July 2012 | Commentary | IT Matters

Containerization’s Benefits Can’t Be Contained

Tags: Ocean

Fabrizio Brasca is Vice President, Global Logistics, JDA Software, 480-308-3000

Today's leading companies are reexamining their supply chain operations, and implementing new strategies and technology to improve performance and enhance efficiencies.

Moving cargo in containers, or containerization, is one area of opportunity shippers can leverage, not only in downstream transportation and logistics functions, but also in unexpected upstream supply chain planning functions.

In its simplest application, containerization allows shippers to maximize cargo loading efficiency by optimally building out a space while respecting constraints such as orientation, crush factors, and stacking rules.

Containerization is especially useful for companies that move products in varying weight categories. Heavy and light freight can be shipped together to utilize all available container capacity, resulting in increased resource utilization, and fewer containers required to move the same volume of goods.

In addition to configuring loads, shippers can leverage containerization in other applications, working alone or in cooperation with other optimization capabilities to solve problems. Here are a few ways shippers can use containerization to drive performance and supply chain improvements:

  • Take TMS to the next level. Incorporate containerization capabilities into end-to-end transportation and logistics management to get better results from transportation management systems (TMS). Shippers can use containerization as part of a dynamic routing solution to ensure multi-stop routes maximize asset utilization.

Containerization enables companies to confidently build loads that use 100 percent of available container capacity, instead of estimating and leaving a safety buffer that results in underutilizing shipping space. The ability to ship more merchandise in a single container facilitates the routing process, and may enable shippers to include extra stops.

  • Split distribution orders as an extension of the fulfillment plan. Shippers can apply the containerization concept upstream in supply chain planning by splitting distribution orders into shipments that take into account both date constraints and inventory policies.
  • Eliminate high-level capacity assumptions from order management. Companies fulfilling customer orders frequently offer advantageous pricing for full truckload purchases, but determining when an order meets a legitimate full truckload is difficult without data visibility. The common remedy is to establish an assumptive truckload threshold based on a designated order amount, but this imprecise method means companies often end up leaving money on the table by discounting less-than-truckload orders. Containerization eliminates uncertainty about when the shipment reaches the full truckload threshold.
  • Optimize ocean container use. A common port scenario is a mismatch between freight forwarder and shipper incentives. While freight forwarders simply charge by the container, it is in a shipper's best interest to ensure the container is full. Adding containerization capabilities to the process ensures maximum capacity utilization.

By incorporating containerization into downstream transportation and upstream supply chain workflows, companies can improve asset utilization, use fewer trucks, drive fewer miles, reduce fuel costs, and enhance distribution center operations.