 Freight Airports in Latin America

October 21, 2019

Thought Leadership Updates with Brian Petrie

March 28, 2023
DB Schenker

DB Schenker is the world's leading global logistics provider, delivering over 150 years of premium performance and transportation solutions. One call gets our customers on the fast track to nearly 2,000 locations in all of the world's most important economic regions.

Contact Us

United States
+1 (800) 225-5229 (in USA)
+1 (602) 458-6200 (outside USA)
www.dbschenker.com/usa
Canada
+1 905 676 0676
www.dbschenker.com/ca

Categories

Visit Us

• DB Schenker Americas
• DB Schenker Canada
• DB Schenker Careers
• DB Schenker USA
• Trade Advisory Solutions

Follow Us

• LinkedIn
• Twitter USA
• Twitter Canada
• Facebook

© 2022 Schenker Americas, Inc. | Privacy Policy

No Result
View All Result
  • Insights
  • Shipping & Logistics
  • Digitalization
  • Trade
  • Industries
    • Aerospace & Defense
    • Automotive
    • Beverages
    • Chemical
    • Consumer
    • Electronics
    • Fashion & Retail
    • Healthcare & Pharma
    • Industrial
    • Marine Parts
    • Oil & Gas
    • Semi Conductor & Solar
  • pt-br Português
  • fr Français
  • es Español
  • en English

© 2022 Schenker Americas, Inc. | Privacy Policy

We use cookies in order to optimize our website and continually improve it. By continuing to use this site, you are agreeing to our use of cookies. You can find further information on cookies in our privacy policy. Accept
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT