Trends in Third Party Logistics – Hayes H. Howard, American Shipper

Trends in Third Party Logistics


– Hayes H. Howard, American Shipper


Concept


Asset Heavy Provider

Asset Light Provider

Shipper: out sources logistics management

Shipper: in-house logistics management


Threads

What are we looking for in a relationship?

How to achieve inventory management and control?Visibility Integration



Speakers

Michael Connor - Logistics Sr. Manager, World Wide Procurement, Dell, Inc.,

Klaus Schnede - Manager, Marine

Procurement, Eastman Chemical Co. Edward Zaninelli - Vice President

Transpacific Westbound Trade, OOCL Jeffery G. Lee - Managing Director - North

America, Vanguard Logistics



Participation & Questions

You are a key member of the panel!


Thank You

First upMichael Connor, Dell, Inc.


Trends in Third Party Logistics – Michael Connor, Dell, Inc.

- How did it start and why?

What are we looking for in the relationship?

- Acquire the business

- Maintain the business

- Grow the business


1999 2000 Future

•Limited Structure•Supplier Free for All

•Improved Structure•Suppliers Picked from8 Providers

Consolidate volume To optimizeAir spend - regional

2000-2007

Consolidate volume to optimize ocean spend - regional

Consoli-date whse3PLs

StandardizeT & Cs globally

Dell DSI 35

Dell DSI 35

Dell DSI <.5

Dell DSI <.5Sup DSI

0

Sup DSI 0

Sup DSI 11.7

Sup DSI 11.7

Core global Providers ID’ddrive efficiencies And visibility

Globalize volume to optimize trans spend

JIT-DHO

W?

WH

Y?


Acquire the business:

- Demonstrate the value of your core competency

- Partner to develop the business case

- Integrity must be obvious

- Show global scalability

- Demonstrate financial strength


Maintain the business:

- Maintain service levels

- Your IT must scale ahead of customer

- Partner in Project Management

- Show global scalability

- Drive Financial Acumen to the lowest levels

– Michael Connor, Dell, Inc.

Be W

illin

g to W

alk

Away

!


Grow the business:

- Service both ends of the supply chain

- Expand in the right areas – you have a core competency too!

- Grow globally ahead of customer

- Be willing to partner with other 3PLs to service the customer

- Be Ready!



Wrap-Up:

- Everyone knows the game – act like it and put it on the table

- You are better positioned to manage the logistics – your actions must prove it

- Executive Alignment is a must to grow

- Be Prepared ahead of your customer – that’s what we really want



Thank You

Next UpKlaus Schnede, Eastman Chemical

– Michael Conner, Dell, Inc.


Klaus Schnede May 2007

– Klaus Schnede, Eastman Chemical

Trends in Third Party LogisticsTrends in Third Party Logistics – Revising Logistics Trend…..?Table of Contents

1. Introduction2. Cendian Corp. – History3. Eastman Today – - Forwarder Relationship - Controls back in-house - Inventory Control and Management - Security and Compliance4. Conclusion



2. Cendian Corp. - History

NVO/3PL Founded in 2000 as ShipChem Started as Eastman's domestic and

international logistics arm/network Focused on the chemical market 2003 expanded into other chemical

customers as 3PL Not able to meet profitability goals Off the shelf IT-Systems not fully capable to

support the business Dissolved in 2005



Eastman Today - Forwarder Relationships

Using three Forwarders for our business today; set up by destination region

Mostly used for documentation Some bookings are still made with the

Forwarders; most bookings are through INTTRA

Letter of credit support Destination customs clearance and

warehousing



Controls back in-house

Eastman rehired most of the operations Cendian employees

A handful of Cendian procurement professionals were hired by Eastman

Total control of all domestic and international transportation is back in-house

Vendors are being measured and held accountable

Freight is being negotiated by Eastman



Inventory Control and Management Performed by Eastman, in-house

Warehouse and Container Management Performed by 3PLs

Dedicated Container Truck Fleet Management Outsourced today



Security and Compliance

Handled in-house Only working with certified vendors on a

global basis Member of American Chemistry Council and

a preference for Responsible Care® carriers Only use C-TPAT certified carriers Chemtec for hazmat response



4. Conclusion – The Future…..?

Eastman's Logistics seeks smart sourced solutions in the future. Outsourcing decisions will be made selectively on tactical functions that can be done better by 3PLs. Core functions however, such as Strategy, Procurement and Management will not be outsourced.



Thank You


Next UpEdward Zaninelli, OOCL


South CarolinaInternational Trade Conference

Edward ZaninelliOOCL USA

– Edward Zaninelli, OOCL


TRANS-PACIFIC TRANS-PACIFIC 18 million TEU18 million TEU

10.4 % Growth10.4 % Growth

ASIA-EUROPE ASIA-EUROPE 12.2 million TEU12.2 million TEU

10.9% Growth10.9% Growth

TRANS-ATLANTIC TRANS-ATLANTIC 5.4 million TEU5.4 million TEU

5.3% Growth5.3% Growth

INTRA-ASIA INTRA-ASIA 33 million TEU33 million TEU(including Australia, (including Australia,

Indian Subcontinent and Indian Subcontinent and Middle East)Middle East)

12 % Growth12 % Growth Source: Drewry Consultants, 2005

OTHER TRADESOTHER TRADES

North-South North-South 19.2 million TEU19.2 million TEU

Intra-RegionalIntra-Regional16.1 million TEU16.1 million TEU

Global Container Trade PerspectiveGlobal Container Trade Perspective– Edward Zaninelli, OOCL

Trends in Third Party Logistics – Edward Zaninelli, OOCL

Trends in Third Party Logistics – Edward Zaninelli, OOCL


U.S. Liner Shipping LandscapeU.S. Liner Shipping Landscape New mega ships increase trade capacity

Global trade growth outpaces infrastructure including ports, railroads, terminals, trucking and warehouses.

Cross-industry collaboration synchronizes transport activities to improve efficiency and service quality

Trade imbalance: imports approach 3 x export volume

Export becomes a cost recovery business model

Terminal, transportation and fuel cost increases affect carrier profitability, products and services




Round Trip unit income under pressureRound Trip unit income under pressure

Source: Drewry



Where do the Carriers Stand

Profits have been compressed by internal and external forces

Fuel costs, environmental challenges, limits to NAT Infrastructure and more

Some Carriers trying to make the jump from liner mentality to logistics management

Historical results of the carrier/3PL is mixed or clouded

Major challenge to be a multi carrier 3PL when you are a carrier



Carrier Trends in Logistics

Inclusion of the entire sales force in the logistics strategy, does this work?

Can liner sales sell logistics? Will the trend continue? Most carriers opening up 3PL shops, but

many are on a small scale Two largest carrier 3PL groups may not be

profitable or are marginal



Carrier Logistics/Asset Owners/Closing Remarks

Do we do it for the money? Do we do it for the tie in? How do Asset owners see 3PL opportunities How does an Asset owner compete with

non Asset owner logistics There’s money in logistics management Can Carriers access logistical dollars to

compete with non Asset owners for profit???



Thank You

Next UpJeffery G. Lee, Vanguard Logistics



Logistics: Warehouse to Boardroom


Examine your supply chain


Trend behind the trend

Shoes: $0.34 of $45

TV: $12.50 of $2000

Motorcycle $90 of $11,000


Challenges

Inefficient sourcing due to lack of cost info

Higher inventories or lost sales

High cost of expedited freight

High overhead cost managing logistics functions

Inbound lead time variability

Reactive rather than proactive management

Disconnect between various transport modes


Needs and Solutions Reliability Overall Cost reduction End to end Visibility Speed/ Tighter controls Flexibility Global Coverage Predictability Optimization/Data

warehousing Deeper integration


Industry Response

Visibility Predictability Scope


Thank You

Next Up

You!

– Jeffery G. Lee, Vanguard Logistics


Questions

Documents

Trends in Third Party Logistics – Hayes H. Howard, American Shipper