Zoom meetings are replacing face to face sales calls for LSP (Logistics Service Provider) representatives and I’m hearing a lot of frustration from former colleagues and clients. LSP reps are under pressure to conduct an aggressive number of zoom meetings or phone contacts per day. Indications are that this strategy will continue as it reduces costs and may increase sales productivity.

Clients are often working remotely and with reduced staffing so understandably want to avoid these calls. The discussion usually includes small talk, commiseration, service issues, and client complaints about rates or surcharges. Let me suggest an alternative approach that can be a big plus for small/medium shippers. Rather than avoid the calls why not look to set the agenda and add value while also reducing the number of routine calls? I guarantee that you will have your LSP representative’s attention.

A common mistake made by small and medium sized clients is failing to prepare before meeting with LSP representatives. Another mistake is focusing on price. A better strategy is to emphasize value in your discussions with providers. If you determine that they have the capabilities to provide quality services, then you can move the discussion to price. Consider: if simply asking for lower rates can result in transportation savings, how much better would the result be with a little preparation? Here are some suggestions from someone who has spent many years on the LSP side of the table.

Determine your specific transportation needs and goals ….for example

• Price- compare net rates (not % off because base rates differ), minimums
• Transit Times/Reliability- including pick up and delivery, terminal services, linehaul
• Inventory Costs- reduced transit time = reduced inventory costs… how transportation adds value
• Product Differentiation- faster, better service as a marketing tool
• Capability/Access- carrier has right equipment in right place at right time
• Security- carriers claim ratio and loss/damage experience
• Relationship- responsiveness and problem solving protocols

Analysis Prior to Negotiation

There is not much advantage to withholding your shipping profile from providers. Because the industry is so competitive you will get a better deal if LSPs know what volume they are bidding on and any specific service requirements. If this information is not available to them they will hedge their bets and be less aggressive in their offers. Gather some data and present it. This will give you professional status in the eyes of your providers. Here is some minimum information needed. Most of it can be found in bill of lading or invoice files.

• Volume/Frequency- # of shipments per day, week, or month
• Weight- average weight per shipment
• Dimensions- standard dimensions, if any… palletized or non palletized…pictures are helpful
• Heaviest Shipping lanes- domestic and international
• Services- priority or economy, express or deferred
• Density- pounds per cubic foot ( for motor carriers)
• Classification- NMFC item numbers (for motor carriers)
• Dimensional Weight or Dim Factor (for air freight forwarders)
• Packaging type- transportation only, display, labeling
• Freight Payment Terms- prepaid, collect, third party
• Control- Who has authority to sign an agreement? Who makes routing decisions?

Request for Proposal/Request for Quotation

A formal RFP or RFQ is an effective way to both reduce transportation costs and gain the value that you need from your carriers. Ad Hoc Logistics can prepare your RFP/ RFQ, get it to the appropriate transportation providers, and even negotiate on your behalf. Contact mitch@52.91.45.227

My background includes a number of years as a corporate trainer. So I understand that in an economic downturn one of the first cuts is to the training budget. This is problematic because staffing cuts are often made at the same time. Remaining staff will be taking on additional duties and performing out of their comfort zone with few opportunities for training.

This is not the time to risk logistics service failures or customs delays which can cost you business. Some basic training with practical “how to’s” is in order. We can help!

I have developed “A to Z of Managing Logistics”, a brief presentation designed for managers who wear several hats and need to oversee logistics without devoting too much time to it. The steps outlined in the presentation are also valuable in training new logistics employees.

If interested contact:

mitch@52.91.45.227

Posted on LinkedIn

Brexit is not going away…
While the pandemic is dominating all news feeds, the Brexit deadline steadily approaches. Big questions remain unanswered. How will trading partners manage relationships and logistics with both the UK and EU as separate entities?

Logistics Trends & Insights LLC

FollowAmazon Air’s freighter fleet projected to hit 200 in 2028 which, if it happens, can definitely rival UPS and FedEx. If true, how will this change the air express market? How will it impact Amazon’s relationship with UPS?

Mitch Kostoulakos, LCB   Licensed Customs Broker, International Logistics Consultant

200 aircraft would be less than half the size of the FedEx fleet

Compliance is about attention to detail, consistency, process, and oversight. I guarantee that your compliance folks are not trying to practice “sales prevention”. The goal is to complete transactions the right way and avoid customs or logistics delays and possible exposure to fines and penalties. However, there is no doubt that complying with all of the agencies involved in international trade generates a lot of red tape and can be frustrating.

Consider just a few of the details that can make or break a smooth transaction:

Harmonized Codes to the full 10 digits including heading and sub heading. It is very easy to transpose digits.

Schedule B Codes, ditto

ECCN , Alpha numeric, number, letter, followed by 3 numbers. Example 4A994. Then followed by sub paragraph level and don’t forget the dot between the last number and the sub para.

License Exceptions are designated by 3 letter codes and must be compatible with the ECCN listed.

COO, Country of Origin markings and proper codes on documents and AES filings. Best not to guess here. Have you ever entered CH for China?

Valuation must be determined accurately and is best covered in a separate post which I have done on 05/09/2019.

These are just some of the basics. We could also mention commodity descriptions, red flag screening, incoterms, and plenty of other details. So, hats off to the compliance teams.

For assistance contact mitch@52.91.45.227

The public health crisis and resulting economic decline calls to mind the term “wicked problem” from a noted supply chain management text*. We can consider supply chain to be strategic while logistics is more tactical. Fortunately, most logistics problems do not fall into the “wicked” category. Supply chain is more complex and problems are more difficult to solve.

A wicked problem involves multiple stakeholders, each with different interests and values. As a result there is no single common goal , no clear mission, and no universal solution. Any solution, after being implemented, will generate waves of consequences and can result in making the problem worse.  A suggested framework for tackling a wicked problem consists of 4 levels of increasing complexity:

Level 1- Process Engineering and inventory management– This is the engineering approach focusing on what is being carried (work, cash, information) and process design within and between organizations. Risk management is about improved visibility and control.

Level 2- Assets and Infrastructure- This is the insurance and financial approach. Nodes and links are examined and strengthened to avoid disruptions along the supply chain.

Level 3- Organizations and Inter-organizational networks– this is strategic level problem solving involving outsourcing, partnering, and offshoring.

Level 4- the Macro Environment- This level uses PEST  (Political, Economic, Social, and Technological) analysis of environmental changes. Issues include green and legal/regulatory as well as geo political factors.

*Global Logistics & Supply Chain Management by John Mangan, Chandra Lalwani, Tim Butcher, and Roya Javadpour

Post navigation

PREVIOUS POST

The current pandemic and economic upheaval will lead many people to change jobs or careers by necessity. Some will make the leap to entrepreneurship and the arena of international trade. Allow me to provide a little perspective.

In my past experience teaching Supply Chain courses, many students expressed the desire to start their own importing or exporting business. In some cases they were motivated by an interest in a particular product they encountered on an international trip. Others wanted to turn a hobby into a business. In these early stages the nuts and bolts of international logistics are less important than the product, the markets, and realistic expectations on the part of the entrepreneur. As an instructor I always wanted to provide guidance and assistance along with real world business facts. The attached Twenty Questions are a good way to start the process,

IS THIS BUSINESS FOR YOU

Mitch Kostoulakos, LCBLicensed Customs Broker,

USMCA (New NAFTA) on hold?

Delay the USMCA? Business Leaders Call for Postponing Implementation of the ‘New NAFTA’natlawreview.com

Dean Maciuba 

Marek, I disagree with your comments regarding legacy mind-sets at UPS/FedEx as both are well run companies and have huge customer bases to serve. There enormous size, much larger than European carriers, make it harder to implement change, yet both carriers are changing dramatically.  Cultural consumer differences do drive how US consumers use/access carrier resources versus European based consumers, like how consumers use access points, but things like parcel locker availability/usage are just a small part of both carrier’s global networks. Look at the size and scope of FedEx/UPS global operations, with both carrier’s operating in every European country and practically no European carriers operating in the US. Also, FedEx is the largest cargo carrier in the world and no single European carrier can match UPS/FedEx reach, FedEx being the largest cargo carrier on the planet. Both carriers do have legacy cost issues that they are both addressing and FedEx will adjust to the Amazon threat. Now, the USPS is struggling with numerous organizational problems. 

Mitch Kostoulakos, LCB   

Dean, your posts have described how UPS and FedEx are making dramatic changes. Certainly these changes are like turning an aircraft carrier due to the size and scope of these operations. Legacy mindset does exist but it can also be a positive factor in establishing the values and culture of service in both UPS and FedEx.

Ad Hoc Logistics recently completed a project for a Massachusetts manufacturer consisting of an extensive parts list “scrub”. We analyzed the harmonized codes and descriptions used for their imports, checking codes for validity. We then reviewed catalog descriptions and specs for all parts. Here is what we found:

10% of harmonized codes were invalid or out of date.

21% of parts had descriptions which were not relevant for the codes listed even though the codes were valid.

Our report to the client included recommendations for changes to the parts list with up to date and more accurate harmonized codes.

Invalid harmonized codes and descriptions can result in customs delays and possible exposure to fines and penalties. Why not give your parts list a good scrub?

Need help? Contact mitch@52.91.45.227