Small Package Delivery Goes Global Like the Big Boys, July 2004

July 1, 2004
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Not long ago the global logistics resources of large-scale supply chain management companies were largely reserved for the shipment of large cargo. Companies whose international business focused mainly on small package movements were left to manage the stream of shipments and deliveries, to say nothing of the sea of accompanying documentation, themselves.

This meant that executives such as Tim Yourieff and Bob Pattison, co-owners of Neil Pryde Sails in Milford, Conn., found themselves spending as much time shuffling papers as they did designing sails. One can appreciate what they were coping with. The company receives orders from around the world. As a matter of course, it has three weeks to design the sails at its Connecticut office; deliver the patterns to its manufacturing plant in Shenzhen, China; manufacture the product (approximately 4,000 a year) and ship the finished sails to anxiously awaiting customers around the globe.

To manage this process, the company employed a host of third-party freight forwarders. "The tricky thing we found was third-party billing," Pattison recalls.

Besides the options of shipping CIF (cost, insurance, and freight) or C&F (cost and freight only), Pattison and Yourieff had to determine when and where to send shipping documents and convert fees into U.S. dollars. "There were a complicated amount of customs and duties as well as the issue of dealing with third parties who handled our shipments," Pattison says.

"We could not possibly do 'this, that and the other thing' and have it all happen automatically in a critically short period of time," Yourieff says. "For example, typically, the company's freight forwarder in China would arrange for the shipments to be flown out of Hong Kong on Wednesdays. But by the time the packages made their way through Customs at the country of destination, customers were not receiving their sails until the following Monday. In their business, five day delays made a big difference."

What to do? Integrated carriers such as UPS, FedEx, DHL and TNT are addressing this very scenario by introducing various products and services that streamline the shipping process and bring all aspects under one roof. From automated shipping forms to tracking and tracing, and even door-to-door deliveries across continents, the shipper now has the ability to pick and choose specific services that best suit corporate needs. Companies today are finding much of their shipping can be handled virtually on-line, totally eliminating the need to warehouse or stock products.

Making life simpler

"UPS said they could do something for us that would make our lives simpler and at the same time improve the actual turnaround," Pattison recalls. "They introduced to us a system that was able to streamline the process so that shipments could arrive at the customer on Thursday or Friday." Not only did UPS streamline logistics, they also found ways to realize cost savings in duties, particularly for shipments going to Europe and South America.

"By giving our customers a freight delivery price only, UPS could bill each customer in their local currency so that they would pay a lower import duty," Yourieff says. "Our distributors in Europe, in particular, were pleased that we went with UPS to handle our shipments."

Today, the sail maker, whose annual sales average $3 million, utilizes several UPS small package supply chain management schemes. UPS Worldwide Express guarantees the pick-up, drop-off and in-transit times for all Neil Pryde Sails shipments from Hong Kong; UPS Customhouse Brokerage makes sure that sails clear customs in a timely fashion; UPS Imports allows the company easy-to-follow billing in U.S. dollars, and UPS OnLine WorldShip provides software, a time-saving database that prevents the company from filling out duplicate forms.

"UPS's help in customizing our supply chain," Pattison says, "put us in a league ahead of our competition."

Competition abounds

Both sides, the shipper and the expediter, benefit from these new arrangements and business services. Companies like UPS find that to stay competitive in their own sector they must offer programs that help small and medium-sized customers penetrate larger markets by creating more opportunity and revenue flow for them.

"We have developed our portfolio to help not only global companies, but small business owners expand," says Larry Darrow, UPS Vice President for International Business. "We have tried to simplify international trade and shipping by making it as easy to ship across the city as across the world. We have developed international services that are time-definite, small package express or a combination of both. Our subsidiaries can provide brokerage service, warehousing, even pick, pack and ship so that shippers don't have to have a presence in all the countries where they're doing business, although the perception would be that they are a local player."

In some cases, companies can bundle multiple packages from overseas as freight, then have these broken apart and shipped as small packages once they arrive U.S. airports, such as Anchorage International Airport where UPS operates a large sorting facility.

"Products such as UPS Exchange Collect and COD Automatic help get customers' funds back to them faster," Darrow adds. "Depending on which service they use, UPS will not release the goods without getting the money."

UPS relies on such services to differentiate itself from competitors like FedEx, DHL and TNT who are also increasingly engaged in the small package market. The goal for all is to make it easier for customers by limiting the number of vendors they have to deal with, the amount of inventory they have to carry, the headaches associated with billing cycles and currency exchange, and the tracking of packages from Point A to Point B.

Other small- to mid-sized shippers find advantages to using different providers. Epicentre Technologies of Madison, Wisconsin, for example, has been using FedEx for its international services for over eight years and began using the carrier exclusively about a year ago. "We found they were the best of the large consolidated carriers in terms of complete routes and promise of delivery," says Chip Palmer, the company's packaging and shipment manager.

Epicentre Technologies is particularly concerned about delivery speed since the company ships high-value, time- and temperature-sensitive perishables such as unique enzymes and proteins for molecular biology research.

"As FedEx has evolved, it has come out with new programs such as Insights, which sends me an email of my proof of deliveries and an outbound view of everything picked up from the previous day so that I can see where each package is internationally or domestically," says Palmer. "If there is a problem, it will show an attempt of delivery or clearance delays. This keeps us ahead of the curve of having to call someone or hearing from the customers themselves."

There's also added reliability. Palmer explains that when Epicentre Technologies was using three or four third-party providers, he found packages were being bumped off of flights because someone else's cargo was deemed more important. "If the package is a day or so late, its contents are no good," he says. "Also, we found packages being lost because of the four, five or six different entities handling them. In addition, everyone wants a cut, so the charges were three to four times more than what we could charge our customer by using FedEx."

They're also saving money. "The rates we get from FedEx are competitive, and include customs clearance and delivery. Plus, we are dealing with one entity all the way through rather than using freight forwarders," he says.

The company ships to places like Malaysia, Germany, the United Kingdom, Singapore, Australia, and Greece. "We have distributors all over the world, but their business is different in each country," Palmer adds.

It has been two decades since FedEx launched its first global service. Today, it connects 215 countries within 24- to 48-hours. "The FedEx global network enables companies both large and small and countries both rich and developing to compete in ways once thought impossible," says Don Colleran, Senior Vice President of Sales, International FedEx Express.

When it comes to international shipments, the top concerns businesses have are visibility of their shipment as it is transported, simple and flexible connectivity, customs, and the need for cost-effective transportation solutions. Colleran points out two FedEx products that help with these issues, FedEx Insight and FedEx Global Trade Manager. FedEx Insight is a free online tool that provides customers content-level visibility into their inbound and outbound FedEx Express and FedEx Ground shipments. FedEx Global Trade Manager is a web-based international shipping assistance site consisting of a suite of tools and resources for international shipping on fedex.com.

Relationships count

Even in a context of multiple value-added services, some firms find that old-fashioned relationship building fulfills their primary needs when it comes to managing international small package shipments. One example is Turner Construction - International LLC in New York City.

Richard Jones, Turner traffic manager, finds pluses and minuses with each service. Given the huge volume of documents and personnel effects his firm ships to job sites around the globe, Turner is faced with the dilemma of identifying and invoicing each specific shipment. "If it is set up right by the courier, it makes life easier," Jones says. "What helps is TNT and DHL have identified each and every job by the contract number that we identify on the shipments. This makes it easy to track, trace and process. By being able to automatically identify each shipment, we save our accounting department a full days' work every week." With 60 or 70 small packages going out from the New York Turner offices every week, the workload can be daunting. Billings are generated and paperwork goes out to each project.

The international division of the Turner Construction Company provides comprehensive professional building services in Africa, Asia-Pacific, Europe, Latin America and the Middle East. Currently, the company manages projects totaling more than 4 million square meters in building area, with a value of some $6 billion, and is looking at a number of U.S. embassy projects in Europe.

"Our construction expertise is delivered through program management, project management, and construction management services," explains Jones. "This means we place a team of our top engineers, financial people and project administrators on a particular job such as the Taipei 101 Tower, just designated the tallest building in the world. We will physically run that project, but not with Turner labor. Therefore, we need to communicate from the head office to these projects via documents such as engineering drawings, and inter-office correspondences as well as urgent materials for parts that did not work properly. Such parts are needed fast so the trade can pick up the next phase of development."

With some 3,000 engineers overseas, Jones also handles the shipment of personal items from friends and family-shipments, he says, are sometimes more important than corporate correspondences or parts.

"Consequently, I've run into a number of customs situations where I need to be able to reach out to people like TNT to inquire out whether or not a package is okay to send, and find out how best to describe it and declare it so that it is not confiscated or delayed in Customs overseas," Jones says.

With Turner Construction - International involved with a host of projects in the Middle East, the company has to be especially concerned about censorship.

"The TNT operations there do the customs clearance for us," Jones says. "They address whatever concerns Customs has, and therefore, we have very little problem getting the shipments released. Whereas shipments used to take 10 to 20 days to get through the customs process in places like Saudi Arabia and Kuwait, it now only takes five. This is because TNT has a constant presence there."

To help, TNT has installed a computerized shipping system at the New York office, which develops a manifest for every package, an air waybill, and customs invoice if shipping something other than documents that must be declared to foreign customs.

"The main thing is we are a people-driven organization," comments Peter Reed, TNT's Vice President for sales, North America. "As a business, our customers have 24/7 access to people in our organization, not an automated system. We have a sales structure whereby a sales person deals with customers first hand."

While TNT is largely European-based, it operates in over 200 countries and has three U.S. gateways: JFK, Miami International Airport, and Los Angeles International.

In the meantime, DHL is undergoing major changes since Deutsche Post World Net took ownership of the company. With Danzas and Deutsche Post Euro Express joining forces with DHL, all worldwide express and logistics are now placed under one brand. In February, DHL also announced the integration of DHL and Airborne Express. After only six months, both companies have integrated the majority of their ground and courier networks, and are now launching several new programs for customers.

While TNT is largely European based, it operates in over 200 countries and has three U.S. gateways: JFK, Miami International Airport, and Los Angeles International. The company continues to invest in its hub in Liege, Belgium, and its people.

Introducing new services and programs to shippers is the name of the game as each company in this highly competitive arena seeks out ways to better serve the customer. Wading through the offerings can be daunting for the shipper as each offers fast and reliable service. But what helps narrow the field is a clear understanding of how well ingrained each carrier is in specific markets needing to be served, and just what services can address key issues with each shipper.

In the case of Turner Construction - International, relationship building in markets such as the Middle East and Asia are key. For Neil Pryde Sails, removing third-party freight forwarders and being able to deal with one courier company throughout the entire shipping process was imperative in streamlining its operations. Epicentre Technologies needed fast, reliable and traceable delivery service. After all, satisfaction in shipping has as much to do with the details as it does getting the small package from Point A to Point B.

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