The Power of Information

October 2nd, 2013 - by andrewh

by Mike Challman, VP North American Operations, CLX Logistics

Sophocles, a Greek playwright from the 5th century BC, once wrote, “Not knowing anything is the sweetest life.”  Clearly, Sophocles never worked in supply chain management.  Those of us who have made a career of the logistics arts could write our own tragedies about the consequences of not having the right information at the right time.

What is the ‘right information’?  Seems like a simple enough question.  However, we sometimes consider some information to be important that really is not relevant to the job. Other times, we might base a decision on information that is flawed in some way or get accurate information too late to be helpful.

Some of the key attributes of meaningful supply chain information are as follows:

  • Relevant

We live in an age where technology provides us with the ability to capture data that surpasses anything we could do in the past.  Enterprise Resource Planning (ERP) systems, Transportation Management Sytems (TMS) and freight payment systems offer reams of data about your supply chain.  But, just because something can be tracked and reported doesn’t mean that it deserves your attention.  We can become enamored with information because it’s interesting.  However, ask whether it is relevant to helping improve service, reduce costs, or support other supply chain efficiency gains.

  •  Timely

Information that can support supply chain decisions or corrective action needs to be available within sufficient time to assess, understand and include it in the decision process.  Supply chains move fast so information must move at the same velocity.  For example, if a customer shipment is delayed enroute, the logistics team must have the ability to know status immediately to take corrective action or, at a minimum, notify the customer of the delay.  You don’t want to learn about a service failure from the customer.

  •  Reliable

Worse than ‘not knowing anything’ is using information that is wrong or misunderstood.   Accurate calculations are vital.  As information is often derived from multiple places (ERP, TMS, etc.), ensure that the source content and context are understood to prevent confusion.  For example, information about freight costs for a calendar month can yield different numbers from different sources.  The TMS may report on what was shipped while the freight pay system may report what was paid.  Neither is wrong, so understanding the context is critical to the reliability of the information.

  •  Objective

To steal the tagline from the 1981 film “Absence of Malice” — suppose you picked up this morning’s supply chain reports… and everything they said was accurate… but none of it was true?  Data is impartial; but, as it becomes information, outside factors may affect it so that it takes on a slant or spin.  For example, a service reliability report might state Adjusted On-Time Delivery as 99.9%.  But, what if the ‘adjustments’ excluded a type of failure important to you?  It’s essential to understand the assumptions or influences behind the interpretation of data.

  •  Cost Effective

One final question that often doesn’t get asked:  Is the information worth the cost?  Data capture, review, cleansing, correction and analysis can be time-consuming.  Report development and production isn’t free, either.  A healthy information management program will recognize that effort and expense and validate that the ‘juice is worth the squeeze’.  Periodically, reviewing what is being produced and distributed is also critical.  Over time, information that was once valuable may become unnecessary.  Finding and eliminating those relics will bring efficiency and cost control to your supply chain information management efforts.

Our business vocabulary reflects what today’s information environment has become – we talk about the ‘Cloud’, we talk about Big Data.  The incredible degree to which we can capture and report information is exciting and can provide a great competitive advantage in the management of your supply chain… if the information is kept manageable.  Focus on these five attributes and you will be able to do that.

A Pragmatic Guide To Managing Transportation Costs …the keys to success may not be what you think

September 16th, 2013 - by andrewh

By Mike Challman,  Vice President, North American Operations

Let’s try a quick word association.  What comes to mind when you hear “transportation costs”? For many of you, the immediate thought will be “carrier rates”.  It’s a valid response, but; unfortunately, it is also one that can reveal a limited point of view about the best way to manage those costs.

For many shippers, the go-to strategy to reduce or control transportation costs is to continually pursue carrier rate reductions while ignoring other, equally important, aspects of the equation.  Outlined below are a few guideposts to provide some food for thought about how you can positively influence carrier rates, and, in turn, more effectively manage your transportation costs in ways that go beyond just trying to squeeze a few more cents out of your carriers.

#1: Carriers Are Entitled To A Fair Rate of Return On The Service They Provide – The success of your transportation network relies on good carriers.  While you do not want to over pay to ensure access to high-quality capacity, you must remain competitive in the market. Do you know where your rates stand relative to others with similar shipments?

#2:  You Can Usually Find a Cheaper Carrier… But You Risk Paying For It In Other Ways – A lower line haul rate doesn’t always mean less total cost.  You might pay more in accessorial costs or, even worse, you may be faced with degraded service performance, increased claims activity and more customer complaints. Do you have a carrier management program in place that addresses all areas of potential carrier cost?

#3:  Sometimes The Main Reason Your Carrier Rates Are Going Up Is… You – A carrier will consider multiple factors when assessing whether or not you are a ‘good’ shipper.  That includes ease of operation at pickup and delivery points, dependable and accurate information as well as the timeliness and accuracy of carrier payment. When is the last time you evaluated your supply chain to find areas for improvement?

#4:  Not All Of Your Transportation Costs Are Controllable By The Carrier – In fact, most issues in your network are related to forces other than carriers.  A carrier influences transportation costs only when in possession of your shipment.  Before and after that timeframe, you must look at other factors. Do you know the impact on overall cost resulting from activities at your ship locations?  From decisions made by Sales or Customer Service?  From the expectations of your customers?

#5:  A Well-Managed Transportation Network Benefits Everyone – When your entire network operates efficiently, all parties enjoy the benefits – particularly you and your customers.  And from your carriers’ perspective, you may find a greater openness to rate negotiations if you have a reputation for keeping their trucks moving.  Are you looking at the whole picture when you consider ways to improve your transportation costs?

 Bottom Line:  Address the source of the issue, not just the most apparent symptom.

While carrier rates are often at the top of our mind when considering transportation cost issues, higher rates can be a response to other issues and not the root cause.  Shippers need comprehensive and effective carrier program management (CPM) to measure, identify, discuss and solve all of the issues that can impact carrier rates.

A successful CPM will develop strong relationships with the best carriers, effectively address carrier performance issues quickly when they do arise, and ensure a productive and continuing dialogue to identify all of the areas that are impacting a carrier’s ability to provide the best possible service at a competitive rate.  In the end, your best word association response to “transportation costs” can be “well managed”.

ChemLogix offers a variety of managed services in conducting freight benchmarks and developing an effective CPM.  To find out more, refer to contact Mike Challman at



SaaS TMS Offers Operational and Cost Advantages over Traditional Hosted Solutions

September 4th, 2013 - by andrewh

by Bill Wolfe, Director, Global Technology

According to a recent report by ARC Advisory Group, the TMS (Transportation Management System) market has “bounced back” after the global recession, growing faster than the rate of inflation in 2010, with significant growth forecasted through 2015.

While hosted TMS solutions have been deployed in the market for over 20 years, SaaS (Software as a Service) or cloud-based TMS solutions are rapidly outpacing hosted solutions, with a 6x annual growth over premise systems.  That’s because a SaaS TMS offers significant application and cost advantages over traditional hosted solutions:

Network Connecting:  Most SaaS TMS provide a pre-established and extensive network of carriers, suppliers and trading partners.  As shippers look for new capacity in a carrier-limited market, greater access to carrier resources provides a competitive advantage in contracting additional capacity or optimizing relationships with existing partners.  With a SaaS TMS, only one connection is necessary to interface with multiple logistic partners, carriers and vendors.

Continuous Improvements:  SaaS TMS enhancements are seamless and executed on a continuous basis.  As new functionality becomes available, upgrades are automatically accessible to all users at once with very little, if any, effort required by the user. With a traditional TMS, upgrades are normally at the discretion of the user; therefore, their hosted TMS can become outdated and support may no longer be available if upgrades do not occur over a certain period of time.  Also, when upgrades are executed, a much larger effort is required from the user compared to a seamless SaaS TMS upgrade.

Lower Cost:  As no hardware needs to be purchased, implemented, or maintained with a SaaS solution, shippers spend very little in internal IT costs when utilizing a SaaS TMS.  Additionally, as many logistics partners connect directly to the SaaS TMS, users do not need to maintain EDI connections as they are already established and supported through the cloud-based system.

Fast Deployment:  With little IT footprint and no hardware requirements, SaaS TMS implementations can be completed within a few weeks.  Additionally, as the SaaS TMS can be configured and utilized through a web-browser, all of the implementation steps (such as customization, administration, testing, training, etc.) can be fully controlled and implemented by the project team without the need for IT development work.

Customization:  Many SaaS TMS solutions now offer similar levels of customization as traditional TMS.  Users can turn offer certain functions and customize applications to meet their requirements.

Time to Value:  Rapid deployment generates quicker ROI in about 12 to 24 weeks.  Cost savings from optimization, automation and control, and reporting is about 10% of the shipper’s total logistic costs.

For a no-obligation demonstration of CLX’s SaaS TMS from IBM, call (215) 461-3800.

Your Supply Chain is Only as Strong as the Weakest Link: Leveraging the Talents of Your Internal Logistics Team

July 3rd, 2013 - by andrewh


By Brian Hamilton, HR Manager and Mike Challman, VP Operations

As the economic recovery continues, companies are, again, looking toward growth and expansion.  The years of stagnation or retrenchment, however, forced many chemical shippers to reduce staff and limit investment in associate development.  As a result, a growing gap now exists between business requirements and the ability to meet those needs with existing resources.  While partnering with a third party logistics provider (3PL) can help fill this void, chemical companies must also refocus on developing internal resources to manage internal controls and processes associated with supply chain management. 

The most effective 3PLs employ a variety of approaches to leverage talent within their organizations.  Outlined below are some of the critical methodologies used by ChemLogix that can be used to develop and retain your own internal logistic resources  

Cross-train, cross-pollinate and provide development opportunities
Supply chain management is a complex endeavor, one in which the various elements are strongly linked throughout an organization.  An associate in one department who has knowledge or experience of other areas can provide invaluable insight and perspective.  The best 3PLs provide associates with opportunities to train in, or transfer into, other areas of the organization. 

Associates at all levels of a 3PL organization are also given professional development opportunities to remain current on market trends and further their understanding of the logistics world. Not only is the supply chain discipline complicated; it is incredibly dynamic and fast-moving.  Technologies, regulations, market pressures and best practices are constantly updating.  3PLs and chemical shippers alike must ensure staff remains knowledgeable on changes while developing their expertise in the field.

Utilize a documented career path process and post all job openings internally
3PLs that can show talented associates a career path create value for everyone: the 3PL organization, itself, by leveraging home-grown talent; customers who receive the benefit of knowledgeable and enthusiastic associates at all levels of the support structure; and the associates themselves, who remain motivated to advance within the 3PL organization for the long term future.  Unless a confidentiality issue exists, a healthy 3PL organization posts every open position for internal associate review and application.  External hiring costs 1.7 times more than an internal hire; and research shows that as few as 40%-60% of external hires are successful versus 75% for internal candidates.  The 3PL with a successful internal hiring program also provides its customers with greater cost efficiency and more dependable support.   Chemical shippers can consider doing the same for every type of associated within its organization, not just those involved in the supply chain.

Establish a referral program that taps into the talented acquaintances of your talented associates
When an internal posting doesn’t yield candidates, your associates can still help fill positions.  A referral program with a monetary incentive turns associates into instant logistics recruiters.  The best professionals have large networks of talented contacts.  Studies show that candidates recommended by associates are more likely to succeed as most associates only recommend qualified candidates.  After all, his/her reputation is on the line, too. Employee referral programs are especially effective in cases of highly specialized positions that might be difficult to fill through conventional channels – not an uncommon situation with logistics roles.  The 3PL with an effective referral program will have a greater success rate with external hires.

Actively engage the two most important human elements of the supply chain – customers and associates
Successful3PLs have an appetite for continuous improvement and actively seek feedback about associates’ effectiveness directly from customers.  Customers know what valuable support looks like and they know what they need from a 3PL.  An open line of communication between the 3PL and client helps immeasurably to determine associate strengths and areas for improvement – on both sides.  Using this feedback, a 3PL and chemical shipper can improve its associate development programs. 

Management, from the most senior levels on down, should also be genuinely interested in listening to their own associates’ input.  Associates appreciate the opportunity to be heard.  Interaction should be both structured and unstructured as some of the most valuable exchanges can occur in the break room.

While today’s shippers need exceptional support from 3PL partners to respond rapidly and effectively to the new business opportunities that are emerging as we exit the Great Recession, retaining and developing internal resources remain important issues to implement successful supply chain strategies.   The 3PL that has embraced the value of associate development will be ready to provide critical support and responsiveness to its clients.  The same is true for the shipper who needs talented staff to work with a 3PL to get the most out of the partnership.

Lasting Values: What Every Professional Should Bring on the Job

April 23rd, 2013 - by andrewh

By Mike Challman, Vice President, North American Operations, CLX Logistics, LLC

When I was a younger man, I developed and, then, refined over the years a simple list of tenets to guide my personal and professional life.  As I’ve grown as a leader, I’ve seen clearly how these principles yield a very high level of performance when embraced by a work team.  Applying these values, which include both things to do and things to avoid, will inevitably lead to success for both the team and its individual members.

BE COOPERATIVE –  Recognize the importance of working together.  Don’t worry about who gets the credit.

A high-performing team links individual effort to group results.  Individuals can still have specific goals and should certainly be acknowledged for their contributions.  It is essential to recognize and reward behavior that contributes to overall team success.  Do it consistently and members will become confident that they will be properly recognized for supporting team goals.  There is room enough for everyone to succeed, if they work together.

BE CREATIVE   –   Find new and better ways to do things.  Trust that your ideas are worthwhile. 

“It’s the way we’ve always done it” is a toxic attitude to a vibrant team environment.  If a team won’t adapt and improve, first-rate solutions can quickly become cut-rate.  And some of the best ideas can come from newer team members.  A fresh set of eyes may recognize an opportunity that is camouflaged to veterans.  The creative spirit thrives when team members think aloud, offer suggestions, ask questions and challenge the status quo.

BE COMPASSIONATE   –   Encourage one another.  Help others.

Many of us spend more waking hours during the week with our work team than our families.  We need to treat team members with the level of respect and support that we want for ourselves or the people for which we care.  That includes taking time to recognize a teammate who does something good.  A sincere ‘thank you’ from a colleague might mean more than a comment from a leader.  People want to be appreciated.  A sincere word of encouragement costs you nothing.

BE COURAGEOUS   –   Take a strong stand in support of your values and ideas.  Take a risk.

It can be scary to advocate for something that challenges prevailing sentiment or the team leader’s opinion.  It’s scarier still if you stand alone.  But if you’ve done your homework and strongly believe that your proposal is right for the team, take a deep breath and push ahead.  The most capable teams foster an environment that encourages open interactions and objective discussion.  If we’re not risking, then we’re not moving forward.

AVOID COMPLAINING   –   Focus on what you can do to make things better.  Control your own destiny.

It’s natural to need to vent sometimes.  But there is a fine line between blowing off steam and becoming a victim.  When team members are encouraged to focus more on resolution and less on the problem, the level of empowerment rises dramatically.  Recognizing a problem is usually relatively easy; expressing unhappiness about it is even easier.  Moving past that emotion and seeking answers is where real strength lies, and that is where a strong team will focus its collective power.

AVOID COMPLACENCY   –   ‘Good enough’ is almost never good enough.  Raise the bar.

An old colleague used to say, “Perfect is the Enemy of Good”.  More often it seems that “good enough” can become the enemy of “great”.  A high-performing team will have progressive goals.  When a set of clear, specific objectives are achieved, newer and higher targets must be set.  The achievement of goals should still be celebrated.  Every win, both big and small, is important.  The team can celebrate that success before getting down to the business of reaching the next level.

AVOID CRITICIZING   –   Believe that everyone is trying to do their best.  Help them to do better.

Constructive criticism and critical analysis are good things.  The negative, judgmental variety is destructive to the culture of a team.  We work with people from all sorts of backgrounds and many different life experiences.  One constant is true of virtually everyone; we want to do our best and we want to be successful.  Before you declare a struggling teammate to be a lost cause, ask yourself – would I want help if that was me?  If so, be that support.

AVOID CAPITULATING   –   Persevere in the face of challenges.  “Never, never, never give up.” – Churchill

High-performing teams demonstrate endurance, commitment and tenacity.  Sometimes it is easy and fun; other times, grim and demanding.  It is important to keep the long view, to expect some bumps in the road, to communicate openly and to focus on improvement.  The best teams foster an environment where members trust, challenge, encourage and support one another.  A high-performing, results-oriented team will foster the individual achievement of each of its members.  It won’t always be easy, but the rewards are worth it, guaranteed.

Navigating Europe’s Logistics Labyrinth – An Expert’s Advice

February 25th, 2013 - by andrewh

by Marc Huijgen, Managing Director, LHC Consulting (a CLX Logistics company)

Shipping freight across Europe can be an expensive and complex business for most U.S. companies. Composed of 2.3 million square miles and 50 separate countries with their own laws, border controls and language, transporting products across the continent of Europe by many U.S. companies can be a daunting task.  Add to that rising fuel costs, and it’s no wonder that domestic companies with operations in Europe question what happens to their bottom line when shipping through the continent.

To get a deeper understanding of the mysteries of European shipping, you must delve into the effects that gasoline prices, green initiatives, capacity shortages, and labor laws have on U.S. transportation requirements and costs when shipping products throughout Europe.

European Diversity on Gas Prices and Road Restrictions

Gasoline prices are obviously a key factor in overall freight rates, since fuel is typically responsible for around 25% of transportation costs. As in the rest of the world, Europe suffers from the impact of rising barrel costs and, depending on where you do business that impact has wide variations.

In the U.K., a key destination and customer base for U.S. companies, fuel costs are above the European average and fluctuate from country to country.  For example, gas costs more than $8 a gallon in Italy and closer to $7 in Luxemburg.  When you consider that it”s just over 550 miles from the center of Luxemburg to Milan, you start to see the scale of the maze of considerations when shipping across Europe.

Further considerations when shipping through Europe include weekend restrictions on road freight, with 12 countries (including France, Switzerland, Austria and Hungary) only allowing weekday shipping. In Switzerland and Austria, freight vehicles above a certain capacity are not allowed to transit, enter or leave the country at night. And there is clearly one other issue to add: road tax. Some European countries levy it; others are planning to introduce it soon.

A Green Europe Is a Costly Prospect for U.S. Companies

As if these issues weren”t complex enough, green initiatives increasingly focus on the type of fuel used by hauliers or carriers.  The EU administration in Brussels already decreed it will ban vehicles running on fossil fuels from entering European cities by 2050. Although this seems a long way off, it will, nonetheless, significantly impact any company with customers in the capital city or routes running through it.

The green logistics trend is widespread and will continue to grow as stakeholders and customers of multinationals put on the pressure to conform to “green” ideals. While current focus is on products and manufacturing processes, customers are increasingly demanding that companies initiate a green philosophy for their supply chain, from end to end. For hauliers, this means operating a “green fleet,” with lightweight vehicles and “Euro 6″ engines to reduce emissions.

This raises the prospect of a transportation mode shift in volume from roads onto train, short sea and intermodal transport. While this may seem like a simple and logical solution, these transport models vary vastly from country to country. It is often said that the only thing the rail infrastructure across European countries has as a common factor is the distance between the rails. Added to this the pertinent question:  will there be capacity in these alternative modes?  If there is a sudden shift away from the roads, will short sea, train and intermodal networks be ready to cope with demand?  At present, there is no definitive answer, but the consensus is that it”s a situation that could benefit from rapid and urgent improvement.

Capacity Shortage

The majority of the hauliers in Europe today are small and midsize companies; a substantial number are family owned. For these companies, there is a growing problem: succession. With no one available (or willing) to carry on the family business, a general shakeout is expected in the next two to five years, with large and financially stable hauliers acquiring some smaller family companies. This, in turn, will lead to a more dominant position for a small number of big European players. Compounding this position is the question of fleet finance – in such a small-margin industry, there is little capital available (and fewer willing lenders), which reduces the capacity of the smaller hauliers, further increasing the influence of the largest players.

What this means, of course, is that the negotiating power of these players will become bigger, making it increasingly challenging for shippers to secure beneficial rates.

Another concern is a shortage of drivers as a substantial portion of currently available drivers come from the post-WWII Baby Boom generation and will soon reach retirement. When these drivers started their careers, requirements were relatively low, with no minimum educational requirements for entry. Today, as in most jobs, drivers must meet a range of standards before suitably certified. For many young people, the prospect of becoming an international driver simply isn”t attractive enough, leading to declining numbers of people entering the trade, which will cause a capacity shortage within the next couple of years.

Labor Costs and Tightening Regulations

While labor laws in Europe are famously complicated, with differing legislation from country to country, labor cost has been a major influence in recent years on company profitability. Until as recently as 2005, a goldmine of cheap labor was available in Europe, with East European countries offering workers at a fraction of the cost of their Western counterparts. This disparity is almost gone, as Eastern countries raise their minimum wage to encourage a flourishing economy, minimize emigration and bring their residents” quality of life more in line with neighboring countries. Those companies employing or subcontracting East European drivers are already noticing a rise in costs and, in a few years, the days of low cost labor will be gone completely.

So What Does All This Mean for the U.S.?

Every U.S. company with operations in Europe will see an increase in transport costs as the transportation market overseas increasingly moves to a sellers” market, with a smaller number of hauliers gaining increasing influence as they expand. Even under normal conditions, with no global economic crisis to consider, shippers would face a hike in transportation spend.

Many of the clients I work with at LHC — leading blue-chip and Fortune 500 companies — are already preparing themselves for the imminent rise. They are securing transport capacity as far into the future as they can, while changing their procurement strategy towards cost avoidance. Above all, they are studying distribution changes. With smarter distribution (optimizing routes and consolidating shipments to locations in close proximity, increasing shipment volume, improving forecasting), annual logistics expenditure can be improved or maintained, actually offsetting the rise in transport rates.

U.S. companies are already questioning European transport rates, which rose by 7.9 percent in 2010. For many, the Continent is seen as a single unknown quantity in transport cost calculations and that will only continue as even minor changes in one territory can have an impact on overall transport network cost. For companies with existing dealings in Europe, or those expecting to launch on the Continent, it has never been more important to find out the real market trend, and to face the reality that those costs are about to rise for the unprepared.

CLX Logistics LLC, parent company of ChemLogix LLC, established international operations with the acquisition of Netherlands-based LHC Consulting, a consultancy firm offering supply chain management and logistics services to multiple industries throughout Europe.

Seven Questions to Determine If Your Logistics Provider is a “True Professional”

February 12th, 2013 - by andrewh

By Mike Challman
Vice President, North American Operations, ChemLogix, LLC

Lately, I’ve been chuckling at the TV commercials featuring tax software providers in which consumers learn that their “professional” tax preparer is actually a retail store clerk or a master plumber.  Whether that is a fair assessment of tax preparation companies or not, it got me thinking about third-party logistics. The implication of the commercial is obvious: some jobs are better left to “true” professionals. The question that it raises in my mind is:

What are the risks of assuming that any third-party logistics company can efficiently and safely manage your freight activity?

Many people might just assume that all transportation modes and services are basically the same thing.  The equipment looks similar, doesn’t it?  Trucks travel on the same roads, don’t they?  A load is a load, right?  Most of all, many third-party logistics providers claim that they can do it all.  Accept that assurance at your own peril.

When assessing 3PLs as potential transportation outsource providers, ask these seven fundamental questions, especially if you are a shipper of bulk chemicals and/or hazardous products:

1)  Is the provider’s core expertise primarily in transportation or in another logistics discipline?

2)  Does the provider have specific expertise in the transportation of your specific type of product?  In the chemical industry, the 3PL must understand the intricacies of bulk shipments and hazmat requirements.

3)  Is the provider offering the latest technological capabilities and are they ideally suited to your market?

4)  Does the provider’s operational staff possess significant experience and training in the proper and safe management of your type of product?  For chemical transportation, the staff should have knowledge of bulk and/or hazardous shipping.

5)  Can the provider offer insights into market conditions, rates, carriers and other critical aspects of transportation, both for your market segment and for the broader transportation marketplace?

6)  Is the provider’s proposed solution flexible and adaptable to your specific requirements?

7)  Does the provider demonstrate an appetite for continuous improvement, for challenging the status quo, and for finding new and better ways to address your evolving needs?

While there many good 3PLs, not all are primarily transportation experts; offer state-of-the-art technology; and/or hire, train and retain operations staff with significant industry experience.  Virtually no 3PL is an expert in every single industry.  And only the very best are ready or willing to adjust and adapt their solution to best fit customers’ needs, with an eye toward doing it even better tomorrow.

If the 3PL with whom you are working, or thinking about engaging, can’t answer at least five to six of those questions appropriately, you may be asking a “retail store clerk” or “plumber” to do your taxes.  The very best of the 3PL breed can effectively address all seven issues.   Just as tax-paying consumers need a professional tax consultant, you need a 3PL partner who is a truly experienced and verifiable professional.

Elements of An Effective Continuous Improvement Program For Long-Term Successful Supply Chain Operations

February 5th, 2013 - by admin


European Benchmark Study Reveals Trends In Overseas Chemical Bulk Freight Market

January 18th, 2013 - by andrewh

Michiel van Dorst, Supply Chain Consultant, LHC Consulting
Gijs Hofman,
Supply Chain Consultant, LHC Consulting

A 2012 Full Truck Load Chemical Liquid Bulk Benchmark study conducted by LHC Consulting (a CLX Logistics company) compared the contracted freight rates of chemical shippers for liquid bulk transport on a pan-European basis. The study accounted for differences in transport specifications including mode of transport, equipment type and product classification. Companies participating in the study collaboratively spend approximately €420 million ($560 million) annually on chemical liquid bulk freight.

Study results revealed that on an aggregate basis, freight rates for shipping chemical liquid bulk loads throughout Europe have decreased slightly between 2011 and 2012. At the same time, prices across different trade lanes often moved in opposite directions. For example, shipments originating from the Iberian Peninsula on average became 9% less expensive, caused, in part by the financial crisis in that part of Europe. During that same period, shipments out of Sweden became 5% more expensive.

While basic freight rates generally decreased from 2011 to 2012, increasing fuel prices (approximately 10%) propelled total costs for liquid bulk freight, indicating that fuel costs continue to account for an even larger part of total freight spend.

Outlook for 2013

Last year, 82% of shippers expected an average freight rate increase of up to 5%. This year, only 45% of surveyed shippers anticipate an increase, while that same percentage expects steady freight rates for the upcoming year.

While no shippers predicted a fall in freight rates last year, 10% of survey respondents expect chemical liquid bulk freight rates to decrease in 2013 by a maximum of 5%. The deteriorating macroeconomic situation in Europe may have stimulated this change of opinion among chemical shippers as an economic decline in chemicals demand will result in lower capacity requirements for shipping these products. As carriers typically try to maximize fleet utilization, they may agree to be paid lower prices by customers. This, in turn, could lead to a drop in freight rates.

Trends in chemical liquid bulk shipping

Interesting trends in chemical liquid bulk shipping identified in the study:

  • Most chemical shippers participating in the benchmark (86%) procure FTL chemical liquid bulk freight on a pan-European level. Only a small number of companies follows a more decentralized approach and procures liquid bulk freight on either a country or site level.
  • The main focus during a tender for chemical liquid bulk freight is on cost (35%), followed by service (25%), security (21%) and sustainability (13%).
  • Shippers have significantly increased their carrier base over the past year from an average of 19 to 29, perhaps as a way to safeguard capacity at a time when carriers frequently go out of business.
  • Not all shippers measure “on time” delivery performance of their carriers. Companies that do measure carriers’ performance on average apply a target of close to 99%. In day-to-day practice, carriers deliver almost 97 out of every 100 shipments on time.
  • Chemical shippers use a range of services provided by carriers including the shipment of dangerous goods under ADR regulations, EDI connectivity, temperature-controlled transport, loading and unloading, Track & Trace functionality and documents handling.
  • Most corporate strategies on sustainability in transport are limited to increasing the share of intermodal transport through a combination of road and rail, barge and/or short sea transport. While the carbon reduction potential of intermodal transport as compared to road transport can be significant for specific trade lanes, various operational and financial constraints inhibit a full modal shift across all lanes.

In September 2012, CLX Logistics LLC, parent company of ChemLogix LLC, established international operations with the acquisition of Netherlands-based LHC Consulting, a consultancy firm offering supply chain management and logistics services to multiple industries throughout Europe. With skill sets in logistics and technology implementation, in-depth knowledge of the European transportation market and a large European client base, LHC Consulting brings the essential resources necessary for CLX Logistics to expand its position in Europe while enhancing service to its current international customers.

Having Shipping Capacity Issues? Consider Obtaining Volume Where Capacity Already Exists

October 4th, 2012 - by admin