CC BY
43UDC 338.47:656.613 DOI: https://doi.org/10.46783/smart-scm/2020-2-4
JEL Classification: L91, M21, R41. Received: 29 July 2020
Patkovskyi Sergii. Business practitioner. Business development manager, emerging markets Kuehne + Nagel Inc., Chicago, IL USA
ORCID - 0000-0002-5369-7580 Researcher ID -Scopus author id: -
Lytvynenko S.L. PhD (Economics), Associate Professor, Associate Professor of International Economics Department National Aviation University (Ukraine)
ORCID - 0000-0001-7185-1193 Researcher ID - R-6986-2018 Scopus author id: 36573718100
THE WAYS OF SUPPLY CHAIN RESPONSIVENESS INCREASE AT TIME OF PORT INFRASTRUCTURE AND TRANSPORTATION ASSETS
PRODUCTIVITY DISRUPTION
Sergii Patkovskyi, Sergiy Lytvynenko "The Ways of Supply Chain Responsiveness Increase at Time of Port Infrastructure and Transportation Assets Productivity Disruption". The article determined that the delivery of goods by sea to the United States has its peculiarities and nuances. Specific trends over the last few years which have led to a number of supply chain disruptions have been described. An analysis of previous research has shown that the issue of increasing of the supply chain responsiveness in terms of reducing port infrastructure and transportation assets has been studied insufficiently. The volumes of traffic through US ports for the last three years were analyzed. It was identified that inefficiency in operation leads to an increase in inventories and immobilization of cash flows, as well as increased transportation, storage and demurrage costs. The complexity of the processes requires a systematic approach to reducing the main risks and building a multi-scenario model of operation with a flexible supply chain. The system of strategic and tactical measures for US shippers has been developed to reduce key risks. At the strategic level, it was proposed to implement a system of 3-4 distribution centers linked to supply chains on both coasts of the United States; ability of capacity variation; availability of 1-2 intermodal distribution centers; availability of alternative routes and ports of arrival, as well as various vehicles; maximum reliability of the last mile; real-time process management including the use of outrunning indicators to trace shifts. It was proposed to implement the tactical level through operations planning and increase in time of placing seafreight bookings and inland transport allocation; realization of the opportunity to choose alternative services by balancing actual supply and demand; reducing capacity constraints by using multiple routes and ports of arrival; active use of services for accelerated full container load for goods that are sensitive to time fluctuations; preventing container dwells. The dynamics of containers dwell time served in the port Los Angeles in 2018 during the trade war between the US and China was analyzed and the impact of new tariffs on imports of steel and aluminum products imported from abroad, as well as a wide range goods made in China was determined. A case study of6250 shipments from China ports to the port of Los Angeles was conducted, dividing them to containers terminated at port of arrival and containers moved
intermodally to inland terminals (dry ports) by rail. Storage periods peaked in the fourth quarter, when the number of containers that spent over 10 days and over 20 days doubled in each consecutive month.
Keywords: supply chain, responsiveness, seaport, trade war, cargo, disruption, transport assets productivity.
Сергш Патковський, Сергш Литвиненко «Шляхи тдвищення стшкостi ланцюга поставок при перебоях в продуктивност'1 морських nopmie та транспортних aKmueie». У
cmammi було визначено, що доставка вантажiв морем до США мае своУ особливостi та нюанси. Було охарактеризовано специфiчнi тенденцп за останн клька рошв, яК призвели до ряду перебоУв у ланцюгах поставок. При анал'з попередн'!х наукових досл'джень виявлено, що проблема п'!двищення стшкост '! ланцюга доставки за умов скорочення транспортних емностей та зменшення пропускно)' спроможностi морських порт!в вивчена недостатньо. Проанал'вовано обсяги перевезень вантаж!в через порти США за останн три роки. Визначено, що неефективн'1сть роботи призводить до збльшення нвентарних запаав i iммобШзацП грошових потоюв, а також збльшення витрат на перевезення, збер '1гання, демередж та детеншн. Складн '1сть процеав вимагае системного пдходу до зниження основних ризик'т та вибудовування багатосценарно'Умодел'1 роботи '¡з гнучким ланцюгом постачань. Розроблена система сmраmегiчнихта тактичнихзаход/'в для вантажов'дправник'в США з метою звуження ключових ризиюв. На сmраmегiчному рiвнi запропоновано реалiзацiю системи iз 34 дистрибу^йних ценmрiв, якiпов'язанiзланцюгами постачань на обохузбережжях США; можливiсmь варiювання емностями; наявнiсmь 1-2 розподльчих центр'т; наявнсть альтернативних маршруmiв та порmiв прибуття, а також використання рiзних клаав транспортних акmивiв; максимальна надiйнiсmь останньо'У мил'г, керування процесом у реальному режимi часу, в тому числi i шляхом використання випереджаючих iндикаmорiв для вiдсmеження змн. Тактичний рiвень запропоновано реалiзовуваmи шляхом опера^йного планування та збльшення mермiнiв розмiщення замовлень на морсьм перевезення i розподл по внуmрiшньому транспорту; реалiзацiï можливосmi вибору альтернативних сервiсiв морських л!н!Ш виходячи з фактичного балансу попиту i пропозицИ; зменшення обмежень транспортних емностей шляхом використання деклькох маршруmiв i порmiв прибуття; активного використання послуг з прискореного хендлiнгу контейнера для mоварiв, якi чуmливi до часових коливань; унеможливлення простою конmейнерiв. Було проаналiзовано динамiку часу затримки для контейнер'в, якi були обслуженi в порту Лос-Анджелеса у 2018 роц пiд час торговельноУвйни м'/жСША та Китаем та виявлено вплив новихmарифiв на широкий асортимент mоварiв, вироблених в Кита). Проведено дослiдження 6250 вiдправок з порmiв Китаю в порт Лос-Анджелес. Вони були роздiленi на контейнери, що mермiнуюmься в порту прибуття, i контейнери, що перемiщуюmься в iнmермодальних сполученнях на внуmрiшнi mермiнали (сухi порти) залiзницею Пер/'оди збер^ання досягли свого пку в четвертому кварmалi, коли кльюсть конmейнерiв, як провели бльше 10 днiв i бльше20 д^в, подвоювалося в кожному наступному м'сящ.
Ключов'1 слова: ланцюг постачання, спйккть, морський порт, торпвельна вшна, вантаж, збм, продуктивысть транспортних активiв
Сергей Патковський, Сергей Литвиненко «Пути повышения устойчивости цепи поставок при перебоях в продуктивности портов и транспортных активов». В статье было определено, что доставка грузов морем в США имеет свои особенности и нюансы. Были охарактеризованы специфические тенденции за последние несколько лет, которые привели к ряду перебоев в цепях поставок. При анализе предыдущих научных исследований выявлено, что проблема повышения устойчивости цепи доставки в условиях сокращения транспортных емкостей и уменьшение пропускной способности морских портов изучена недостаточно. Проанализированы объемы перевозок грузов через порты США за последние три года. Определено, что неэффективность работы приводит к увеличению инвентарных запасов и иммобилизации денежных потоков, а также увеличение расходов на перевозку, хранение и демередж. Сложность процессов требует системного подхода к снижению основных рисков и выстраивания многосценарной модели работы с гибкой цепью поставок. Разработана система стратегических и тактических мероприятий для грузоотправителей США с целью сужения ключевых рисков. На стратегическом уровне предложено реализацию системы из 3-4 распределительных центров,
которые связаны с цепями поставок на обоих побережьях США; возможность варьирования емкостями; наличие 1-2 интермодальных распределительных центров; наличие альтернативных маршрутов и портов прибытия, а также различных классов транспортных активов; максимальная надежность последней мили; управление процессом в режиме реального времени, в том числе и путем использования системы опережающих показателей для отслеживания изменений. Тактический уровень предложено реализовывать путем операционного планирования и увеличения сроков размещения заказов на морские перевозки и аллоцирования транспортных емкостей для наземной перевозки; реализации возможности выбора альтернативных сервисов морских линий исходя из баланса фактического спроса и предложения;уменьшения ограничений по емкостям путем использования нескольких маршрутов и портов прибытия; активное использования «экспресс» сервисов доставки товаров в полных контейнерах, которые чувствительны к временным колебаниям; предотвращения простоя контейнеров. Была проанализирована динамика времени задержки для контейнеров, которые были обработаны в порту Лос-Анджелеса в 2018 году во время торговой войны между США и Китаем и выявлено влияние дополнительных пошлин на широкий ассортимент товаров, произведенных в Китае. Проведено исследование 6250 отправок из портов Китая в порт Лос-Анджелес. Они были разделены на контейнеры, которые следовали до порта прибытия, и контейнеры, которые перемещались в интермодальных сообщениях на наземные терминалы (сухие порты) по железной дороге. Периоды хранения достигли своего пика в четвертом квартале, когда количество контейнеров, провели более 10 дней и более 20 дней, удваивалось в каждом следующем месяце.
Ключевые слова: цепь поставок, устойчивость, морской порт, торговая война, груз, сбой, продуктивность транспортных активов.
Introduction. Over the past decade increasing the sustainability and reliability of supply chains has become key issue for all participants in the delivery process. Even a slight deviation in a certain part of the supply chain can cause catastrophic consequences for the whole chain. The key criterion of delivery efficiency is the just-in-time logistics principle. Although maritime shipping involves longer delivery times, especially compared to air transport, transit time parameters are also highly important given the planning of the entire supply chain.
Cargo shipping to the United States has its own characteristics and nuances. In addition, it should be noted that there are specific trends in this market. Last several years brought a number of disruptions to seafreight based supply chains in the US:
- Union strikes 2015;
- ELD (Electronic Logging Device) regulation implementation Q1 2018;
- emerging Trade War with China in H2 2018 when Section 301 Import Tariffs were imposed against wide variety of Chinese goods;
- COVID19 unprecedented vessel capacity removal by steam ship lines from the main trade lanes.
So, it is necessary to study in more detail the characteristics of this market and develop effective proposals to increase the sustainability and reliability of supply chains.
Literature and research review. The deepening of globalization and integration processes, the widespread use of modern information technologies determines the need to find ways to increase the sustainability of the supply chain while reducing existing risks. This is especially relevant in direction of ensuring sustainability in the face of business environment complexity and uncertainty. The issue was studied by many researchers, namely Mota B., Gomes M.I., Carvalho A., Barbosa-Povoa A.P., Lee H.L., Shen Z.-J., Lee H., Gillai B., Chen Y., Rammohan S. Mota B. et al. [1] focused on creating an appropriate decision-making support tool to provide sustainable supply chain designing and planning taking into account economic, environmental and social aspects. The application of the offered tool was considered through a case-study of the
company with a head office in European region.
Lee H. et al. [2] devoted their research to global supply chain and logistics improvement for better service and customer satisfaction, in particular through deregulation, trade liberalization, ecommerce development, formation of multinational logistics alliances and networks targeted to the development of the U.S.China B2C sector. Lee H.L. and Shen Z.-J. [3] studied innovations introduced into supply chains and logistics in the framework of the Belt and Road Initiative in China. Implementation of such a project contributed to the improving interaction between business representatives and providing better value. The authors analyzed international cooperation and supportive adjustments in carrying out supply chain improvements. Also risk management in supply chain is essential for optimal operational performance, that was noted by Munir et al. [4]. Authors offered the decision-making framework considering the links and dependencies between supply chain risk management and integration. Xu M. et al. [5] designed the framework for evaluating risks in supply chains based on economic, social, and environmental sustainability dimensions.
Peculiarities of improving supply chains and providing sustainable operation of seaports are considered by a number of researchers and practitioners. Hossain N.U.I. et al. [6] analyzed the interconnection between waterway port infrastructure and adjusting supply chain causing failures in the system. The evaluation model can be used as a tool for decision-making in eliminating critical risks in performance. Oh H., Lee S.-W., and Seo Y.-J. [7] conducted analysis of South Korean port sustainability indicators in terms of its competitiveness, optimization of resource allocation and operational improvement. The authors, like most other researchers, identified economic, social, and environmental dimensions of sustainability. Baert L. and Reynaerts J. [8] devoted their study to aspects of factors competition
between ports, outlining port charges and congestion as main factors in decision making of port users. Based on this, optimal logistics can be ensured.
Identification of port hinterlands and their overlapping was done on the example of Chinese foreign trade container ports for perspective seaport development and operation planning in terms of infrastructure improvement by Wan S. et al. [9]. The paper reveals the features and importance of interconnection and cooperation between international hub ports, regional hubs, and feeder ports. Han C.-H. [10] also highlighted the importance of integration to ensure port supply chain effective and quality performance (case of Busan container ports). Ascencio L.M et al. [11] concentrated their study on proposals on introducing modern supply chain management practices based on multilateral collaboration for the port development.
Another aspect of port community system development was considered by Moros-Daza A. et al. [12]. Authors conducted multivariate analysis for the purpose of developing specific IT tool that will help to reduce seaport costs and increase its competitiveness. Essential components of seaport sustainability are environmental factors. In this direction, research was carried out by Notteboom T. et al. [13], giving comprehensive study of perspectives and methods of interaction between port actors in the region in terms of green supply chain management. Sustainability of the seaport cannot be provided without elimination of critical risks in supply chain. Thus, the appropriate tool for risk management should be used. In particular, Jiang B., Li J., and Shen S. [14] offered an AHP method for this issue to increase port efficiency.
Despite the significant amount of research and their importance, the issue of increasing the supply chain responsiveness in terms of port infrastructure and transportation assets productivity reduction has been insufficiently studied.
can cover normal case operations volume and encounters congestion or clogging at time of inbound containers volume spike.
US inbound seafreight volume developments were determined by quite strong consumption and retail sales 2017 through 2019 (Table 1). Growth pace accelerated by mid of 2018 driven by US shippers advancing their cargo and outrunning actual demand. This was caused by 301 Import Tariff Section imposed by White House administrations as of Jan 1 2019. Cargo advances resulted in 8.48% growth year over year according to 20 largest US ports study conducted. However, with gradual decline in 2019 it is obvious that previous year increase was rather reflected in inventory stocks than in actual sales numbers.
Table 1.
Volumes of traffic through US ports (2017-2019 years)_
PORT OF ARRIVAL / QUARTERS 2017 Q1, TEU 2017 Q2, TEU 2017 Q3, TEU 2017 Q4, TEU 2018 Q1, TEU 2018 Q2, TEU 2018 Q3, TEU 2018 Q4, TEU 2019 Q1, TEU 2019 Q2, TEU 2019 Q3, TEU 2019 Q4, TEU Total TEU
PORTS TOTAL
LOS ANGELES,CA 1 066 891,803 1 145 150,31 1 231 091,469 1 233 260,699 1 058 064,691 1 150 753,034 1 262 219,423 1 365 775,284 1 062 653,666 1 173 507,012 1 302 693,478 1 128 073,736 14 180 134,604
LONG BEACH,CA 769 342,221 984 343,24 1 070 916,882 984 162,133 930 153,13 1 069 932,885 1 046 615,138 1 061 397,754 845 600,309 931 688,675 998 1 63,157 935 527,936 11 627 843,461
EW YORK/NEWARK AREA NEWARK, NEW JERSEY 747 946,11 832 459,029 891 552,783 869 034,214 849 390,474 873 291,266 950 646,209 965 073,171 883 149,145 926 594,496 973 681,703 938 083,552 10 700 902,151
SAVANNAH,GA 431 035,327 461 206,579 492 784,337 480 490,632 482 173,631 507 194,312 537 653,182 553 246,812 543 933,024 531 751,445 600 881,08 541 637,752 6 163 988,114
NORFOLK,VA 288 927,102 296 495,456 323 867,882 329 695,471 305 762,006 305 652,615 337 212,344 337 445,417 312 701,934 338 662,478 348 826,076 317 747,069 3 843 995,849
HOUSTON,TX 235 771,906 265 352,026 278 650,443 282 286,465 263 233,556 287 067,046 319 284,839 310 412,506 293 369,755 315 964,412 329 200,768 303 223,745 3 483 817,466
CHARLESTONS 231 210,408 240 839,102 237 204,57 241 140,137 236 095,082 252 916,057 256 796,134 269 075,773 256 512,719 262 082,28 286 946,659 261 707,417 3 032 526,337
OAKLAND,CA 194 037,508 225 810,133 237 140,12 223 636,605 207 327,511 240 915,417 249 964,285 247 241,595 222 715,954 244 564,643 259 983,952 235 077,624 2 788 415,346
TACOMA,WA 224 779,65 201 862,653 195 220,065 199 989,339 176 218,842 201 832,998 211 634,466 222 722,867 183 640,073 204 077,199 224 274,337 209 049,403 2 455 301,891
SEATTLE,WA 121 628,218 158 002,763 173 020,535 171 715,904 155 064,898 178 249,582 195 606,708 206 104,225 163 345,681 161 378,457 163 404,68 129 015,754 1 976 537,405
PORTS TERMINATED
LOS ANGELES,CA 798 280,022 845 559,348 920 891,332 928 481,27 779 079,687 839 716,435 963 154,756 1 022 909,315 793 535,265 865 821,486 992 311,508 848 111,557 10 597 851,981
EW YORK/NEWARK AREA NEWARK, NEW JERSEY 648 132,874 709 843,117 762 052,381 735 303,962 714 036,795 724 884,904 796 097,631 812 930,71 740 004,867 775 899,682 821 434,813 787 403,093 9 028 024,83
LONG BEACH,CA 554 936,125 721 290,535 796 846,345 741 375,684 680 841,442 779 381,026 806 270,814 828 687,897 648 956,758 727 319,997 794 741,191 748 119,489 8 828 767,302
SAVANNAH,GA 380 332,881 403 889,961 434 413,515 422 284,307 417 055,813 434 052,44 460 625,121 474 136,608 463 546,996 453 895,448 520 1 94,785 466 526,598 5 330 954,474
HOUSTON,TX 220 829,441 248 434,847 262 371,402 266 107,794 249 067,367 270 422,89 301 867,937 293 043,201 275 457,566 297 961,826 310 644,204 285 728,414 3 281 936,889
NORFOUKVA 214 939,609 220 843,693 243 864,599 253 178,538 234 035,047 226 173,043 256 059,363 258 693,396 234 390,69 250 606,909 267 155,118 243 154,627 2 903 094,632
CHARLESTONS 194 137,113 205 393,83 200 836,951 207 050,198 201 221,403 216 733,364 219 806,827 229 572,868 217 603,088 220 453,865 243 390,76 221 895,075 2 578 095,344
OAKLAND,CA 178 304,661 207 172,00 217 847,722 205 665,528 190 506,724 222 875,44 232 608,807 231 507,622 207 227,979 226 817,158 240 799,682 215 447,569 2 576 780,891
TACOMA,WA 136 225,851 131 790,118 133 596,839 138 146,266 120 962,621 137 927,016 142 066,405 151 270,526 121 080,797 132 463,066 151 122,447 144 731,778 1 641 383,73
SEATTLE,WA 96 964,907 120 017,418 131 871,478 125 436,747 114 175,789 125 877,098 136 852,492 146 116,374 119 588,996 118 003,946 123 594,992 100 016,089 1 458 516,327
CY TERMINATED CARGO
CHICAGO,IL 222 968,012 242 281,99 249 824,15 250 243,402 241 489,261 268 457,731 251 621,625 254 726,54 224 930,31 238 404,129 234 998,728 207 869,222 2 887 815,10
DALLAS/FT. WORTH,TX 80 214,412 106 018,204 103 233,72 103 916,532 91 918,772 115 928,363 106 804,005 121 638,427 91 944,824 111 950,111 107 258,619 101 517,873 1 242 343,862
MEMPHIS,TN 56 799,197 64 943,618 67 514,345 61 448,216 63 311,564 73 313,105 67 003,545 72 036,092 60 603,282 64 853,62 63 377,011 58 692,003 773 895,599
Aim and objectives. The purpose of this article is to identify ways to increase the responsiveness of the supply chain at time of US ports infrastructure and transportation assets productivity disruption using systematic approach in main risks mitigation, strategical and tactical measures.
Results, analysis and discussion. Events that cause disruptions for inbound seafreight emerge in cycles fashion and can be recognized as systematic risks exposures for supply chain going forward. One of the fundamental reasons for this is natural constraints of further US ports infrastructure development. There is simply no lots of land available to build and put new sea port terminals in operation. Present bandwidth
End of Table 1.
ATLANTA,GA 42 222,417 48 370,697 45 145,443 45 240,799 47 433,847 56 534,703 57 295,082 64 298,934 51 427,091 53 116,233 54 217,049 51 084,501 616 386,798
KANSAS OTYJMO 39 666,212 45 598,081 46 392,294 47 356,593 48 863,577 54 074,141 50 131,839 54 181,029 47 689,032 53 041,588 51 200,931 49 504,164 587 699,481
COLUMBUS,OH 39 115,487 39 803,008 42 774,178 41 328,275 40 550,357 46 126,342 45 764,755 48 310,895 41 044,935 42 973,236 47 739,038 45 605,91 521 136,416
CLEVELAND,OH 31 593,811 34 428,694 35 259,844 34 821,652 33 793,116 37 228,337 35 494,465 37 963,026 32 045,043 34 757,239 34 282,201 31 864,642 413 532,07
ST. LOUISMO 22 748,315 25 688,339 28 366,328 25 973,564 25 680,874 27 701,158 29 076,485 30 438,563 25 444,84 29 324,122 28 965,217 25 894,587 325 302,39
DETROIT,MI 22 661,67 23 757,052 23 847,699 23 985,345 25 520,769 28 831,145 25 676,798 25 775,194 23 536,388 24 275,102 21 908,774 19 520,766 289 296,70
CINCINNATI-LAWRENCEBURG,OH 20 629,541 22 449,142 23 532,726 23 113,613 21 308,236 25 360,218 24 848,511 25 526,957 21 457,976 23 250,654 25 060,751 24 562,242 281 100,568
Source: US Customs and Border Protection AMS data
Volumes of traffic between the largest US ports of containerized cargo present in Table 2.
Table 2.
Volumes of traffic between the largest US ports of containerized cargo (2017-2019 years)
PORT OF ARRIVAL / QUARTERS
2017 Q1, 2017 Q2, 2017 Q3, 2017 Q4, 2018 Q1, 2018 Q2, 2018 Q3, 2018 Q4, 2019Q1, 2019 Q2, 2019 Q3, 2019 Q4,
TEU TEU TEU TEU TEU TEU TEU TEU TEU TEU TEU TEU
Total, TEU
CONTAINER YARD CHICAGO i-
LOS ANGELES,CA 64 862,742 64 311,18 67 847,137 71 802,669 68 126,528 72 186,972 64 045,978 71 435,235 60 896,416 63 831,223 65 536,909 56 872,15 791 755,14
LONG BEACH,CA 56 121,793 74 643,22 80 015,611 67 657,60 72 203,056 79 488,857 62 170,198 58 697,977 53 174,683 54 298,748 51 483,542 45 551,463 755 506,748
NEW YORK/NEWARK AREA, NEWARK, NEW JERSEY 30 782,454 35 472,566 37 019,986 41 095,082 40 831,023 45 764,65 45 107,45 46 742,467 44 287,915 47 145,237 44 032,672 44 109,021 502 390,521
TACOMA,WA 35 895,744 24 531,999 20 934,246 22 221,793 19 655,30 23 450,732 26 298,602 27 422,449 22 711,777 25 799,559 31 409,23 27 194,97 307 526,401
NORFOLK.VA 23 359,446 25 296,384 24 744,989 24 184,706 21 425,078 24 486,783 26 174,954 24 651,606 25 677,103 30 547,274 25 108,985 22 069,412 297 726,719
CONTAINER YARD DALLAS
LOS ANGELES,CA 46 026,715 62 070,427 57 953,344 61 767,833 49 805,734 65 760,752 63 310,366 79 697,382 57 015,878 73 281,736 65 123,477 62 706,526 744 520,172
LONG BEACH,CA 29 444,07 38 902,445 40 129,714 37 597,019 37 588,391 45 431,357 38 704,815 36 376,266 30 054,647 34 599,582 37 132,72 34 604,171 440 565,198
HOUSTON,TX 3 898,873 4 285,382 4 235,177 3 766,332 3 601,912 3 603,30 3 744,70 3 735,131 3 679,372 2 237,702 1 908,948 2 448,925 41 145,755
SAVANNAH,GA 476,00 323,026 423,673 386,589 462,132 696,942 629,953 618,96 691,11 611,97 571,01 469,05 6 360,414
NEW ORLEANS,LA 125,25 102,75 158,25 119,00 156,50 148,50 165,03 1 018,97 294,00 974,25 2 041,51 992,50 6 296,51
CONTAINER YARD MEMPHIS
LOS ANGELES,CA 25 883,643 25 212,176 26 952,997 24 336,64 24 478,578 27 840,134 26 049,102 31 405,239 23 653,908 25 851,435 26 076,299 23 778,828 311 518,979
LONG BEACH,CA 19 993,699 27 541,313 26 901,729 21 913,222 24 648,883 31 198,368 24 784,646 23 037,201 18 503,157 20 335,417 18 249,656 16 985,087 274 092,377
SAVANNAH,GA 5 922,117 7 001,16 8 389,877 9 397,09 9 031,46 8 598,424 9 364,227 8 734,955 10 505,945 9 829,226 11 366,682 10 830,423 108 971,585
CHARLESTONS 2 692,639 2 396,481 2 206,502 2 724,752 2 437,246 2 637,975 2 765,724 3 357,075 3 555,442 3 932,652 3 297,576 2 906,273 34 910,337
SEATTLE,WA 0,00 183,00 308,257 413,00 217,49 351,00 2 214,82 3 408,404 2 237,614 2 589,839 1 972,347 1 315,707 15 211,477
CONTAINER YARD ATLANTA
SAVANNAH,GA 25 753,189 28 297,988 26 020,48 26 216,358 31 482,295 38 374,017 37 439,303 41 619,292 38 195,381 38 462,181 38 987,17 36 471,237 407 318,89
LOS ANGELES,CA 6 316,425 7 462,494 6 582,996 7 486,195 6 053,981 7 109,501 7 822,072 9 698,523 5 710,056 8 232,301 8 285,925 7 102,066 87 862,534
LONG BEACH,CA 5 962,20 7 883,218 7 441,39 6 638,987 6 037,451 6 551,865 7 403,723 8 263,484 3 450,807 2 410,293 2 520,301 2 620,21 67 183,929
CHARLESTONS 1 996,129 2 185,368 2 493,42 2 302,652 1 927,968 2 778,569 3 396,63 3 582,528 3 032,582 2 941,682 3 398,218 3 907,64 33 943,387
NEW YORK/NEWARK AREA, NEWARK, NEW JERSEY 759,189 1 146,826 1 014,983 1 018,053 1 034,485 1 262,753 1 000,23 902,067 900,015 1 003,441 972,435 962,349 11 976,826
CONTAINER YARD KANSAS CITY
LOS ANGELES,CA 15 071,67 16 389,019 18 108,177 18 785,31 18 536,045 19 371,081 19 424,616 21 595,214 18 578,013 21 349,184 21 198,735 19 147,907 227 554,972
LONG BEACH,CA 14 093,156 18 193,511 17 135,654 16 268,698 17 564,497 22 259,116 17 930,876 18 782,838 15 857,201 18 316,894 16 723,18 18 335,831 211 461,454
NEW YORK/NEWARK AREA, NEWARK, NEW JERSEY 5 673,935 6 666,781 6 751,941 7 449,747 8 284,738 8 082,745 7 993,007 7 874,972 8 297,308 7 461,735 7 359,962 7 340,26 89 237,132
NORFOLK.VA 2 885,01 2 634,239 2 660,201 2 827,46 2 571,497 2 605,453 2 586,493 3 140,23 3 287,48 3 819,29 3 972,30 3 233,547 36 223,20
TACOMA,WA 1 685,69 1 130,77 894,07 959,117 965,55 945,247 1 058,317 1 528,266 1 068,78 1 415,984 1 403,00 1 146,627 14 201,417
Source: US Customs and Border Protection A
MS data
Distribution of inbound container yards (CY) is shown in Fig 1. Percentage stated volumes that moved intermodally from main represents port of arrival contribution to US ports of arrival to 5 largest inland container entire CY inbound volume.
- port of arrival # - CY of arrival
Fig. 1. Distribution of inbound container volumes that moved intermodally to inland CY
There is dual effect for US shippers caused by operational inefficiency and transport assets productivity drop. On one hand they result in increased safety inventory stocks and immobilized cash-flow, or non-satisfied ultimate customers demand usually accompanied by contract penalties. On the other hand inefficiencies produce sizeable losses for the shipper as far as extra freight charges required to get freight moving; storage, demurrage, detention charges due to increased dwell time inside and outside the terminals. Large number of various factors requires conscious and systematic approach in main risks mitigation. US shipper has to build resilient and responsive supply chain that has several operational scenarios for the goods to reach final destination in a timely fashion.
There are strategical, long term, and tactical, short, term planning implemented by US shippers in order to narrow down key risks. Seafreight delivery chain has rather long response time hence not just operational risk acknowledgment is vital but availability of tools that allow to collect and interpret data.
This helps to recognize shifts and make preventative decisions in advance. Inventory stock increase possibility is removed for the purpose of subject study.
Strategical measures:
a) 3-4 DC (Distribution Centres) locations widespread across the market, linked to both US coasts routed chains. Planning DC locations shipper considers not just bottom-line numbers and unit economy but supply risk resilience as well. Best case scenario - each main distribution regions has to be symmetrically covered by 2 out of 4 DCs. Main requirement is that each DC has to be independent and different route wise from other DCs within the network. Obviously, such model creates additional burden of overheads, operations set up and extra day to day efforts. On the other hand operating with several DCs enhance ease of inventory redistribution within the network and reversal shipments settlement. Also decentralized operational model allows to diversify the risk of disaster impact.
b) Ability to contract additional buffer capacity with the DC or 3rd party warehouse. At
time of fluctuation, seasonal goods or rapid stock inventory replenishment company strives to have extra capacity buy up possibility with existing DC landlord or in the same area. As practice shows limited warehouse capacity or systematic conflict between inbound and outbound became a main problem of operations productivity and generates sizeable transport assets detention charges for the shipper.
c) 1-2 intermodally connected DCs within supply chain. Circumstantially intermodal operations are becoming more resilient a time of arrival port disruption; hence it is important for the shipper to have at least 1 intermodally connected DC in the network. Located within large US inland CY area this DC can be reached intermodally from the ports of both coasts, also from Canadian ports of arrival like Vancouver/Prince Rupert on the West and Halifax/Montreal on the East.
d) Multiple routes and multiple ports of arrival. Intermodally connected DCs allow utmost flexibility on ports of arrival selection and intermodal connection. This protects the company from possible chain interruptions due to port strikes and congestions, allows to utilize vast majority of steam ship lines and rail-roads in case of operational glitches of any kind.
e) Various classes of transport assets contracted for deliveries execution. Ability to cover most reliable services, different ocean vessel rotations and ports of transship. Large size Beneficial Cargo Owners (BCO) are in the position to distribute sufficient volumes directly with the carriers. Midsize and small size shippers typically operate through freight forwarders to benefit from existing basket deals.
f) Highly manageable last mile based on several reliable contractors. Resilient last mile has to be organized through several asset own contractors and a 3PL in order to maximize pool of possible dray agents. ELD implementation in mid Jan 2018 showed that assets own truckers can commit for the workload that exceeds bandwidth of their fleet that eventually makes them selective. So
when contractual and spot markets are inflating lower paid cargo can make the company less attractive. Typically US based truckers have high level of debt and upon cashflow gap are forced to go out of business. Keeping 3PL in the contractors' network helps to make a smooth switch when needed.
g) Clean data for real time visibility. Outrunning indicators to trace shifts in transport capacity supply. Understanding and acting towards quality data became the cornerstone of prompt decision making for any decent size shipper these days. US shippers work with own and 3rd party data to trace key disruption phenomena and seek for the triggers of switching from one operations flexible to another. Re-active companies with all strategical measures encounter significantly higher losses comparing to proactive.
Tactical measures:
a) Operations planning, lead time of placing seafreight bookings and inland transport allocations have to go from standard 2 weeks to 4 weeks in advance. Upon capacity tightening for both seafreight and drayage first step to accomplish is becoming forecast horizon increase from 2 to 4 weeks. Seafreight bookings placed 4 weeks in advance with steam ship lines significantly increase probability of prompt departure of goods from port of loading. Reasonable number of bookings 10-15% can be amended and pushed back for later departures. Shipper has to ensure that ration of cancelled bookings remains low, so trust is retained. Drayage moves along with key requirements have to be forecasted 3-4 weeks in advance upon cargo departure from Origin. Depending on projected warehouse bandwidth at time of cargo arrival special handling requirements: pre-pull, yard storage, drop/pull have to be aligned so no gaps on assets utilization occur.
b) Blank sailings monitoring, alternate services selection. Circumstantial blank sailings are becoming a powerful tool of balancing actual demand with capacity supply. This is fair especially for direct call strings of Transpacific Eastbound trade lane that is
being operated with the ocean vessels of medium size, up to 10-12 thousand TEU. Steam ship lines can easily remove by blanking (canceling) departures at a certain week. During Apr-May 2020 up to 30% of overall Transpacific capacity was removed (Fig 2). Typically this information is known several weeks in advance, that makes shippers to seek for alternate steam ship line option or alternate routing of cargo from the port of loading.
c) Multiple ports and DCs are feed on a weekly/monthly basis. When recognized
timely, capacity tightness has to be mitigated by utilizing multiple routes and ports of arrival feeding all DCs from the network. Each DC has to have a safety stock replenished on a regular basis that would allow cargo owner to be backed up in case of demand fluctuation on downstream side. Safety stock also serves possible losses and penalties from the ultimate customers in case shipments got delayed.
Fig. 2 Blank sailings
Source Sealntelligence Jul 19,2020
d) Expedited full container load (FCL) services considered for time sensitive goods. Shippers from automotive segment are utilizing so-called expedited FCL services for Transpacific trade lane on a systematic basis. Those yield faster transit time by 30%-45% on average and priority in port handling at origin and destination, no roll-overs at departure. They are being operationally traced in the manner that allow minimum dwell time at port and rapid connection with rail-road or release to a dray agent. These services operate smaller capacity vessels of 2-3 thousand TEU and require valid service contract and proved track record to get required space allocation at time of peak season or overall capacity tightness.
e) Full container load (FCL) vs less than container load (LCL) transportation mode selection in conjunction with inventory stock
replenishment requirements. Less than container load freight rates are typically less sensitive to a fluctuations and can yield sizeable cost advantages for shipments up to 12-15 cbm in measure at time of FCL market peaks. LCL containers pay higher freight amounts in general and has higher priority in handling at both departure and arrival ports. Those are still consider general shipments if not shipped through one of expedited services. Shipper can partially mitigate cost increase by streamlining some of consignments through LCL. Cargo has to be seaworthy packed to prevent damage due numerous handling operations. Overall transit time will be 14 days longer on average but increase probability of in-time departure.
f) Containers dwell time increase at time of Trade War between US and China. Starting early 2018 a number of proclamations have
been issued that imposed tariffs on steel and aluminum products imported from overseas as well as wide variety of goods manufactured in China. Tariffs implementation was set in phases and most impactful 301 Tariff Section was due to go into force Jan 1 2019. Shippers were advancing their cargo in order to create necessary inventory margin earlier on. Larger volumes of goods were shipped and customs cleared outrunning actual demand by 90-120 days. That means that outbound pace for distribution became considerably lower than inbound pace. Consequently this created additional loading on warehouse space projected for normal case operations. In order to understand relative impact of Tariffs imposed study of 6250 shipments from China ports into port Los Angeles has been conducted. Those were divided to containers terminated at port of arrival and containers that are being moved intermodally to the inland terminals (dry ports) by rail-road.
Dwell time is a good indicator of overall delivery chain productivity, warehouse and drayage capacity states. Increasing dwell time means that either port is congested, and
containers can't be processed timely or shipper made a conscious decision to keep arrived cargo at port until warehouse has enough space for in-storage.
For the purpose of the study dwell time (port terminal storage time) was segregated in ranges: 1-5 days, 5-10 days, 10-20 days, over 20 days. Port storage of 1-5 days can be considered as normal for the goods terminated at port towards existing business practices and actual dray operations timings for majority of US ports. Typically steam ship lines honor 5 days free at port that are being used as a grace period to arrange last mile delivery. Port dwell time is the main source of hard dollar losses that cannot be mitigated operationally. 1 Day of storage outside of grace period costs USD 265/day per container. So containers that spent 5 extra days at port encounter USD 1 325 in storage fees per container, that equals 50% of seafreight charges at that time, those encounter 15 days would pay USD 3 975 per container. In Fig. 3 chart of dwell time dynamics from March through Dec is shown.
1200
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ■ >20 ■ 10-20 Ul S ■ 5-10
Fig. 3. Port terminated containers dwell time chart 2018 Source https://www.oocl.com/eng/ourservices/eservices/cargotracking/Pages/cargotracking.aspx
With normal case operations in Jan through March dwell time started to increase significantly by June. Partially this is caused by Christmas and New Year inventory being brought in and partially by seasonal cargo advances imported to outrun 301 Tariff Section. Storage periods reached their peak in
Q4 when number of containers that spent over 10 days and over 20 days were doubling in each consecutive month.
Dwell time dynamics for the containers that were moved intermodally from port of Los Angeles are shown in Fig. 4.
250
200
150
100
50
I I . I I I I
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Pec
■ >20 ■ 10-20 ■ 1-5 : 5-10
Fig. 4. Intermodally moved container dwell time
Source https://www.oocl.com/eng/ourservices/eservices/cargotracking/Pages/cargotracking.aspx
Comparison results of dwell time for port terminated containers vs moved intermodally is shown in Table 3.
Dwell time comparison
Table 3
Total 1-5 days 5-10 days 10-20 days Over 20 days 1-5, % 5-10, % 1020, % Over 20, %
Port terminated 3163 1964 748 234 219 62.1 23.5 7.4 6.9
Moved intermodally 534 335 116 54 30 62.7 21.6 10.1 5.6
Source https://www.oocl.com/eng/ourservices/eservices/cargotracking/Pages/cargotracking.aspx
Considering comparison results show that dwell time difference is insignificant. The main fact to keep in mind that intermodally moved containers do not encounter port storage charges since based on business
practices steam ship lines remain liable for the storage charges.
Containers street dwell time, time spent by the inbound container outside port terminal is shown on Fig. 5.
1200 1000
Jnn Feb Mai Apr May Jun Jul Aug Sep Oct Nov Dec
■>20 110-20 Bl-5 U5-10
Fig. 5. Street dwell time outside of Los Angeles port Source https://www.oocl.com/eng/ourservices/eservices/cargotracking/Pages/cargotracking.aspx
In Q4 2018 warehouse space in Los Angeles area became exhausted and inbound container flows were exceeding outbound port terminated container. Containers quantity that required extended dwell time of over 10 days went from average 33 in Oct and Nov to 93 in Dec, those quantity that were hit by 20 days outside the port increased twice from 10 in Nov to 21 in Dec.
A detailed description of ways to reduce the risks when shipping cargo to the United States is described in [15]. In particular, it was noted that the organization of a stable and reliable system of supplying products on time within the allotted budget plays a leading role.
Conclusions. In the article detailed study of the strategic, long-term and tactical, short-term planning carried out by US shippers was presented. Strategic and tactical measures to increase the sustainability of the supply chain were identified. The relative impact of tariffs imposed was analyzed through the case study of 6250 shipments from Chinese ports into Los Angeles port.
Majority of the studies that have been conducted by the time being are often based on the assumptions that foreign supply is unlimited or that inventory stock at destination can be increased to the level that prevents unfulfilled domestic orders. Reality is different though. Supply at origin is rare to be unlimited. Typically purchase orders size increase is caused by uncertainty factors or scares financial recourses that didn't allow to retain production and supply pace. There are many business cases when vendors overseas can recognize destination market developments and increase goods prices, increase lead times or request advance payments to prioritize and satisfy additional demand. This might also create some lag that will be required to negotiate acceptable conditions, so naturally time between minimum stock inventory achieved and goods shipped will be significant. Safety inventory might be of help, but market environment change can create inventory imbalance by populating the shortage for the most demanded goods. Having said that main potential of the further research is:
- elaboration of the system of outrunning indicators that would help the shipper to recognized emerging trends that could lead to a disruption or at least significantly increase supply chain vulnerability
- assessment of digital technology and real time visibility tools to increase operations and transport capacities planning in order to partially mitigate losses at time of supply chain disruption.
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