Port of LA wants to add incentives for “green” vessels

ESI is an international web-based ship-rating system ports can use to promote clean ships by rewarding operators whose vessels exceed current environmental performance standards and regulationsBy Patrick Burnson, Executive Editor
November 22, 2011

The Port of Los Angeles is working with the International Association of Ports and Harbors (IAPH) to develop incentive program strategies to participate in the Environmental Ship Index (ESI) Program starting in 2012. 

ESI is an international web-based ship-rating system ports can use to promote clean ships by rewarding operators whose vessels exceed current environmental performance standards and regulations.

“We are hoping that this will be the start to give BCO’s (beneficial cargo owners) a voice on where cargo is routed,” said ports spokesman, Phillip Sanfield.“We believe that there should be a financial reward given to ports and carriers for doing the right thing.”

Port staff presented an outline of the program to the Board of Harbor Commissioners last week and expects to submit recommendations for participation in the program to the Board by early 2012.

The announcement comes on the fifth anniversary of the port’s adoption of the Clean Air Action Plan (CAAP), landmark pollution reduction initiative whose measures have helped to cut harmful air emissions from port-related sources in the San Pedro Bay by as much as 76 percent.

The CAAP was designed as a blueprint for charting a permanent course for the Port of Los Angeles to operate the cleanest, most environmentally sustainable port. In 2010, the port reaffirmed its commitment to the CAAP by expanding its programs and setting more aggressive targets with near-term goals through 2014 and long-term objectives through 2023.

“The Port of Los Angeles is looking forward to being part of these international standards and setting the stage for North American ports to follow suit and reward operators for greening their fleets,” said Port of Los Angeles Executive Director Geraldine Knatz, Ph.D. and IAPH president. “As participation grows, the benefits increase for carriers and communities.”

The Port of Los Angeles adopted the CAAP to help tackle harmful emissions in the South Coast Air Basin. After launching the CAAP in 2006, the port has met or exceeded nearly all its goals for reducing air pollution from port-related sources. Ships remain the toughest challenge, as they are regulated by international convention and represent the single largest source of air pollution from port-related operations.

The ESI identifies voluntary engine, fuel and technology enhancements ships can use to exceed current environmental performance standards. The ESI targets primary pollutants, which include nitrogen oxides (NOx), sulfur oxides (SOx), and diesel particulate matter (DPM). The program also contains a component to help reduce greenhouse gases.  The index was developed by some of the world’s major ports collaborating under the World Ports Climate Initiative, a project of the IAPH.

Nine European ports in the Netherlands, Norway, Germany, Belgium and Italy have signed on to participate in the ESI and either have current programs or are in the process of developing programs to offer financial incentives to reward operators whose ships outperform environmental standards.

Some thoughts and signs about the economy

A few economic indicators released this week were not new or jarring in terms of a “wow factor,” but they are telling at the same time.

One of these indicators is that according to the Department of Commerce third quarter GDP growth checked in at 2.0 percent, which is down from a previous estimate of 2.5 percent. I am sure we all wish that final tally had been 0.5 percent heading in the other direction, but what can you do?

The other one from Commerce told us that new orders for manufactured goods in October fell 0.7 percent to $197.7 billion and overall shipments were up 1.3 percent, while inventories were up 0.5 percent.

These numbers are pretty much status quo, given the slow growth occurring at the moment and many preceding months. But as the year comes to an end in a matter of weeks, we all would like to see more growth.

On a more positive front are solid export numbers in recent months, especially from the Port of Los Angeles, whom reported an all-time high in October exports. Some of this is due to a “cheaper” dollar, but it is a good sign.

And retail sales figure to show some strength very soon, with Black Friday (or is it now Black Thursday?) soon to be upon us. It stands to reason that November and December retail sales will be strong and definitely serve as a nice late in the year stimulus for the economy.

While things are far from perfect, we are slowly moving in the right direction, it seems. This is also bearing out in fairly decent truck tonnage and intermodal/rail carload numbers we have seen in recent weeks.

In regards to the truck tonnage volumes, I asked Chuck Clowdis from IHS Global Insight to offer up his take on the most recent batch of data from the American Trucking Associations, which stated that in October its advance seasonally-adjusted (SA) For-Hire Truck Tonnage index increased 0.5 percent in October, following a revised 1.5 percent and was up 5.7 percent annually, whereas the non seasonally-adjusted index was down 0.8 percent from September and up 4.8 percent annually.

“The latest ATA tonnage numbers are slight but still encouraging,” said Clowdis. “We now need to see what holiday spending reveals. It has been especially difficult to take true measure of inventory levels and many are still rather low for this time of year.”

The changing patterns pertaining to inventory control and management are also creating an interesting supply chain dynamic, which, many industry stakeholders have told me, is creating a sort of “new normal.” As you probably know, retailers, especially, are being far more conservative with inventory levels than they have in the past—and with good reason.

In any event, it is worth keeping an eye on as we hopefully continue to see positive progress made on the recovery front.

How Do Online Retailers Offer "Free Shipping?"

A question we get a lot from clients is "How can so many online retailers offer free shipping?", which is then followed up with "What can we do to compete with free shipping offers?"

There are a couple of reasons online retailers are able to offer free or cheap shipping, unfortunately the reality is that there are no free shipping service options with Fed Ex or UPS or the Post Office or anyone else. So whether you are a large shipper, ecommerce startup, or growing online retailer there is no such thing as free shipping.

What large companies do get, that startups and small companies typically do not, are substantial discounts on small package company's published rates. In addition, if a company is shipping a very large amount of the same size packages there is often the chance to get preferential rates in those circumstances.

Clearly if you are a startup or small online retailer you are at a significant disadvantage because you are without the leverage to negotiate better rates with FedEx or UPS. But in the end, just like your business, the big online retailers are covering the cost of shipping with the margins in their products.

What to do about it as a startup or small online retailer? Obviously it is paramount to figure out ways to minimize shipping expenses because these are costs that are not going away no matter how big you get.

Consider alternatives to FedEx or UPS by looking at the options offered by the USPS. Many companies find that Flat Rate Priority Mail boxes are a good way to reduce costs. FedEx and UPS charge hefty residential, extended delivery area and fuel surcharges that hurt the economics of shipping Business to Consumer (B2C) with them.

More distance equals more cost so your shipping location is directly correlated to your shipping costs. Most of the people in the US are located in the mid-atlantic and northeast part of the country. If you are shipping from San Francisco to customers in New York, the cost could be double or more than the cost to ship to New York from a location in Pennsylvania. Another advantage the big guys have is the ability (as in volume) to ship from multiple points within the US. They can service most of the country with cheaper ZONE 2 or 3 shipments, as opposed to expensive ZONE 8 shipments going coast to coast by having multiple warehouse locations to ship from. Similar story, but it does take volume to make it worthwhile to set up multiple shipping points around the country.

Many 3rd party order fulfillment warehouses will pass on their volume discounts with FedEx and UPS, so look into a partnership to outsource your product shipping. Your operation will potentially benefit from the collective volume of all the customers shipping from that fulfillment center.

Is The Shipping Industry On The Way To Follow Aviation Into The EU ETS?

As aviation is on the way to become a part of the EU's system for carbon trading from 2012, the question that will inevitably come under the spotlight is whether or not the shipping industry will also inevitably follow this path. Although the International Maritime Organisation (IMO) and the UN Framework Convention on Climate Change (UNFCCC) are making efforts to reduce emissions from shipping, the European Commission is gradually getting impatient and seems to be determined to take action in 2012 if sufficient progress is not made in the meantime.

Despite of the approaching expiration date of the Kyoto Protocol and the uncertainty arising thereof, The EU's resolution to move toward a low-carbon economy seems stronger than ever and the expansion of the EU ETS system is a step in that direction. The recent inclusion of emissions from the airline industry has brought about excitement and worry in the shipping sector as well, especially considering that a commitment to include it into the EU ETS was made as early as 2005 - the year when the carbon cap-and-trade system was first launched.

At present, the EU Emissions Trading System (EU ETS) is the most integrated carbon trading mechanism in the world, operating on the basis of the "cap and trade" principle, where companies receive emission allowances within a certain limit or a "cap" that they can later on trade among themselves. One of the most important steps toward integrating the transport sector into the EU ETS was taken as the European Commission adopted the decision that, from 2012, emissions from all domestic and international flights arriving or departing from EU airports, will be covered by the EU ETS. The decision was met with approval and criticism alike and naturally provoked the discussion about the inclusion of the shipping industry in the emissions reduction system.

Shipping currently accounts for a surprising 3% of global emissions, and according to the Directorate-General for Climate Action of the European Commission (DG "CLIMA"), in the absence of action, greenhouse gas emissions from shipping are expected to more than double by 2050. With the increased shipping traffic recently observed through arctic shipping routes, the environmental consequences of shipping seem to be more pressing than ever, as carbon emissions could further speed up ice melting in the Arctic.

Emissions from the shipping industry are not covered by the Kyoto Protocol and the specifics of the maritime sector make its inclusion in a carbon trading scheme a rather complicated matter. Just like aviation, the shipping sector is not a land-based industry and does not operate on a limited territory. Therefore, the successful integration of shipping emissions into EU ETS would require cooperation of both governments and shipping companies based outside the EU. And to complicate matters even more, recently the UK shipping industry rejected the urges for European action in the field. As Mark Brownrigg, director general of the UK Chamber of Shipping, told the Guardian, "The EU's emissions trading scheme will not work for shipping. It is not suitable. It is not a global system, and shipping is".

Meanwhile, the IMO is also taking steps toward reduction of greenhouse gas emissions. On its 62nd session in July 2011, the Marine Environment Protection Committee (MEPC) adopted measures aimed at the reduction of emissions of greenhouse gases from international shipping, as the new regulations are expected to enter into force from 2013. It still remains uncertain, however, whether these measures will be considered as sufficient by the European Commission and especially by Connie Hedegaard, the EU Commissioner on Climate Action, who stated that it was "high time" for an agreement in IMO. "Much as we prefer a global solution, the Member States and the European Parliament have asked the Commission to present a possible proposal to reduce shipping emissions for 2012 in the case that the IMO fails to find a solution", she said in a statement from 28th June 2011.

The integration of shipping into a carbon trading scheme could be an additional way to raise money for combating climate change in developing countries. However, in order to make that effective, an agreement for the reduction of emissions from shipping will have to be reached on an international level, and not to be limited solely to the EU/EEA region. An opportunity for a global agreement might emerge at the upcoming climate conference in Durban, where the EU is expected to initiate talks on shipping, together with the fight for global regulation of emissions from the airline industry. The absence of a global solution, however, will most probably not influence the determination of the European Commission to include emissions from shipping in the EU ETS.

The Role of Information Sharing in Global Supply Chain Operations

Information sharing can radically improve the way global companies and their partners do business, especially in the wake of increasingly globalization and outsourcing, which has and will continue to have a profound effect on supply chain operations. By exchanging information such as inventory levels, forecasting data, and sales trends, companies can reduce cycle times, fulfill orders more quickly, cut out millions of dollars in excess inventory, and improve forecast accuracy and customer service.

Information sharing can be applied to almost all the core domains of corporate operational activities. Starting from the development chain process where information sharing can happen in the product design stages and product life cycle management activities with both internal and external partners. In the customer chain processes information sharing can help in formulating customer experience strategies, increase customer service effectiveness and operations.

The psychological barriers around information sharing are real and imperative. Sometimes there is a real and justified fear that information sharing across the corporate boundaries can turn into a competitive disadvantage. By formulating effective business policies, agreements and business plans that an enterprise can use to establish guidelines and rules for exchange of information with supply chain partners can help assuage those barriers. This will ultimately help mitigate the fear of information sharing and improve efficiency and create new opportunities for all stakeholders.     

Information sharing can be most effective and least disruptive for all concerned when done by implementing the available technological tools, which would accomplish the process in a controlled and secured way thereby streamlining the global supply chain operations.
 
Collaborative Planning, Forecasting and Replenishment workflows and solutions exist in the supply chain process to enhance supply chain integration and data sharing across enterprises but very few companies effectively use it to their competitive advantage. The current challenges that organizations face in implementing these workflows really revolve around non-integrated processes and systems with retailers and manufacturers operating out of their own silo and different planning data. This results in excessive response times, costs and inventory due to forecast inaccuracy. Retailers on one hand face stock-outs, material shortages, lost sales and poor customer service to name a few. On the other hand manufacturers get plagued by obsolescence and inventory costs impacting margins. SAP's Supply Network Collaboration tool, JDA's Collaborative Supply Planning and Execution tools offer sophisticated and rich workflows to enable information sharing with the extended supply chain partners which not only provides timely visibility into supplier fulfillment constraints but also facilitates speedy resolution resulting in reduced purchasing costs, expedited freight and better supplier negotiating capabilities.

A large apparel, footwear and golf equipment manufacturer implemented key features of collaborative supply planning and procurement execution tool to achieve forecast analysis and collaborative workflows on the planning side and firm order collaboration with vendors on the procurement execution side.  

The gains achieved were two-fold. On the planning side sharing of mid to long term forecast and publishing near term requisition forecast to suppliers and receiving supply commits from them resulted in reduced material shortages and stock-outs at the component level. Additionally, synchronized and tightly integrated procurement and manufacturing planning activities gave planners the ability to quickly re-plan globally based on changes in execution.

On the other hand Intelligent Buyer-Supplier approval workflows facilitated timely visibility of supplier's fulfillment constraints and their resolution by the corporate procurement group, resulting in aforementioned benefits of reduced procurement costs at different levels. The global buying group also achieved execution efficiencies with a single view of all procurement worldwide, managing different replenishment programs and multiple communication channels with their supplier base using a single system.

In the past manual order processing, spreadsheet dependent and fax/phone method of communication with suppliers made a dent not only to the corporate procurement budget but also generated global operational plans that were out-of-date because of limited-to-no visibility into supplier's plan and operational constraints.

On similar lines global organizations can harness the power of technology to collaborate with their supply chain partners to exchange information and work as a single entity. All this can be done with the end objective of having greater understanding of the end consumer behavior and effectively responding to the changes in the market place from a supply chain perspective so that manufacturers make the products only when they are needed and retailers store and sell them to end customers, drastically cutting down on their own inventory levels and associated costs. In the long term timely exchange of information will not only improve supply chain responsiveness but will also enhance cash flow and profitability to every link in the supply chain and ultimately contribute to consumer satisfaction.

The Business Plan Process

It all begins with research. Is there a market for your product or service? What is the competition? After research comes developing a strategy, calculating costs and revenues, drafting a plan, and finalizing a finished copy.

1. Do The Research

Use databases, articles and direct interviews with entrepreneurs and potential customers to do research on the industry as a whole, your niche market, your competitors, and operational costs. Keep detailed, organized, careful notes. Be very careful about citing sources, as you will be referencing them throughout the Business Plan.

2. Develop A Strategy

Use industry standard best practices as a jumping off point. This insures your strategy is solid, as it is tested in the field by others. But then you must develop further strategies that differ from the rest of the industry. This will set your company apart from the competition and create "barriers to entry" to help your business succeed. This will inform all sections of your Business Plan.

3. Do The Calculations

Add up all the costs of every activity your business will engage in. Include operational costs for the first-year, five-year and long-term projections. Then create revenue projections for the same time periods. Base your projections on the research you did, in light of the strategy you developed. Your projections must absolutely be realistic from square one, or the scent of naivete will make its way to investors, who will promptly drop your Business Plan in the wastepaper basket.

4. Write A Draft

If you have done the previous parts of the Business Plan process thoroughly, writing a draft will flow naturally from your existing data. The idea is to turn it all into prose, organized into the ten standard sections of a Business Plan: Executive Summary, Company Analysis, Marketing Plan, Industry Analysis, Customer Analysis, Competitive Analysis, Marketing Plan, Operations Plan, Management Team, Financial Plan and Appendix.

5. Revise and Hone as a Final Draft

First revise for logic and completeness. Remove any redundancies, as the Business Plan must be as brief as possible without sacrificing the whole picture. Then revise for grammar, punctuation, and finally formatting. If you need to hire a new pair of eyes to look over your Business Plan, do it. Business planning burnout can make you miss glaring flaws.

Your business may be at state. Don't make the mistake of leaving out complete analysis of the market and competition. It doesn't have to be all about the glories of your own business. Open the door to more information and your plan will be more enticing to investors.

Use Hot Melt Adhesives to Cut Back on Costs

Hot Melt adhesive that's otherwise known as hot glue, is a thermoplastic adhesive. It's based on the thermoplastic's property, where it's a versatile liquid when exposed to temperatures above 180F, and becomes hard within few seconds, when exposed to temperature less than 180F. They are used in a range of industries for sealing cartons, or for assembling products, or binding books and even diapers. This technology derives its inspiration from molten wax, which was used for bonding in earlier times. Hot melt adhesive are pressure sensitive and work best when using hot melt glue guns. Many industries use this for their packing needs, or wherever harmless adhesives are necessary. It's used widely and preferred for being an Eco-friendly adhesive.

Different types of hot-melt adhesives include Ethyl Vinyl Acetate or EVA copolymers, Styrene-Butadiene-Styrene or SBS copoymers, Styrene-Ispoprene-Styrene or SIS copolymers, Polurethane Reactive or PUR, Ethylene Ethyl Acrylate copolymers or EEA. These polymers need additional material for making them perfectly adhesive. A polymer property can be enhanced by adding waxes, plasticizers, antioxidants and other materials. Textiles to labels, to disposable products, many industries utilize hot-melt adhesives from. Glue guns are deployed in most industries, for ease of application.

A hotmelt glue gun will need PVC sticks that are melted within the gun and applied over the area for sealing. This sealing is achieved through bonding polymers and can be strengthened, when one uses additives. Antioxidants are used to avoid oxidation, which occurs due to presence of unsaturated bonds in a polymer. These days, one can find both colorless and colored adhesives. Textile industry will make use of low temperature glue guns, while a typical higher temperature gun may be needed when stronger bond is required. Bonding process must be complete, before the glue is solidified. Some guns come with option to switch temperature range. Hot melt equipments needed for bonding include hotmelt glue guns, staple guns and staples, rivet tools and rivets, glue guns and glue sticks. The right tools should be chosen based on the purpose.

There are industrial adhesive glue guns that spray the adhesive through nozzles. This uses compressed air, in order to spray the adhesive. However, if one is not quick enough, the adhesive loses its tackiness and becomes unusable. There are industries that manufacture custom guns for adhesive application. Alternate industrial adhesives, to solvent based models, the various types need to be studied and chosen based on costs of operation, power used, etc. Using hot melt technology, is considered to be cost-effective and an efficient adhesive solution.

Though this method calls for installation of heat tracking systems for safety, there's not a standard design that can be used for all industries alike. Most need to be customized depending on the industry needing industrial adhesives. Finding a manufacturer serving every industry is not difficult either. When savings are considered, capital costs can be reduced to a great extent, when using hot-melt equipments. Also, floor space needed is less, when compared to solvent based adhesives. Curing times are lesser when compared to other industrial adhesives. Thus, overall cost is reduced to a great extent, when one uses hot-melt equipments and adhesives.