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Why SoCal Ports will Remain Strong Post Panama Canal Expansion

It’s hard to say exactly when the newest section of the expanded Panama Canal will open. Construction delays and labor disputes have laid waste to the original timeline. 

Once it opens, many people (particularly representatives of ports east of the Canal) have suggested that a significant percent of import freight would shift to Gulf Coast or East Coast ports, closer to populated markets in the Eastern U.S.  These ports are investing to dredge harbors in order to receive the newest Post-Panamax cargo ships, which will have the capacity to carry up to 18,000 TEUs. 

We believe that the demand for Southern California ports will remain strong long after the Panama Canal expansion is completed.  Download our Insight paper: Panama Canal Expansion: Impact on West Coast Ports.

The reason is that it takes far more than a deep-water port to successfully process millions of containers and transport them to and from the port. 

Over the past 50 years, the Ports of LA and Long Beach have developed a complex supporting infrastructure to accommodate huge import and export volumes. This infrastructure includes roads, warehouses, trucking terminals, rail terminals that run directly to the vessels at the ports, and the logistics companies and experienced workers to service high and fluctuating volumes.

Eastern ports like Savannah, Tampa, Norfolk, Baltimore and New York are just developing an ability to receive larger cargo vessels, and they do not yet have the complex supporting infrastructure to move goods efficiently from the port to the retail shelf quickly and efficiently.

These infrastructure changes take years to complete. They involve dredging harbors, building larger bridges to accommodate the taller heights of the “super vessels,” building roads to accommodate increased heavy vehicle traffic flows, adding rail lines, and building warehouse facilities.

Such projects are also very expensive and the costs, no doubt, will translate into additional fees and taxes to the ship lines and, ultimately, higher costs for U.S. importers and exporters.

Southern California is the gateway to North America for Asian shippers today. Why? Because importing through Southern California is less expensive and two weeks faster than using Gulf Coast and East Coast port cities.

The expansion of the Panama Canal will not change this. The Ports of LA and Long Beach will continue to be North America’s freight gateway long after the Canal expansion is completed. 

Weber Logistics is the leader in West Coast and California logistics, warehousing and trucking.

Connect with Weber Logistics on Google+

Is Commercial Warehouse Pricing Simple?

Well, yes and no.

At one level, commercial warehouse pricing is very simple in that it considers just two things:

  • the amount of SPACE needed
  • the TIME it takes to perform certain tasks

So, if you know your space costs and labor costs, coming up with a warehouse cost per square foot should be straightforward. 

Hold on Flash Gordon….not so fast.

Tasks can be performed in different ways:

  • with or without automation
  • with or without computer systems
  • with or without engineered process flows

All of these impact time. 

And products can be stored in different ways:

  • unstacked on the floor
  • stacked several levels high on the floor
  • in racks as high and deep as the building and business profile will allow

The storage method will dramatically impact space required and, ultimately, the storage rate.  

Detailed information is required to determine how much space and labor will be required.  Gathering this data can be tedious, but the more information that can be extracted and shared, the more accurate the pricing will be. 

Weber Logistics has developed a simple guide to commercial warehousing pricing.  Download it for free.

commerical warehouse pricing guide

Weber Logistics is the leader in West Coast and California logistics, warehousing and trucking.

Connect with Weber Logistics on Google+

Choosing the Right 3PL for Cold Chain Logistics and Food Distribution

You know the perils of cold chain logistics and food distribution. Let your guard down, and a pallet of chocolate turns into a gooey mess, or you get stuck with racks full of canned goods nearing their sell-by date.

The right 3PL can help you avoid those pitfalls. Download our free guide: Choosing a 3PL for Food Product Distribution.  

How do you know which 3PL to trust with your food shipments? Here are steps every food shipper should take to determine if a 3PL really has what it takes:

Temperature Integrity

  • Ask to see logs that show temperature readings over time.
  • Ask how reefer trailers are monitored. At the very least, they should carry digital thermostats that are easily visible to the driver.
  • What’s the backup plan? If the cooling or heating system goes down, how will the company maintain the right temperature in each zone until it’s repaired?

Inventory Management and Stock Rotation

  • Ask how many of the 3PL’s customers require picking by FIFO, FEFO and other principles.
  • Call some of those customers and ask how well the 3PL meets their criteria for picking.
  • Ask to see sample orders that demonstrate how the WMS tracks particular code dates or other indicators.

Cost Reduction

  • Investigate the WMS. A full-featured system does a better job of managing productivity.
  • Ask what investments the company has made to lower energy costs.
  • Ask how the company measures labor productivity. If there are no metrics in place, that’s a bad sign.

Regulatory Requirements

  • Ask to see records of mock recalls.
  • Ask to see records of inspections by a professional auditing firm.
  • Get references from food companies for whom the 3PL has performed mock recalls. Find out what company officials thought of the results.

Experience

  • Tour the warehouse. Does everything look well-maintained? Or do you see danger signs, such as poor seals around refrigerator doors, or doors left open?
  • Is the facility spotless? Are there written procedures to ensure proper sanitation?
  • Ask to see sample reports that demonstrate the power and flexibility of the WMS and other IT systems.

Food distribution may entail many risks, but an experienced, well-qualified 3PL will help you keep your operation profitable, compliant and safe. To find the right partner, make sure you ask the right questions.

food distribution 3pl

Weber Logistics is the leader in West Coast and California logistics, warehousing and trucking.

Connect with Weber Logistics on Google+

Choosing the right location for your West Coast warehouse

chose west coast warehouseMost importers to Southern California want to establish a West Coast warehouse for national, regional or local distribution. The question is where to locate your inventory.

If you establish a transload/warehouse facility near the port, your drayage costs will be cheaper and transportation costs to LA customers will be less, but space and labor costs will be higher and you’ll deal with LA-area road congestion.

If you choose to locate in the Inland Empire region – a major hub for logistics activity 60 miles east of Los Angeles – your space and labor costs will be cheaper and facilities will be newer, but drayage and outbound transportation costs will increase because of the added distance from the port.

Download our white paper – Logistics Primer for Importers to Southern California Seaports – to learn more about optimal warehouse locations and other logistics challenges faced by importers to Southern California.

The right location choice for a West Coast warehouse will depend on the specifics of your business. The following “If/Then” chart can help you decide what’s best for you. There are many variables to be considered and the chart covers just a few.

west coast warehouse

There are about 1 billion square feet of California warehouse space from Bakersfield to the Mexico border and many are operated by third party logistics providers (3PLs).  The right 3PL partner can do a detailed analysis to determine the optimal West Coast warehouse location for your business.

  logistics southern california ports

Weber Logistics is the leader in West Coast and California logistics, warehousing and trucking.

Connect with Weber Logistics on Google+

What is the C-TPAT program and why should you care?

C-TPAT is a voluntary government-business initiative designed to guard against illegal smuggling of dangerous cargo by terrorists.

describe the imageIn the post 9-11 era, stepped-up inspections delay processing of imports from 1 to 2 weeks, slowing the importer’s supply chain and cash cycle. Importers that want to avoid these Customs delays and support efforts to secure the country’s borders are seeking certification under the C-TPAT program – the Customs-Trade Partnership Against Terrorism.

Weber has published a paper to help you understand the benefits to shippers of the C-TPAT program. Download the paper: C-TPAT Membership: Is it Right for You?

Following is a quick summary of these benefits. 

  • Secure the country’s borders.  Many C-TPAT members cite this as their primary motivation for becoming certified.
  • Speed your supply chain. C-TPAT shipments are 4-6 times less likely to undergo an examination than non-C-TPAT shipments.
  • Reduce costs. As an importer, you pay for Customs cargo examinations. C-TPAT program certification means fewer inspections, reducing these costs. Another cost, and one that is harder to quantify, is the cost of delayed shipments to retail customers. A lengthy delay on an out-of-stock product could jeopardize your relationship, even your business, with a retailer.
  • Gain favor with retailers. Increasingly, retailers are encouraging vendors to become C-TPAT compliant. While C-TPAT compliance is not the reason retailers seek out your products, it can tip the scales in your favor at the tail end of a vendor selection process.

If you are outsourcing any portion of your supply chain to third party logistics providers (3PLs), their security procedures come under just as much scrutiny as your own during C-TPAT evaluations. So, if you are considering the C-TPAT program, it helps to work with 3PLs, like Weber Logistics, that are well-versed in C-TPAT protocols. 

Download the Weber Logistics Insight:

  Is C-TPAT Right for You?

 

Weber Logistics is the leader in West Coast and California logistics, warehousing and trucking.

Connect with Weber Logistics on Google+

Comparing Price Quotes for Warehousing Services: Apples and Oranges

If you get competing carrier bids, rate comparisons are easier than those for warehousing. Trucking companies have published tariffs for services. As rates are requested, these carriers will ask about the commodity, the originating address, the destination address, and whether the product is palletized or floor loaded. With this information, carriers can reference their tariffs and quickly provide a quote.

It’s an apples to apples comparison.

warehouse pricing guideBut precise warehouse rates require a more detailed analysis. Companies often cannot provide all the data requested, so 3PLs have to make assumptions in order to complete the pricing profile. Different 3PLs make different assumptions, and these differences are reflected in different rates for the same exact volume and services. 

It’s an apples to oranges comparison that makes it difficult to fairly assess supplier pricing.

You can’t assume that, because you gave multiple providers the same input, that their pricing will be based on the same assumptions.  Let’s take the simple example of stackability. Without detail that pallets can be stacked on top of each other 3 high (taking up less floor space per pallet), the provider may assume it can’t be stacked and base the storage pricing on 30,000 sq. ft. instead of 10,000 sq. ft.

Other providers will do the opposite. They will assume a “best case” scenario in order to lowball rates and get the business. In three months, they’ll ask for an increase after showing you how the actual operations are very different from initial assumptions.

The best thing you can do is educate yourself about how 3PLs develop commercial warehouse pricing.  And, what do you know, we can help!  Weber Logistics recently published a Commercial Warehouse Pricing Guide that explains the basics of how rates are determined.  You can use your new-found pricing knowledge to save your company money.  Understanding how 3PLs determine warehouse rates will allow you to work with these partners to create the best, most efficient receiving, storage and fulfillment processes possible.

commerical warehouse pricing guide

Weber Logistics is the leader in West Coast and California logistics, warehousing and trucking.

Connect with Weber Logistics on Google+

Manufacturing and Distribution Align Along the Border

manufacturing distribution us mexican boarderFor years China has been the country of choice for companies looking to establish lower-cost manufacturing operations overseas.  Today, the same firms are looking to move their manufacturing out of China. Why? Well, China is experiencing higher labor costs, high fuel prices, and an overall increase in transportation costs to get goods to the final consumer. These factors have led many companies to seek alternate manufacturing sites closer to home. 

China’s loss has become Mexico’s gain, with more companies relocating manufacturing there. Many CEOs are very happy to leave the 16 hour flights and midnight conference calls behind. Who wouldn’t?

The key factors triggering the journey across sea from Asia to Mexico include:

  • Cheap labor costs - The Chinese currency, the Yuan, has risen in value, making goods more expensive to export. One Yuan = $0.16 U.S. Dollar, while one Peso = $0.07 U.S. Dollar.
  • Easier ability to cross US borders with goods - Mexico and the United States are working to streamline the border crossing process. 
  • Shorter shipping times to Western United States – A 6-8 weeks wait period for product to get to market now shrinks to hours.

As an increasing number of U.S. companies start manufacturing in Mexico, the U.S. and Mexican governments will continue to work closely to streamline trade. This will allow companies who position their supply chain along the border to become more efficient than ever before. Since logistics operating costs are not labor intensive, they can be kept low in the U.S.

California itself has 6 ports of entry in Baja, California, including San Ysidro, Otay Mesa, Tecate, Calexico West, Calexico East, and Andrade.  Baja, California has become one of the key entry ports, making San Diego a key distribution center location to support cross-border activities. About $54 billion worth of goods move across the region’s border annually, according to the San Diego Association of Governments. A San Diego distribution center brings the following benefits:

  • Close proximity to Mexican manufacturing plants
  • Easy access to the largest port in America to retrieve raw materials
  • Distribution to the huge Western U.S. consumer market

Weber Logistics provides logistical services in San Diego. Weber’s San Diego warehouse is located 5 miles from the Mexico border with easy access to the San Ysidro, Mexico port of entry. Advantages of Weber’s San Diego logistical services include proximity to border crossings, rail siding, integrated warehousing/trucking services, and port services.   

Learn more about Weber Logistics services in San Diego and across the Western U.S.   

Contact Weber Logistics

Weber Logistics is the leader in West Coast and California logistics, warehousing and trucking.

Connect with Weber Logistics on Google+

The Latest on West Coast Port Labor Negotiations

port labor disputeThe contract between the Pacific Maritime Association and the International Longshore and Warehouse Union, which represents almost 20,000 longshore workers at 29 West Coast ports, expired on July 1. The union extended its previous six-year contract until this past Friday, July 11 and negotiations are now underway to complete a new deal. 

Port drivers and Teamsters have picketed selected terminals.  This is a separate issue from the ILWU and PMA negotiations.  Members of the Teamsters are organizing owner-operators and employee port drivers to protest what they believe to be unfair business practices at the port. This is leaving many Los Angeles drayage companies without a full staff of drivers to accommodate the huge demand for full container transactions.

Importers and exporters have slammed the ports with product, fearing a West Coast port labor disruption.  Volumes at U.S. container ports are expected to reach 1.5 million containers this month, up 4.3 percent from last year. This volume increase is way ahead of the normal holiday peak season and has come at a time when many ILWU members take their summer vacations.   Problems at the Ports of LA and Long Beach include:

  • Equipment shortages
  • Severe congestion
  • Chassis availability
  • Long waits for drivers

What Can We Do?

Be patient.  Extra capacity is non-existent right now.  Shippers can help by ensuring containers are cleared and made available in a timely manner. 

The good news is that, unlike the disruption in 2002, when the steamship lines locked out the ILWU for 10 days, current negotiations have gone smoothly and there is no indication of a deadlock in the talks, according to spokespeople from the union and the ports.  Once resolved, Southern California ports will continue to be the fastest, cheapest choice to move goods from Asia to the U.S. market. 

Learn more about Weber Logistics solutions:

Contact Weber Logistics

Weber Logistics is the leader in West Coast and California logistics, warehousing and trucking.

Connect with Weber Logistics on Google+

Panama Canal Expansion Delays – Money or Politics? Or both!

The deadline for completing the $5.25 billion Panama Canal expansion has already been delayed multiple times, with the original target date of October 2014 set back by a total of 16 months to early 2016.  The project has been beset by problems. 

panama canal delaysIn early May, Panamanian construction workers ended a two week strike that severely delayed construction.  Salary increases will be in place over the next four years in response to the work stoppage.  Earlier this year there began an ongoing financial dispute between the Canal Authority and GUPC, the consortium of European contractors responsible for completing the expansion.  In question is a $1.6 billion cost overrun that would bring the total price tag to around $7 billion for the expansion project.  The cost to build the entire canal in the early 1900’s was approximately $360 million, according to pancanal.com 

An arbitration process is now in place to decide who will pay what.  While financial measures have been taken to resume construction, what drama holds next for the remaining 25% of construction? 

According to an article posted on www.npr.org, Jan Kop, GUPC’s Deputy Project Director, says that the cost overruns are due to “surprises that we could not have foreseen such as rare soil conditions and higher than expected earthquake potential along the canal.”  He also states that the Panama Canal Authority “should have known about these things since 1914.”  On the other hand, Jorge Quijano, a US educated engineer and the head of the Panama Canal Authority says, “Even if their claims were fact, the amounts they are claiming are outrageous.”

The two parties agreed to pay an additional $100 million each to keep the project moving forward and the canal authority expects to recoup their funds upon the completion of the expansion. 

Canal Expansion Impact on Southern California Ports

They say that for every action, there is a reaction.  Many people wonder about the impact of the Panama Canal expansion on the ports of LA and Long Beach.

Weber believes that the impact will be less significant than many predict.  Read our Insight Paper: Panama Canal Expansion: Impact on the Volume of Imports to Southern California

Southern California’s already established infrastructure is designed to handle great volumes of import freight, while the Gulf and East Coast ports try to catch up.  Also, the additional costs of fuel and higher tolls on the Canal will more than likely increase costs, which will ultimately be passed on to the consumer.

Download this Weber Insight:

c-ptat membership

Weber Logistics is the leader in West Coast and California logistics, warehousing and trucking.

Connect with Weber Logistics on Google+

New Commercial Warehouse Pricing Guide

commercial warehouse pricingEver wonder how third party logistics providers (3PLs) determine the warehousing rates that they quote to you?  
A new Commercial Warehouse Pricing Guide is now available that explains the basics of how rates are determined.  You can then use this knowledge to control your costs.

I know what you’re thinking...What could be more boring than a guide on warehouse pricing?  Well, we’ve got a question for you in return… How important is it for you to control your warehousing and logistics costs?   By getting smarter about the 3PL pricing process, buyers of warehousing services are in a much better position to impact how product is stored and handled and can actually reduce warehousing costs.  

How much savings are we talking about?   Well, according to the Department of Transportation, total logistics costs represent about 10% of a company’s revenue. Warehousing costs, not including inventory carrying costs, are around 9% of that logistics spend. For a billion dollar company that spends $9 million a year on warehousing, a 15% reduction in these costs adds $1.3 million to company profit. For a smaller, $50 million dollar company, a 15% reduction in warehousing costs translates to about a $68,000 profit increase − still nothing to sneeze at.  

Commercial Warehouse Pricing

The warehouse pricing guide looks at the three basic components of 3PL pricing for commercial warehouses:

1) Inbound Processing – receiving the goods into the warehouse
2) Storage – storing the product
3) Outbound Processing – picking and preparing orders for shipment
We examine the detailed data needed to determine an accurate rate.  And, for each of these areas, we provide examples of how a change in the storage or handling approach can reduce costs.  

Download the Commercial Warehouse Pricing Guide for free.  And let us know what you think!

commerical warehouse pricing guide

Weber Logistics is the leader in West Coast and California logistics, warehousing and trucking.

Connect with Weber Logistics on Google+
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