Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
People tend to equate seaports with static infrastructure. And it's not hard to see why. Ports cannot simply pick up and move the container terminals, bulk handling facilities, or roadways they build. But they do have some flexibility. They can, for example, deepen channels and expand terminal facilities.
Trouble is, these infrastructure improvements typically take many years to complete, while the needs of ports' customers—shippers, carriers, and other port facility users—may change very quickly. And that raises a question: Do ports win and retain business based on their infrastructure and efficiency, or do customers use different measures to evaluate port service quality?
A new research project seeks to answer this and other questions by asking port users just how they evaluate port performance and how well seaports are meeting their needs. Here's a look at what researchers have learned so far, along with information on how you can participate in this groundbreaking study.
Your opinion is needed!
The Port Performance Research Network (PPRN) is seeking volunteers to participate in a panel that will evaluate ports on an annual basis. Eligible companies include importers, exporters, forwarders, and third-party logistics service providers that directly purchase ocean transportation services. Panel members will be asked to complete a survey on port performance each year. The data gathered will be used to help ports worldwide improve the service they provide to customers like you.
If you'd like to participate, please contact Mary R. Brooks, William A. Black Chair of Commerce, Dalhousie University School of Business.
Not by efficiency alone
The study is being conducted by the Port Performance Research Network (PPRN), a group of nearly 60 maritime economists from 14 countries. Led by Mary R. Brooks, the William A. Black Chair of Commerce at Dalhousie University's School of Business in Halifax, Nova Scotia, the survey will focus initially on ports in the United States and Canada but will soon expand to other countries.
Most port research to date has focused on efficiency, as measured by container throughput, vessel turn times, labor activities, and equipment utilization. PPRN decided to investigate effectiveness—how well seaports perform in delivering the services their customers want. If they could determine how users evaluate ports' performance, the researchers reasoned, then port management could use that information to better serve customers and make their operations more competitive. This information could also help them prioritize planned improvements in order to make the best use of scarce investment dollars.
It's a subject that merits investigation, because competition is a bigger concern for ports today than it was in the past. Thanks to intermodal networks, most importers and exporters are no longer "captive" to the nearest harbor, and ports on opposite sides of the continent may battle for the same business, Brooks says. Furthermore, today's huge retailers and consumer goods companies have more economic clout than their counterparts did in the past. "In terms of the entire supply chain, they are much more important and powerful now," says Brooks' Dalhousie Business School colleague Tony Schellinck. "They're dictating where goods arrive, and through their need to minimize inventory, they have increased their involvement in the distribution system and have forced changes [that affect ports]." Add in carrier consolidation and the trend toward bigger ships calling on fewer ports, and it's clear that port authorities must work hard to attract and keep customers.
To find out what users really want from seaports—and how well ports are meeting their needs—PPRN has been surveying ports' three main constituencies: cargo interests (importers, exporters, and agents that purchase ocean transportation services), ocean shipping lines, and asset-based warehousing and transportation companies that do business with ports. Researchers asked survey takers in all three categories to rank 12 general evaluation criteria based on their importance in port selection decisions. These criteria covered areas like information, cargo handling, safety and security, and direct and connecting services.
The researchers also asked respondents to rank a second set of criteria that reflected their group's specific concerns. For cargo interests, these included:
The effectiveness of ports' decision-making process (ability to make requested changes);
Port authority's responsiveness to requests;
Terminal operator's responsiveness to requests;
On-schedule performance;
Port employees' capability to meet cargo interests' needs;
Ability to develop/offer tailored services to different market segments;
Cost of rail/truck/warehousing;
Availability of rail/truck/warehousing;
Overall cost of using the port.
Finally, respondents were asked to rate the performance of ports they use against both sets of criteria.
What really matters
The findings for the cargo interests—our primary concern in this article—were revealing and, in some respects, a little surprising. For one thing, the results indicated that respondents use different yardsticks when selecting a port and when evaluating a port's performance. For example, when asked to rank the nine cargo interest-specific evaluation criteria by their importance in their port selection decisions, cargo interests put "effectiveness of decision-making process" (which encompasses altering schedules, amending orders, and changing processes to meet cargo interests' demands) in seventh place. Yet when asked to identify which of these criteria had the greatest influence on their overall satisfaction with a port's performance and their perception of its service, they put "effectiveness of decision-making process" at the top of the list.
One finding that may come as a surprise to anyone who's negotiated pricing with importers lately is that neither the overall cost of using a particular port nor the cost of hiring local warehousing and transportation services carried much weight with cargo interests. In fact, the cost of using a port essentially had no influence on overall satisfaction, perceived competitiveness, or perceived service quality. One possible reason why, Brooks says, is that cargo interests often don't see port-related expenses broken out from their total transportation bills and may not be fully aware of the cost of doing business with one port versus another.
So, what does matter most to cargo interests? Importers, exporters, and their agents zeroed in on what Brooks and Schellinck categorize as "responsiveness" but could also be termed "relationships." As Exhibit 1 shows, when it comes to overall satisfaction with a port's performance, the most influential factors were the aforementioned effectiveness of decision-making (making changes to accommodate cargo interests' requirements) as well as the responsiveness of the port authority and the terminal operator to requests.
What this indicates for ports is that the key to customer retention is to work closely with cargo interests, accommodating special requirements and helping them solve problems. "If the focus is just on moving boxes and ports don't really care who owns them, what's in them, or the impact of their actions on them, then customers will go somewhere where they get better care," Brooks says.
This finding bucks conventional wisdom, suggesting that cargo interests' evaluation of port performance has more to do with responsiveness and management style than with investments in infrastructure. "The things that turn out to have the greatest impact on perceived satisfaction by cargo interests are also probably the easiest for ports to fix," Schellinck observes.
Practical applications
PPRN's research is still in the early stages; researchers plan to continue gathering data both within and outside of North America. (For information on how you can participate, see the sidebar "Your opinion is needed!") But they are already seeing ways both ports and their customers can benefit from practical applications of the survey results.
PPRN plans to develop a global service benchmark that ports can use to measure their performance against their competitors'. And because respondents are evaluating specific ports, researchers will also be able to identify areas in which a particular port may not be meeting customers' expectations, Brooks says. The results will allow individual ports to make targeted investments that will improve port users' satisfaction. "Ultimately, the survey results will help port managers understand how to better meet their customers' needs," Brooks says.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.