Transport My Shipment Cheap? Sure! But What Do I Consider First?

By Adolf Onwuka Nanyell

A few months ago, I ran into an old friend of mine, Serge Meyer, right in front of the Notre Dame Cathedral in Paris. Serge Meyer used to be the Marketing Director of Guinness PLC. He now runs an industrial blade manufacturing plant in Montreal, Canada which supplies its products to most of the top family run lumber jack companies in Central Canada. His factory procures some of the components it uses to produce the more sophisticated blades meant for more precise cuttings. These components weight between 4 pounds and 28 pounds. According to Meyer, his annual purchase is about 7,000 units of these components.

Meyer's major supplier of these blade components is Bell Metals Canada Inc., located in Vancouver. Bell Metals is known for its reputation for top quality products and has been a trustworthy partner of Meyer's company since its inception.

The Procurement Manger of Meyer's company believes that their next 12-month purchase from Bell Metals will be roughly 6,000 units with an average weight of 15 lbs. The factory would also require monthly shipments of equal amounts. Considering that it is difficult to predict what the precise needs of clients would be until shortly before the units would be used for production, Meyer's company can only inform Bell Metals of its size specifications only about 7 weeks before the products are to be used by Meyer's company in Montreal. It typically takes Bell Metals about 2 weeks to produce the units and have them packaged and prepared for shipping.

Meyer told me he's been battling to keep his factory afloat and just recently realized that transportation savings amount not just to gross profit, but NET profit ultimately. Consequently, since he knew I had a very in-depth background in Commercial Logistics, he pinned me down for a drink at the Bar d'Ivoire which is just at the beginning of Place de la Republique. As we had the drink, he insisted I gave him a few tips on what FACTORS to consider in determining the best mode of transportation for moving the blade components supplied by Bell Metals from Vancouver to his factory in Montreal.

My Response to Meyer regarding the factors to consider in determining the best mode of transportation for shipping the blade components supplied by Bell Metals (Vancouver) was quite brief. It was:

1. Product type

I would bear in mind that the product to be transported are small blade units which are not hazardous or dangerous.

2. Quantity / Total Weight / Size / Packaging

I would also note that I will have monthly shipments of about 500 blade units with an approximate monthly total weight of 7,500 lbs (500 x 15lbs) which will be less than 2 pallets.

3. Packaging

Considering that my expected monthly shipments will weigh about 7,500 lbs (about 3.8 tons), will be small shipments rather than full loads on sea, rail or road, I will ensure that the packaging of each shipment takes into consideration the fact that the shipment will be handled, loaded and reloaded a couple of times on each journey.

4. Distance to Customer / Plant Location

I will bear in mind that my factory is located in Montreal (Central Canada), while Bell Metals is located in Vancouver (West Coast). This means that I have various options for transporting the blade units to Montreal. My options include:

• Road: the Trans-Canada Highway that links all 10 provinces

• Rail: the CN & CP railways that link many cities in Canada like Vancouver and Montreal

• Air: through the Vancouver - Montreal domestic air route

5. Service Level / Business Relationship / Speed

I will consider that I will most likely have just 5 weeks to ship the blade components since Bell Metals will be informed 7 weeks before the delivery date and needs 2 weeks to produce and prepare the components for shipping. Since 5 weeks will be enough for all of the options open to me to have the blade components shipped from Vancouver to Montreal without disrupting the business relationship/ service level agreement with Bell Metals, I shall consider other factors than speed for my choice of transportation.

6. Cost / Safety

I shall consider the cost implications of all the options open to me for the shipment of the package based on its type, size, weight & quantity especially the 3 options mentioned above and then select the mode that is most economical and safe for the blade components. Afterwards, I will hunt for the most competitive company to provide this service to me. In obtaining the service, I will explore the idea of signing a shipping agreement with just one company for the annual weight-quantity of 90,000 lbs (6,000 x 15lbs) that I hope to ship from Vancouver throughout the year in order to obtain a more economical transportation cost.

Conclusion

Trucking is the most flexible mode of transportation because it can provide door-to-door service. Shipping the packaged blade components from Vancouver to Montreal in quantities of less than 7,500 lbs or 2 pallets per month to me requires a competitive-small quantity-door to door service. As such, a less than truck load service ought to be considered for transporting the total annual quantity from Vancouver to Montreal. This would amount to huge cost savings for Meyer's factory which can be imputed into the factory's financial books as net savings and therefore, NET PROFIT.

Adolf Onwuka Nanyell is a Canada Institute of Transport and Traffic trained Business Logistics expert. He holds an MBA from the University of North Alabama Business School and worked for many years as Commercial Manager (Sales and Logistics) for various multinational companies which include: Cimrep International Logistics, PZ Cussons, Nosak Distilleries, Visa International and Air France. He is bilingual and speaks both French and English fluently. In 2002, he became one of the 3 bilingual Africans selected and sponsored by the government of France to undergo professional management training at the MCM, Paris as invitees of the government, after which he was directly employed by Air France and further retrained for several months in Vilgenis, Paris (France).

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