Tag Archives: transportation

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DCSA unveils new era of smarter supply chains with track & trace standards

The Digital Container Shipping Association has unveiled its new T&T standard for tracking containers while en route between shipper and consignee.  They are quite detailed and have been planned using some of the latest design thinking techniques, including the definition of personas who might use the system one way or another. They’ve prepared some very nice slide shows to describe at a high level what they are doing.

DCSA was launched by MSC, Maersk, Hapag-Lloyd and ONE last April, with CMA CGM, Yang Ming, Evergreen, HMM and Zim joining a month later. This is a fairly quick turnaround for a first standard delivery.

The catch will be how fast people start sticking to them when building equipment and systems. Doing so can be predicted to help sales, via a network effect– since the standards make systems compatible, there’s less hassle making one system relate to another.  A close review should be done of the standards, to see how many choices individual participants are given to make the information specific to their needs.  Such choices tend to produce systems that lose their compatibility if one of the partners changes, and make specific programming necessary when others try to adapt to the system. It’s the anthesis of cooperation.  And these standards are meant to promote cooperation rather than competition.

An example of the issue can be seen with EDI, in which general record structures are defined, but a lot of latitude is given to provide extra information or different information. The result is that EDI needs to be specially programmed for each pair-wise interaction of companies, a problem that has haunted us for 20 years even though
EDI, in general, was a big step forward.

Let’s hope that we all have learned from the past, and can use the standard to really lubricate information flow in supply chains.

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By via New era of smarter supply chains as DCSA track & trace standards are unveiled – The Loadstar
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Maersk invest in ZigZag Returns

It’s clear that Maersk is making bets as a venture capitalist on young firms with unique value propositions. They have made an investment, via Maersk Growth, in ZigZag, a London-based firm.

I had never heard of ZigZag before.  They offer a SaaS (Software as a service) that allows manufacturers and retailers to manage returns in a one-stop manner.  Their services include hard logistics assets like access to warehouses and sortation centers and access to carriers, as well as just the software.

The story indicates some of what they do.  We all know that returns are a unique type of operation, whose nature differs with the type of industry.  HP has been doing it for many years in the printer division.  But I was interested to find out that there is a lot of interest among clothing manufacturers or retailers.

Apparently people buy clothes, use them for a while, and then return them, even for no refund.  There is also a temptation for retailers to get rid of stale inventory by simply throwing it in a landfill, a sustainability issue.  Easy returns offers an opportunity for a firm that can handle these problems efficiently and in a sustainable manner. (I presume there might be an incentive to cheat; but certainly a specialist could do a better job because it’s their core business).

I doubt that ZigZag will be merged with Maersk.  However, the bet makes sense when you understand that a lot of what Maersk carries is clothing manufactures from the Far East.  If ZigZag can help these clients it could make a difference in the clients’ bottom line, and Maersk would be able to say they helped with the supply chain problems.

Reach ZigZag here: https://www.zigzag.global/

screenshot-Zigzag 2019-11-06

via Maersk invest in ZigZag Returns – Press Release

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IMO 2020 makes box lines speed up?

Mike King wrote a piece about the risk that the IMO2020 fuel regulations will induce ocean carriers to speed up, thus burning more fuel and causing more emissions.

Most carriers are equipping ships with scrubbers, which will let them continue to burn high sulfur (3.5%) fuel, rather than shift to the lower 0.5% fuel grade.  The scrubbers take out the sulfur and other unwanted chemicals, either discharging them into the sea (open-loop systems) or retaining them for disposal in port (closed loop systems).  Some ports and countries have banned the use of open-loop scrubbers near their shores.  China and Singapore are two.

Exceptions to the rules are in certain zones called Emissions Control Areas (ECAs), where the maximum sulfur content is 0.1%, very low.  ECAs are set up by countries or trading unions like the EU with a mileage limit near their shores.  While steaming in those zones, the ultra low sulfur fuel must be used.

I recently refereed a study [1] that indicated that the ECAs actually induced carriers to avoid them for longer, burning the high-sulfur fuel longer, and also in some cases going faster.  It’s an economic decision problem with fairly straightforward calculations to optimize the route taken, based on the price differential of the grades of fuel and the exact time on each part of the route. Lower emissions and lower cost come about in opposition.  The calculations are especially relevant for short sea shipping routes, such as along the East Asian and Chinese coastline.  Ships can go offshore far enough and, using their scrubbers, burn the highest sulfur fuel which might be a lot cheaper, then dart directly in when they get near the port, into the ECA region.

On long sea routes a lot of time can be spent steaming with the 0.5% fuel, and speeding up might be a way of reducing the time and improving customer service by shortening the voyage.  Delays in ocean shipping happen very frequently and are a source of much discontent among shippers; they also produce a lot of lost business for carriers.

The interesting part of the article to me is the clear indication that speeding up using a scrubber could be a viable strategy for improving service. We might then get greater CO2 emissions than we did with slower steaming.

Sustainability is always tightly coupled with economics.  We have to watch for unintended consequences whenever rules are imposed, and be prepared to adjust them. Hopefully, we’ll keep trying to improve the emissions control measures.

as-twitter-card-default-image3   via Could IMO 2020 prompt box lines to speed up? – FreightWaves

[1] Zhao, Yuzhe; Fan, Yujun; Zhou, JingmiaoKuang, Haibo. Bi-Objective Optimization of Vessel Speed and Route for Sustainable Coastal Shipping under Regulations of Emission Control Areas, Sustainability, under review(2019).