Your company has made a cost-driven decision to manufacturer in Asia and import from Asia back into the U.S. The by-product of that decision is a much lengthier supply chain and cash cycle. Your job, in logistics, is to mitigate the negative impacts of your import supply chain by designing an efficient U.S. distribution strategy. And one of the first things you will need to decide is your destination port. For this decision, you’ll need to look at the impact of port location on time-to-market, customer satisfaction, freight costs and inventory costs.
We examine this and other key importer issues in our most recent eBook: How to Speed Distribution Cycle Time for Asian Imports
West Coast vs East Coast speed
When importing from Asia into the U.S., you’ll need to decide where your containers will land – at an East Coast, Gulf Coast or West Coast port. A good portion of your market may be east of the Mississippi, but shipping a portion of your containers to the East Coast (through the Panama Canal) will add weeks to your supply chain. For example, it takes around 34 days to ship from Hong Kong to New York, and only 20 days to ship from Hong Kong to Los Angeles. How important is this 14-day difference to you?
Your answer may depend on the products you’re shipping.
If you import into Southern California, over-the-road (OTR) freight costs will obviously increase to move goods west to east. For lower-cost commodity products, like tube socks, you may prioritize lower freight costs over shorter ship times and elect to ship at least a portion of your freight direct to East Coast or Gulf Coast ports.
But if you ship higher-value, short-shelf-life products like smartphones or seasonal clothing, an extra 14 days of ocean transit could mean you’ll miss a portion of your selling season. For these products, a West Coast port will likely be your best solution when importing from Asia. It will save you 2 weeks of time on the water and you can ship OTR from L.A. to 90% of the U.S. population within 5 days.
This overland transportation does come with a cost, of course – particularly in the current freight market. Intermodal with rail is cheaper, but you then lose even more of your time advantage from bringing imported goods into the West Coast.
Don’t Ignore the Cost of Added Inventory
While a West Coast port solution may inflate trucking costs for national distribution of Asian imports, it also reduces the amount of inventory you need to carry since goods are getting to market faster. The less inventory you have in the system, the lower your overall cost for things like taxes, insurance, obsolescence and the cost of money.
Unfortunately, because such inventory carrying costs are not discreet logistics costs, they are too often ignored in the cost analysis. Don’t make that mistake.
Retailers and Consumers Want Faster Deliveries
One argument for shipping products to ports closest to final consumers is the desire of retailers, and consumers, for faster deliveries. Retailers want to minimize their own inventories and order on a more just-in-time basis. Consumers, of course, have been conditioned by Amazon to expect two-day service. Utilization of multiple ports on the East, West and Gulf coasts can reduce “port to market” time to more of your key U.S. markets.
For Asian imports, a large percentage of products imported into Southern California are consumed in the region. For that reason, shipping to a West Coast port is a highly cost-effective solution as goods move from port to market quickly, avoiding the cost of inland distribution.
Need Advice on Port Selection?
When importing from Asia via ocean shipping, your choice of a destination port will be a key factor in determining the speed at which your products get to market – and the speed at which you turn these products into cash. If you’d like help evaluating the many logistical factors that go into port selection, contact Weber to discuss strategies to get your products from Asia to your U.S. customers in the fastest and most efficient manner.