New routes to value

Rebecca Ellinor Tyler is former editor of Supply Management
11 November 2014

Rebecca EllinorThere’s currently much movement (no pun intended) in the shipping sector, with new carbon taxes and company alliances as well as booming expansion and competition at many of the world’s hubs.

A year ago this month, Britain’s first new major deep-sea port in more than 20 years opened for business. With the planned logistics park that will sit alongside London Gateway expected to open next year, it’s still too early to judge its full impact, but according to operator DP World the port is already operating at two-thirds capacity.

While this may be one of the most recent additions to the shipping scene, many others around the globe are growing. This includes ports in the Middle East, Asia and elsewhere in Europe. The rapid increase in the numbers of consumers with disposable income, particularly in China and India, is one of the trends driving this demand.

Shipping companies are teaming up to optimise the use of vessels and routes to ensure capacity is used as best it can be. And some businesses are applying dual strategies – a combination of shipping and air – to get goods delivered promptly while avoiding the worst of tighter regulations and charges on carbon emissions.

The level of involvement of procurement and even logistics professionals varies, with one commentator describing it as a “black art” and a “very confusing market” that leaves buyers wanting to be one step removed from doing the deals directly. Yet businesses that use shipping as part of their logistics strategy need to ensure procurement has a close involvement to understand the total cost of ownership of goods. It also enables buyers to have a better handle on potential risks. “The more you know about the total cost, the better decisions you take, and the better you know your suppliers’ ability to live up to your requirements,” says CPO Michael Mikkelsen.

So if shipping is part of your delivery strategy, you might need to make this your next port of call.

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