April 2011 | Sponsored | Thought Leaders

Achieving Air and Ocean Freight Flexibility

Tags: Logistics I.T.

Tom Zinner is Director, Supply Chain Software and Strategies, IES, Ltd., 201-639-5000

Q: There has been a trend of airfreight traffic shifting to freight forwarding by sea. How can air freight compete?

Zinner: The shift toward ocean freight is purely cost-driven. The real question is how to make air freight a less expensive and, therefore, a more competitive option. Both air and ocean shipments often have the added expense of processing at a distribution center (DC). If an air shipment can bypass the DC, however, this cost is eliminated.

Allocating the goods at origin allows the shipment to be routed directly to its final destination. In the case of air shipments, goods can be flown directly to the dock closest to its final delivery point. Applying DC bypass technology results in a 50-percent faster turnaround and an up to 25-percent cost reduction per shipment. This flexibility effectively allows air freight to compete at a higher level when compared to ocean freight.

Q: How can shipments remain flexible with slower ocean transport?

Zinner: Ocean shipments can remain flexible with an en-route allocation process. The shipment can be allocated and re-allocated in response to consumer demand while it is on the water.

The solution lies in serializing the cartons at the point of origin and shipping from the vendor. The cartons are stripped out of the container and scanned, and a final delivery label is applied in a one-to-one relationship—one carton is scanned, and one label is produced and placed on the carton. It can then be cross-docked and put into a truck for final delivery.

In a sense, the ocean shipment becomes a floating warehouse, assigning inventory while still on the water.

Q: What are some new ways forwarders are using technology to affect the bottom line?

Zinner: Smart companies are looking to use technology to their advantage and to push it to its greatest potential. To be operationally flexible as a freight forwarder, it is essential to know what is in the shipment pipeline, and to have quick access to customer and shipment information.

Forwarders need one ‘go-to’ resource for visibility, regulatory compliance, supply chain management, and accounting. There is a strong payback when a business can instantly access, analyze, and react to operational changes.

It is just as vital to remain adaptable within day-to-day operations as it is to be adaptable to customer expectations. Forwarders require all of these options without losing focus when switching to an accounting program. This type of operational flexibility, added to compliance tools such as Automated Broker Interface and Importer Security Filing, is what forwarders are looking for in a technology offering.