Over the last 19 month, Hellmann has developed a new operational concept and process of how to handle and manage sea freight LCL shipments within our Network. As part of our business transformation plan, the NextGen Gateway Sea Project has been introduced.
Dubai is now the first location to implement the new gateway concept and respective processes and designs. By offering multiple import and export services to and from the region Middle East and South Asia (MESA) we aim to handle most of our less-than-container-load (LCL) shipments in-house by utilizing own consolidation container. This will ensure proper control and visibility over the cargo and our forwarding costs.
Analyses have shown that the vast majority of our company’s costs are directly linked to transportation (i.e. forwarding costs). Therefore, to further improve our situation we would need to move our cargo even more intelligently through our network. Volume concentration normally leads to optimized buying, and especially in the LCL market, the impact could be big: Rather than utilizing co-loaders, we should make use of our strength internally and build our own consolidation container. That way, the often very expensive post-landing charges at destination could be avoided and our logistic spend reduced. By stuffing and stripping our own boxes, we improve control over our customers’ cargo and our costs. A win-win situation!
A lot has happened in our industry in the past years: The Hanjin bankruptcy or the mergers of numerous carriers into bigger companies and the creation of new alliances only to name few. Changes that all find their origin in the financial circumstances the carriers were faced with. Also in forwarding, margins are under constant pressure. In order to overcome the situation, Hellmann needs to find ways to reduce our operating costs.
The long term vision of the Global LCL Product Management is to establish a globally aligned structure of neutral regional gateways in support of dedicated country/sub-regional gateways. The ‘Gateway SEA’ project will also focus on process, usage guidelines and cost allocation rules of engagement to deliver that vision. The goal is to increase Hellmann’s bottom line by reducing our forwarding costs, thus, increasing our productivity and ultimately to grow our LCL volumes and product portfolio and services.
Gateway SEA is a global strategic initiative and considered as a crucial component in reaching our company’s restructuring goals. Within the Gateway SEA project, we distinguish 4 main phases:
- Understanding & observation – to get a sound impression of our AS-IS situation
- Design phase – to define and align on key elements and processes (i.e. TO BE)
- Pilot phase – to test our concept in the Hellmann world, get feedback and learn/improve
- Roll-out and CIP – to get the rest of the world on the same level
Back in September 2016 the project was officially launched and the project team had to identify and get acquainted with the current status of our LCL activities. A questionnaire was launched in Europe and Asia and volume analysis been done based on reports from Hellmann’s data warehouse. Multiple site visits were conducted in various locations in Europe where the project team had the chance to discuss and exchange viewpoints with many subject matter experts (SME’s).
The “design team”, consisting of colleagues from product management (global, regional and country) and operations (export and import) from different countries, developed key design elements during a series of workshops. Those key design topics focused around 4 main themes:
- Standard organization – what are the core functions, and how should an org chart look like?
- Network design – where should those core functions be located?
- Service design – what services are offered, and when should the GTW be used or not?
- GTW rate design – what should be in-/excluded, and how to treat indirect costs?
After completing the concept and its design features, concept approval was obtained in May 2017. In the pilot phase, the ‘Gateway SEA’ concept will now be implemented in Dubai for the first time in the Hellmann Network; an important step to test, learn and make final adjustments to the concept if necessary. During the roll-out and CIP (Continuous Improvement Process) phase, the focus will be on the implementation of the Gateway Sea design in Dubai and other regions and selected gateway locations. Eventually, the NextGen Gateway Sea initiative will pave the way for a more efficient handling of LCL shipments and, thus, improve services for our customers.
By Norman Setzkorn, Global Head of Sea Freight LCL
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