London, 29.01.2013 – Against a volatile and unpredictable business environment what can be done to render global supply chains more reliable, or at a minimum how can businesses manage supply chain risk more effectively? These and many other hot topic issues will be discussed at the upcoming TOC Container Supply Chain Asia conference in Hong Kong, 12-14 March 2013.
In the run-up to TOC CSC Asia, the TOC conference team is polling some of the conference’s key speakers for their take on the most critical challenges facing container supply chains. They also examine the impact on the shipping and transport sectors both within Asia, and between Asia and other global markets. For more information please visit: www.tocevents-asia.com
In this bulletin:
Mark Holloway, Head of Supply Chain at Diageo. Mark participates in the Plenary Session on Global Liner Performance & Supply Chain Impact.
Stanley Smulders, SVP Asia - Europe & West Africa Trade Management, MOL Liner. Stanley also features in the Plenary Session on Global Liner Performance & Supply Chain Impact.
Frederic Campagnac, General Manager, Clevy China. Frederic is an expert on intermodal transport in China and participates in the session on Day Two, Emerging Trades: Asia’s Linkages with the World
Q: In current market conditions what do you see as the main challenges to successfully executing the logistics chain?
Mark Holloway: For Diageo this would be ensuring the reliability of our end-to-end Supply Chain from Europe to Asia Pacific.
Stanley Smulders: For carriers, this has to be the lack of sustainable returns on investment as it will ultimately affect the provision of services, and with that the reliability of the supply chain.
Frederic Campagnac: Specifically about China, the country’s infrastructure is maturing. The coming challenge is now on the software and systems side. Developing this will enable China to reduce logistics costs and promote the economic development of the country’s inland regions.
Q: What do you consider as the prime responses and priorities for managing today’s volatile container transport environment?
MH: We have to manage costs while at the same time delivering reliable and predictable service. An important factor in this we believe is that carriers have to be more customer-centric in their market focus.
SS: Carriers will need to control their capacity and should maintain pricing discipline. Firstly, this will mean that with bigger vessels arriving, fewer sailings will ultimately be offered to the shipping community. This is likely to continue. As fuel expenses remain a substantial part of the operational costs, it is likely that slow steaming is here to stay. Saving fuel will support the carriers’ P&L and contribute significantly to a cleaner environment.
Q: Is there likely to be a significant shift from manufacturing 'off-shoring' back to 'near-shoring'? If so, what are the implications for container logistics?
MH: I can’t speak for industry as a whole but at Diageo we continuously look at our producing network to optimise costs, service, quality and environmental impact.
SS: While there is more frequent discussion on this topic, significant shifts in the location of manufacturing seem limited. Near-sourcing may reduce the impact of the sea leg in the logistics chain, but on the other hand it could increase total logistics costs as more expensive modes of transport (measured in costs/kilometre) are required to distribute the cargo across, for example, North America or Europe.
FC: If China is able to reduce its logistics costs, there is an opportunity for the further development of container traffic with export volumes coming from its inland regions.
Q: Is supply chain risk management a strategic concern within your organisation? What do you see as the main risks - and responses?
MH: Yes it is. Diageo has an embedded Risk Management Culture, where risks are formally evaluated and mitigated routinely. Perhaps the predominant risk today is global economic uncertainty and the impact that will have on consumer demand, in terms of the product mix they expect from us. Our response to this is to remain as close as possible to our consumers and to provide them with a comprehensive portfolio of products that is continually innovated.
Q: So-called 'south-south' trade linkages (Intra-Asia, Asia-ME/Africa, Asia-South America) now account for nearly 50% of global trade. What do you see as the long term impacts of this trend on logistics investment?
MH: Logistics service providers will invest where they see business opportunities. As a global shipper I see the main challenge is to help LSPs see these logistics challenges from a customer’s perspective and invest accordingly.
SS: Above all, this will require investment in infrastructure – ports, roads, rail and telecommunications. Many countries in Africa and South America are not yet geared up for the increase in transport volumes. The carrier community however is very much geared up to entertain volume growth in the world and will quickly adapt their services and capacities to serve these regions.
FC: China already runs huge developments in these regions and has put in place the financial tools to support these projects. These developments are likely to grow in the following years.
Q: What is the main message you would like to get across to the supply chain professionals gathering at TOC CSC?
MH: To think of the performance of the end-to-end supply chain, rather than just individual costs. Ultimately, all of our futures depend on our ability to deliver to consumers at the lowest possible cost. Currently, we are not doing this as well as we could.
A poignant note on which to end this TOC CSC Asia briefing. Currently container supply chains are performing but there remains much work to do to render them more efficient and effective. For further updates on the TOC CSC Asia agenda please check our website regularly. In the meantime we will be posting further speaker interviews ahead of the event to give you a full flavour of what to expect in Hong Kong.