DELIVERING THE GOODS

DELIVERING THE GOODS

E.I. du Pont de Nemours & Co. has long been considered a leader among large American companies in terms of its purchasing of international transportation.

Effective management of this function has not only helped make DuPont one of the most profitable companies in America, but has produced a long line of executives who have been articulate leaders in the logistics field. Clifford Sayre, DuPont's retired logistics director, and Bill McCurdy, its transportation counsel, are names well known in the field. And even further back, DuPont was represented by innovative transportation thinkers, such as the late Jess Jessen.

DuPont was one of the first companies to recognize that transportation is only one aspect of logistics. DuPont logistics managers and staff have a say in issues ranging from location of plant sites to distribution of finished products.

Those who attended the May 8 conference organized by the Port of Baltimore and The Journal of Commerce Group on the eve of the Propeller Club's annual Crab Feast got to hear from another DuPont transport honcho, Inka Omholt. She is the individual responsible for purchasing all international ocean, air and third-party logistics services for the chemicals and plastics giant. Her department handles over 100,000 TEUs of ocean cargo per year, 60 percent of it U.S. exports. Last year the company exported $3.9 billion worth of goods, making it one of the largest U.S. exporters. Most of the remainder of its ocean cargo moves in cross trades, such as intra-Asia and Europe-Asia. Like her colleagues at DuPont, current and retired, Omholt is not shy about speaking her mind.

High on her list of concerns about the ocean sector is the effect major industry mergers are having on the so-called top tier of ocean carriers. She said deals in which a carrier is absorbed into a larger organization, often retaining its brand presence, have been relatively smooth. It's the blockbuster mergers such as Maersk Sealand that are cause for alarm, said Omholt, a 27-year DuPont veteran, who is based at the company's global headquarters in Wilmington, Del. ''The paradigm was that there were top-tier carriers and second-tier carriers,'' she said. ''For the first time, you have the top of the line performing not at the top of the line, to be kind. That will have long-term effects.''

Those long-term effects, she said, will determine whether ocean carriage will become truly commoditized. ''I wonder if ocean carriage isn't going to be a commodity like trucking is today. That is the big question that is out there,'' Omholt said. She questions, for example, how much differentiation a carrier can offer when it shares vessels with other lines in alliances.

DuPont is a highly ''matrixed'' company, meaning people are organized around processes such as logistics, rather than departments. Omholt's group of 15 specialists, which include international procurement manager Rey Ortiz, work for all of DuPont's 19 strategic business units. That makes her unit an important cog in a well-oiled corporate machine. Although DuPont ranked 42nd on the Fortune 500 list in revenue ($27.8 billion last year), its profit in actual dollars ($7.7 billion) was exceeded by only seven companies in the U.S., among them General Electric, IBM, Microsoft and Citigroup. From 1994-1999 its earnings per share grew at an annual rate of 28 percent, 48th highest among the Fortune 500.

Omholt is held to account for helping produce numbers like those. Financial performance is a major part of how she is evaluated, as is her ability to manage a global team. She said 30 percent to 40 percent of her time is spent watching the various shipping markets in which DuPont is a buyer. Recently she has spent a lot of time laying the foundation for DuPont's new joint venture with BDP International to serve third-party shippers, many of them DuPont customers.

Like her counterparts at nearly all major corporations, Omholt views procurement from a global perspective. She and her colleagues seek out carriers with global capabilities; all of DuPont's 20 ocean shipping contracts cover multiple trade lanes. Yet she said that achieving global scope is an elusive goal for many lines, because competing interests still reside within carrier organizations. ''If you are global only in name, and you have profit centers around the world, the global contract becomes a challenge to implement,'' she said.

Omholt admits, however, that the best performance often comes from carriers that know what's expected of them. ''We work with the carriers to help them understand what our needs are. The better you understand what is expected of you, the better you can fulfill those expectations'' - words from a tradition of know-how.