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Transcript of Here We Go Again, Or Do We? - JOC.com · Here We Go Again, Or Do We? A BCO Perspective on Carrier...
Here We Go Again, Or Do We? A BCO Perspective on Carrier Shipper Relationships
Alan Mctaggart, Group Logistics Director
Today’s Presentation
Outline of Techtronic Industries Business (TTI)
Techtronic Ocean Freight Programme
Conclusions on the “Shared Experience”
2
Techtronic Industries Co. Ltd.
A world-class leader in design, manufacturing and marketing of Power Tools, Outdoor Power
Equipment, and Floor Care and Appliances for consumers, professional and industrial users.
POWER EQUIPMENT FLOOR CARE & APPLIANCES
3
1999
Acquisition
2000-2004
Acquisition
2005
Acquisition
2003
Acquisition
2002
Acquisition
2007
Acquisition
1985 2012
Founded
TTI
1,000
2,000
3,000
SALES
(US$m)
Expansion
1986 Revenue
US$3M 2011 Revenue
US$3.7B
1990
Listed on
HKSE
4
Diverse Global Customer Base
Mass Merchants / Home Centers Industrial Distributors / Independent Hardware Stores
5
Global Presence
Power Equipment,
Floor Care and
Appliances
Milwaukee Professional
Tools
• Sales & Marketing
• Research &
Development
• Manufacturing
Consumer and Trade
Tools
• Sales & Marketing
• Research &
Development
Outdoor Products
• Sales & Marketing
• Research &
Development
• Manufacturing
Floor Care and
Appliances
• Sales & Marketing
• Research &
Development
• Manufacturing
UNITED STATES
Power Equipment,
Floor Care and
Appliances
CANADA
Power Equipment ,
Floor Care and
Appliances
EUROPE
Floor Care and
Appliances
• Manufacturing
MEXICO
Power Equipment,
Floor Care and
Appliances
LATIN AMERICA
Power Equipment,
Floor Care and
Appliances
ASIA
TTI WORLD WIDE
HEADQUARTERS
AUSTRALASIA
Power Equipment,
Floor Care and
Appliances
MIDDLE EAST, AFRICA,
INDIAN SUBCONTINENT
6
Global Sales and Ocean Freight Volume
Sales by Segment Sales by Region
Ocean Freight Volume 25,000 FEUS Per Year
7
North America 72% By Value
15,000 FEUS 60% By Volume
Rest of the World 7% By Value
4,000 FEUS 16% By Volume
Europe 21% By Value
6,000 FEUS 24% By Volume
Power Equipment 73% By Value
13,000 FEUS 52% By Volume
Floor Care & Appliances
27% By Value
12,000 FEUS 48% By Volume
Innovated Faster than our Competitors
Cut costs Faster than our Competitors
Improved Quality Faster than our Competitors
Partnered with the MOST Demanding and Fastest
Growing Customers
Critical Success Factors
8
TTI Ocean Logistics Rationalization & Outcome/Experience
Consignees Forwarders Origin Booking Parties
Shipping Lines
USA T.P. Ocean Freight Summary Situation OLD - As Was (Late 2006)
Power Tool &
Outdoor
Equipment
Floor Care
& Appliances
F
G
H
I
A
G
H
I
J
K
D
E
A
B A
A
B
I
J
K
L
M
N
C
D
E
B
C
D
E
F
C
E
E
F
G
H
9 11 14
Supplier (PRC)
Outside Suppliers
10
Consignees Origin Booking Parties
USA T.P. Ocean Freight Summary Situation NEW - As Is (Mid 2007)
Power Tool &
Outdoor
Equipment
Floor Care
& Appliances
Supplier (PRC)
C
U
S
T
O
M
S
B
R
O
K
E
R
S
C
D
A
B
A
Outside Suppliers
Customs Broker Shipping Lines
4 1 1
11
Cost reduction
Access to Economies of Scale
Process Improvements
Service Level Improvements
Consolidate Information System
Supplier Management
TTI Group Ocean Freight Project Vital Few Objectives
12
TTI OFFERS TTI EXPECTATIONS
Regular, Year Long, High
Volume Support and Contract
Lower Stable Rates – No
PSS/GRI
Yearly Rates
Fulfilled MQC Commitment Stable Space Provision
Reasonable Volume Forecast
+/-10% (Port Pairs)
Reliable and Predictable
Schedules
Immediate Uncomplicated
Centralized Decision Making and
Communication
Transparency
No Low Season Shopping Measurable Performance (KPIs)
Opportunity for Long Term
Relationship
Worthwhile High Level
Relationship
Stable Supply Chain
TTI Ocean Freight Offer and Expectations
13
The 6 Year Experience
+19% Before Currency
2007 - 2013
14
Logistics Confessions
2007 No Fuel Concession
2009 & 2011 Renegotiated Europe Contract
2008/2009 Christmas and Spring Shopping USA
15
TTI Summary of Contracted Carriers 2007 - 2013
2007 - 2008 2008 - 2009 2009 - 2010 2010 - 2011 2011 - 2012 2012 - 2013
Rank Carrier Rank Carrier Rank Carrier Rank Carrier Rank Carrier Rank Carrier
1 A 1 G 1 A 1 J 1 A 1 G
2 B 2 E 2 H 2 D 2 G 2 A
3 C 3 F 3 B 3 A 3 F 3 B
4 D 4 C 4 E 4 B 4 J 4 I
5 D 5 G 5 C 5 B 5 J
6 B 6 D 6 H 6 H
7 A 7 I 7 K 7 M
8 L
GREED
FEAR
COURAGE / STABILITY / STRATEGY
Ranking trend & Behavior:
OPPORTUNITY
16
Prevalent Patterns of Erratic Carrier Behaviour
Lack of Self Confidence • Have you heard?
• Follow my leader?
Lack of Reality
• 5 or 6 GRIs to Europe
• USD2500 B/E to West Coast!!
• Not a large impact on the sales price!!
Understated Value of
Customers & Relationships
• BAF destroyed goodwill (TTI Experience)
• FOB, CIF, NVOs, BCO’s; Small, Medium,
Large
Confused Strategy/If At All
• Long Term/Short Term
• Q3/4 2011 Bad NVOs
• Q3/4 2012 Bad BCO’s
17
Reality and Changes – Now and Future
Dropping Global Demand
Less Peaks and Troughs (Surges)
Over Supply of Capacity – 13500T./Vessels
Ecommerce
Capital Supply Squeeze
Increasing Industry Price Volatility
Complete Transparency
18
Visible Improvements
Pricing Discipline and Stability
Strength of USA Market
Clever Disposition of Vessels
Recognition of Long Term Relationships
19
Suggestions for Moving Forward
Index Linked Contracts with BCO’s
Be Realistic; Resist Science Fiction
Have a Strategy and Recognize It
Value Long Term Customer Relationship
Be Courageous
20
The Last Word
“People of the same trade seldom meet together, even
for merriment and diversion, but the conversation ends
in a conspiracy against the public, or in some
contrivance to raise prices.”
- Adam Smith, The Wealth of Nations
21
THANK YOU