Trends in Third Party Logistics

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Trends in Third Party Logistics
Hayes H. Howard, American Shipper
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Concept
Hayes H. Howard, American Shipper
Asset Heavy Provider
Shipper in-house logistics management
Shipper out sources logistics management
Asset Light Provider
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Threads
Hayes H. Howard, American Shipper

• What are we looking for in a relationship?
• How to achieve inventory management and control?
• Visibility
• Integration

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Speakers
Hayes H. Howard, American Shipper

• Michael Connor - Logistics Sr. Manager, World
  Wide Procurement, Dell, Inc.,
• Klaus Schnede - Manager, Marine Procurement,
  Eastman Chemical Co.
• Edward Zaninelli - Vice President Transpacific
  Westbound Trade, OOCL
• Jeffery G. Lee - Managing Director - North
  America, Vanguard Logistics

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Participation Questions

• You are a key member of the panel!

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Thank You
Hayes H. Howard, American Shipper

• First up
• Michael Connor, Dell, Inc.

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Michael Connor, Dell, Inc.

• How did it start and why?
• What are we looking for in the relationship?
• Acquire the business
• Maintain the business
• Grow the business

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Michael Connor, Dell, Inc.
Future
2000-2007
1999
2000
Globalize volume to optimize trans spend

• Limited
• Structure
• Supplier
• Free for All

• Improved
• Structure
• Suppliers
• Picked from
• 8 Providers

Consolidate volume To optimize Air spend -
regional
Consolidate volume to optimize ocean spend -
regional
Standardize T Cs globally
Core global Providers IDd drive efficiencies
And visibility
HOW?
JIT-D
Consoli-date whse 3PLs
Sup DSI 11.7
Dell DSI 35
WHY?
Dell DSI lt.5
Sup DSI 0
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Michael Connor, Dell, Inc.

• Acquire the business
• Demonstrate the value of your core competency
• Partner to develop the business case
• Integrity must be obvious
• Show global scalability
• Demonstrate financial strength

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Michael Connor, Dell, Inc.

• Maintain the business
• Maintain service levels
• Your IT must scale ahead of customer
• Partner in Project Management
• Show global scalability
• Drive Financial Acumen to the lowest levels
  

Be Willing to Walk Away!
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Michael Connor, Dell, Inc.

• Grow the business
• Service both ends of the supply chain
• Expand in the right areas you have a core
  competency too!
• Grow globally ahead of customer
• Be willing to partner with other 3PLs to service
  the customer
• Be Ready!

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Michael Connor, Dell, Inc.

• Wrap-Up
• Everyone knows the game act like it and put it
  on the table
• You are better positioned to manage the
  logistics your actions must prove it
• Executive Alignment is a must to grow
• Be Prepared ahead of your customer thats what
  we really want

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Thank You
Michael Conner, Dell, Inc.

• Next Up
• Klaus Schnede, Eastman Chemical

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Klaus Schnede, Eastman Chemical

• Klaus Schnede May 2007

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Trends in Third Party Logistics
Revising Logistics Trend..?
Klaus Schnede, Eastman Chemical

• Table of Contents
• 1. Introduction
• 2. Cendian Corp. History
• 3. Eastman Today
• - Forwarder Relationship
• - Controls back in-house
• - Inventory Control and Management
• - Security and Compliance
• 4. Conclusion

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2. Cendian Corp. - History
Klaus Schnede, Eastman Chemical

• NVO/3PL Founded in 2000 as ShipChem
• Started as Eastman's domestic and international
  logistics arm/network
• Focused on the chemical market
• 2003 expanded into other chemical customers as
  3PL
• Not able to meet profitability goals
• Off the shelf IT-Systems not fully capable to
  support the business
• Dissolved in 2005

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Eastman Today - Forwarder Relationships
Klaus Schnede, Eastman Chemical

• Using three Forwarders for our business today
  set up by destination region
• Mostly used for documentation
• Some bookings are still made with the Forwarders
  most bookings are through INTTRA
• Letter of credit support
• Destination customs clearance and warehousing

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Controls back in-house
Klaus Schnede, Eastman Chemical

• Eastman rehired most of the operations Cendian
  employees
• A handful of Cendian procurement professionals
  were hired by Eastman
• Total control of all domestic and international
  transportation is back in-house
• Vendors are being measured and held accountable
• Freight is being negotiated by Eastman

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Inventory Control and Management
Klaus Schnede, Eastman Chemical

• Performed by Eastman, in-house
• Warehouse and Container Management
• Performed by 3PLs
• Dedicated Container Truck Fleet Management
• Outsourced today

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Security and Compliance
Klaus Schnede, Eastman Chemical

• Handled in-house
• Only working with certified vendors on a global
  basis
• Member of American Chemistry Council and a
  preference for Responsible Care carriers
• Only use C-TPAT certified carriers
• Chemtec for hazmat response

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4. Conclusion The Future..?
Klaus Schnede, Eastman Chemical
Eastman's Logistics seeks smart sourced solutions
in the future. Outsourcing decisions will be made
selectively on tactical functions that can be
done better by 3PLs. Core functions however, such
as Strategy, Procurement and Management will not
be outsourced.
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Thank You
Klaus Schnede, Eastman Chemical

• Next Up
• Edward Zaninelli, OOCL

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South CarolinaInternational Trade Conference
Edward Zaninelli, OOCL

• Edward Zaninelli
• OOCL USA

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Edward Zaninelli, OOCL
Global Container Trade Perspective
TRANS-PACIFIC 18 million TEU 10.4 Growth
ASIA-EUROPE 12.2 million TEU 10.9 Growth
TRANS-ATLANTIC 5.4 million TEU 5.3 Growth
OTHER TRADES North-South 19.2 million
TEU Intra-Regional 16.1 million TEU
Source Drewry Consultants, 2005
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Edward Zaninelli, OOCL
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Edward Zaninelli, OOCL
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U.S. Liner Shipping Landscape
Edward Zaninelli, OOCL

• New mega ships increase trade capacity
• Global trade growth outpaces infrastructure
  including ports, railroads, terminals, trucking
  and warehouses.
• Cross-industry collaboration synchronizes
  transport activities to improve efficiency and
  service quality
• Trade imbalance imports approach 3 x export
  volume
• Export becomes a cost recovery business model
• Terminal, transportation and fuel cost increases
  affect carrier profitability, products and
  services

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(No Transcript)
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Edward Zaninelli, OOCL
Round Trip unit income under pressure
Source Drewry
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Where do the Carriers Stand
Edward Zaninelli, OOCL

• Profits have been compressed by internal and
  external forces
• Fuel costs, environmental challenges, limits to
  NAT Infrastructure and more
• Some Carriers trying to make the jump from liner
  mentality to logistics management
• Historical results of the carrier/3PL is mixed or
  clouded
• Major challenge to be a multi carrier 3PL when
  you are a carrier

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Carrier Trends in Logistics
Edward Zaninelli, OOCL

• Inclusion of the entire sales force in the
  logistics strategy, does this work?
• Can liner sales sell logistics?
• Will the trend continue?
• Most carriers opening up 3PL shops, but many are
  on a small scale
• Two largest carrier 3PL groups may not be
  profitable or are marginal

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Carrier Logistics/Asset Owners/Closing Remarks
Edward Zaninelli, OOCL

• Do we do it for the money?
• Do we do it for the tie in?
• How do Asset owners see 3PL opportunities
• How does an Asset owner compete with non Asset
  owner logistics
• Theres money in logistics management
• Can Carriers access logistical dollars to compete
  with non Asset owners for profit???

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Thank You
Edward Zaninelli, OOCL

• Next Up
• Jeffery G. Lee, Vanguard Logistics

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Logistics Warehouse to Boardroom
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Examine your supply chain
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Trend behind the trend
Shoes 0.34 of 45
TV 12.50 of 2000
Motorcycle 90 of 11,000
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Challenges
Inefficient sourcing due to lack of cost info
High overhead cost managing logistics functions
Higher inventories or lost sales
High cost of expedited freight
Inbound lead time variability
Reactive rather than proactive management
Disconnect between various transport modes
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Needs and Solutions

• Reliability
• Overall Cost reduction
• End to end Visibility
• Speed/ Tighter controls
• Flexibility
• Global Coverage
• Predictability
• Optimization/Data warehousing
• Deeper integration

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Industry Response

• Visibility
• Predictability
• Scope

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Thank You
Jeffery G. Lee, Vanguard Logistics

• Next Up
• You!

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Questions