Freight Knowledge

  • As the ongoing pandemic continues to raise concerns about the agility of global supply chains, organisations across industries are looking for ways to identify and leverage new opportunities and weather the storm.  In a webinar hosted by GoComet last week, vice-president procurement of Glenmark Pharmaceuticals Rajasekhara Reddy emphasised how technology and a strong team are the key pillars of a resilient supply chain. Here’s a synopsis of the insights shared by Mr Reddy  Switching from air to ocean freight  “We thought that the virus was somewhere far away and suddenly it came to our doorstep. It disrupted supply chains around the world. We being a pharmaceutical company didn’t have the choice to take a break for a few months and then come back,” Mr Reddy said.  He added that 80% of the capacity vanished overnight. Having a huge dependence on airfreight, one of the biggest challenge Glenmark faced was switching from airfreight to ocean overnight.  “Ports were being shut due to coronavirus cases and the Government didn’t know how to react. The first reaction was to shut down the ports for 14 days. Long-distance carriers were not working, all the cargo capacity was diverted to China as everyone was buying personal protective equipment from there,” Mr Reddy said.  To minimise the impact of the disruption, the pharma company identified a few airlines and made an offer stating that Glenmark will pay for the fuel, parking charges, crew, etc. and in return gets 60% capacity. The airline could sell the remaining capacity in the market.  Improving predictability helped Glenmark build the confidence that they could send freight by sea.  “Destruction paves way for a new growth.” Leveraging data more important than ever before “Previously I was happy with 35 day transit time from the plant to the warehouse. But with the...
  • For organisations that ship goods internationally, shipping cost accounts for a significant expense and its dynamic nature makes it close to impossible to spot opportunities for driving cost savings. Especially for businesses that are inventory intensive, logistics cost plays a crucial role in determining profitability.  However, there are several practices you can deploy to beat the unpredictable nature of freight costs and get the best prices every single time. Here are 10 steps that you can follow to lower your freight cost and drive substantial cost savings:  Know the market and the prevalent rate It is imperative that you keep track of market rates in order to be sure that you aren’t paying an unfair price for shipping your goods. A good way to ensure this is by adopting a modern-day supply chain software that will enable you to benchmark freight rates and help you negotiate rates better.  Analyse the route Route optimisation is yet another way to lower freight costs. Sparing some time to closely study the routes and figure out the best route available can go a long way in not only reducing price but also increasing overall efficiency.  Plan effectively Effective and advanced planning can help you prioritize your requirements while shipping goods. Moreover, carriers as well as freight forwarders, look forward to working with clients who have a clear vision of what they want. Thus planning your shipments well in advance will help you build a good relationship with them in the long run. Consolidated shipments Typically, shipping in bulk is cheaper than shipping smaller consignments. You are more likely to get cheaper rates if you ship in bulk as it enables carriers to load a container more efficiently and also helps reduce the time spent in loading, unloading and processing multiple customers’ shipments. However, consolidated...
  • Deciding whether your organisation needs a 3PL or a 4PL provider is an integral part of your supply chain management. Mistakes on this front can and do happen, costing companies big money.  The key here is to understand the five kinds of logistics parties and learn to distinguish between the services they provide. While in first-party logistics an enterprise sends goods from point A to point B, in second-party logistics the enterprise owns the modes of transportation.   Whereas third and fourth-party logistics come into the picture when the enterprise outsources its supply chain process to other businesses. On the other hand, 5PL providers meet the logistics needs of multiple customers and lean on technology to simplify end-to-end logistics.  Before diving into the differences between 3PLs and 4PLs, let’s explore the advantages and disadvantages of undertaking either of the logistic parties.  Image credits: Warehouse Anywhere What is 3PL? Third-party logistics (or 3PLs) refers to the outsourcing of logistics processes, including inventory management, warehousing, and fulfilment. 3PLs’ providers allow e-commerce merchants to accomplish more, with the tools and infrastructure to automate order fulfilment. The enterprise maintains management oversight, but most of the inbound and outbound logistics are taken care of by the third-party business. Some of the Third-party logistics providers are Freight Forwarders and courier companies. Advantages of 3PL: Proves to be cost-efficient for SMBs Distribution of goods is easier Highly decentralized  Warehouse and inventory management at their disposal Saves on time if undertaken efficiently Disadvantages:  Slow responsiveness Lack of data collection Disruption to visibility Less control over inventory Lack of responsibility and accountability What is 4PL? Fourth-party logistics (4PLs) or lead logistics providers, is a model in which the enterprises completely outsource both the structure and oversight of their supply chain to a 4PL provider. 4PL generally offers a high...
  • June 19, 2020

    Airfreight Vs Ocean freight

    Businesses that deal with international shipments are always faced with the dilemma of choosing between Ocean freight and Air freight at some point or the other. Although the two serve the same purpose, they are poles apart in multiple ways. Choosing to use one over the other is a highly conditional decision and boils down to a significant difference in cost and time.  Determining which one is better is undoubtedly a never-ending debate. Both of them come with their own set of pros and cons and that is the reason why companies must use a mix of the two in order to respect deadlines and budgets.  To aid the decision-making process of air freight vs ocean freight, it is imperative to consider the following factors: Cost: For most businesses worldwide, cost is of prime importance when it comes to shipments. It is a well-known fact that ocean freight offers more capacity while being the less expensive of the two options. Whereas air freight is faster and safer. But air freight comes at a very hefty price. To put that into perspective by example – a package that costs $200 by ocean freight can cost up to $1000 by air. That is why most professionals recommend that air freight be used when it costs less than 15-20% of the value of the goods.  All that being said, for ocean freight, when a package is small and less than a full container’s load, its cost is calculated in cubic metres. A lot of times, this can actually cost a lot more than air freight for the same package. That is why it is important to do a thorough calculation and cost comparison before choosing the mode of shipment. Time: While cost is a primary condition, time is an equally important one. When...
  • More often than not, the freight world deals with two standard terms—Supply Chain Management (SCM) and Logistics Management (LM). These are used interchangeably, and the difference(logistics vs supply chain) is not made very apparent. Logistics management is a small portion of SCM that combines the flow of goods, services, information, and capital right from raw material to its final consumer. Whereas supply chain management is much broader and starts right from the product’s source to delivering it to the consumers. Each of these has different functions and processes and are different in many aspects. Before we start picking out the differences, let’s get a brief overview of both these processes. What is Supply Chain Management? According to Supply Chain Logistics Management, a book by professors of Michigan State University, Supply Chain Management or SCM involves collaboration between firms to connect suppliers, customers, and other partners to boost efficiency and produce value for the end consumer.  In a broader sense,  SCM is a three-part process. It starts from sourcing the raw materials for the product, goes through manufacturing processes, and finally gets dispatched to the end-buyer. The process is complicated due to a lot of factors and needs intense planning and strategies. Check out our Freight Knowledgebase. Image Credits: TechTarget Businesses and companies go out of their way to optimize their supply chain management to incur fewer losses and enhance the business’s productivity. Supply Chain Managers are the personnel who take care of your supply chain and devise various strategies to optimize each part of this process.  What is Logistics Management? Logistics management is a subset of the more extensive supply chain management process. According to the Council of Supply Chain Management Professionals (CSCMP), Logistics management or LM is a part of the supply chain process that plans, implements and controls...
  • With tightening capacity and ever-soaring rates in the face of COVID-19, managing logistics and shipping goods has become a turbulent experience. Investing in the right TMS can streamline your operations and boost business.  However, with so many options to choose from, how do you identify the TMS best-suited for your organisation and your budget?  What does a TMS do? A good TMS should simplify your shipping process by helping you plan, coordinate and track your shipments. It should also be designed to process data and generate insights that can assist you when making decisions. An efficient TMS should automate your freight management, improve your communication with vendors, save time and help you reduce costs.  Check out Sailing Schedule – a smart tool to make smart decisions while planning the movement of your freight. Key factors to consider when buying a TMS The true cost of the system Be aware of companies offering you a low-cost solution as chances are further hidden charges lay in wait. Choose a system that caters to your business needs without having to rush to vendor’s support services or costly code changes every other day.  A low-cost system may appear attractive at the time of purchase, but over time, you may find your money going towards maintaining the system- instead of your bottom line.  Easy integration with existing systems A TMS is only as good as its functionality. Make sure that the TMS you choose is designed for easy integration with your existing systems and quick onboarding. A mistake here can affect you for the life of the system you select.  Scalability Ensure your chosen TMS is able to handle the depth of your existing requirements both in your jurisdiction and throughout your organisation.  Server-based systems are best avoided as these quickly become outdated. It is...
  • The larger, more complex and interdependent an industry grows, greater the scope for errors to occur. Certainly, the rapidly growing and highly intricate supply chain industry is no exception.  When it comes to supply chains, be it a small error (like slight delays in tracking your shipments) or a missed opportunity (getting better freight quotes from forwarders), mistakes can and do often cost a lot of money. They can not only leave businesses scrambling with reduced efficiency but directly affect your company’s profitability.  Luckily, most of these mistakes can be taken care of if only supply chain leaders are mindful of the red flags along the way and find long-term solutions to the problems.  Here are some of the most common supply chain mistakes professionals tend to make: Failure to break free from obsolete ways: While you might have got comfortable with the age-old way of creating inquiries manually and negotiating freight rates even without realising that it’s hurting your business, it’s high time you evolve. If your organisation is yet to adopt automated solutions and digitise supply chains, you are already at a major disadvantage.  Relying on the traditional system stifles the growth of your company as you unknowingly end up using resources where they aren’t needed. Managing your supply chain manually is not only labour intensive, time-consuming and tedious but affects your profits.  The easiest way to deal with this mistake is to deploy a supply chain software that can automate your business processes and save a great deal of time, energy and money.  Poor relationship with customers and vendors Your business is bound to suffer if you fail to create and maintain a good relationship on both ends of your supply chain network. Develop a system that will constantly listen to your customers and cater to their...
  • June 2, 2020

    10 Major Sea Ports in India

    According to the Ministry of Shipping, 95% of India’s foreign trade is mainly via seaports. These ports play a crucial role in the International North-South Trade Corridor (INSTC), which connects the Indian Ocean to trade with the Eurasian trade corridors and the Arctic. The coastal regions of Maharashtra, Kerala, Goa, Karnataka, Gujarat, Andhra Pradesh, Tamil Nadu, Odisha, and West Bengal are home to nine of the total thirteen major Indian seaports. As India continues to stir up high volumes of global imports and exports, here are ten of India’s most substantial container and cargo shipping ports: Nhava Sheva Port: The Nhava Sheva port, also known as Jawaharlal Nehru Port Trust (JNPT), is one of the busiest container ports in India with annual traffic of 5.05 million TEU (Twenty-Foot Equivalent Unit). It features in World’s Top 30 seaports and has seen a steady rise in traffic in the past five years. It is responsible for 56% of India’s container traffic and will see almost double the capacity once the construction of its fourth terminal is completed. Also known as the King Port across the Arabian Sea, it was built back in 1989 and is situated in Navi Mumbai. The main shipments exported from the port include machinery, chemicals, pharmaceutical products, textiles, carpets, plastics, and sports goods. The second busiest port in India is The Port of Mundra, with annual traffic of 4.4 million TEU. It is ranked at the 32nd position in the World’s Top 50 seaports. With fast-rising traffic, Mundra Port almost doubled its traffic of 2.7 million TEU in 2014. Furthermore, it is India’s largest commercial port by size and acts as a significant gateway to the hinterland of northern India. The Mundra Port is owned by the Adani Group and has four container terminals that boast a capacity...
  • Two manufacturing companies ‘A’ and ‘B’ sell the same product.  Both companies have good profit margins, employees are happy and the management is satisfied.  Despite being in the same product, none of them pose a threat to each other as they have independent customers and more or less fixed revenues.  Now that’s not the entire story. In time, their market opens up, demand increases and owing to customer requirements, changing business strategy becomes inevitable, right?  Here’s what “A” does: 1. Focuses on reducing the price for customers. 2. Hires fewer people but expands capacity through technology solutions. 3. Gathers real-time tracking information using tech systems and improves the response speed. 4. Team members spend time building strong relationships with clients and vendors. Here’s what “B does: 1. Focuses on increasing the price for customers. 2. Hires more and more people to expand capacity, prefers manual work, creates 5 levels of hierarchy. 3. Gathers information through day-long meetings, phone calls, emails, hires secretaries to create reports. 4. Team members spend most of their time managing essential workflows, checking or correcting data in reports. 8 years passed. One of the two survived. Who is likely to have survived? “A” or “B” In the last 15 years, 52% of fortune 500 companies have vanished. This is not a hypothetical brain teaser. If you can guess who survived, you are already a genius, because 52% of fortune 500 companies couldn’t see it coming, isn’t it? As said by Dr. Graeme Edwards – “It’s not the plan that is important, it’s the planning.”  Why some businesses fail? The worst part about a failing business is that the entrepreneur is unaware of it happening until it is often too late. It makes sense because if the entrepreneur really knew what he was doing wrong, he might...
  • Do you outsource your shipment tracking process to third party logistics services? We have observed that numerous organizations outsource their third-party logistics needs to get to the adaptability and scalability that an outside vendor can offer. If their shipping needs increase rather than employing additional staff or extending distribution center space, they hire 3PL merchants for frequently supply additional capacity on request. Most logistics managers tend to oversimplify the problem by making it a short-sighted decision based only on investment of time, effort, and money. What is Third Party Logistics (3PL) Third-party logistics (or 3PL) refers to the outsourcing of logistics processes, including inventory management, warehousing, and fulfillment. 3PL providers allow e-commerce merchants to accomplish more, with the tools and infrastructure to automate order fulfillment. We don’t know for sure who coined the term “third-party logistics,” but companies began trending toward outsourcing logistics services to third parties in the 1970s and ‘80s. With the presentation and development of the web-based business during the ’90s and 2000s, the term 3PL has turned out to be pervasive, and 3PLs have extended their services. The supply chain integration of warehousing operations and transportation services has become what we now call third-party logistics. Real-time Shipment Tracking Enforcing real-time shipment tracking to gain visibility throughout the supply chain is paramount for industries of all sizes. Many supply chain managers rely upon their transporters to implement track-ability to enhance efficiencies and reduce operational overheads.  Whilst working with many supply chain processes of different industries we realized that the challenges of outsourcing the implementation of visibility to transport providers would eventually outweigh its benefits in the longer run. Find out why this practice of outsourcing the implementation of IoT visibility solutions to transporters or 3PLs is indeed a recipe for failure. Here are the top 8 reasons why...
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