Download - Cold Chain Storage & Distribution 2012
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Cold Chain Storage & DistributionLondon 21st & 22nd Feb 2012
Mark Edwards – Global Freight Manager
Sea Freight An Evaluation of the TransportOpportunities & Risks
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What will we look at today?
• Modal characteristics• When to use sea freight• Benefits of seafreight• Drawbacks of seafreight• Temperature excursions• Insurance• Roles and responsibilities• Summary
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Modal characteristicsRoad
• Typically used for trans-continental movements
• Well set up hub and spoke systems• Temperature-controlled “groupage”
services becoming widely available• Security risk higher than other modes –
primarily through theft
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Modal characteristicsAir
• Typically used for inter-continental movements
• Primarily point-to-point operations but some hub and spoke systems
• Varying degree of “pharma” services offered by airlines
• Ground handling often of a poor quality• Fast transit times• Commensurately expensive
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Modal characteristicsSea
• Typically used for inter-continental movements
• Primarily hub and spoke systems through “feeder” and “mother” vessels
• Slow transit times• Commensurately less expensive
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When to use sea freight
• Transit time is less important• India to Europe 22 to 24 days• Air freight 1 week – sea freight 4 weeks
• Transportation costs need to be minimised • Air freight +1000% the cost of seafreight
• Regular supply of larger volume products• Sea freight container takes 30
pallets single-stacked
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When to use sea freight
• Enhanced security required• Few parties are involved• Containers can be loaded and sealed at
your own site• Containers stay sealed through to
unloading destination• Negotiable documentation
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Benefits of sea freight
• Cost• Typically over 1000% lower than airfreight
costs• More secure mode of transport
• Air freight involves multiple hand offs & regular trans-shipment
• Air freight handling is a low-skill environment
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Benefits of sea freight
• Lower risk of temperature excursion• Units are sealed throughout journey• No physical handling of product
• Possibility to defer inventory• Take advantage of the longer transit• Use of the right Incoterm
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Drawbacks of sea freight
• Variable quality & availability of equipment• Use containers less than 5 years old• Communicate requirements in advance
• Reliability of shipping schedules• Partner with high quality forwarder and
shipping line• Construct reliable supply chain to take
account of such factors
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Temperature excursions
• Equipment quality is the key factor• Use containers less than 5 years old
• Ensure containers are pre-conditioned to your required temperature
• Load and seal containers at your temperature-controlled warehouse
• Unload containers at your temperature-controlled warehouse
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Insurance
• Sea freight is governed by very old rules• All parties with product on a ship are
deemed to have an “interest” in the voyage
• This means you are proportionately responsible for serious incidents where a “general average” is declared
• Typically this would be a serious collision or pollution incident
• SO………..
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Insurance
• Always have marine cargo insurance• Most policies do not cover temperature
excursions - ensure yours does• Ask your broker to investigate a “risk of
loss” clause
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Insurance
• Shipping lines and freight forwarders have a very small, limited liability• All work to internationally agreed
amounts • All will reject your claim and point you to
your own insurance
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Roles and responsibilities
• Shipping lines • Provision of equipment – container and
ship• Freight forwarders
• Liaison with shipping line• Customs & documentation services
• You• Liaison with your supplier• Temperature information• No different to current supply chain
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Summary
• Sea freight is an excellent solution in the right circumstances
• Have a full understanding of your current supply chain before making any change
• Finding the right freight forwarder is a critical success factor