Modex 2012

FROM THE MM&D JANUARY/FEBRUARY 2012 PRINT EDITION:

Modex 2012 used the tagline of “where supply chain solutions are moving,” and the closing keynote addressed exactly that issue.

The speaker, Donald Ratliff, executive director of the Georgia Tech Supply Chain & Logistics Institute, briefed the audience in Atlanta about global trends in logistics and the supply chain.

Among the biggest revelations is that trade between Asia and North America isn’t growing.

“We think about Asia exporting to us, and they do export a lot of stuff to us, but if you look at where your trade growth is, the biggest single area of trade growth is Asia-to-Asia. If you look at Asia-to-North America, it had growth from 2002 to 2008, but it is reasonably flat from that point on.

“Things are changing some in terms of trade. I don’t know if we really understand it, but we see that it’s happening.”

Ratliff attributes intra-regional trade growth (such as Asia-to-Asia) as down to one single factor: convenient, easy and dependable logistics.

Along with changing trading patterns, Ratliff spoke about how the globalization of logistics is affecting inventories in the supply chain.

He noted that in general, it hasn’t changed warehousing operations all that much, but it has changed the way inventories are handled.

“Inventory used to be only in warehouses and retail locations, or most of it was, now there’s inventory out there everywhere, and a lot of people have a lot more inventory in the chain than they have in locations where they’re thinking about planning for inventory. Most of this inventory is not planned.”

This type of inventory presents a problem.

“All of our inventory models are based on what we put in warehouses and what we put in stores. This is planned inventory. But if you look, there is all this in-transit inventory which is just out there floating around, and what is worse, there is a bunch of stuff that is waiting for something [such as goods waiting at a port for a ship]. Generally you can track it one piece at a time, but if you say ‘how much stuff  have I got waiting at the Port of Savannah?’ not many people can tell you that.”

Waiting for ships is something that might be happening more and more in the future, as larger ships, built with the expanded Panama Canal in mind, will require more and more stops to take on more and more cargo. Their size will also make them harder to get into most ports. (Ports will be required to make expansions, including improvements to intermodal connections, which in turn will promote greater cargo volumes.)

In contrast, he mentioned that Maersk Line, is moving to a model of guaranteed, daily service.

“Bigger ships and more service are not compatible. One of those ideas is wrong, and whoever is most wrong is going to be out of the shipping business.”