In the first quarter of 2007, Only 46 percent of container vessels arrived at ports throughout the world on time, the lowest level on record. At European ports, less than 30 percent of the vessels arrived on time. With worldwide transportation bottlenecks and congestion occurring on a steady basis, the best technologies utilized in global supply chains are only as good as the existing infrastructure goods are delivered to.

According to industry experts, by 2010 global container volumes will be double those of the volume in 2000. Complicating the matter is the lack of infrastructure to handle the anticipated increases. For example, emerging economies such as India and Vietnam urgently need to build and expand their inland road and rail infrastructures. And European and United States ports need to not only expand their infrastructures, but also create greater efficiencies as they do so.

In the meantime, logistics providers are developing alternative delivery routes to keep supply chains moving smoothly. For example, they are delivering goods from Asia to the United States through the Suez Canal to East Coast ports in order to bypass the congestion at West Coast ports. In fact, East Coast-based trade is witnessing a revival.

On the surface it may seem that a company receiving products from the Pacific Rim should establish a facility on the West Coast. However, it may not be the most effective logistics strategy if the majority of the Outbound services are headed to customers who are located on the East Coast, says Tom Giovingo, executive vice president, Fidelitone Logistics, based in Chicago. Fidelitone Logistics is a third-party logistics provider of comprehensive distribution services, which includes warehousing, inventory forecasting and reverse logistics services, among other activities. The company conducts repair parts activities for more than 1,000 manufacturers, sending parts out and taking them back; as well as stocking more than 100,000 different stock keeping units (SKUs).

Giovingo says that if most of his customers are located on the West Coast, it makes sense for a 3PL to have a West Coast facility. If most of the customers are located East of the Mississippi River, it would be more prudent to have a facility located in the Midwest or on the East Coast. Companies can make use of technologies and applications available in today’s supply chain process to determine the best location to establish a logistics-related facility.

Of course, not all companies find it feasible to establish an East-Coast based distribution center. For Cheyenne, Wyo.-based Sierra Trading Post, operating from one distribution center is the most effective way to adequately control inventory, even though 50 percent of the company's products are shipped to customers located on the East Coast.

Sierra Trading Post is a seller of name brand overstocks and closeout merchandise, which began in the owner's garage in Nevada, moving to Cheyenne in 1992, where it has a nearly 500,000-square- foot facility, and 80 acres, providing room to expand.

"We deal in close outs, so we don't have rapid turnover in our SKUs," says Robin Jahnke, director of fulfillment and corporate services, Sierra Trading Post. "Some products last a week and some last a year. In our analysis, we believed that it would be a major undertaking to develop a way to control inventory in two facilities and balance out that inventory." The company also considered the costs to operate another facility, and the fact that it would have duplicate services at an East Coast distribution facility.

Jahnke says that Sierra Trading Post has employed innovative and creative ways to better serve its East Coast customers. The company also serves its global customers well from its Cheyenne location. Products reach Australian customers in three days. “The paper work, dealing with tariffs, that is the challenge," Jahnke says. “We are looking at ways to export better than we are now. The issues are not logistics specific."

Critical Elements
The workforce is a critical factor when deciding where to locate the facility domestically to meet supply chain requirements. Giovingo says companies, in addition to ensuring the availability of labor, as this is a labor-intensive industry, should also analyze the inbound and outbound needs, and the costs of facilities (owning versus leasing).

Companies are also asking for increased space for trailer parking at distribution and warehouse parks; and an increase in clear height spans in facilities, ranging from 32 foot-to-80-foot clear heights.
And with increased homeland security needs, especially on the container side of the logistics equation, companies want fenced yards at their own facilities as opposed to sharing a fenced yard with other companies, as shipments move from one secured area to another.

Companies are also reviewing the reliability of power systems, as systems such is conveyors, are highly mechanized. Logistics related companies will find that the $1 billion, 630-megawatt power generating station that Central Louisiana Electric Co. Inc. is building near Boyce will meet such requirements nicely. The unit will be the third of two existing units at the Rodemacher Power Station site, and is expected to be complete in late 2009.

The utility company intends to use a byproduct of the oil refinery process, petroleum coke, to fuel the facility, notes Elton Pody, president, Central Louisiana Chamber of Commerce, which markets eight parishes in the central portion of the state.

The central Louisiana community also offers physical infrastructure connectivity with the Port of Alexandria, which is located on the Red River Waterway, which provides access to the Mississippi River and the Intracoastal Waterway. The port features a 40-ton crane for off-loading cargo. Pody says a 15,000 square-foot warehouse will be enlarged by 45,000 square feet for additional storage space. The Port of Alexandria has also undertaken other expansion activities, for example in 2004, when a 7,000-ton fertilizer dome was built.

At this time, port officials are considering expansion activities, including offering direct rail services to the port's terminal.

Pody notes that companies can do business uninterrupted from central Louisiana, -which is strategically located inland, outside of the storm areas of the state. "With our highways, rail services, air transportation and broadband connectivity; companies that need to distribute out of the South can conduct business without a lot of interruptions from here," Pody says.

And while the unexpected can happen when moving goods worldwide, the fewer interruptions, the better. When companies consider the best locations for distribution activities, employing innovative technologies and exploring alternative shipping routes can ease the pain of transportation congestion.

Business Moves In Atlantic Canada
Truro and Colchester, Nova Scotia, which are known as the transportation and distribution hub of Nova Scotia, are located at the center of the Halifax-Moncton (New Brunswick) growth corridor. The corridor is comprised of the fastest growing economy in the Atlantic region.

Halifax is home to the third-busiest port in Canada. And the greater Moncton area is underway with building up its distribution capabilities, which are well suited to support rail operations and air cargo.

Combined, these communities provide companies with several logistics options, which are constantly being enhanced. One initiative is the Atlantic gateway initiative, which positions the region as the gateway into North America through the port of Halifax, says Greg Brown, Director of Industrial Development, Colchester Regional Development Agency. The organization and its partners view Atlantic Canada as an alternative logistics center that allows companies to bypass the congestion found at ports along the U.S. West Coast and Southeast, Brown says.

The port of Halifax's strategic location makes it the first call in and last call out of the Europe - North American trade route. In a shipping route that runs from China to India to the Suez Canal to the Atlantic Ocean, the port of Halifax is the first port that is passed; as is 40 percent of the world trade between the EU and North America.

The strait of Canso (the strait separates Cape Breton island from the Nova Scotia mainland) also plays a role in Atlantic Canada's logistics advantages. Melford International Terminals, Inc. has announced a $300 million deepwater container terminal, which will be located at the 14,500-acre Melford industrial park. The terminal will be operational by 2010.

In regard to air cargo movements, there are estimated to be a quarter of a million fly-overs in the region, many of them cargo based, coming from Europe destined for the United States or Canada. To encourage these cargos to land in Moncton, officials are establishing the Canada east inland port which will be a center of excellence for transportation and logistics operations. Companies could unload and repackage their products in Moncton, says John Thompson, CEO, Enterprise Greater Moncton. The port will be ideally situated for distribution, located near highways and a rail head. "All roads go through greater Moncton that are heading to trading partners in the United States or central Canada," Thompson says.

At this time, the land for the inland port is earmarked, located near the tarmac of the Greater Moncton International Airport.

Additionally, Moncton's officials are also looking to build facilities where companies can break down and repackage their products in order to reduce costs by shipping from the region, for example for bulk products, such as electronics. Another planned park is the Aerospace Defense Park, which would be attractive to companies in these industries, Thompson notes.*

*Excerpts from the October 2007 article.