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DOING BUSINESS LIKE A BIG OCEAN SHIPPER

LTD SUPPLY CHAINwww.ltdsupplychain.com

Presented by:

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MY PERSPECTIVE

Real world logistics experience with major importers and exporters (and domestic)

LTD Shippers Association—for SMEs for Imports primarily

Spoke at NITL seminars on OSRA LTD Supply Chain—4PL / LLP for Import

Supply Chains (4PL is neutral party) SCM consulting for 3PLs, Importers,

Manufacturers, Wholesalers, Retailers

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WHAT NEW RULE (NSAs) MEANS

Two beneficiaries—SMEs 3PLs

NVO as competitive alternative to carrier deals with large shippers

Change the relationship between SME and NVO

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NVOCC SERVICE AGREEMENTS--Basic Terms--

Origin port(s) Destination port(s)

and Inlands point(s) Commodity (ies) Minimum volume Service commits Liquidated damages

(if any)

DurationLegal names and

addresses Shipment records to

be maintainedAll other provisions

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DEAL WITH NVO VS OCEAN CARRIER

Given your volume and complexity:How many ocean carriers you needWhat service(s) you requireFlexibility ( Plan B)Whether space or containers is tightTrend of rates

• Better as Beneficial Cargo Owner / Direct Account or not?

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KNOW WHAT YOU ARE BUYING

What do you need for service? What rates do you need—port to port, port to

door, door to door? What carrier(s) is NVO quoting? Which service (note: each carrier has multiple

sailings) is NVO quoting? What transit time? What service/delivery reliability? Ability to get you containers and get on ship

as needed? And if not?

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WHAT YOU ARE BUYING

Ability of NVO to add surcharges and increase surcharges or create new surcharges?

Ability to get lower rates in off-peak / soft market?

Need for Plan B flexibility in a commit agreement?

Insurance coverage and rate? Free time and demurrage cost? Do you deal with one or multiple NVOs or

deal with NVO and a carrier?

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WHAT YOU ARE BUYING

Void contract if too many service failures?

Volume commitAre two commits

• By NVO to ocean carrier• Importer / Exporter to NVO

Protection to importer / exporter in event NVO fails to meet his commit to carrier(s) and there are penalties

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CONVERSELY FROM NVO VIEW

What do you bring to the table besides volume?

How well can you define your import supply chain process and operation? What problems are there and why? (Dumping problems on to NVO does not solve anything)

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SUPPLY CHAIN ISSUES--Go Beyond the Freight Rate--

Freight is a derivative of the purchase order

It’s about what’s in the container, not the container itself

25+% of import POs are not shipped or delivered on time

Supplier performance is key concern

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SUPPLY CHAIN ISSUES

Supply chain visibility is more than just a freight portal

Need for multi-carrier/multi-service strategy to align with different inventories (A vs B vs C)

Need an NVO or a 3PL / 4PL?Don’t forget about Sarbanes Oxley

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DOWN THE ROAD

Service Agreements can--go beyond just freight ratesbecome a vehicle for supply chain

optimizationlessen the competitive gap between

the large shipper and the SME

Think beyond just rates

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IN CONCLUSION