Logistics: The industry as it is

By Cheranka Mendis

Having being born in to the transport and logistics industry, as he puts it, Scott Case has seen the evolution of the dynamics in logistics and seen its role progress in an ever changing world to facilitate global trade growth.

Founder and Chief Storyteller at Position: Global, Case cut his professional teeth at The Camelot Company, founded by his father, soon after graduating from Northwestern University and counts over 20 years experience in the field.

Sharing his thoughts at the inauguration of the CILT International Conference 2013 yesterday under the theme ‘Future of logistics and transport from a global perspective’, Case praised the advancement of the sector and the future of an industry that has been indicated as a fast expanding supply chain industry by the CBSL Report last year – a though echoed world over.

The here and now

Currently, the industry is faced with steamship lines and utilisation challenges, he said. “From here certainly, we want to look towards northern Europe and we see what’s going West and what little bit is coming back East and it is really not a surprise that going to USA, the utilisation is going East and certainly not coming back West.”

Ships are getting larger and the average size of the vessels will change dramatically this summer with the launch of the Triple E, the largest ship in the world, handled by Maersk. Airlines can also see opportunities to grow, especially in the Asia Pacific region as forecasted for the year.

Case noted that the supply and demand that carriers face will be under pressure as larger vessels cascade in while the amount of tonnage and TEUs available is not keeping pace with the growing global demand. “They are going to have to make tough decisions about economics,” he observed. “Do they continue to keep the capacity where it is at and keep rates at a depressed level, or do they take a look at reducing capacity and bringing the rates back up to survive and grow sustainably?”

The non-asset providers are also forcing those in the logistics industry to make choices. The supply chain from beginning to end relies on asset owners and their health. Unfortunately, when they cannot manage their business properly, logisticians are weighed down with the extra responsibility to keep things afloat. “It is our responsibility to provide solutions in the wake of such conditions. Customers rely on us to make more intelligent decisions.”

What is under our control?

There are lot of other things we cannot control, Case acknowledged. Even for their customers, they cannot control the availability of raw materials, climate change, strikes/civil commotions and global oil prices which impacts every decision they make. Capacity changes and slow streaming are also on the list of ‘cannot-be-controlled’ box. “Our customers may have built a supply chain assuming a certain number of days in transit and then all of a sudden, days are added on and they have to make inventory choices and change promises to their customers, hopefully without a negative impact or implication.”

What is beyond their reach to exercise power over are the business decisions made to mitigate those risks – for example, he noted that Singapore Airlines got through the fuel crisis several years ago by hedging, while Southwest Airline did the same in the USA. “We can also take steps towards reducing our carbon footprint.” In the wake of interruptions caused by natural disasters or labour/civil unrest, they can also make use of the opportunity to think about multimodal transport to redirect cargo.

Knowledge is power

“As logisticians, we know the carriers, transit times and the routes. We know airline schedules, timetables, cut-offs. These are things we just collect, aggregate and learn from. It demonstrates our ability to conduct this through reputation, knowledge and by staying involved,” Case said.

We know customs regulations as well, he added. “I can tell you as a customs broker than understanding what customs is thinking is like pretending you know what your significant other is thinking all the time; it just doesn’t work that way. Customs regulations are something we all know and respect but our importers and exporters don’t understand it because they don’t work with them on a daily basis.”

To top it all off, things aren’t as automated as you would like it to be. Sure, you can book seats online but this does not take out the fact that vagaries do happen, such as late sailings, cancelled aircrafts or extensive questioning at customs offices. “However, because it is not automated, we as professionals are able to come to the fore and take advantage of our strength and knowledge.”

As an industry, logisticians are also faced with the task of dealing with trade protection, which is a hot topic today. He noted that product safety is key and that government agencies are likely to pay more attention to ensure product safety. Customs authorities are also going to be increasingly mindful of intellectual property rights of products, Case said.

Antidumping and counter-bailing duties are also a given for the industry, he asserted. “Trade is good and great for business. But trade is best when it is made fair. The WTO and individual countries are certainly paying attention to antidumping, counter-bailing and market related issues.”

Data, data, data

There is a need to build a database of information, he emphasised. Case noted that security programs are in operation in countries, starting from the US and have picked up stream in Europe, Canada and Jordan. “We are continuing to add value – securing value in the supply chain and taking evolutionary steps to protect assets, doing background checks on people and running our businesses properly. From there it rolls out. These are things we can do as an industry so that they won’t just look at us as a simple transaction provider.” A database is vital in this regard.

“In the future, it’s going to be all about data.” There is value in all the data collected as customary to the business. However, the question is what they can do to analyse it and bring value to it. Can we do projections, modelling for people based on it, check the shipping patterns and talk about trends and volumes?

“These are things we capture as part of our standard reporting for documentation, transport, customs etc. Can we find ways that save money for customers that make money for us?” Case noted that the Kyoto Protocol in 2020 is likely to demand companies to reduce carbon consumption. On the other hand, brands are feeling the pressure globally to reduce their carbon footprint which they do through packaging chains, composition chains and recycling materials in the supply chain.  He observed that it will require multimodal solutions to be able to offer those kinds of solutions and innovations. Such solutions if analysed, presented and delivered to customers, will add value in the future.

Potential for Sri Lanka

“Think of the potential Colombo has for institutions like Sierra where cargos are collected from North Asia and brought here and then jump off to Europe or to the Americas,” he pondered. “These are the places where innovation kicks in. These are the places where you lay the groundwork for local companies, global partners and for your mutual customers who are looking to provide solutions for customers.”

This is where the value and analysis comes in, where logisticians and those in the transport sector can utilise the industry experience and own knowledge to build cutting edge technology in conjunction with asset providers to be able to continue to offer attractive deals.

Utilising social media

A company’s web presence must be globally professional, Case said, while social media will give an opportunity to show off the company, its projects, people, visits to see your agents etc. “That credibility works. This is the best way to make an impression to the people who could be your future customers,” he asserted. “You sell your brand awareness on the internet to build your identity.”

Believing that there is strength in numbers, he professed that partners are a company’s key assets which should be highlighted. Promoting both partners together will also improve visibility.

For a better tomorrow

Technology should be such that a customer should be able to see the entire process at one port without having to run around. “Avoid duplication of data at all cost. Have mobile-ready solutions accessible anywhere. Work with them from design delivery itself,” he advised. Those in the logistics and transport industry need to consult, advice, manage, solve problems and help customers save money as well. Focus on the quality of services – create processes internally, form instructions and flow charts to get the same expected result. “The reason fast food companies are propagated around the world is because when you walk in, you know what you’re in for. We need to provide the same for our customers.” It is all about the continuity of services and the brand.

Those in the industry must also have the ability to track everything in a central location whether it’s the customer service people, warehouse, sales teams or management – “Put all of it in the same place. This would help you better understand why things went wrong or how things went right.” Set up KPIs and milestones, measure it and report publicly, he said, which could work as a referral point that allows customers to compare one company with another. “It is the honesty and transparency that everybody needs. Supply chain is about transparency. It is important to give people the opportunity to understand how we are doing and what.”

Pix by Upul Abayasekara