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ShareThisJ.C. Penney Sees 'Havoc' from Ocean Carrier Cuts
Shippers need reliability, predictable rates for contracts written six months out
Carrier cutbacks are playing havoc with the supply chains of retailers. "Changes in sailing schedules are killing us," said Martin Bernstein, transportation excellence director at J.C. Penney.
Bernstein said 25 percent of Penney's routings this year have been affected by changes in schedules and reduced sailings. This scheduling uncertainty comes at a time when retailers have reduced the inventory they carry in order to cut costs and improve efficiency.
Logistics officials at shoe manufacturer Nike said recently carrier cutbacks had hurt the shipper's ability to diversify its gateways.
Although freight rates today are low, Penney's priorities are reliability of transportation service and predictability of rates because contracts with overseas factories are written six months before the merchandise is delivered, Bernstein said.
"This is not an RFP (request for proposals) industry. It has to be built on predictability," he said.
Contact Bill Mongelluzzo at bmongelluzzo@joc.com.
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More self serving from a transportation buyer. They play the market down down and down and howl when it finally hits the bottom. Meanwhile no carrier can count on longterm support or accurate forcasting from any major importer- the game is rigged against the carriers and has been ever since the advent of confidential service contracts. Carriers of course must share in the blame- each trying to cut the next for a nickel, ignoring common sense and refusing to sue bad faith customers. The current mess has been brewing a long time.
- By mercury on 11/17/09
So... there is value in reliable shipping schedules and predictable services. Funny how so many shippers focus on rates, rates, rates, until the reliable services are taken away.
- By John Doble on 11/17/09
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There's a fine balancing point between rates and service from a carrier. Truely, any carrier can ship goods from A to B, their true worth as a working partner comes in when a delay or "speed bump" occurs in the supply chain and they are there to assist in the solution or become the solution. It is these carriers who earn the rates they ask and get. This is a business partnership enviroment, not a short term bidding arena. It does no good to tell your CFO you have the lowest rates and then not be able to deliver the goods on time.