Surveys of multinational companies conducted by American Shipper indicate a growing trend to meld domestic and international transportation management, says publisher Jim Blaeser. Issues driving this trend are part circumstance and part desire, he says.
In terms of circumstance, "the shippers we study certainly are being forced to do more with less," he says, including reductions in head count. At the same time, companies want the efficiencies they can gain by managing domestic and international transportation in concert.
Shippers increasingly feel that managing these two sectors as separate silos leaves a lot of money on the table, Blaeser says. "They believe that combining all their freight will allow them to bring more critical mass to the supply chain and reap more value from moving shipments with fewer resources."
International and domestic transportation are very different operationally, however. The big differences boil down to distance - literally in terms of miles and figuratively in terms of culture, language and currency - and the regulatory environment, Blaeser says. "Domestic transportation deals with regulations like CSA and the hours of service, but the international market is on a whole other level," he says. "Every country has its own set of import and export regulations and large, multinational companies, especially, have to wrestle with that on a very large scale." There also are differences in mindset. "The trucking world really revolves around the shipper, while the ocean world revolves around the ocean carrier," he says. "This is a hard paradigm shift for shippers to get their heads around when they start to delve into international."
These are just a few of the challenges involved in this shift, says Blaeser. "If this were easy, it would already have been accomplished."
Technology vendors are broadening their offerings to meet shippers' demands on this front. "This is a task that you simply cannot accomplish without technology because it means tying together two very large organizations with different needs, different languages and different sets of terminology and standards," Blaeser says. "We see technology providers stepping up their game and expanding mode-wise and function-wise, which is allowing companies to envision how this would work."
Large retailers are leading the trend, Blaeser says. "North American retailers in particular have a relatively simple supply chain in terms of a large portion being China or Asia inbound to the U.S. "Retailers have the advantage of inherently being very centralized, which gives them the ability to get their hands on more information and manage more providers in one place, compared with manufacturers that tend to be more distributed and regionalized," Blaeser says. "Retailers are well positioned to lead this trend and they are doing it on the back of the technology and services now available in the market."
