As cost savings continue to be the name of the game in retail, supply chain has come under even closer scrutiny as a major expense to be controlled. Chain Store Age talked with George Prest, COO of the Material Handling Industry of America (MHIA), about what lies ahead for the supply chain and global trade, as well as the association’s inaugural trade show MODEX, to be held in early 2012.
What one trend do think will most shape the supply chain in 2012?
There are several supply chain trends we are hearing about from Material Handling Industry of America members and end users. Sustainability is still a hot topic, as well as leveraging labor resources and training. Ergonomics and safety is also big, as well as forklift fleet management and third-party logistics selection.
However, it seems that automation is on top of most agendas right now, whether you’re talking automation equipment or related software, as companies strive to improve the efficiency of their supply chain operations. Within automation, we are hearing a lot about flexible automation, voice, order picking, order fulfillment, mobile computing and visibility solutions.
Will the Panama Canal expansion have an impact on the supply chain dynamic in the United States?
Yes. We see the Panama Canal expansion as a real supply chain game changer. The expansion is certain to have a major impact on the flow of imports into the United States. However, it will also have a major impact on the flow of goods once they get to the U.S., creating new supply chain efficiencies — especially for retailers.
According to Jones Lang LaSalle, 25% of imports currently coming through the West Coast could shift to East Coast ports as a direct result of the canal expansion. By lengthening, widening and deepening the locks, the canal will accommodate much larger ships. In fact, the largest ships today carry just 5,000 twenty-foot equivalent units (TEUs).
When the expansion opens in 2014, that number will jump to as high as 13,000. Most hopes for the canal’s future are for cost savings, which are estimated at $400 per TEU compared with intermodal rates from the West Coast.
JLL cites the Panama Canal as one of the five most compelling change agents in the supply chain going forward. Inland ports are expected to also benefit from the import shift. Of particular note are Atlanta, Chicago and Columbus.
The Ports of Savannah, Charleston, Jacksonville, Miami, Baltimore and Philadelphia have announced projects to enlarge and deepen channels to make way for the larger ships. Hampton Roads and New York/New Jersey ports are already in position to benefit from the shift.
We also expect that more distribution centers will be needed, in the Southeast especially, as a result of this shift. Distribution networks may already be undergoing a significant shift from super distribution centers to a hub-and-spoke model of smaller DCs. The driving force is the high cost of energy and the low efficiency of less-than-truckload shipments typical of the large DC model.
Tell us about your upcoming conference, MODEX 2012.
The inaugural MODEX expo, to be held in Atlanta, Feb. 6 to 9, 2012, is the industry’s newest event to offer end-to-end supply chain solutions for manufacturing and distribution prof