Similar to many industries, the trucking sector in recent years has experienced considerable consolidation as bigger firms have bought and paired up with smaller companies in order to extend their reach in products and services. This 'urge to merge' has even resulted in a few unique partnerships-evidence that as shippers continue to move operations to overseas markets, their transportation service providers have been required to respond with new offerings in order to keep up with them. And naturally, of lot of the impetus has come from the non-stop activity occurring in China.

Recently, APL Logistics (www.apllogistics.com) and Con-way Freight (https://freight.con-way.com) introduced a new service called OceanGuranteed, which provides port-to-door guaranteed delivery from Hong Kong, Shenzhen, and Shanghai, through the company's Los Angeles terminal to destinations in the continental United States.

While some customers have always required shipments to the door, there's definitely been a trend toward more door-oriented products, notes Bill Villalon, vice president, product development, APL Logistics. “Frankly, the reason is they're looking for a broader chain of custody and control,” he says, and it's a trend that's likely to expand, particularly in emerging markets. The other advantage is greater security due to a minimization of hand-offs throughout the supply chain.

Although executives from both companies believed there was considerable potential for this product, their thinking was confirmed with market research conducted on their behalf by Washington-D.C.-based MergeGlobal, which showed there was growing interest for services tailored towards smaller lot sizes and LTL freight. “Customers were telling us they weren't satisfied with the existing LTL products that were being offered in the marketplace,” says Villalon. “They said there were few options outside of FCL on one hand and airfreight on the other.” The LTL shipment posed a dilemma. “They could either fly it or underutilize a box [container].”

Demand for the new service isn't precisely known yet, but executives are confident that there's untapped potential. Furthermore, “We're boosting customers' interest in the product with a money-back guarantee,” says Villalon. “When a customer makes a booking, they choose one of the three origins, the delivery zip code, select the sailing, then go to the Web site and choose a delivery date. If we don't make that date, they get a 20 percent refund.”

Meanwhile, Villalon says the service is targeting freight that he calls “air freight downgrade.” In other words, “we believe there's a substantial piece of the air freight market that customers buy because they need the reliability, but not necessarily the transit time. Of course, if someone has an emergency shipment that they need in five days from China to the U.S., this product's not for them. However, what we've found is that there are numerous times that they could allow for a 20-day window if the delivery was absolutely reliable. So, we created a product that has the reliability aspects of air freight, but offers a superior surface transit option that is priced considerably less than traditional air freight.”

Theme and variation

UPS Supply Chain Solutions saw a market void a few years ago that prompted the creation of its Trade Direct product (http://www.ups-scs.com/transportation/tradedirect.html). “Basically, it's a distribution center bypass model that provides supply chain efficiencies,” explains marketing director George Post. Freight starts out in the origin country, China, for instance, moves by ocean or air carrier to a U.S. port, gets cleared through Customs, then gets drayed either to an LTL carrier or to a UPS hub, where it's injected into the company's small package network.

With Trade Direct Ocean, inventory is in motion for the 17 or 18 days the shipment spends crossing the ocean, like a virtual warehouse for the customer, says Post. “It allows the customer to make on-the-fly distribution decisions and respond to demand forecasts, while increasing the speed to market. We can label the freight upon arrival and integrate into our small package network, which is one of the largest and most reliable systems in the world today.”

The Trade Direct product was initially launched in 2002 for cross-border service between the U.S. and Canada and Mexico. In 2003, the product was expanded to include ocean, and a year later air was added.

Another benefit the product offers is improved tracking and tracing. “We've got an integrated technology front and back end for Trade Direct that gives the customer full visibility-through Flex Global View-and single user interface through a single Web portal to process shipments. We can also offer a single invoice,” he adds. “Traditionally, customers would get up to a dozen different invoices for a multitude of services-ocean carriage, customs clearance, drayage, LTL carrier-anyone who touched the freight or performed some type of service.”

In fact, this aspect alone has saved a lot of time and money for Crown Premiums, a company that manufacturers high-quality miniatures and collectibles such as die-cast muscle cars. Although most of the company's customers are based in North America, Crown Premiums relies on suppliers in China for manufacturing. The company turned to UPS Supply Chain Solutions' Trade Direct to streamline administrative processes and reduce lengthy transit times. Not only was UPS Supply Chain Solutions able to meet this challenge, it greatly reduced the invoicing process too. “We palletize our Canada-bound LTL product and ship it out all at once. UPS clears it through Customs, and the individual deliveries go directly into the UPS system in Canada. I only have to create one commercial invoice as opposed to, say, 70 for each shipment, so we can now handle bigger shipments with fewer personnel,” remarks Crown Premium's vice president of operations, Noreen Gedmin. Furthermore, “Customers buy our products as collector items, so even the boxes they come in add to their value. They want everything in pristine condition,” she adds.

According to Post, the typical customer for the Trade Direct product is the mid-tier and larger companies. In addition, the demand tends to be higher for shippers of higher valued commodities. “We're in most all the verticals. We look at retail, apparel, high-tech, automotive-all sectors where there is obvious value in direct-to-retail or direct-to-consumer business model.”

The product is also very attractive to companies who are launching a new product or expanding into a new market. It allows them to avoid myriad fixed and variable costs associated with setting up a new distribution center or establishing full logistics operations in a foreign country.

“Our Trade Direct product extends to all geographic origins,” says Post. “We have a lot of expertise developed in this product over the past several years, and have been expanding its availability in growing trade lanes. Today, so many companies have a complex logistics supply chain. That's why they look to us to be able to pull this off-we have a lot of breadth and depth in our organization.”

Other 'trucking' companies have followed customers and their freight up the supply chain to overseas origins, which means they can hardly be referred to as simply 'trucking' companies any longer.

A year ago, Schneider Logistics (www.schneider.com) opened their first office in Shanghai as a platform to deliver end-to-end international freight management across North America, Europe, and Asia. “It is imperative that logistics providers directly link to China,” remarked the company's president, Tom Escott, at the time. “With the addition of the new location in China we are able to connect clients to every corner of the world and provide logistics expertise across every facet of the global supply chain, from manufacturer to retail outlet.”