Mexico continues its rise as an important global logistics hub with the opening of a new container terminal at the Lázaro Cárdenas port, earlier this month. There are ten reasons why this is important to companies with supply chains in South America.

Lázaro Cárdenas is Mexico’s busiest port and considered one of Latin America’s most important. With the improvements, it’ll also be the continent’s most modern port. According to the World Bank, Mexico’s imports have grown more than 30% since 2010. Container volumes are also up 60% in just the last three years. These statistics, along with the fact that it has more than 45 free trade agreements, is the reason behind Mexico’s meteoric rise as an important global logistics hub.

That’s why this month we’re going to be focusing on how this new port is something to be very exited about for cross-border logistics and supply chain professionals looking south of the border!

10 Reasons to be Excited About the New Lázaro Cárdenas Container Terminal

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That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Morai-Logistics-Blog-north-america-outsourcing-manufacturing

Dongguan Win Win Industrial, a Chinese shoe factory that makes high-quality shoes for large American chains, is looking to the U.S to source its manufacturing. Wall Street journal writer Andrew Brown wrote about the story on Tuesday as the growing trend of nearshoring for outsourcing solutions develops.

The case Brown looks at isn’t isolated. Other Chinese manufacturers have also built factories in the U.S. In November of last year, clothing manufacturer Tianyuan Garments Co. acquired a metal fabrications plant in Arkansas. Even Hasbro Inc. has decided to source from the U.S. Play-Doh products are again being manufactured locally; something that hasn’t happened since 2004.

Over the last decade, an increasing number of manufacturing jobs having been returning from abroad back to North America. While the political climate plays a part, other factors are driving the change.

Looking at the Numbers

To say that offshoring producer jobs has been popular over the last few decades, would be an understatement. Just between 2000 to 2003, around 220,000 American jobs were shipped overseas annually according to the Reshoring Initiative.

2014 was a turning point. For the first time in over 20 years, there was a net gain of 10,000 jobs brought back to American shores. Combine that with the fact in 2016 alone, Chinese companies invested over $20 billion into the U.S. That figure was practically non-existent just a decade earlier.

The trend is set to continue. The 2016 Global Manufacturing Competitiveness Index predicts that the U.S will be the most competitive manufacturing economy in the world by 2020.

Factors Contributing to Reshoring

There are several contributing factors that is changing global supply-chain economics:

Rising Wages in China

Rising labour costs in China shouldn’t come as a surprise, especially with some years seeing a 15%-20% annual increase.

“In 2004, the cost of manufacturing on the east coast of China was approximately 15 percentage points cheaper, on average, than in the United States. In 2016, that gap was down to about 1 percentage point” report Justin Rose and Martine Reeves in this Harvard Business Review article.

Automation Technology

The rise in robotics technology has led to greater automation of tasks, further reducing the cost advantage of offshoring. It’s estimated that up to 50% of the work done in a plant today could be replaced through robotics technology.

Changing Customer Expectations

We’re now in the age of e-commerce. Industry giants such as Amazon are already cutting deep into their profit margins to keep up with competitors. The only advantage left is speed. Customers want their items arriving the same day or even hour as when they order. This means it’s becoming more practical for items to be manufactured in-country rather than ship it overseas.

It’s too early to say how the growing trend of nearshoring will affect the American job market. Companies like Walmart have already pledged themselves to investing in more local sources. However, that doesn’t mean all the jobs lost will be returning. Customer expectations are pushing supply chains toward greater automation at home, not necessarily more jobs. What is certain, is that as global supply chains grow in complexity and cost, more companies will be looking closer to home to manufacture their items.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Morai-Logistics-Blog-infographic-transparency-supply-chain

Transparency has been the promise of many CEOs and businesses in recent years. That’s for good reason, customers want to know where the products and the parts came from.

“Consumers, governments, and companies are demanding details about the systems and sources that deliver the goods. They worry about quality, safety, ethics, and environmental impact” writes University of Oxford’s Saïd Business School professor Steve New, in the Harvard Business Review.

However, ethics isn’t the only reason that a logistics provider should commit to a transparent supply chain. The benefits of transparency affect consumers, but it also has a positive impact on how a company does business and the operation of the company itself.

Infographic: How Improving Transparency is Beneficial to Your Supply Chain

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Several studies indicate that transparency is an asset. What many don’t realize is that it goes beyond marketing. Transparency helps your business on three levels: with consumers, with business, and with every day operations.

Making a supply chain entirely transparent takes work and commitment. However, the result is a net benefit for all involved.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Morai-Logistics-Blog-eld-mandate-intermodal-logistics

Canada’s Electronic Logging Device (ELD) Mandate is set to affect intermodal transportation favourably in rates, fuel prices and capacity. This is based on the Intermodal Competitive Index (ICI) of the freight transportation forecasting firm FTR.

Earlier this week, the condition of intermodal versus truck was described as ‘moderately favourable’ according to freight transportation forecasting firm FTR. Their Intermodal Competitive Index (ICI) showed a slight increase in November to a level of 5.0.

The ICI looks compares North American intermodal sector and over-the-road trucking. A negative number indicates conditions are unfavourable. The higher the positive number, the better the favourability for the intermodal sector. Factors affecting the level are intermodal rates, fuel prices and truck capacity.

Despite the current state, FTR predicts that the ICI may deteriorate soon because of normal seasonal factors. Thankfully, the ICI is anticipated to start rising again until the end of the year. The rise will be due to the truck Electronic Logging Device (ELD) federal mandate.

“While the new administration’s more restrained philosophy with regard to regulation may have some eventual downstream effects on the trucking environment, we believe that the ELD regulation, which has already been formalized into law, will not be recalled…[]..While the extent and precise timing of the capacity effects of the ELD mandate are open to debate, there seems to be little doubt that its capacity effects will result in some tightening of truck availability which should work to the benefit of intermodal” said Larry Gross, Partner at FTR and principal author of its Intermodal Update, in a statement.

Canada Soon to Implement ELD Mandate

The Canadian Council of Motor Transport Administrators (CCMTA) is expected to have a final rule on its own ELD mandate early this year. A Canadian compliance date will likely occur for early next year.

The mandate received a lot of enthusiasm from the CCMTA as discussions about implementing a ELD mandate in Canada has been ongoing for nearly ten years.

“Though safety and consistency with U.S. guidelines were primary factors behind the change, Canada’s ELD mandate was also motivated by financial considerations as its trucking industry hopes to compete with U.S. carriers who have seen the economic benefit of using electronic logging devices” writes Keep Truckin, a blog about fleet management.

“Canadian fleets who implement and train drivers on ELDs well before the 2018 deadline will be more competitive with U.S. fleets already reaping the benefits, including fewer hours-of-service and form and manner violations and improved Compliance, Safety, and Accountability (CSA) scores.”

Although the Canadian ELD mandate will be a year behind it’s American counterpart, the decision is the right step to improve competitiveness. A high volume of trade is conducted between Canada and the U.S. In fact, the two countries trade around trade $662 billion worth of goods and services with one another annually.

What the ELD Mandate Will Mean for American and Canadian Fleets

Having ELDs be the standard will benefit fleets in a few different ways. For one, the amount of paperwork will be greatly reduced. Secondly, dispatchers will be kept up-to-date with the condition of the drivers, helping them with planning better loads. Thirdly, it will eliminate paper logs and with that, the headache that comes with maintaining it.

The American ELD mandate is only 11 months away, but is already predicted to have a positive impact on the intermodal sector. Canada will follow suit next year. Fleets in both countries will benefit in regards to increased safety, planning and efficiency. The North American Intermodal sector has a lot to look forward this year and the next.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Morai-Logistics-Blog-TPP-NAFTA-2

Earlier this week, newly inaugurated president Donald J. Trump withdraws from the Trans-Pacific Partnership (TPP). Hence, the U.S withdrawal from the 12-country agreement effectively rendered seven years of negotiations a waste.

Pulling the U.S out of TPP was one of Trump’s campaign promises. Though, aside from the possible global-political ramifications of the action, what many are wondering now is if he’ll do the same to NAFTA and what all this will mean for the logistics industry.

Consequences of the Withdrawal

To say TPP was controversial would be an understatement. Several protests around the world were held throughout the negotiations.

There are many reasons for and against TPP, with both sides passionate about their position. But, the trade agreement would have created a network encompassing 40% of all world trade and affected millions of people across the world. Other global concerns would’ve been impacted as well, including cyber security, environmentalism and free trade.

Fallout of the withdrawal is being hotly debated across the professional and media landscape. So we have detailed the three key concerns that are being discussed:

  • Loss of North American competitiveness — TPP would’ve eliminated more than 18,000 taxes and trade barriers across its member countries. By pulling out of the trade agreement, the U.S and by extension Canada, is losing out on a large section of the global market. Farming manufacturing, and the services and technology sectors will be impacted the most. While Canada and Mexico can still negotiate on their own, they lose a lot of bargaining power without U.S backing.
  • Loss of North American influence over global trade — One notable absence from TPP was China. Some experts theorized the exclusion was intentional. TPP they argue, was an attempt to counter China’s growing economic influence on global trade. China has pushed its own trade pact, called the Regional Comprehensive Economic Partnership (RCEP), which currently has 16 members. By backing out of TPP, Trump may’ve pushed some countries that originally signed to seek other trade agreements, like RCEP.
  • Risk of protectionism — The U.S is not part of the RCEP. If it goes through, experts are worried that it will have tariffs against the U.S. This, along with the shaken confidence of TPP members may raise the number and cost of tariffs.

What Will Happen with NAFTA?

Trump promised Americans to either renegotiate or outright end NAFTA during his campaign. His actions with TPP indicate he’s serious about his promise.

When asked on Monday, White House press secretary Sean Spicer said Trump would rather renegotiate NAFTA rather than tear it up.

“Mr. Spicer said Mr. Trump’s complaint is with “multinational” trade deals because they are more complicated to renegotiate. But he said the President was open to bilateral deals – a sign that he might be willing to keep a deal with Canada, even if he makes good on his pledge to change the terms of NAFTA to make it harder for American companies to move to Mexico” wrote Adrian Morrow, reporter for the Globe and Mail.

Trump will be meeting with Prime Minister Trudeau and Mexican President Enrique Pena Nieto in the coming weeks to discuss a renegotiation.

If NAFTA were to end, it would have serious negative repercussions for the transportation, manufacturing and logistics industries across the three nations.

The end of TPP is already having an impact on offshoring efforts. Thus, the coming weeks will see if nearshoring efforts will be upturned as well.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Outsourcing is business strategy of contracting work out to a third-party. Companies use outsourcing to gain access to cheaper labour, larger specialized labour pools, and/or obtain other benefits through an economy of scale. The term encompasses both the setup of a subsidiary, and the off-site activities of a company.

For decades, companies used outsourcing strategies to meet the needs of their business, but it was not formally identified as business strategy until 1989.

The three main types of outsourcing are: offshoring, nearshoring, and reshoring in the logistics and supply chain industry. The main difference between them is the location of the third-party. Each has its own benefits and costs, but because of the dynamic nature of global political-economy these are always changing.

We created this eBook to kick off 2017 to clarify why companies choose a particular offshoring option over another. This way, you can see how manufacturers think about these strategies.

What is the Difference Between Logistics Oursourcing Options

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Choosing Shoring Options

There are many advantages to outsourcing certain jobs and functions—cost advantage, access to bigger pools of skilled labour, increased efficiency, and saving on infrastructure and technology. However, the biggest advantage is that it allows your business to focus on core areas. Your business will be able to spend more time on building its brand, R&D, and providing higher value added services.

Offshoring, nearshoring and reshoring each have their own distinct advantages and disadvantages. Though, what will work best for your business will depend on its goals and core competencies. Talking to a third-party logistics provider is a very useful way to learn more about sourcing options.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-santa-ecommerce

eCommerce operations is the true Santa’s workshop and its logistics and supply chain professionals that scramble during the holiday season to make sure that your gifts and goodies arrive just in time for the holidays!

Most people are readying themselves and their bellies for the holidays, logistic providers are readying themselves as well. eCommerce businesses in particular, started preparing for the holidays back in August. Although Black Friday and Cyber Monday are behind them, there is still Christmas Day and Boxing Day still looming later this month.

Right now, operation teams across North America are making their lists (of inventory and personnel) and checking it twice (and several more times for good measure). Thanks to Black Friday and Cyber Monday they’ve found out which retailers and shippers are naughty or nice. This is because when the holidays come, customer shipments are comin’ to town (every town)!

Getting the Workshops Ready

According to a recent Wall Street Journal Logistics Report written by Loretta Chao, Transportation and warehouse companies added about 8,900 jobs across the U.S in November.

The number of warehouse operator jobs grew by 3,100 jobs from October to November. Payrolls have also increased as its grown by 47,000 jobs over the past 12 months.

It wasn’t only fulfillment centers that saw an influx of newly hired associates. As Chao points out,

Courier and messenger companies, including the package carriers that deliver online orders, increased their payrolls by 5,700 jobs last month, expanding employment in the industry by some 26,300 jobs from a year ago, according to the U.S. Department of Labor jobs report. The gain followed the addition of 12,200 transport and logistics jobs in October

Big Business in Gift Giving

The reason the holidays are such a scramble for retailers is because of the amount of business they stand to gain. In the U.S alone, the holiday season generated over three trillion dollars for the retain industry in 2013. The holiday sales accounted for 19.2% of retail total sales that year.

Increasingly, people are turning to online shopping. In terms of numbers, by 2010 B2C ecommerce sales totaled $283 billion USD in North America. By this year’s end, ecommerce sales are predicted to reach nearly $600 billion according to Statista.com.

In 2015, the holidays season saw desktop retail e-commerce spending in the U.S reach over $56 billion USD. Most of that money was spent online on Cyber Monday.

Cost of Late Deliveries

Understandably, customers will be upset if the items they ordered online don’t arrive on time. The main draw of purchasing gifts online is the promise of convenient and speedy delivery after all. Failing to hit deadlines means not just having angry customers, but also losing their trust when they need to do their holiday shopping in the future.

The holiday season of 2013 is the worst example of this. A shortened holiday season and erratic weather were cited as the reason for delays, but the damage was done. Customers were angry. It took costly good will gestures to regain their trust.

As 2016 ends, remember all the people that helped make your holiday special. Receiving gifts is great, but more amazing is the gift’s journey and the people around you!

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-tips-holiday-peak-season-logistics

November is almost at an end. As December nears, the holiday peak looms for many distribution centers. The season will be the busiest for us in logistics and transportation thanks to Black Friday, Cyber Monday, Christmas Eve, and Boxing Day.

Customers will be expecting to receive their purchases and gifts with little hassle. This means that for many organizations, the sole focus of the winter peak will be to customer satisfaction. Thanks to the increasing number of people shopping online, the winter peak is especially volatile for orders.

Proper planning for the winter holiday peak should have started months ago. Some businesses go all-hands-on-deck as early as August, or October. While strategic planning is important for a smoother peak, it doesn’t guarantee it. There are several ways the plan can become derailed.

This week we’ve decided to focus on the five ways to help make sure your business stays on track.

1. Clarify Your Expectation to the Staffing Providers

As Deborah Ruriani of Inbound Logistics points out in her article, planning for the holiday peak should have involved your staffing providers. With the winter peak so close, it’s important that the expectations of your relationship are re-communicated. Turnover is likely to be high until the peak is over. Staffing providers need to ensure that new hires are of the same standards as those they are replacing.

2. Audit the Preparedness of Your Organization on All Levels

As the holiday season approaches, it might be tempting to hunker down and only focus on your work until it passes. Doing so puts your organization at risk. Fulfillment centers can only succeed if all its parts are all working smoothly and towards a common goal. Any weakness in the management, operations, support, HR or other departments can lead to a domino effect.

3. Regularly Check the Morale of Your Employees

It’s normal for stress levels to be higher during the holidays. A lot is expected of the staff and they’ll have tight deadlines in which to accomplish these tasks. Stress levels can’t get too high however. Too much stress over too long a period will cause mistakes. Too many mistakes will cause more stress, growing and extending the cycle.

4. Check and Update the 5S Lean or Other Quality Initiatives

The 5S Lean Methodology is a strategy on how companies organize a work space for efficiency and effectiveness by identifying and storing the items used, maintaining the area and items, and sustaining the new order. By this time of year, your company should have a detailed space utilization plan in place. But remember, this time of year is volatile so your plan may need tweaking. You’ll need to check which variables have changed since the plan was drafted and adjust accordingly. Flexibility is crucial in this area.

5. Continue to Audit your Building’s Processes for Best Practice Research

Peak is an important time for many organizations. This is why a record of what worked and what didn’t needs to be kept during and after every peak. Each peak brings with it the opportunity to do things a little bit better.

The winter peak is a stressful time for many of us in the logistics industry. Our customers expect us to deliver so they can have a happy holiday season. It’s because of our customers that we need to ensure that both the planning and execution of peak plans are done with the utmost dedication and care.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-driverless-car-manufacturing-supply-chain

The long road to commercially available autonomous cars is almost at an end. A number of things will be changing when that happens. Chief among the changes is the way automotive manufacturers invest and sell their products.

What separates an autonomous car from a regular car is the onboard computer. Behind that technology are companies such as Intel, Qualcomm Inc. And Nvidia Corp. which provides the chips necessary for the computing power. Cars will need to be turned into essentially mobile data centers meaning that the competition for the future of autonomous cars isn’t only among car manufactures. It’ll also be with and between the world’s largest biggest tech companies.

There’s Big Business in Little Parts

As we approach the final lap on the course towards autonomous cars, automotive manufacturers have already started to change their sale tactics. Where manufacturers used to talk about horsepower, they’ve now started talking about processing power.

According to data compiled by Bloomberg, the total value of automotive supplier deals in 2015 and 2016 were $74.4 billion. For some context, each of those years far exceeded the $17.7 billion annual average of the previous 10 years.
“The number of transactions valued at $500 million or more also skyrocket to 18 last year, triple the level of the previous decade” writes Elisabeth Behrmann, Polina Noskova, and Aaron Kirchfeld from the same Bloomberg article. “There have been 11 such deals so far this year.”

An example is Intel. Its automotive business is currently involved in 30 vehicle programs on the road. By 2020, the company is set to increase that number to 49 with orders worth $1 billion according to the Wall Street Journal.

Many of the deals are still done with makers of powertrain and chassis components. However, electronics-related acquisitions are growing the fastest. Some estimates have the cost of electronics in car manufacturing growing to 50% by 2030, up from around 30% in 2015. A portion of resources have also gone into securing the proper know-how to ensure that their cars have the necessary sensors, cameras, radar, and computing power necessary to safety assess traffic conditions and see their environment as a driver would.

Phone to Pocket PC, Car to Mobile Entertainment Hub

One of the biggest innovations over the last two decades has been in finding new uses for old products. TVs grew ‘smart’, watches and shoes graduated into personal trainers, and cell phones evolved into pocket PCs. Today’s new technology is sold with the promises of greater efficiency and consolidation. Autonomous cars will be no different.

For as useful as cars are in our everyday lives, they spend close to 95% of the time unused. This means there is a big opportunity for the manufacturers of autonomous cars. Captive consumers will be surrounded by the technology for an average of at least five hours a week. The challenge will not just be how to commercially manufacture autonomous cars, but also in building a platform that connects software developers with the passengers.

As Nokia and Blackberry demonstrated in the past, consumers need more than just an effective product. They also need their devices to consolidate their consumption of media.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-zombies

Zombies are undead creatures, popular in many modern books, movies, television, and as Halloween costumes. They are the monsters that just won’t stay down. No matter what happens to one, it will eventually get up and continue its hungry lurching. Unlike more classic monsters, zombies cannot be waited out or ignored. Every passing hour increases the size of the horde as more people fall and become zombies themselves.

We have our own zombies in the world of logistics. Logistical zombies are issues that just never seem to go away. Like the classic zombie, these zombies can be very hard to put down. Just when you think it’s been taken care of, it rises again. These zombies generally start small. The problem is that like its movie and film counterpart, it will escalate and multiply if ignored, becoming a much bigger problem later on.

The go-to recommendation is to take action. This may just waste resources. Without a strong understanding of the core issue its likely time and effort will be wasted on a symptom and not the true cause. What’s needed is a root cause analysis.

Here are the 3 steps necessary for an effective root cause analysis:

Build Your Root Cause Analysis Diagram

To start, you’ll need a root cause analysis team. With a dedicated and varied team, a better root cause diagram is more likely because of the different perspectives.

Choose which root cause analysis diagram to use. Two popular diagrams are the fishbone or Ishakawa diagram, and the 5 Whys. Both diagrams have their advantages and disadvantages.

It’s important that everyone on the team understands that participation will not result in disciplinary action or peer ridicule. Management must stand by this agreement.

Walkthrough the Story and Verify Observations

Once the diagram is complete, the team needs to run through the diagram from every angle. Conditions and sub-causes need to be checked against verifiable evidence. Unsupported items need to be removed.

The aim is to have a list of actions (5 Whys) or diagram with items within verifiable contexts. A clear and cohesive story needs to come from the team’s diagram that leads to the primary event.

Depending on the resources available to your team, financial or technical constrains may restrict how far they are able to go.

When this happens, TechRepublic advises “… there are two possible solutions. First, the team can identify another point at which they can improve or implement a control. The goal is to arrive at the desired probability of occurrence with a combination of changes instead of a single root cause remediation.”

Consider Implementation and Create Action Plans

With the root causes analysis diagram complete, now it’s time for a formal action plan. List the tasks necessary to reduce the likelihood of the issue or increase your organization’s ability to detect the issue.

For each task, the plan should list the resources assigned and expected completion date. Don’t forget to assign someone to own and manage the plan!

Film and TV zombies may rise again, but by using root cause analysis your company/team will be able to put down logistical zombies permanently!

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.