My colleagues Chris Clott, Rob Cannizzaro and I just published a paper in the Journal of Shipping and Trade. In it we propose a new standard called ServiceTerms for classifying container cargo on six ACTION dimensions which are relevant to downstream supply chain service and performance (and to some extent upstream actions). The six dimensions are
- Customer Service
- Orders and paperwork
- None of the above.
ServiceTerms would function something like INCOTERMS in supply chain contracts. They would provide a standard which every participant in the supply chain– ocean, rail and truck carriers, port terminals, warehousing, drayage, distribution, and so on– would know about in advance and determine how they were going to handle the goods to meet the standard. The standard includes a specification of limits on the time spent in each step of the journey, based on the total length in time committed to. These time standards would allow each of the actors to plan their operations to meet their time requirement. Aiming for the standard would coordinate the supply chain actors with only limited need for them to work together except on the handoffs. (And these are typically between just two adjacent players in the network.) The actors in the chain would be enabled to innovate their own individual techniques to meet their goals.
Like INCOTERMS there would be no specific penalties for failure. However, there would be measurement and reporting of performance (time in service) at each stage of the end-to-end delivery. Individual contracts could provide penalties, negotiated by the participants; everyone involved could keep track of whether a participant was doing his or her bit to meet the standard; or whether some were agreeing to a standard with less than total commitment to making it happen for individual cargoes.
Alliances have been touted as supply chain improvements because they coordinate a few ocean carriers on legs of a journey. But supply chain thinking tells us what matters is the overall source to destination performance, and that requires more involvement, particularly from downstream players such as rail, barge, truck, warehouse, and “last mile”. To improve their abysmal service performance, alliances have to find ways of coordinating the entire delivery process. A standard for the process that shippers, handlers, and carriers can agree and coordinate on is a central element.
We see alliances as entities capable of incubating the ServiceTerms standards, much as the International Chamber of Commerce does for INCOTERMS. ServiceTerms could then be included in a standard contract for delivery. The specifics of the ServiceTerms standard should be negotiated during the incubation process; and the process should allow for individual variations by contract, much as INCOTERMS do.
If the majority of cargo went according to the standard, all the supply chain players would work together to make sure the overall term was met. That should improve everyone’s focus on the goal of making customer service a standard rather than an exception in the container business.
Cite this article as:
Clott, C.B., Hartman, B.C. & Cannizzaro, R. J. shipp. trd. (2018) 3: 9. https://doi.org/10.1186/s41072-018-0035-0
A pdf of the article is available here.