SCDigest Editorial Staff

SCDigest Says:

Import warehouse managers are not masters of their own fate. Rather, their efficiency and productivity depend not just on how well they execute their own operations, but also on how well the other players within the import supply chain. . . execute theirs. What do you say? Send us your comments here

At one level, global logistics managers have been able to relax a bit in 2007, as congestion at US ports hasbeen substantially reduced from the levels faced by importers in previous years (See Port Congestion Worries Fade, as Container Volume Growth Slows Dramatically).

But a variety of factors are causing throughput challenges in many “import warehouses” – facilities used to process and transfer inventory coming in from offshore supply sources. For example, the “mega” cargo ships increasingly being used to move goods from Asia have altered the incoming container profile for many importers – they now receive fewer shipments of more containers, playing havoc with labor requirements and workload balancing. With ships continuing to get larger and congestion likely to worsen again, these problems are not likely to disappear any time soon.

High prices and lack of availability of land is also pushing import warehouse further and further from port facilities, especially in the Long Beach/LA port complex. Combined with heavy traffic congestion, the ability of importers to quickly get containers from terminals to the warehouses for processing is often constrained.

Different Import Warehouse Models

Import warehouses serve several different purposes in an increasingly complex global supply chain process.

• Transloading: Moving goods from ocean container to truck trailers for inland transport by truck or rail/intermodal.
• Distribution: Sorting and fulfillment services for customer or retail store orders
• Warehousing: Goods are stored for longer periods in the import warehouse, especially those located in “Foreign Trade Zones”
• Postonement: Additional services and “value-add” are performed in the warehouse before distribution. Those services can range from simple (price ticketing) to complex (final assembly of electronic products) and be performed defensively (suppliers can’t perform the services required) or offensively (delaying final inventory decisions).

A given import warehouse can be involved in one or several of these functions. Many companies use third parties to manage their import warehouse, while others, especially in the retail sector, run their own operations.

The need for import warehouse has naturally grown in direct proportion to the double digit annual growth in import volumes in the US over the past decade. But as researchers Arnold Maltz, Professor of Supply Chain Management at Arizona State University, and Thomas Speh, Professor of Distribution at Miami University (Ohio), well captured in a recent report commissioned by ProLogis, the pressures on import warehouses operations are increasing.

The most important of these operational challenges are as follows:

• Variable and unbalanced work load requirements due to ocean carriers schedules and long unloading times
• Poor visibility to inbound movements due to manual systems and lack of integrated visibility portals
• Limited flow of containers due to union rules and hours of port/terminal operations

As a result, import warehouse managers often have a very tough job, and operational challenges are an increasing bottleneck for many importers, adding to supply chain variability. As the report notes, “Import warehouse managers are not masters of their own fates. Rather, their efficiency and productivity depend not just on how well they execute their own operations, but also on how well the other players within the import supply chain — the steamship lines, longshoremen, freight forwarders and customs brokers, and the Customs and Border Patrol personnel — execute theirs.”

How Can Import Warehousing Supply Chain Flows be Improved

Maltz and Speh offer a number of recommendations on how import warehouses throughput and effectiveness can be improved, based on interviews and observations with nearly two dozen importers and import warehouse operators.

Organized by category, these include:

• Shipping Arrival and Unloading:

• Better availability of real-time availability of information on the end-to-end status of ship and container arrival, unloading, customs clearance and drayage pick-up
• Container pick-up hours (now limited) aligned with ship unloading hours (usually round the clock)

• Drayage Operations:

• Automated security for entrance and exit
• Real-time monitoring of dwell times
• Centralizing the port chassis pool
• 24-hour delivery availability at the receiving warehouse and/or drop yards

• Warehouse Operations:

• Located to minimize inbound/outbound traffic congestion, either near port, near outbound transport, or on dedicated rights of way
• Access to a single reliable source of complete, accurate information
• Access to a pool of temporary labor to better deal with highly variable volumes
• Physical buildings optimally configured to support the mission (transloading, distribution, distribution and storage, etc.)

• Outbound Transportations:

• On dock doublestack rail capability
• Adequate, timely truck capacity

Of these recommendations, relatively few are in the importer’s direct control. More flexible port operations are in the hands of the port authorities and their negotiations with the Longshoremen’s unions. The Pier Pass program at LA/Long Beach, which allows for 24 hour pick-up during the work week and on Saturday, has generally been considered a success. The concept needs to be expanded elsewhere.

As for improved visibility – that’s the holy grail. While there is constant progress, the answer to that still looks to be a long haul.

Do you agree or disagree? Share your perspective by emailing us at feedback@scdigest.com