Image: www.directindustry.com - CHEP International This final blog post in the series includes observations that may help to clarify our views on the employ of Unit Loads & Hubs. For those interested in the earlier posts, they appear on our blog starting with the early September title “That Nexus Between Inventory, Transport, Markets”.
We are big fans of both consolidating into unit loads, and the employ of hubs. Hence, our gripe with hubs relates to incorrect assignments, rather than the employ of the concept itself. The bigger-the-hub and hinterland, however, the less convinced we become of the relative merits of its existential case.
On the other hand, in terms of large-scale merchandise trades, there remains nothing cleaner than having a full ocean container of product move from the source’s dock to a regional fulfilment centre. This is especially so in terms of single SKU shipments direct from producer vendors. However, recent market indicators suggest that these same-styled regional fulfillment centres have been ineffective during peak consumer demand periods. Further, the increases in stock-holdings and/or the express distribution cost outlays required for such centralised DC’s to meet fast changing consumer demand, may not be within feasible bounds.
Leaving that aside for a moment, another factor supporting the full container load’s relative efficiency is that large-scale vendors across the world are often found to have inadequate consolidation areas in their warehouses. Those with many docks, however, often perform the consolidation in the container or trailer itself.
Where the vendor is a large-scale screwdriver plant, the minimum order quantity for a SKU is also often that corresponding to a full container. That situation should not preclude, however, the prospects for taking a limited number of single SKU containers destined to a country level DC, and then splitting them at origin into sub regional destined full containers with a mix of SKUs, if the economics and velocity-to-market equation works. It is from this broader view of accessing unit loads that we can then start to discuss the optimal means of handling them.
We are big fans of both consolidating into unit loads, and the employ of hubs. Hence, our gripe with hubs relates to incorrect assignments, rather than the employ of the concept itself. The bigger-the-hub and hinterland, however, the less convinced we become of the relative merits of its existential case.
On the other hand, in terms of large-scale merchandise trades, there remains nothing cleaner than having a full ocean container of product move from the source’s dock to a regional fulfilment centre. This is especially so in terms of single SKU shipments direct from producer vendors. However, recent market indicators suggest that these same-styled regional fulfillment centres have been ineffective during peak consumer demand periods. Further, the increases in stock-holdings and/or the express distribution cost outlays required for such centralised DC’s to meet fast changing consumer demand, may not be within feasible bounds.
Leaving that aside for a moment, another factor supporting the full container load’s relative efficiency is that large-scale vendors across the world are often found to have inadequate consolidation areas in their warehouses. Those with many docks, however, often perform the consolidation in the container or trailer itself.
Where the vendor is a large-scale screwdriver plant, the minimum order quantity for a SKU is also often that corresponding to a full container. That situation should not preclude, however, the prospects for taking a limited number of single SKU containers destined to a country level DC, and then splitting them at origin into sub regional destined full containers with a mix of SKUs, if the economics and velocity-to-market equation works. It is from this broader view of accessing unit loads that we can then start to discuss the optimal means of handling them.
Image: www.ekol.com For background, I have had the privilege of working with some of the best gateway cargo & carrier liaison managers in the business over time. Our goal in freight forwarding was always to build our own consolidated FAK (Freight-All-Kind) shipping containers and air cargo pallets in our facilities across the world. These unit loads are built for both individual shippers and multiple ones; and moreover, for a single consignee or many consignees.
If they get it right at the gateway, a freight forwarder can achieve better control and visibility over unit loaded shipments than those asset-owing carriers that seek to provide services to customers directly. At root, the reason for this is that by concentrating purely on the unit load, and seeking the right solution to move it among the carrier cohort, means that forwarders are better focused, and less compromised, than the carrier and terminal employees that necessarily serve wider interests. Procedures for loading containers & aircraft pallets can also often be more easily adapted to specific shipper needs when separated from the loading activity cycle performed by a carrier itself.
In respect of unit loads themselves, the build quality is a significant point of difference between freight companies, be they forwarders or asset-owning carriers. Time cycle compression in carrier terminals often works against them in this respect, so offsite builds usually have a flexibility advantage. Each transport mode has its own unique optimum build or stuffing formula, but building an air freight aircraft pallet is a fine example, so we will be using it here today.
As they say in Formula 1 car racing, the point of performance difference usually comes down to the fine details. Among the tricks to get at this top level of performance in air freight gateway operations, is that in the first instance, we try to avoid structural aircraft Unit Load Devices (ULDs) for reasons of cargo security & loading/unloading accessibility. With structural units, it is usually harder to detect small holes that lead to water ingress; it is harder to recognise when pillage has occurred; and it is easier to damage freight when loading and unloading.
When our air freight gateway managers’ people loaded and secured near-perfect aircraft pallets, their out-turn quality instilled a certain status at the terminals of the airlines we employed. Beyond the development cycle for implementing the initial standard, it was always the praise of the craft and workmanship of the individuals involved by their managers that maintained it. Alongside this, the junior motivational partner was the practice of visual recording and sharing any load quality non-conformance incidents between origin and destination.
If a freight forwarder’s gateway airport delivery vehicle turned up with the same quality standard for their loaded aircraft pallet product time-and-again at a terminal, those same pallets became less prone to be targeted for theft over time. Any interference to our unit load would both be more noticeable, and noticed, by those we dealt with. In respect of water damage security, we always had in mind the negative effects of nicks and cuts on plastic sheeting, the need to deeply overlay wraps, and when to use treated pine to create a false base in order to avoid water puddling from ingress. We understood how torque was both required for load restraint, and yet at the same time could also damage cartons unless we took effective counter-measures. Moreover, when using disposable materials, the cost or time difference in respect of accessing good quality always paid off in comparison to accepting any lower standard.
Be it a shipping container, an aircraft pallet, or a trailer, despite any level of effort, the process of building or unloading the unit was the riskiest time. If we built a unit, we also tried to plan for that unit to transit undisturbed from the build location to the nearest intermodal hub possible for our customer’s cargo.
In past decades, boondoggles and liquidity have made for strange logistical infrastructure investment in super-hubs and the carriers that serve them. This in turn has seen unit loads not progressing as far into the transport cycle as they should. However, while these super-hubs remain primary meccano set pieces, we cannot always ignore them. When forced to employ carriers that transit through these mega-hubs, we can usually make choices that will see us navigate through them with intact unit loads. Even so, the times suit us and the rise of possibilities to bypass hubs & primary DCs. Indeed, many of the largest ocean and dedicated air cargo carriers, especially those that have based their operations around such primary hubs, are now observed to be experiencing financial difficulties as a lack of fundamentals comes home-to-roost.
Even as we discuss the international scene, we don't set aside the domestic transportation & logistic opportunities based on the same principle cascading through from pick faces, to trailers, and regional hub bypass opportunities.
There are always fine legal points to be considered before wrapping up a case such as ours. Transport enterprises seeking to be more logistically dynamic and responsive in making unit loads available for distribution deeper in a merchandise supply chain will undertake new processes & control orders. These may have significant legal impacts if not addressed by means of clear supplementary agreements. One such issue was recently brought to our attention by our friend Sam Ignarski at The Maritime Advocate, who in turn referenced Ted Graham’s opinion at Ince & Co:
http://incelaw.com/en/knowledge-bank/publications/bills-of-lading-keys-to-a-floating-warehouse-or-a-cumbersome-outdated-system
From this point we feel we can close this blog series with a summary of our overall theme. We contend that future E-Commerce markets will see traders routing high-turn product around high cost primary hubs in order to directly reach deeper into markets. Those seeking more adaptive or market responsive inventory flows should rely on the better employ of the transport cycle. Consequently emerging trends should see new intermediary systems & processes deployed, those that enable the leaner employ of a diverse array of logistical assets in order to reach consumers. The non-asset owning transport & logistics sector, those less leveraged into primary hub operations, are best placed to bring these solutions to market.
If they get it right at the gateway, a freight forwarder can achieve better control and visibility over unit loaded shipments than those asset-owing carriers that seek to provide services to customers directly. At root, the reason for this is that by concentrating purely on the unit load, and seeking the right solution to move it among the carrier cohort, means that forwarders are better focused, and less compromised, than the carrier and terminal employees that necessarily serve wider interests. Procedures for loading containers & aircraft pallets can also often be more easily adapted to specific shipper needs when separated from the loading activity cycle performed by a carrier itself.
In respect of unit loads themselves, the build quality is a significant point of difference between freight companies, be they forwarders or asset-owning carriers. Time cycle compression in carrier terminals often works against them in this respect, so offsite builds usually have a flexibility advantage. Each transport mode has its own unique optimum build or stuffing formula, but building an air freight aircraft pallet is a fine example, so we will be using it here today.
As they say in Formula 1 car racing, the point of performance difference usually comes down to the fine details. Among the tricks to get at this top level of performance in air freight gateway operations, is that in the first instance, we try to avoid structural aircraft Unit Load Devices (ULDs) for reasons of cargo security & loading/unloading accessibility. With structural units, it is usually harder to detect small holes that lead to water ingress; it is harder to recognise when pillage has occurred; and it is easier to damage freight when loading and unloading.
When our air freight gateway managers’ people loaded and secured near-perfect aircraft pallets, their out-turn quality instilled a certain status at the terminals of the airlines we employed. Beyond the development cycle for implementing the initial standard, it was always the praise of the craft and workmanship of the individuals involved by their managers that maintained it. Alongside this, the junior motivational partner was the practice of visual recording and sharing any load quality non-conformance incidents between origin and destination.
If a freight forwarder’s gateway airport delivery vehicle turned up with the same quality standard for their loaded aircraft pallet product time-and-again at a terminal, those same pallets became less prone to be targeted for theft over time. Any interference to our unit load would both be more noticeable, and noticed, by those we dealt with. In respect of water damage security, we always had in mind the negative effects of nicks and cuts on plastic sheeting, the need to deeply overlay wraps, and when to use treated pine to create a false base in order to avoid water puddling from ingress. We understood how torque was both required for load restraint, and yet at the same time could also damage cartons unless we took effective counter-measures. Moreover, when using disposable materials, the cost or time difference in respect of accessing good quality always paid off in comparison to accepting any lower standard.
Be it a shipping container, an aircraft pallet, or a trailer, despite any level of effort, the process of building or unloading the unit was the riskiest time. If we built a unit, we also tried to plan for that unit to transit undisturbed from the build location to the nearest intermodal hub possible for our customer’s cargo.
In past decades, boondoggles and liquidity have made for strange logistical infrastructure investment in super-hubs and the carriers that serve them. This in turn has seen unit loads not progressing as far into the transport cycle as they should. However, while these super-hubs remain primary meccano set pieces, we cannot always ignore them. When forced to employ carriers that transit through these mega-hubs, we can usually make choices that will see us navigate through them with intact unit loads. Even so, the times suit us and the rise of possibilities to bypass hubs & primary DCs. Indeed, many of the largest ocean and dedicated air cargo carriers, especially those that have based their operations around such primary hubs, are now observed to be experiencing financial difficulties as a lack of fundamentals comes home-to-roost.
Even as we discuss the international scene, we don't set aside the domestic transportation & logistic opportunities based on the same principle cascading through from pick faces, to trailers, and regional hub bypass opportunities.
There are always fine legal points to be considered before wrapping up a case such as ours. Transport enterprises seeking to be more logistically dynamic and responsive in making unit loads available for distribution deeper in a merchandise supply chain will undertake new processes & control orders. These may have significant legal impacts if not addressed by means of clear supplementary agreements. One such issue was recently brought to our attention by our friend Sam Ignarski at The Maritime Advocate, who in turn referenced Ted Graham’s opinion at Ince & Co:
http://incelaw.com/en/knowledge-bank/publications/bills-of-lading-keys-to-a-floating-warehouse-or-a-cumbersome-outdated-system
From this point we feel we can close this blog series with a summary of our overall theme. We contend that future E-Commerce markets will see traders routing high-turn product around high cost primary hubs in order to directly reach deeper into markets. Those seeking more adaptive or market responsive inventory flows should rely on the better employ of the transport cycle. Consequently emerging trends should see new intermediary systems & processes deployed, those that enable the leaner employ of a diverse array of logistical assets in order to reach consumers. The non-asset owning transport & logistics sector, those less leveraged into primary hub operations, are best placed to bring these solutions to market.
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