[#302-Appendix] Inbound port selection factors

Welcome to “Supply Chain in Numbers”. This newsletter tracks significant numbers from the supply chain world. Primarily, this newsletter publishes five prominent numbers every Monday. In this “Appendix” post (published on Thursday), one of the numbers from the week is used to illustrate more interesting points.

In this week’s Supply Chain In Numbers newsletter, I covered a number showing how the Savannah port is 32% cheaper for East Coast shipments compared to the West Coast. Here is what I wrote:

…Containers routed via West Coast ports are often trucked to local warehouses for transloading into 53’ domestic containers and then drayed to railheads for transit to Atlanta, which can add further delays and transit variability. The researchers factored in both vessel and inland transit from ten Asia ports to Atlanta. They found that Asia/Atlanta via West Coast routings and Asia/Atlanta via Savannah routings are very comparable in robust transit time, but Savannah is 32 percent cheaper... [The Trucker]

The finding is, directionally, correct. If you are a supply chain manager, how would you know if the Savannah port (or any other port) is suitable for your supply chain? (or as a Consultant would ask, “How to establish optimal inbound network strategy?”).

Since your objective is to select inbound port(s), let us assume the following are fixed: demand regions, nodes (manufacturing plants, DCs), ocean as primary inbound mode, and source geographies (i.e, origin ports of materials that are shipped in containers)

Here are some key questions to ask; this list is by no means comprehensive. I have three categories (most obvious, a little less obvious, and often missed) of line items or types of information to consider. Your supply chain is different, and hence, you need to decide how much each question needs to be weighed.

As you examine these, consider two numbers to compare for each question: Baseline and Future State, both of which are calculated for the same forecast scenarios.

What is the “Total Cost” difference?:

• Most obvious: Origin to destination port total FCL/LCL costs, Inbound port to final destination transportation cost (truck, intermodal, rail), and Transloading handling cost, Port fees

• A little less obvious: Insurance costs, One-time and fixed costs

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