Quick News : Saturday 19 Nov 2005
UPS is going to raise their shipping rates :
United Parcel Service Inc. Friday announced that ground shipping rates for small packages will rise 3.9 percent in 2006 while air and international service will go up 5.5 percent.
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UPS in the coming year will also expand the number of locations eligible for early delivery, thanks to logistical improvements.
Port congestion is becoming a major problem not just on the West Coast of the U.S. but all over the world. In the UK, shipping groups are warning of further congestion :
Dr Traill said ‘Few people seemed to view the complete picture. In a supply chain there are a number of different parties with a particular job to do. As the ball gets passed to different players in a footfall team, so the freight gets passed along the chain. In a successful team each player knows exactly what to do with the ball, where they fit in the play, where everyone else is and, ultimately, where the ball needs to end up – in the goal. This seems to be more difficult with freight!â€
He added: ‘What we need is more teamwork. This summer, representatives of shippers, ports, carriers, and the rail and logistics industries produced a document that highlighted areas in which players in the supply chain all needed to work in order for the chain to operate effectively and efficiently. And just because the demand this Christmas appears to be less, and the congestion more manageable, does not mean that the problems have gone away.
‘We still have inefficiencies in the chain, which means that unnecessary costs are being incurred. Last year those inefficiencies were exposed; this year they are not so obvious because the peak-season volumes are down. However, the whole industry needs to act now before those failings are exposed again. Industry must not waste this opportunity to eradicate those problems, regardless of whether trade volumes on the scale of last year, or higher, occur again. Inefficiency is inefficiency – it is not just for Christmas but all year round.’
Yes, there is such a thing as modern day pirates. Nowadays pirates ride around in speedy jetboats armed with machine guns and RPGs (rocket propelled grenades). The rise in piracy off the coast of Somalia is forcing ships to sail further away from the coast, which is increasing shipping times, causing concern that prices will in turn rise :
“For vessels which are coming into the port of Mombasa, to stay over 200 miles (320 km) from the coast of Somalia, it means that they also are going to spend more time at sea,” said Twalib Khamis, harbour master and chief operating manager at KPA.
“That will have an impact on the freight rate of the cargo which is coming to Kenya,” he told a news conference.
The International Maritime Board (IMB) said recently that after two years of relative calm, 32 pirate attacks had been recorded since mid-March, including raids on ships carrying supplies for the U.N. World Food Programme.
In early November, pirates unsuccessfully tried to board a Bahamas-registered luxury cruise liner, firing rocket-propelled grenades and assault rifles at the vessel.
The rise in piracy is causing insurance premiums to rise as well :
Maritime Insurance companies intend to raise premiums for ships docking at the Mombasa port because of persistent incidents of piracy off the Somali coast, a Kenya Ports Authority (KPA) official said yesterday.
Speaking of security, the GAO recently issued a report on Air Cargo Security, saying that air cargo is still a security problem :
The GAO report outlined four key objectives to address the threats: boost security before cargo gets to airports; identify and screen high-risk cargo as it enters the shipping area; develop technology to inspect high-risk cargo; and improve security aboard the aircraft and in airports.
Airlines deliver more than 23 billion pounds of cargo annually, of which about 6 billion travels on passenger aircrafts, Cathy Berrick, director of homeland security and justice issues, said in an interview. Much of it is not screened.
Transportation Security Administration began to evaluate explosive detection systems to screen air cargo in January 2004 at six airports, but “because of the nature and size of the different packages, the machines aren’t effective in screening everything,” Berrick said.
Some cargo is exempt from screening and inspections based on nature and size. The GAO found limitations on this practice. The specifics are restricted information and that the GAO declined to comment on, but the recommendation is for the TSA to rethink the exemption policy.
Effective returns management can save costs and boost customer service :
With more than 4.5% of logistics cost attributed to handling returns, an effective returns process contributes to both bottom line numbers along with customer satisfaction. For ecommerce retailers this is more relevant given the higher return percentage and the returns being one of the key ingredients of customer retention.
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Most .com customers value good return policy as one of the deciding factors between comparably priced web sites. About 10 percent of people surveyed by Harris Interactive said that they would decide not to return to shop at an online store if the return policies proved inconvenient. 95% of direct shoppers stated they would shop again with a direct retailer that made the returns experience more convenient. With the proliferation of comparison engines reducing brand loyalty amongst shoppers, effective returns management may become a key retention activity.US companies spend $950 Billion dollars on logistics and 4.5% of all logistics costs are related to returns; therefore, $43 Billion is spent on returns (AMR Research).
The cost of handling these may be as much as 5% of the retailer’s sale. The problem seems to be more acute on the .com side of the business
Of the approximately $96 billion in online retail sales in 2003, over $20 billion were sent back to retailer. (AMR Research “Beyond The Shopping Cart”, 2003).
This is a long article, but loaded with great stuff, especially if you are involved in e-commerce. Read the whole thing here.
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