Slide 1

Logistics, Getting Your Goods To Your Customers Efficiently….Shipping Can Take A Bite Out Of Your Bottom Line

Jacqueline R. RussoVice President North AmericaKN ExposerviceKuehne & Nagel, Inc.

Logistics, Getting Your Goods To Your Customers Efficiently….Shipping Can Take A Bite Out Of Your Bottom Line

Jacqueline R. RussoVice President North AmericaKN ExposerviceKuehne & Nagel, Inc.

Slide 2

Components of TransportationComponents of Transportation

International Freight Forwarding

U.S. Customs Clearance

Terms of Shipment/Payment (Inco Terms) DDP, DDU, Collect, Prepaid, Customer Routed

Domestic Transportation (U.S. Air and Truck Freight) FUEL SURCHARGES

Supply Chain Management

International Freight Forwarding

U.S. Customs Clearance

Terms of Shipment/Payment (Inco Terms) DDP, DDU, Collect, Prepaid, Customer Routed

Domestic Transportation (U.S. Air and Truck Freight) FUEL SURCHARGES

Supply Chain Management

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International Freight ForwardingInternational Freight Forwarding

Importing: If you are a U.S. Company with production or supply from abroad, what is involved to bring goods into the U.S.

Exporting: If you sell goods abroad, working with a forwarder can ease the transaction. *Currently, Capacity is Tight due to Low $; need to plan ahead and be flexible.--

o Choose your own freight forwarder (making a selection in the U.S. allows for greater control on cost and transport.)

o Find out freight rates in advance, watch for hidden costs. I.e. additional handling charges on foreign side. Ask for door to door or door to port rates. Ex-Works is not a bad idea.

Importing: If you are a U.S. Company with production or supply from abroad, what is involved to bring goods into the U.S.

Exporting: If you sell goods abroad, working with a forwarder can ease the transaction. *Currently, Capacity is Tight due to Low $; need to plan ahead and be flexible.--

o Choose your own freight forwarder (making a selection in the U.S. allows for greater control on cost and transport.)

o Find out freight rates in advance, watch for hidden costs. I.e. additional handling charges on foreign side. Ask for door to door or door to port rates. Ex-Works is not a bad idea.

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Import Requirements Import Requirements

o Demand complete paperwork from your supplier. If you are the supplier, learn what paperwork is required and comply to regulations.

o Homeland security and the TSA have changed the landscape of international freight. **FF used to offer to do all of the paperwork and it was a selling tool. This is no longer an option.

o Documents:

- Should be in English

- Should have a complete description with your harmonized tariff number. Are you familiar with the Harmonized System?

o Insist upon good information flow between your import/export department, supplier, freight forwarder/customs broker.

o Stay on top of the shipments to save costs.

Slide 5

U.S. Customs ClearanceU.S. Customs Clearance

Types of Customs Entries

Consumption (Permanent)

T.I.B. (Temporary –Only goods may not stay in the U.S.– Excellent for Prototypes.)

Warehouse (Bonded Area) Goods can stay in bond up to 5 years – Really only beneficial for high duty items, or goods which will be re-exported. Different than a Free Trade Zone

For the Imports the Automotive Industry, most entries are consumption for ultimate distribution domestically. If you re-export, and there is a duty associated with your product, consider the Foreign Trade Zone.

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Customs Clearance ProcessCustoms Clearance Process

Freight Forwarder can be involved at any point in the manufacturing process. The sooner the better for efficiency.

Airway Bill or Ocean Bill of Lading

Complete Commercial Invoices In English with values in USD

Homeland Security/TSA Longer lead times, more frequent exams, delays and extra costs

U.S. Customs Power of Attorney (document which allows Customs Broker to act on your behalf)

**Above must be on hand to begin Clearance

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U.S. Customs BondU.S. Customs Bond

All U.S. Customs Entries Require a Bond

SEB – Single Entry Bond (This bond is written on an entry by entry basis to cover a particular shipment.)

Rates for SEB’s are more expensive than a Continuous Bond.

Continuous Bond – Written for a One (1) year period and covers all entries during that period. (Cost Effective if you enter more than 15 shipments per year.)

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Customs Clearance ProcessCustoms Clearance Process

Documents presented to U.S. Customs Electronically (ABI system)

Customs replies electronically if goods are cleared or require document review

Broker assembles a package of documents for presentation to Customs

Goods either cleared or flagged for exam Exams are very common today Wait times for exam appointments can be

significant

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Customs Clearance cont.Customs Clearance cont.

Exam complete…..goods released

Your organization or forwarder arranges for local delivery.

Duties are paid within 10 days either direct by you to Customs or by your broker Trend for Customers to Pay Customs Direct to

ensure timely payment.

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Homeland Security – Transport WildcardHomeland Security – Transport Wildcard

Post 9/11 has brought many new wrinkles to the Customs Process. Many more exams required Customs must be notified of cargo contents prior

to export on foreign side Exams sometimes required in foreign country (I.e.

in Canada prior to transport to the U.S.) Delays for exam can be significant

Airlines reducing free days (storage accrues even if goods are waiting examination)

SS Lines backed up in West Coast and Miami (long delays for clearance and pick up possible.) Container fees as much as USD 100/day.

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RecommendationsRecommendations

Ensure paperwork is correct

Follow up with shipper and forwarder regularly to answer questions and supply any needed additional documents

Be prepared: Just in Time Internationally is less possible than before (Air freight may be your only option.) U.S. Warehousing is may be key to keeping the orders flowing.

Stay involved in the shipment. Many companies have their foreign manufacturers control the process which can cost money and time.

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Exporting Exporting

If you are controlling the transport process, ensure your forwarder is aware of shipping terms.

Provide clear export invoices with proper values (Export Declarations are required electronically for freight valued over USD 2500.)

Ask for complete shipping rates Hint: Negotiate ocean and air rates for a variety of

weights in advance. Shortages in space available air and sea therefore

quote freight rates separate from your product. Again, Just In Time at risk

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International “MOST IMPORTANTS”International “MOST IMPORTANTS”

International Transportation requires attention to detail and involvement by your organization. Key to success is knowledge and participation.

U.S. Customs clearance is a process in the state of flux due to security changes. Stay abreast of current conditions, ask questions.

Inspections will increase until better screening equipment available. TSA going to 100% screening.

The virtual world or transport involves a lot of paper. Proper documents will ease the way.

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Where To From Here?Where To From Here?

Transportation Is But One STEP in Supply Chain Management

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Supply Chain DefinitionsSupply Chain Definitions

Supply Chain Management (SCM) as defined by the Council of Supply Chain Management Professionals (CSCMP): “Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.”

Supply Chain Management (SCM) as defined by the Council of Supply Chain Management Professionals (CSCMP): “Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.”

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Supply Chain Definitions - 2Supply Chain Definitions - 2

Third Party Logistics Provider: A firm which provides multiple logistics services for use by customers. Preferably, these services are integrated, or "bundled" together by the provider. These firms facilitate the movement of parts and materials from suppliers to manufacturers, and finished products from manufacturers to distributors and retailers. Among the services which they provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding.

Third Party Logistics Provider: A firm which provides multiple logistics services for use by customers. Preferably, these services are integrated, or "bundled" together by the provider. These firms facilitate the movement of parts and materials from suppliers to manufacturers, and finished products from manufacturers to distributors and retailers. Among the services which they provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding.

Third-Party Logistics (3PL): Outsourcing all or much of a company’s logistics operations to a specialized company.

Third-Party Logistics (3PL): Outsourcing all or much of a company’s logistics operations to a specialized company.

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Logistics Market ObservationsLogistics Market Observations

Potential for continued 3PL consolidations

Shippers continue to outsource more logistics• But choose not to outsource majority of logistics operations*

Continued need for collaboration between warehouse and transportation units**• Driven by hours of service legislation, increasing fuel cost and

customer service pressure

Lengthening and complexity of supply chains• Especially as more production moves to Asia & 3PLs learn to

respond to growing needs of market

Planning & managing inventory remains issue• Visibility throughout supply chain still needed

• Where available, must be better used

* www.eyefortransport.com* www.eyefortransport.com ** Dr. Don Maier, Ph. D. - University of St. Francis

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Information Management Lead Logistics

Global Supply Chain ExecutionGlobal Supply Chain Execution

Sea Freight

Air Freight

Customs Brokerage

Vendor ManagedInventory (VMI)

Shared / Multi-client

Dedicated / Contract

Product Transformation

& Value-add ServicesFreight Audit & Pay

All-Modes Freight Management

Carrier Selection & Management

Service Logistics

Reverse Logistics

Planning & MonitoringPlanning & Monitoring

Analysis & Design

Risk Management& Claims

Freight Freight ForwardingForwarding

SupplySupplyLogisticsLogistics WarehousingWarehousing DistributionDistribution AftermarketAftermarket

ServicesServices

SourceSource MakeMake DeliverDeliver ReturnReturnPlanPlan

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Complete Solution for North AmericaComplete Solution for North AmericaManage receipt of imported goods• Clear Customs• Deconsolidate loads• Transport goods to

distribution points

Store & manage inventory• Basic to complex

value-added services

Manage outbound transportation • Domestic• Transborder

• Non-Resident Importer• Maquiladora

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Network Optimization MethodologyNetwork Optimization Methodology

R e v i e w p r o j e c t g o a l s& o b j e c t i v e s

D e s c r i b e c u r r e n tn e t w o r k s t r a t e g y

A n a l y z e l o g i s t i c sp r o c e s s e s & e n a b l e r s

D e f i n ec u s t o m e r n e e d s

D e t e r m i n el o g i s t i c s c o s t d r i v e r s

D e f i n ep r o d u c t s & m a r k e t s

D e v e l o pc o n c e p t u a l m o d e l

D e v e l o p d a t ar e q u i r e m e n t s

S u b m i t d a t a r e q u e s t R e c e i v e & o r g a n i z e

d a t a

D a t a c l e a n i n g S t a t i s t i c a l a n a l y s i s P r o d u c t f l o w s u m m a r y A s s u m p t i o n

g e n e r a t i o n

P r o d u c t f l o w m o d e l e d T r a n s p o r t a t i o n p r o f i l e

d e v e l o p e d M o d e l e d b a s e l i n e /

o p e r a t i n g m o d e l A s s u m p t i o n s

d o c u m e n t e d C a l i b r a t e m o d e l

D e v e l o p s c e n a r i o st o b e m o d e l e d

C l e a n - s h e e t a p p r o a c h M o d e l w i t h

s e n s i t i v i t y a n a l y s i s D e t e r m i n e

o p t i m a l l o c a t i o n s M o d e l o u t p u t a n a l y s i s S e n s i t i v i t y t r a d e - o f f

a n a l y s i s O v e r a l l n e t w o r k

s t r a t e g y V a l i d a t i o n

T r a n s p o r t a t i o nc o s t i m p a c t

O v e r a l l c o s t a n a l y s i s S e r v i c e a n a l y s i s I m p l e m e n t a t i o n

i m p a c t a s s e s s m e n t N e t w o r k d e s i g n

r e c o m m e n d a t i o n

Analyze &OptimizeNetwork

Analyze &OptimizeNetwork

BaselineNetworkBaselineNetwork

AnalyzeData

AnalyzeData

GatherData

GatherData

SupplyChain

Strategy

SupplyChain

StrategyRecommendRecommend

Establish BaselineEstablish Baseline Analysis of What-IfsAnalysis of What-Ifs RecommendationRecommendation

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Benefits of Multi-Client WarehousingBenefits of Multi-Client Warehousing

Pay for only services, space & time needed

Enter new markets without capital investment

Outsource individual logistics operations as needed

Optimize distribution network to multiple locations

Manage changing distribution needs

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Supply LogisticsSupply Logistics

Manages flow of goods & information from suppliers into manufacturing• Reduces cycle time & inventory

Functional elements include:• Automated replenishment of supply inventory

• Manufacturer & suppliers collaborate using Web tools• Flow based on actual demand

• Inventory postponement • Vendor Managed Inventory (VMI) program

• Value-added services to increase efficiency of I/B material flow• Kitting, inspection, programming, etc.

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Product Transformation / Value-added ServicesProduct Transformation / Value-added Services

Transformation• Kitting• Subassembly• Postponement

• Build-to-order

• Repacking / custom packing

Value-added• Inventory management• Pick & pack• Bundling, strapping, & wrapping• Consolidation• Export packing• Climate control• Barcode processing• Pooled distribution• Cross-dock services• Customs bonded• Literature fulfillment• Cycle counts• Customer system order

processing• EDI services

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Transportation ManagementTransportation Management

Multi-mode, non-asset-based

Transportation Control Center for centralized:• Carrier selection & management

• All modes freight management

• Freight audit & payment

• Risk management & claims

Best-in-class transportation managementsystem (TMS)

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Advantages to OutsourcingAdvantages to Outsourcing

Focus on core competencies (manufacturing, R&D, sales, etc)

Utilize existing locations to increase manufacturing capacity or “shed the capital asset”

Move from a fixed cost supply chain to a flexible, variable cost supply chain

Gain access to supply chain specialists

Lower overall landed cost of products

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Kuehne + Nagel OverviewKuehne + Nagel Overview

Global provider of end-to-end supply-chain solutions• 115 years of international experience

• 40,000 employees in 700+ offices across 96 countries

Capabilities• World’s Largest Ocean Freight Forwarder

• Manage 25M square feet warehouse space globally

• Manage 1.5M TEUs (containers) annually

• Top 5 in airfreight forwarding

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MOVING FORWARDMOVING FORWARD

International Export and Import has become more complex but NOT impossible.

Key to success is in the planning and selection of the right partners. Not every forwarder is best suited for all portions of the move.

The financial possibilities are HUGE. Best of Luck! QUESTIONS?