Spotlight on Logistics and Transportation – The Unseen Supply Chain

Logistics and transportation services can sometimes be overlooked in the supply chain and seen as something that ‘just happens’. However the reality is that they play a vital role in the successful working of all businesses.

A greater focus from organisations can be critical for ensuring continuity of supply and saving time and money from disruption. However, organisations also have to contend with outside influences, as these news stories indicate.

Channel Disruption Headaches

Logistics organisations in both the UK and France are counting the increasing cost of Operation Stack after another weekend of disruption. Although cross-Channel services returned to normal yesterday, some lorries were forced to wait up to two and a half hours to cross the Channel on Saturday.

A combination of migrant activity and industrial action in Calais was to blame for the delays this weekend, making it a total of 21 days in the past 3 months that Operation stack has had to be enacted. And logistics companies are beginning to feel the pinch, with costs estimated at £750,000 per day.

James Hookham, Deputy Chief Executive of the Freight Transport Association (FTA), said, “Given the value of goods lost and the subsequent cost to business, these figures show that Operation Stack is not just an issue for Kent and the south east of England but a serious national strategic problem.”

The knock-on effect of disruption to the UK economy for tourism, holidaymakers and businesses in Kent is estimated at approximately £250m per day. In order to try to mitigate further disruptions, a multi-agency meeting was held last week to discuss the issue and make recommendations to the UK Government.

US Port Report

From disruption European ports to a report on disruptions at major US ports. Earlier in the year, Procurious reported on the strikes at ports on the West Coast of America, which forced the shutdown of 29 ports and caused a flotilla of vessels to be anchored off the Californian coast.

Now, the Federal Maritime Commission (FMC) has released a report on the future of all American ports. The report outlines the requirement for investment in the port system to ensure an “efficient and reliable international ocean transportation system and the relevant supply chain”.

With US ports becoming busier and hubs for movement of increasing volumes of international freight, the report offers an overview of the causes of potential issues, as well as solutions that could be implemented.

It is hoped that the measures will help to ease congestion and get the ports operating as smoothly as possible. Download the full report here.

Concerns over New Transportation Bill

Still in the USA and there are increasing concerns over proposed changes to the trucking industry outlined as part of a new transportation bill from the US Senate.

Amongst the proposed changes are a lower age limit for interstate drivers (from 21 to 18) and a measure preventing the public from seeing federal safety rankings for trucking companies. This comes at a time when an investigation by FOX News has shown that one company, Davis Transfer, has had vehicles involved in three fatal accidents since 2014.

There are concerns that these proposed measures would adversely impact health and safety in the trucking industry with potentially more relaxed monitoring of driver logs.

Mazda and CEVA Partnership

Finally to Australia, where Mazda Australia has awarded two new contracts to CEVA Logistics, making them their sole national provider of transportation services.

CEVA, one of the world’s leading supply chain organisations, already hold contracts for transportation to dealerships from docks and storage and processing of vehicles in New South Wales and Queensland, will add the states of Victoria, South Australia, Tasmania and Western Australia to their books.

Casey Fisher, MD of CEVA in Australia and New Zealand, said her organisation was delighted with the growing relationship, seeing it as “confirmation that our past performance and future plans are meeting their needs.”

Have you got any logistics or transportation headlines we have missed? Tell us about your success stories by getting involved on the Procurious website.

To round off, here are some of the other major headlines in the procurement and supply chain profession this week.

UPS said to be in talks to buy Coyote Logistics for $1.8 billion

• United Parcel Service Inc. is in talks to buy Coyote Logistics LLC for about $1.8 billion, two people with knowledge of the matter said.
• A deal for the Chicago-based provider of transport-management services could be reached as soon as this month, said one of the people, who asked not to be identified because the information is private. No agreement has been reached and discussions could still fall apart. Coyote is backed by New York-based private equity firm Warburg Pincus, which first invested in the company in 2007.
• A deal between Coyote and UPS would be the third-largest logistics deal this year, as the industry goes through a wave of consolidation amid rising consumer demand. In April, FedEx Corp. agreed to buy Dutch parcel-delivery company TNT Express NV for $4.8 billion. Later that month, XPO Logistics Inc. agreed to acquire European counterpart Norbert Dentressangle SA in a deal valued at $3.53 billion including debt.
• Representatives for Warburg Pincus and Coyote declined to comment, as did a spokesman for Atlanta-based UPS.

Read more on Internet Retailer

Supply chain professionals still not fully represented at board level

• Almost 60 per cent of logistics professionals in FMCG feel underrepresented at senior board level. A poll by The Grocer of over 150 industry professionals at the Scala Annual Logistics Debate 2015 revealed the majority feel their function in logistics is not accurately represented within the rest of their company.
• “Influence at this level is now needed more than ever as companies have the opportunity to make, or not make, critical decisions about how they operate their supply chains,” said Scala senior consultant Simon Eagle. “The companies that are successfully innovating in collaboration and demand driven are those in which logistics have significant ‘share of voice’ and this requires board level representation.”
• However it would seem that the voice of those in supply chain and logistics is more audible than in recent years.“If you’d have posed that question three or four years ago, you would have had an even higher percentage,” said independent logistics consultant Paul Nixon.“I think the function is better represented today and people perceive it to be better represented. As the likes of e-commerce and business to consumer fulfilment continues to grow for many retail businesses the supply-chain and logistics efficiency and effectiveness will continue to grow in importance and representation.”

Read more at The Grocer

World Bank approves new procurement framework

• The bank said the framework, which comes into effect in 2016, would allow it to “better respond to the needs of client countries, while preserving robust procurement standards throughout bank-supported projects”. The framework replaces the previous “one-size-fits-all” procurement policy with one that is tailored to the needs of individual projects.
• The changes will:• Allow contract award decisions to be based on criteria other than cost, such as quality and sustainability, for the first time.
  • Increase support to help countries develop their own procurement systems.
  • Allow the use of procurement systems from development partners or national agencies in certain circumstances.
  • Speed up the process as reviews of contracts will be limited to those with the highest risk and biggest value.
• The bank said it would “allocate resources to provide hands-on help to fragile countries, small states or others in the greatest need to assist them in procurements financed by the bank”. The bank’s procurement system covers a portfolio worth around $42 billion (£26.9 billion), comprising more than 1,800 projects in 172 countries.
• Hartwig Schafer, vice president for operations policy and country services at the World Bank, said: “A portfolio this size needs a modern and nimble procurement approach that gives our clients the best value for each dollar that we invest.”

Read more at Supply Management

Gibbs S3 officially certified as an EMB (Ethnic Minority Controlled Business)

• Gibbs S3 has become the only corporate-level business to be officially certified as an EMB (Ethnic Minority Controlled Business) by MSDUK, the country’s leading non-profit membership organisation driving inclusive procurement.

• The certification comes as Gibbs S3 celebrates record growth in its 10th year of business, with revenue growing 38 per cent to reach £41.58m, and on track to hit £46m this year. The company has also previously been certified as a Woman-Owned Business Enterprise (WBE) by WEConnect, the leading global supplier diversity initiative connecting women-owned businesses with multinational corporations.

• Minority-owned businesses have established a clear track record in providing stronger value to their customers. Companies with established supplier diversity programmes that include SMEs and EMBs generate 133 per cent better return on their buying operations, according to research from leading strategic consultant The Hackett Group. Companies working with smaller and more diverse suppliers were also found to spend 20 per cent less on their buying operations and secure significantly greater value.