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Supply Chain: Finding Safe Harbor in the World’s Ports

By: Simon Kaye
Posted: September 5, 2008, from the September 2008 issue of GCI Magazine.

As manufacturers of cosmetics expand their global sourcing, the role of port facilities is central. Most ports today compete globally with one another, and reflect tremendous gains in productivity in ocean transport achieved over the past several decades. Importers of cosmetic ingredients, raw materials and finished products—like all importers—seek improved port efficiency, lower cargo handling costs and port services that are integrated parts of the global distribution network. Many ports are responding with specialized tracking and handling capabilities that add value to cargo throughput.

Consider, as an example, the ports of East Asia, through which much shipping passes. In China, the port of Shanghai ranks first globally in cargo throughput, and its facilities, which have been expanded substantially in recent years, have direct routes to more than 20 other global ports. At Ningbo, another vital Chinese port location, the government is investing billions of dollars in more than 40 port transportation facility projects. Other competing port locations are investing, too. In Malaysia, the major facilities at Port Klang, Penang Port and Port of Tanjung Polepes have advanced facilities—including electronic data interchange (EDI) systems and ample handling capacity. In Singapore, port and cargo handling facilities are modern and include advanced EDI systems, and the port authority has continually invested in expanding the port-handling capacity to cope with future demand.

For the global cosmetic industry, then, the quality of the physical elements in a world class port can virtually be considered a given. Far more important in terms of achieving sourcing efficiency are two strategic elements inseparable from quality port operations: properly selected freight forwarders and properly selected shipping terms.

The Freight Forwarder’s Role

Cosmetics producers should use freight forwarders as the vanguard of new technological advance and cutting-edge supply chain methodology. Their services can be customized for use by both the smallest and largest businesses and corporations. Freight forwarders can often find creative solutions where traditional supply chain handlers see obstacles. When it comes to challenges such as refrigeration, throughput, theft, customs and other regulations, and product tracking, freight forwarders consistently solve problems in a non-traditional way that adds value.

A professional logistics company represents the interests of the full range of cargo and supply chain nodes. In addition to having a vested interest in the ups and downs of an entire region, freight forwarders have another ace in the hole: the government agencies responsible for customs clearance and other regulatory issues are much more sympathetic to the goals and aims of such a broadly-backed organization. Foreign supply chain networks should not be constructed without relying on seasoned guides who know how to improve throughput, navigate problems and deal with the governments and ports.