Cloud-based tech to help ‘manufacturers gone retailers’
Insightful perspective! I can vouch for Eric Johnson’s predictions in his commentary last month (March 2017 American Shipper, “CIO Insight: When manufacturers become retailers,” page 10).
As we contemplate this future, there are new cloud-based retail management technologies being introduced to help the “manufacturers gone retailers” make the transition.
You’re right, such a solution must be intuitive and affordable to use for manufacturers but sophisticated enough for big enterprise retailers that don’t want to build it “in-house.” It’s where the future of e-commerce is heading and everyone stands to gain. SaaS that connects manufacturers, retailers, 3PLs, public warehouses and factories using retailer compliant EDI, inventory, warehouse and transportation management, and seamless integration with existing financial systems will prevail and create a whole new market for this innovative way of doing business.
In fact, Open Retail Business Internet Technologies (ORBIT) is designed to run an entire business with an all-in-one, integrated solution. With Retail Exchange Network (RXN) as its platform, this retail cloud system works from the top down for manufacturers and the bottom up for retailers, both of which need the kind of functionality described in Eric’s commentary.
It’s the power to sell to anyone, anywhere, anytime with no risk; easy, afford- able entry; secure cloud data hosting; and 24/7 monitoring.
Manufacturers now have complete retail compliance, purchase and sales order management, small parcel and drop shipping, barcoding and labeling, and all the support they need to essentially become a retailer.
Retailers, on the other hand, now have a robust cloud-based system to expand the quantity and quality of sup- pliers they work with, including overseas manufacturers, knowing they’ll be in full compliance using one standardized platform for increased speed to market with faster, more accurate order processing and product delivery.
As you say, there’s nothing to stop manufacturers and retailers from leveraging smart e-commerce SaaS to master their own supply chains and destinies with unlimited possibilities. Good job being ahead of the curve!
Garry Neeves, CEO,
Retail Exchange Network
Fountain Valley, Calif.
Dallas the ‘best first’ option for booming resin exports
Chris Dupin hit on an important issue in last month’s feature on competition for empty export containers in the U.S. Gulf Coast region (March 2017 American Shipper, “Commodities tug of war,” pages 36- 40), but it’s a bit more complex than that.
The rapid expansion of resin production presents some unique logistical challenges, especially on the export side. It essentially becomes a math game to find the solutions that will be required.
But let’s start with the Petrochemical Industry Association forecast for growth based on the many billions of dollars being spent on increasing production capabilities due to the abundance and low cost of the raw material, and the world market. Total production of resins in the U.S. will double between now and the end of 2020, according to the association. U.S. exports, now at 11 percent of total U.S. production, will increase to 22 percent in that same time frame.
Currently, there are roughly 250,000 TEUs of resin exported from the U.S. annually, the primary markets being Europe and Latin America, with Asia a distant third. According to the Petrochemical Association, of the new volume to be exported (estimated at 500,000 additional TEUs per year) 62 percent will go to Asia, primarily China.
That’s 310,000 TEUs a year additional to Asia. Asian resin is moved in 40-foot containers, so it amounts to approximately 155,000 40-foot container loads a year, an average of 2980 loads a week.
A vast majority of the increased volume will be produced in the Gulf, most of it in or near Houston. But the simple solution of exporting those volumes to Asia using services from Houston is, well, not so simple.
Today there are four services weekly from Houston to Asia, three via the Panama Canal taking more than 40 days in transit to China, and the fourth via the Suez with a 55-day sailing time to China. More on transit time later though.
If we look at the three services that transit the Panama Canal, the vessel sizes average about 4,300 TEUs. That’s 4,300 TEUs of essentially import cargo that weighs an average of 8.5 tons per TEU. Exports, however, especially resins, weigh between 12 tons and 14.9 tons per TEU, meaning that the 4,300-TEU capacity drops to under 3,000 TEUs of lift capability for exports.
But consider this: Houston is the first port of call inbound and those ships are carrying import cargo for two or three other U.S. ports—statistically, an average of 2,800 TEUs are off-loaded in Houston. You can’t put an export load in a slot where an import already resides, so the total export capabilities of those ships is only 1,925 TEUs. Today, those ships already sail at 83 percent capacity with resins, cotton and other typical U.S. exports, equal to 1598 TEUs, leaving under 350 TEUs of space per vessel for the additional resin exports.
Even the largest vessel string operated by CMA CGM, at 6,000 TEUs, only has about 490 TEUs available. Between the four services, that’s approximately 1,540 TEUs of capacity each week to carry the increased volumes.
Acknowledging that these calculations are of existing vessels and utilizations, you don’t have to be a math wiz to know that you can’t carry all the additional volumes on vessels from Houston.
Can more capacity be added? As a COSCO executive told the Petrochemical Conference in Houston: only if it pays.
Carriers will not send in new strings for resin exports that pay under $800 a load to Asia, they lose enough money now without those below-cost rates. Bigger vessels could be deployed, but only if there is increased import demand in Houston. And even then, there isn’t capacity for 2,950 40-foot container loads of new resin movements.
So if Houston is the first option, but with recognized limitations, what’s the next option?
In Dallas, roughly 12,000 to 14,000 empty 40-foot containers from retail imports are moved back to Los Angeles and Long Beach and then back to Asia, still empty. There are 28 sailings a week to Asia from these two ports, with aver- age vessel sizes in excess of 6,000 TEUs, so empty equipment and vessel space is not an issue.
Moving some of the resin via Dallas will not only provide the required capacity, it will save ocean carriers tens of mil- lions of dollars in empty re-positioning costs.
Transit times from Dallas to China are 10 days to 28 days faster than the Houston direct sailings, and for those who say, “it’s resin, no hurry,” really? There’s no hurry from production to packaging, as much of it sits awaiting to be sold, but once sold? Faster is better.
Are there other options? Sure. Memphis, Savannah, Charleston, and New Orleans are all possibilities, but none compare to Dallas. There will be some who will debate the issues here, but for those of us who are pragmatic and realistic: use Houston until you can’t, then go to Dallas, the best first option.
Gary Ferrulli, president,
Unicon Logistics
Los Angeles, Calif.
