Transformative times for maritime freight
Across the transportation sector, overcapacity, rising fuel costs, increasing environmental regulations volatile rates and labor shortages are a constant challenge. Water transportation moves 76% of US exports by tonnage, and 90% of global trade is carried by ships. With those large numbers comes a large amount of risk, with piracy and cyber hacking a constant concern for maritime freight. However, there are also some significant opportunities for maritime shippers if they are prepared to embrace a digital future.
Forward-looking CEOs are already taking advantage of the benefits offered by smart operations, e-navigation and manufacturer-to-customer thinking rather than the traditional port-to-port perspective. They recognize that in the fast-moving maritime ecosystem of the next decade, partnerships will feature much more frequently. This will have implications for every aspect of the shipping industry.
In the USA, water offers an efficient and cost-effective way to move cargo. The capacity of a typical dry-cargo barge, for example, is 16 times that of a rail hopper car, and 70 times that of a grain-hauling semi-truck. The waterway network received a major boost in early 2018 when the government announced $170Bn in federal funding aimed at repairing the existing infrastructure and building new infrastructure to meet the demands of the growing economy.
In Europe, the image of barges transporting coal, ores and petroleum is slowly being overtaken by high value shipments of containers and chemical products.
This points towards two lasting trends. The transition towards an energy-efficient and low-carbon economy on the one hand and the increasing integration of inland waterway transport in the supply chain on the other.
How should maritime carriers and shippers respond?
As major shifts continue to take place in consumer, lifestyle, technology and mobility, the entire transportation industry needs to transform itself. There’s no doubt that the shipping industry faces many challenges, but they are not insurmountable. By ensuring an open market and free trade, increased international cooperation, government support, public-private partnerships within the industry, knowledge sharing, and closing the gap between regulators and shipping industry, the industry has an opportunity to thrive.
We can help
Maine Pointe has a wealth of experience helping global shipper and carrier CEOs rapidly optimize distribution networks to release cash, drive out costs and enable growth.
What Maine Pointe Achieves
Developing global supply chain capabilities for a manufacturer of performance materials and specialty chemicals.
What we did
- Negotiated with senior management of international steamship lines to get container and vessel capacity to appropriate levels for the client's needs
- Screened and prequalified 3PL warehousing/packaging companies, railroads, barge lines, ocean shipping companies and freight forwarders
- Developed a strategic plan to reduce costs and improve service both for our client and its 3PL carrier partners
- Facilitated negotiations between the company and short listed service providers
- Carried negotiations through to completion and assisted with implementation
- Instituted improvements with carriers that significantly reduced cost and improved transit times from eight days to one
- Put in place 3PL firms that reduced cost by over 10% while significantly improving service worldwide
- Delivered a 17% reduction in transport costs
- Achieved a $30M decrease in working capital requirements
- 15% inventory reduction
- Improved EBITDA by over $100M
- Over $150M in total financial impact across four global divisions
Implementing new processes and improving procedures to improve competitiveness for a global leader in the production of controlled substances for the pharmaceutical industry.
What we did
- The company was shipping all product by air. Maine Pointe helped cut costs by making the transition to ocean freight
- Conducted a supplier forum to share strategic vision and highlight opportunities to leverage additional spend
- Implemented a formal process to competitively bid for key commodities and services
- Installed an optimized, demand-driven production schedule and shift pattern
- Designed and implemented management operating systems to drive productivity and quality of operations, planning, maintenance and quality
- Helped transition to alternate mode of transportation and renegotiate with incumbent carriers
- Improved true performance visibility across the supply chain
- Improved gross profitability by 14.4%
- Achieved a 24% reduction in direct spend and a 23% reduction in indirect spend
- Realized a 20% reduction in direct and indirect support labor cost while maintaining output per crew
- Delivered a 3.2:1 ROI
“Maine Pointe's well-educated professionals with their significant, practical, hands-on experience brought a unique set of competencies to the partnership with Solutia. Specifically, their capabilities and deep expertise in Operations Excellence and Logistics provided us with significant ROI across several of our divisions. They met or exceeded our expectations."
James R Voss, Executive Vice President Global Operations, Solutia Inc.