Calling on his 20+ years’ experience of shipping goods into the US, Gary Tervit looks at the current challenges and opportunities of shipping into America and how the events of 2020 have shaped the market

The American market has historically been a very attractive market for UK retailers. One of the main reasons is that the US is a relatively straight forward market to ship in to. The country’s customs have a high value threshold for imports before it imposes duties and taxes – $800 – which means that typical ecommerce products are easy to move. For retailers shipping products that typically go on or in the body there is the need to ensure they have the correct registrations with the US Food and Drug Administration. Providing this is done and shippers are providing complete and compliant data then the process remains straightforward.

The second reason that America has traditionally been a solid market is the high number of flights between the UK and the US daily, on which stock could be transported. Once on US soil, there is a then myriad of options for final-mile delivery to the customer.

Shipping to the US by sea is an alternative option, but it does come with a notably longer lead time compared to air travel. The average sea transit to America is nine days, plus an additional three to five days for passing through customs and delivery. Today’s consumers have a much shorter expectation for delivery from the UK, usually a week maximum.

Aviation and us
As we all know, 2020 has seen a paradigm shift in global transit options.

Airline capacity has been severely affected, with transatlantic carriers such as Virgin Atlantic and Norwegian winding back the number of flights operated as passenger demand disappeared seemingly overnight. This had an instant knock on effect on freight capacity and in turn caused the price of air freight to quadruple. As an example, if a shipper was paying an average of £1 per kilo of goods transported, that would now cost between £3.50 and £4.

Unless a Covid-19 vaccine is found soon, it could easily be up to two years before airlines are anywhere near back to their original flight schedules. With some airlines in very public financial difficulties, it could be a long time before reliable channels to the US are reinstated and airlines are able to ramp up with capacity for freight volumes.

The consumer behavior shift in 2020 and meeting the demand
Covid-19 supercharged ecommerce demand worldwide. Buying habits changed almost overnight and in May, Adobe estimated that online spending increased by 77 per cent compared to the same month in 2019, making this period comparable to levels normally only seen at peak times such as Black Friday and Christmas. The surge in online shopping doesn’t appear to be ending any time soon. The fear of physical shopping, combined with the convenience of buying online has meant that in many cases, ecommerce is very much the new norm for making nearly any purchase.

This demand change has had an instant impact on domestic deliveries across the states as capacity forecasts made previously have been rendered useless. These forecasts are relied upon by suppliers with the US to ensure they have the infrastructure in place to meet their predicted need throughout the year.

eMarketer estimates that e-commerce sales in the US will push over the $700 billion mark, equating to 14.5 per cent of total retail sales. This rise is in some cases approximately six years ahead of schedule for suppliers, who are battling to meet the new demand without the necessary infrastructure in place. For many, resources have even had to be reduced due to safety fears surrounding Covid-19. As a result, transit times are taking roughly two to three days longer as there are less personnel to process parcels, plus a need to quickly grow vehicle fleets. On top of this, the peak period is still to come, which could see an even larger increase on current volumes, this could be a contributor to why organizations such as USPS and FedEx have had to implement surcharges to provide the service needed to support the further demand surge.

To meet growing customer demand and delivery expectations, UK companies such as ASOS and The Hut Group are opening their own, or outsourcing to, distribution centers in the US. Online fashion retailers such as Missguided and Boohoo are shipping big volumes to the States, as clothing and wellbeing products are the main drivers of growth in the UK-US market. With the reduced air freight capacity, shippers are having to block book space in advance for these deliveries to beat the increasing competition for space.

New year, new market?
In the UK, 31 December 2020 means a lot more than just New Years’ Eve. However, this should not cause any issues for the US market. Carriers already have strategies in place for dealing with post-Brexit shipments, working on the worst-case scenario of there being no deal. As mentioned earlier, the US has a high de minimis value before it starts charging import duties and taxes, for the EU it is around 20€, which again makes America a more attractive market. The US may change its de minimis, especially for imports from China, but this will depend on the post-election decisions.

Will the US remain viable as a market?
US customs has been taking steps to simplify the process to encourage ecommerce into the country over the past few months. As an example, historically the two main gateways into America were New York and Los Angeles, but in the past year there has been a move towards increased entry points for inbound ecommerce.

Before the pandemic, the US was a very attractive market. During and after the pandemic, the US will remain so. Even with prices for shipping increasing and networks being incredibly busy, there is a lot of opportunity in the states, with consumers eager for UK goods.

Gary Tervit is managing director of Pro Carrier, the cross-border carrier division of freight forwarder DG International. DG International is a global team with local expertise and provides cost-effective and convenient global logistic solutions. Launched in 2009, DG International is one of the UK’s fastest-growing logistics companies. It offers a full supply chain solution to support customers across all sectors, including e-commerce, retail, automotive, fashion and furniture.
https://wearedg.com

Supply chains after Covid-19 - what planners can learn from the pandemic. By Bill DuBois

It’s difficult to be fully prepared for such an extreme event as the Covid-19 outbreak, but some supply chains were better prepared than others. Some businesses went onto the offensive. Many others were forced to adopt defensive positions, simply reacting to the latest shifts in the pandemic. Any organization that could connect the nodes in their supply chain from customers to tier two and three suppliers had an advantage. Equally, any business with advanced scenario planning capabilities was better positioned to quickly model impact and responses.

No company, however, could entirely escape the challenges that came from extreme demand changes and supply disruptions. They may well have had a supply chain that was working well before the pandemic, only to find it was less able to manage when the landscape changed.

As Simon Ellis, Program Vice President, Supply Chain Strategies, IDC, recently stated, commenting on a Kinaxis-sponsored study

IDC conducted in late 2019: “One major finding showed that while companies are confident in the ability of their supply chain to be a source of competitive advantage in the here and now, they are much less confident in its ability to continue to be a differentiator into the future. This was true across almost all the industries surveyed. In the consumer products industry, for example, almost 75 per cent of companies felt that their supply chain was a differentiator today. By 2023, only about 40 per cent of those same companies felt the same way.”

In other words, while they had high levels of confidence that their supply chains were working well in late 2019, that confidence nosedived when it came to projecting what their supply chain management and planning could give them just four years later. You could say it was prescient, given what was lurking around the corner in the shape of the virus - but it does not have to be the case that manufacturing supply chains are immediately thrown off course by such events. Supply chain managers and planners need to be able to expect the unexpected and build resilient supply chains that can flex and adapt to whatever the world throws at them.

This means all companies will ideally need to be conducting post-pandemic boardroom sessions to ready their supply chains for the next major event. If we’ve learned anything it’s not if something like this will happen again but when. Nobody knows what other unexpected ‘black swan’ events may be lying in wait.

There will be much to discuss in the boardroom in the coming months. Below are some of the topics likely to be top of mind for supply chain leaders when it comes to being pandemic-ready:

Global network visibility - It will be important to map your network to understand where there may be risk at any tier in any location, for example, single-sourced supply or highly regulated suppliers. As an outcome of the pandemic, the US Food and Drug Administration (FDA) may, for example, be looking to get supply chain visibility on manufacturing capabilities and supply and inventory into medical devices much like they do now for biopharmaceuticals. This will be so they can report on imminent or forecasted shortages of life-saving or life-sustaining medical devices. Visibility is certainly an overused word, but out of this, there may be a new definition.

Elevated scenario planning - Many businesses claim they can do scenario planning or what-if or digital twins, but the speed of creating, sharing and analyzing multiple scenarios will have to be sub-hour. Things are changing so fast that questions need evaluation as fast as the words come out of someone’s mouth. Planners will take speed over perfection.

Supply reliability. Shortages were the earliest challenges at the start of the pandemic as supply channels started to shut down and demand spiked for critical items. Every supply chain in the world was impacted. For example, aerospace and defense has lots of sole source suppliers, most industries source from China, and India locked down the supply of 26 active pharmaceutical ingredients needed in the life sciences industry. Most supply lanes cross regions and borders. There is plenty to talk about here as companies will look at some if not all of the following:

Diversification: Reduce the reliance on a particular region. Localization: Bring supply closer to the point of use to reduce shipping, tariffs, border crossings, etc. Multiple sourcing options: Protect against sole sources.

Demand sensing and shaping. How do you prepare for the unexpected without having to predict the unexpected? Planners will need to be more predictive and model plans on actual market demand. Traditional sales forecasting will have too much lag to be of value during a pandemic.

Expanded collaboration. Like scenario planning, there may be an opportunity to redefine another overused word: collaboration. Many more people are needed to participate in resolution. Others, like C-level executives for example, will need to be in the know. External collaboration would include the integration of suppliers in preparedness planning and the communication of those plans to customers.

The human dimension
Any discussion about the supply chain must also take into account the people enabling it. During the pandemic, human needs were given top priority. Many of the boardroom conversations around bringing resiliency and agility to the supply chain ultimately will have that same focus of keeping people safe and healthy. This could mean supply chain risk indicators will be just as important as performance indicators.

Indeed, as the current crisis evolves, that emphasis is likely to become ever more important. At the outset, the focus for most manufacturers was on short-term crisis management. Today, they are taking more of a mid-term view and concentrating more on recovery plans. Over the longer-term, risk mitigation will be key. But across the cycle, supply chain planning will be vital in helping ensure these approaches work well and that businesses can best manage their supply chains in these times of disruption.

Bill DuBois is a director at Kinaxis. Eliminating volatility in your supply chain is impossible, but managing it is not. Trusted by top brands, Kinaxis gives people the confidence to know they are making the best supply chain planning decisions to maximize business performance. It solves complex business problems in easy-to-understand ways by combining human and machine intelligence to plan for any future, monitor risks and opportunities and respond at the pace of change.
www.kinaxis.com

A focus on procurement needs to be key in the UK’s Strategic Defence and Security Review, says Steve Beeching

There are high hopes for the upcoming Strategic Defence and Security Review, despite delays due to the ongoing pandemic. It represents a rare opportunity to revise acquisition procedures and rapidly enhance defence capabilities, whilst utilizing the advances of the private sector and saving billions of pounds in the process. At a time when the strains on the defence sector are being increased due to Covid-19 it needs to support the Ministry of Defence in meeting the rapidly changing threat landscape the UK faces. It must provide the process to deliver a stronger industrial base, with more UK jobs at higher skill levels, achieving greater foreign investment and opportunity for exports. But in moving beyond a pure budget and vision statement, what changes need to be made to deliver on these goals, and make better use of private sector innovation?

Facing today’s reality
It is widely accepted that the UK defence and security community faces relentless and demanding challenges – with dramatically reduced resources alongside growing pressures for the MoD to move faster than its adversaries. The UK government recognizes that the integral defence elements of platforms, food and logistics need to be expanded to include information and innovation, underpinned by new technology.

Despite a clear desired vision, making these changes a reality is proving to be a challenge. Many suppliers and existing MoD programs hide in the complexity of their management, processes, and operational environments, and use these as excuses not to improve or deliver. On closer examination, these procurement processes often reveal delays, excessive waste and overspend. Hidden from these overspent programs is the high obsolescence costs caused by then needing to extend existing systems that are often then antiquated.

A pure platform-centric focus for future capability delivery involves long gestation periods, whilst technology and mission requirements evolve quickly – leading to a severe disconnect in the acquisition process. This can lead to overspend and delays; programs and equipment becoming outdated even before entering service; protracted contract procedures that can’t deliver the required capabilities; and even discovering that enemies have already made use of available technologies and fundamentally changed the rules of warfare.

In order to meet mission requirements, the MoD needs to shift to a hybrid platform and technology capability process. This would fuse smaller bite size technology investments with rapid integration into platforms and operational missions on an incremental basis.

Time for change: A new approach to procurement
The MoD, and the defence sector in general, are no longer leading technology roadmaps. A tsunami of technology advancement is upon us, and this relentless innovation shows no sign of slowing down. This places a huge burden on existing program processes, which are not shaped to continuously evolve or learn from the environments they are used in. More must be made of the private sector industrial and procurement strategy to provide innovative design, solutions and funding.

Furthermore, trying to define technology specifications rather than required capability outcomes results in the MoD owning all programme risk. If the MoD forms industrial partnerships, these would own integration and configuration challenges when delivering capability and mission requirements – shifting risk from the MoD to the eco-system of suppliers.

In order to meet mission requirements, the MoD needs to shift to a hybrid platform and technology capability process.

Simplifying complexity
A fused hybrid approach to capability delivery would fuse smaller bite size technology investments with rapid integration into platforms and operational missions on an incremental basis.

The MoD needs to simplify the complexity of its huge defence organization into elements that can deliver change for the benefit of the nation and armed forces as whole. The acquisition process thus turned on its head so that the required mission outcome(s) derive a capability that evolves into the platform, rather than trying to deliver an obsolete capability from the outdated platforms described above.

The more agile hybrid approach acquires the appropriate systems and services to meet technology acceleration and rapidly changing adversarial threats. A new approach by Government in its relationships with the defence industry must emerge, to build trusted partnerships with those companies supplying networks, data and applications that will drive the information advantage. The focus on mission outcomes will be key to rapidly implement new technologies as soon as they become available. Small bite size integrated innovations will allow systems, missions and platforms to be outfitted with the best equipment available at the time of deployment, rather than at the start of development. Such innovations being forward and backward compatible by design. Spiral development processes and outcome driven requirements move much risk of development from the MoD to the expert companies building the technologies. The result will be a faster and better equipped MoD, efficiently using it resources and budget to exponentially i

Increased force effectiveness.
Whilst the MoD’s vision of the future battlespace enabled by weaponized information is correct, we need to implement, as part of the upcoming review, a ‘how-to-fix-issues-driven-by-the-platform-centric-design-freeze’ mentality into new hybrid acquisition processes. The result will be a better equipped MoD, whilst saving billions of pounds and increased force effectiveness.

Steve Beeching is Managing Director of Viasat UK, a global communications company that believes everyone and everything in the world can be connected. For more than 30 years, Viasat has helped shape how consumers, businesses, governments and militaries around the world communicate. Today, the company is developing the ultimate global communications network to power high-quality, secure, affordable, fast connections to impact people’s lives anywhere they are—on the ground, in the air or at sea.
www.viasat.com

Antony Lovell explains how combining both short- and long-term thinking is the antidote to politically-driven supply chain disruption

Achieving optimum levels of efficiency within supply chains is a common objective for organizations across the globe. Increasingly, companies are re-examining the trade-offs between efficiency and risk, resilience and agility.

Many efficiency targets are siloed metrics and this, combined with continued global disruption, raises the question of whether the incessant pursuit of efficiency has led to less resilient networks. A lack of resilience increases risk and, ultimately, supply chains are like stock markets – they hate risk and uncertainty. This is largely because risk needs to be offset with expensive insurance, such as increased inventory or capacity. In a high risk world, supply chains cannot simply rely on inventory and capacity as insurance though, because it is simply too expensive. Instead, they need long-term agility and resilience.

Mitigating the impact of political turmoil
Right now, many businesses are reviewing their supply chains and considering factors such as operational strategy, resilience, agility or perhaps even the possibility of onshoring. This is partly due to the ongoing pandemic disruption. But they’re also looking to hedge their bets against inevitable future turmoil, which we know is on the horizon, but is difficult (or impossible) to predict the
impact of.

For the UK, Brexit and the end of the transition period is looming, with fresh concerns recently raised about whether customs systems at ports will be ready and able to deal with trade in 2021. Elsewhere in the world, there is conflict in central Asia, protests in Thailand and Nigeria, US-China trade wars, the US election – the list goes on.

How then, should businesses be calibrating their networks to combat these issues?

Decision-making in the supply chain
It’s worth remembering that supply chain transformation is normally slow to achieve. We have seen instances where supply chains reconfigure quickly, for example when embracing offshoring to chase a cost advantage. But supply chain processes and systems cannot always be overhauled as quickly. This leaves us managing more complex networks without the right tools for the job at hand and many networks are now counting the cost.

Holistic strategic change encompassing networks, people, processes and systems takes time.

Cost was once the major driver in offshoring. It led to a rapid refocusing of manufacturing and sourcing, and therefore supply chains, to China and other parts of Asia. However, the world is becoming more expensive, as well as more conscious of environmental and ethical considerations one one hand, while robotics are reducing the labour cost differential of near-shoring on the other. Meanwhile, the risk of long lead times and sustainability issues are receiving increased focus.

While these have always been considerations for supply chains, changing market considerations and consumer behaviours has rebalanced their order of priority. As a result, as well as cost, it is now even more so about risk and sustainability, which in particular is increasingly influencing buyers, who are in turn scrutinising all aspects of a business.

Combining short- and long-term thinking
So, with supply chains that can be slow to change and evolve on one side, and continued uncertainty on the other, where do businesses turn? They need a combination of short-term agility and long-term resilience.

First, the short-term. This is where speed is needed – a sudden change in policy tomorrow, or a new administration following elections, could completely alter the process for importing or exporting goods with a key UK trade ally within a matter of days. That’s where being able to scale up or redeploy to different locations, and tap into new logistics routes rapidly, are required. This is where end-to-end scenario planning, rapid decision making, and orchestration across the entire supply chain network are essential. Without this, responding to these unexpected, immediate market changes is next to impossible.

In the long-term, the focus is on how well the supply chain is structured to cope with disruption. So it’s about resilience, it’s about investing in the right locations, and it’s about being able to accurately forecast and prepare for different potential future scenarios, whether it’s a long-term lockdown, rising costs or the ongoing drive to cut carbon emissions.

The common theme is having the ability to plan effectively. Both these short- and long-term strategies work hand-in-hand. By building resilience into the supply chain in the long-term, businesses will have a much better chance at responding with speed and agility to short-term, unexpected disruption. Ultimately, it all comes from being able to capture and analyse data properly across all parts of the supply chain, and from both internal and external sources, in real-time. This in turn informs how different events are modelled and scenarios are tested, and then that is all taken and used to design networks that can manage disruption.

Redefining supply chains for a disrupted future
We’re going to see more political disruption. When coupled with natural and health disasters, it is clear that supply chains need to be primed to cope effectively. That means combining both short-term reflexes with strategic decision-making, all informed by the same accurate, trusted data-driven planning and forecasting.

Antony Lovell is VP Applications at Vuealta. Vuealta is a Global Anaplan Partner helping organizations around the world solve their biggest planning challenges with applications powered by the Anaplan Connected Planning Platform.
https://www.vuealta.com

Manhattan Beer Distributors uses technology to ensure its customers get what they need just in time for happy hour.

By Jim Harris

Distributing beer and other beverages to more than 25,000 customers daily in the New York City metro area is no easy task. Inventory levels as well as truck scheduling and routing, among other factors, all need to be taken into consideration before consumers can enjoy a pint at a bar or take a six-pack home from the store.

The city’s premier distributor manages the complicated logistics of delivering to the nation’s largest city through a large fleet of trucks as well as state-of-the-art warehouse and computer systems that enable it to meet its customer service goals.

“To be successful in this business, you need to understand customers and partner with good suppliers and great brands,” says Mike McCarthy, senior vice president of operations for Manhattan Beer Distributors. “We make sure we’re getting the right brands to our customers where and when they want it and how they want it.

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Gorton’s Seafood enhances its supply chain as it continues to innovate to deliver the highest-quality products to market faster and more efficiently.

By Janice Hoppe-Spiers, Senior Editor at Knighthouse Publishing

For nearly 170 years, Gorton’s Seafood sourcing the highest-quality seafood in Gloucester, Mass., America’s oldest seaport and the birthplace of the United States fishing industry. The company is one of the most recognized brands in the country as America has been putting its trust in the Gorton’s Fisherman for decades before its beloved jingle first appeared in 1975. 

Gorton’s got its start by setting sail in the Atlantic Ocean with company-owned schooners, fishing for cod and mackerel, and salt-curing them on board. As industry pioneers with a thirst for innovation, Gorton’s was the first to develop a frozen convenience food in 1944 when it launched the frozen fish steak. “Now we are exclusively in frozen seafood,” Director of Purchasing Greg Jeffers says. “We offer a variety of products from different species and we want to provide a variety of healthy, nutritious seafood to customers.”

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A strong supply chain supports IRIDEX’s leadership in innovative laser-based medical systems, delivery devices and consumable instrumentation. 

By Knighthouse Editorial Staff

IRIDEX Corp. has a goal of saving sight worldwide through its operations, as well as its extensive charitable efforts. The company is a worldwide leader in developing, manufacturing and marketing innovative and versatile laser-based medical systems, delivery devices and consumable instrumentation for the ophthalmology and otolaryngology markets. At the same time, IRIDEX builds key partnerships with groups that share its mission to fight blindness, improve quality of care and enhance patients’ lives. 

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A robust supplier diversity program has helped CBS Corporation expand opportunities for diverse-owned businesses. By Eric Slack

Supplier diversity has long been a cornerstone of CBS Corporation’s operations. Indeed, diversity is something CBS has embraced at all levels – on screen, behind the camera, in the workforce and with supplier relationships.

“Supplier diversity is a key strategic initiative of the company’s procurement function,” Senior Vice President and Chief Procurement Officer Tom Hogan says.

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