SUPPLY CHAIN

Imports still rising as West Coast ports work on backlog

BY Marianne Wilson

Washington, D.C. — Import cargo volume at the nation’s major retail container ports is expected to rise an unusually high 16.9% this month over the same time last year as West Coast ports begin to dig out from a backlog of cargo that built up during just-concluded contract negotiations with dockworkers, according to the monthly Global Port Tracker report released today by the National Retail Federation and Hackett Associates.



“The contract talks are over, but the tentative agreement still has to be ratified and it’s going to take months to get back to normal on the West Coast,” said NRF VP for supply chain and customs policy. “Retailers’ immediate priority is to make sure spring merchandise reaches store shelves in time.”

Following negotiations that began last spring, the contract between the Pacific Maritime Association and the International Longshore and Warehouse Union expired on July 1. Despite ongoing talks, the lack of a contract and other operational issues led to crisis-level congestion at the ports. A mediator joined the talks in January but a tentative agreement was not reached until Feb. 20, after Labor Secretary Tom Perez sat down to personally broker a deal.



Ports covered by Global Port Tracker handled 1.24 million Twenty-Foot Equivalent Units in January, the latest month for which after-the-fact numbers are available. That was down 13.4% from December following the end of the holiday season and down 9.5% from January 2014. One TEU is one 20-foot-long cargo container or its equivalent.

February was estimated at 1.27 million TEU, up 2.3% from 2014. March is forecast at 1.52 million TEU as spring merchandise arrives, up 16.9% from last year. The March number is high both because of the backlog of ships at anchor waiting to be unloaded and because the annual Lunar New Year shutdown of Chinese factories was later this year, delaying some February cargo into March.

Congestion at West Coast ports has prompted many importers to shift their cargo elsewhere, prompting speculation on how long the shift might last. West Coast ports handled 55% of cargo this January, down from 64% during the same month in 2014, while East Coast ports handled 45%, up from 36%.


“Importers and exporters are reviewing their supply chain plans for the future, and not necessarily in favor of the West Coast,” Hackett Associates founder Ben Hackett said. “Looking on the practical side, a number of factors favor a return to the West Coast.”


Hackett said sending ships from Asia to the East Coast is more expensive than the West Coast, takes longer, and results in higher expenses to move the cargo to Midwest distribution centers by rail. In addition, importers have significant investments in West Coast distribution centers that would not easily be abandoned.

Global Port Tracker, which is produced for NRF by the consulting firm Hackett Associates, covers the U.S. ports of Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston, Savannah, Port Everglades and Miami on the East Coast, and Houston on the Gulf Coast.

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SUPPLY CHAIN

UPS repositions as full-service logistics partner

BY Dan Berthiaume

Atlanta – UPS wants to take on your problems. The company has unveiled a new positioning message, United Problem Solvers, which communicates the company’s capabilities to solve problems for all customers.

Specialty services leveraging or complementing UPS’s transportation network include global e-commerce solutions that include returns management and the ability for customers to change delivery times and locations, refrigerated and temperature-controlled shipping and warehousing, cryogenic transportation, package design and test lab, supply chain modeling and simulation,

FAA-certified employees for government and commercial air operations, and end-to-end supply chain visibility.

“The scope of UPS services has expanded significantly in the last few years,” said Alan Gershenhorn, executive VP and chief commercial officer. “We are continuing to change in response to customers’ needs. We’re transforming UPS from a logistics provider to a full-service partner that offers world class expertise and capabilities that helps customers increase revenue; improve cash flow; minimize lead time and reduce cost.”

The campaign’s television, print and online advertising debuts in the U.S. in media surrounding the NCAA Basketball Tournament. The campaign will subsequently appear in international markets including China, Germany, Mexico and the United Kingdom.

The United Problem Solvers campaign was developed in partnership with UPS’s global advertising agency, Ogilvy & Mather.

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Insights

Retailers Embrace In-Store Pickup Amid Rising Shipping Costs

BY CSA STAFF

By Gregg Aamoth, CEO, POPcodes

The onset of 2015 marked a huge change in shipping costs, and as a result retailers are struggling to find ways to maintain their bottom lines. As of Jan. 1, packages are now being evaluated by their “dimensional weight,” or volume, instead of determining price by weight alone. Experts say that the when combined with other annual rate hikes and surcharges, the resulting average rate increases will be as high as 30% or more.

Unfortunately, retailers are being forced to make sacrifices in the name of customer service in order to soften the blow. Some are raising free-shipping minimums, some are raising prices, and others are cutting free shipping altogether. But for the 68% of retailers already offering free delivery, cutting free shipping would take a serious toll on customer satisfaction.

Smart retailers are looking into alternative fulfillment options, and what better way to save on shipping than to not pay for it at all. The simple solution is to encourage consumers to buy online and pick up in store.

Here is why retailers that have adopted a “clicks to bricks” solution are winning customers and saving money:

1. In-store pickup improves your bottom line
The reality is that “free” shipping is never free … somebody has to pay for it. Fortunately for retailers, when offered, in-store pickup is chosen by more than 30% of consumers. You don’t even have to offer an incentive; they simply chose to come get what they bought. Retailers who promote in-store pickup can improve these numbers even further. Offering incentives for consumers to come into the store instead of having their items shipped could increase online sales while reducing shipping costs. This is a multifaceted win for retailers, as they spend less on “Free Shipping” incentives and many consumers will buy more when they come to the store.

2. Sales associates are informed and can encourage incremental purchases
What is the largest cost for almost every retailer? Employee labor. You hire them, train them and then set them free to improve the shopping experience of your customers. Why not empower and leverage those assets to their fullest potential? The only way to let your sales associates help your online to in-store customers is to inform them of what occurred online and encourage the ideal in-store interaction. If done correctly, chances are that people will actually leave with more than they came in expecting to buy.

In fact, according to a recent POPcodes survey, two out of every three consumers shop for additional items when picking up purchases in store, and more than one in three will actually buy something. So instead of raising prices to accommodate for expensive shipping costs, keep your prices the same, send your customer to the store, and encourage them to buy more while they are there.

3. The return process is simplified
In the same POPcodes survey, 57% of customers say they pick up their purchases in store to simplify the return process. The hassle of returning products, buyer’s remorse for the items still not returned, and the recent rise in shipping costs only exacerbates an aversion to online returns. The physical store alleviates this stress; no paperwork, no post offices, no waiting for reimbursement. Retailers stand to benefit too — an in-store return is a potential new sale, while an online return is essentially a dead-net cost. It is much easier to encourage a customer to replace their return when you’re face-to-face.

4. In-store experiences beget customer loyalty to the retailer and the brands they sell
Retailers know that customer loyalty is the lifeblood of the industry. With the evolution of omnichannel shopping, expectations have changed dramatically, and retailers must meet those expectations or risk losing customers to their competitors. The relentless price pressures from online-only merchants makes consumers who desire home delivery for specific products extremely price sensitive. Retailers that are most successful in building loyalty to their brand create strong emotional connections with consumers through brand messages and experiences. Intimacy, inclusivity, and trust all beget customer loyalty and are achieved when customers can connect with a real person — a delivery driver is a poor substitute for a well-trained sales associate.

The virtues of the physical store extend well beyond shipping costs, and now that prices have increased retailers are more likely to take heed of that. Many already have — Macy’s in-store pickup solution has earned a nearly $1 billion boost in sales, and other big names, including Sears, Kmart, and Staples, now offer in-store pickup as well. It’s obvious that customers also see the value in this fulfillment option — 97% (in the POPcodes survey) of those who have used it say they would use it again. It’s time for more retailers to tap into the “clicks to bricks” model, not only for the customer’s benefit, but for their own.


Gregg Aamoth is the co-founder of POPcodes, a cloud-based retail redemption solution enables omnichannel retailers to quickly give consumers a seamless and secure way to buy online and pick up in store. Prior to launching POPcodes Gregg spent more than 20 years in retail and financial systems leadership, including 10 years as VP of customer marketing systems and privacy for Macy’s Inc.

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F.Nicasio says:
Mar-11-2015 11:18 pm

In-store pick up for the win

I for one am glad that retailers are embracing in-store pickup. I almost always choose in-store pickup over shipping, as I prefer getting my hand on my purchases on my own time, rather than waiting for a package to arrive--or worse, missing it. Thanks for the great post, Gregg.

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