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Wow, the challenges of the world’s economy today!  Amazing— Anyhow, I was at an ISM (Institute of Supply Management) Seminar this week on International Sourcing.  Yes lots of business going to Third world countries.  Nothing new, we have been in this cycle for quite some time.  It was pointed out by the presenter of this program, Ronald C. Day, that foreign sourcing is being reassessed by many companies in the United States.  There are several areas that companies need to focus on to assess the overall benefit of setting up shop in a country outside the USA.

1. Technology—what is the difference between their current country of production and the lower cost alternative?  An example of this would be in the area of proprietary information or processes that may pose problems as many countries have lax laws regarding the protection of intellectual property.  This can also show up as a strong challenge in the technology sector when technology is changing rapidly and needs the discipline and expertise to incorporate these updates into production rapidly.
2. Overall picture—many companies turn to foreign sourcing as their only means of lowering production costs.  This is but a piece of the overall cost of doing business and should be assessed carefully. Labor costs, transportation, Project management, taxes, country politics and laws (or lack of), and other overhead costs should all be taken into consideration.
3. Supply Management Strategy-A steady supply of materials including all the dynamics involved can be extremely complicated and challenging especially when it is on the other side of the world.

A rule of thumb seems to be that if a company can’t realize a profit of more than 20% of the cost of manufacturing within the US, then it may very well not be beneficial in the long run to set up shop overseas.

With the present financial downturn seen in the United States today an upsurge of manufacturing in the US might be just what the US needs to get back on track to help rebuild its economy.

If your business exchanges materials with other parties, shipping most likely will be involved.  This process is one of the most challenging aspects of business due to its dynamics.  The fact is that no one shipping vendor or shipping policy fits all.  Much of it depends on the industry you are in, the country (ies) involved, type of product/material, size/weight, temperature/time packaging and various other requirements and risks.

Ship 4 U handles the entire process of shipping your goods from origination to destination- International as well as within the US- including documentation and/or logistics.  International shipping encompasses a much greater amount of variables compared to domestic shipping.  Risks faced come under a multitude of titles: import export license cancellation, private buyer guarantees, currency inconvertibility, confiscation, expropriation, war risk debt rescheduling, contract frustration, letter of credit drawdown, consequential damages, nationalization, deprivation, strikes, riots, and civil commotion. Each discipline requires expertise.  It would be almost impossible for any one individual to develop an expertise in all the disciplines.

With over 20 years of experience serving government regulated industries, Ship 4 U now offers a unique service that has not been available from the shipping industry until now. Ship 4 U has aligned itself with several reputable, experienced brokerage firms. This combination of expertise provides a broad knowledge base to keep current with rules and regulations as well as day to day occurrences that impact the shipping industry.  The end results are to focus on your specific shipping needs and produce consistently high returns for your business.

Ship 4 U provides the following options to clients:

Phase I—Documentation

• Reviews specific requirements for shipment
• Works with client to identify and fill our proper documentation for shipment
• Increased information capability

Phase II–Logistics

• Coordinate shipment
• Set up appropriate Freight Forwarder
• Set up appropriate Customs Brokers
• 24/7 tracking capability contact with a live person
• Specialized attention to temperature/time/resources/cost requirements/risk components
• Focus on effective and efficient movement of material/product

We act as your representative giving you peace of mind for shipping while you attend to the other aspects of running your business.

Shipping and Logistics Services within the US and Internationally

It’s December 2009 and the economy of the United States is declared to be in the middle of a recession.  In the Shipping sector there has been an 18% loss in air cargo import and exports with a slight upward blip at the end of 2009 due to the holiday season.  Our present condition of the air freight industry is showing instability and the outlook to 2013 is discouraging.  Growth prospects for the ocean routes also look grim.  They are expected to contract by .5 to 1.5% over a five year forecast this year.

Two years ago the indicators were very positive with logistic costs rising to 10.1 percent GDP setting a five-year period of spending on freight transportation, warehousing and supply chain management with a rise of 50%. There was a strong potential for intra Asia container trade to be a source of growth for ocean carriers small and large.   This five year pattern took a downward turn in 2008 and was the first time in six years that total logistics costs decreased.

The future does have its challenges but there are also some positives that are emerging.   It is predicted that through 2013 US and Middle East/South Asia trade is set to grow 7% a year, with Africa-US trade expanding 5.9 percent annually.  Interestingly enough while the United States and Europe have been experiencing a downturn throughout most of their economic indicators, influential countries such as Central America, Chile and Brazil are looking up.

The economies of Latin America have seen revenue grow significantly.  Much of this is attributed to multiyear structural improvement programs that have been instituted.  Another area that is poised for growth is India at 6.5% in the next year.  Again the support for this comes from the infrastructure that has been put in place to support and push their economy forward.

The various modes of shipments are showing some interesting trends:

Air cargo service is one area that has shown resilience in the Climate Controlled area.  Perishables and raw materials are predicted to be the drivers for Latin America’s northbound flow predicting four percent (4%) growth in perishables and 8.1 % for raw materials.  Among the reasons for this is the focus to develop more reliable packaging for the materials to be transported at specific temperature ranges.  Another is coordinating timelier scheduling of the logistics of the material in transport.

The Trucking sector which has experienced a major decrease in equipment and drivers is focusing on various tactics to quickly respond to the increase in demand once the recession lifts.  One of the current programs that have been going on since 2005 is the development of networks set up by TNT with a dedicated over-the-road service between Europe and Southeast Asia. 

One of the key points of TNT’s program is to preserve the security of the goods it carries. The key facet of the service is that the trailer is not unloaded from origin to destination.  If border restrictions require a change of vehicle, then TNT will make the necessary arrangements to move the cargo container to the next authorized TNT vehicle without unloading the container.  GPS systems are used to monitor the movement as well as the integrity of the product.  This provides the benefit of a reliable service at a reasonable price.

Organizations are also looking process improvement to go forward:

The Customs –Trade Partnership Against Terrorism (CBP), a voluntary program under which includes importers and  air carriers, is reviewing their internal security controls governing the shipment of international cargo and are making preparations to streamline their processes to make ready for the new demands as they surface.

The Broker Self Assessment (BSA) which is modeled on the seven-year-old Importer Self-Assessment (ISA) program is reviewing whether a trusted compliance program should be instituted on a voluntary basis for custom brokers.  The goal would be to expedite product/materials through customs with preapproved compliance approved brokers.

Our present recession is setting the stage for a look at where we are and how we proceed to get where we want to be.  Creating the right infrastructure is imperative for Countries and Organizations to emerge in a strong position going forward into 2010 and beyond.