DC Velocity - August 2014

keting officer for Kansas City, Mo.-based KCS. Once Whirlpool signed on, Schneider and Expeditors followed suit. Green Bay, Wis.-based Schneider is Whirlpool’s trucker in the market. Seattle-based Expeditors is its customs broker. The overarching goal, according to Ottensmeyer, was to cut Whirlpool’s end-to-end delivery times to between eight and 10 days, which could potentially save the company millions of dollars in inventory carrying costs.

ELIMINATING CHOKEPOINTS

KCS analyzed the operations of multiple terminals, customs brokers, and intermodal marketing companies (IMCs) that sell intermodal services on behalf of the railroads. KCS also conducted a thorough review of its own processes. It discovered that it was partially responsible for the tie-ups. A containerized Whirlpool shipment arriving at a KCS ramp would typically spend up to 90 hours at a terminal from the time it entered the gate until the time the train pulled out. KCS set about reducing that dwell time to 24 hours, Ottensmeyer said.

Another chokepoint revolved around the nonuniform schedules of Mexican Customs. Some locations were open around the clock, while others were not. Some kept evening and Saturday hours, while others did not. Customs closures would present problems for KCS if a truck entered a terminal with cargo that was ready to be processed, according to Ottensmeyer.

In addition, the flow of containers and the flow of paperwork were often out of sync. Containers would enter KCS’s terminal, where they would be placed in a bonded yard awaiting processing and clearance. However, Mexican Customs is set up to receive documentation from brokers in two daily batches. This meant containers could wait for hours before the documentation reached Customs for processing. To speed up the process, KCS, brokers, and Customs agreed to transmit and accept information in smaller batches and on a more frequent basis. KCS also digitized its manual data entry practices, a step that reduced the potential for human error, Ottensmeyer said.

An effort by four prominent companies to shrink transit times on U.S.-Mexico intermodal rail service by streamlining customs clearance procedures at the border appears to be paying off, according to a top executive at Kansas City Southern Railway (KCS), which launched the initiative some eight months ago.

The group—which includes KCS, home appliance giant Whirlpool Corp., trucker and third-party logistics service provider Schneider National Inc., and freight forwarder and customs broker Expeditors— has been working on a pilot program to drive down delivery times on Whirlpool shipments moving from factories in Mexico to end points in the United States.

KCS initiated the program after
receiving complaints from various
customers about bottlenecks in
Mexico that extended delivery times
beyond what was deemed acceptable
for intermodal service. For exam-
ple, a KCS analysis of Whirlpool’s
supply chain found that it took 12
to 15 days, several days longer than
normal, to move shipments from
the company’s Mexican factories to
its U.S. destinations.

In a bid to identify the problems, KCS created a pilot program with Benton Harbor, Mich.-based Whirlpool as the test customer. KCS asked Whirlpool to participate because of its strong manufacturing and distribution presence in Mexico and its reputation for collaborating with partners to improve supply chain performance in the corridor, according to Patrick Ottensmeyer, chief mar-

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