GLOBAL LOGISTICS - ASIA
strategicinsight
whatever floats whatever floats
your truck
New combined ocean/LTL services
that are faster than all-water but
cheaper than air are proving a hit
with importers.
IN THESE COST-CONSCIOUS TIMES, YOU’D EXPECT THAT SHIPPERS WOULD BE TRYING TO
cut freight costs to the bone. Yet some importers that typically ship goods in less-than-containerload
(LCL) shipments from Asia are switching to air freight or shipping half-empty 20-foot containers instead.
They’re willing to pay as much as four times the cost of conventional LCL for one reason: to get more reliable, predictable delivery.
Maybe they don’t need to. Several less-than-truckload (LTL) truckers and their ocean carrier partners now
offer services that are much faster than traditional LCL and far cheaper than air. Although they’re relatively new
to the market, these services appear to be gaining some serious traction. Several carriers report that the new
offerings have been so well received that they’re now fielding requests to expand the programs’ scope.
Time for a change
To understand the new services’ appeal, it helps to know a little about the background. Traditionally, LCL
was handled directly by ocean carriers. But by the 1990s, ship operators could not compete with lower-cost freight consolidators, or NVOCCs (non-vessel-operating common carriers), and they “more or less
left the LCL business to the [NVOCCs],” says Bill Villalon, vice president, land transportation services for
APL Logistics (APLL).
Regardless of who was in charge, however, importers endured unbearably long transit times and unpredictable deliveries. And no wonder: Carriers and consolidators waited for enough freight to fill the containers at the point of origin, often trans-shipped them multiple times, and then had to sort out and hand
off all those small shipments at the destination. It’s little surprise, then, that some importers turned to
pricey alternatives like air freight or exclusive-use containers.
Sensing there might be a market for a service that fell somewhere in the middle, several carriers began making inquiries out in the importer community. What they found confirmed their hunch. “[Importers] wanted
an option where they could get guaranteed delivery on a time-definite basis, yet not pay an arm and a leg like
they do for air freight,” says Bill Wynne, executive vice president and director of marketing for Con-way Freight.
They also wanted a single provider to stitch the modes together and arrange port-to-door delivery—and make
it all seamless, notes Jimmy Crabbé, vice president, global ocean trade services for UPS Supply Chain Solutions.
The market spoke, and carriers responded. OceanGuaranteed, a joint product of APLL and Con-way
Freight, was introduced in 2006, and similar services soon followed. Among them are Pacific Promise
(Old Dominion Freight Line and Hanjin Logistics), Asia-Memphis Express (Averitt Express), and UPS
Trade Direct Ocean.
