Here We Go Again, Or Do We?

Here We Go Again, Or Do We?
A BCO Perspective on Carrier Shipper Relationships
Alan Mctaggart, Group Logistics Director
Today’s Presentation
Outline of Techtronic Industries Business (TTI)
Techtronic Ocean Freight Programme
Conclusions on the “Shared Experience”
2
Techtronic Industries Co. Ltd.
POWER EQUIPMENT
FLOOR CARE & APPLIANCES
A world-class leader in design, manufacturing and marketing of Power Tools, Outdoor Power
Equipment, and Floor Care and Appliances for consumers, professional and industrial users.
3
Expansion
1986 Revenue
2011 Revenue
US$3M
US$3.7B
SALES
(US$m)
2007
Acquisition
3,000
2005
Acquisition
2003
Acquisition
2,000
2002
Acquisition
1999
Acquisition
2000-2004
Acquisition
1,000
Founded Listed on
TTI
HKSE
1985
1990
2012
4
Diverse Global Customer Base
Mass Merchants / Home Centers
Industrial Distributors / Independent Hardware Stores
5
Global Presence
EUROPE
CANADA
Power Equipment,
Floor Care and
Appliances
Power Equipment ,
Floor Care and
Appliances
UNITED STATES
Milwaukee Professional
Tools
• Sales & Marketing
• Research &
Development
• Manufacturing
ASIA
TTI WORLD WIDE
HEADQUARTERS
Power Equipment,
Floor Care and
Appliances
MEXICO
Consumer and Trade
Tools
• Sales & Marketing
• Research &
Development
Outdoor Products
• Sales & Marketing
• Research &
Development
• Manufacturing
Floor Care and
Appliances
• Sales & Marketing
• Research &
Development
• Manufacturing
Floor Care and
Appliances
• Manufacturing
MIDDLE EAST, AFRICA,
INDIAN SUBCONTINENT
Power Equipment,
Floor Care and
Appliances
LATIN AMERICA
Power Equipment,
Floor Care and
Appliances
AUSTRALASIA
Power Equipment,
Floor Care and
Appliances
6
Global Sales and Ocean Freight Volume
Sales by Region
Sales by Segment
North America
72% By Value
Power Equipment
73% By Value
15,000 FEUS
60% By Volume
13,000 FEUS
52% By Volume
6,000 FEUS 24% By Volume
Floor Care & 27% By
Appliances
Value
Rest of the World 7% By Value
12,000 FEUS 48% By
Volume
Europe
4,000 FEUS
21% By Value
16% By Volume
Ocean Freight Volume 25,000 FEUS Per Year
7
Critical Success Factors
 Innovated Faster than our Competitors
 Cut costs Faster than our Competitors
 Improved Quality Faster than our Competitors
 Partnered with the MOST Demanding and Fastest
Growing Customers
8
TTI Ocean Logistics
Rationalization & Outcome/Experience
USA T.P. Ocean Freight Summary Situation
OLD - As Was (Late 2006)
Consignees
Forwarders
Shipping
Lines
Origin Booking
Parties
9
11
14
A
A
B
Power Tool &
Outdoor
Equipment
B
C
C
D
D
E
E
F
Supplier (PRC)
A
B
C
E
E
F
G
H
F
D
G
E
I
J
K
Outside
Suppliers
A
Floor Care
& Appliances
G
H
H
I
I
J
K
L
M
N
10
USA T.P. Ocean Freight Summary Situation
NEW - As Is (Mid 2007)
Consignees
Power Tool &
Outdoor
Equipment
Customs Broker
Shipping
Lines
Origin Booking
Parties
1
4
1
C
U
S
T
O
M
S
Supplier (PRC)
A
B
A
Floor Care
& Appliances
B
R
O
K
E
R
S
C
Outside
Suppliers
D
11
TTI Group Ocean Freight Project
Vital Few Objectives
Cost reduction
Access to Economies of Scale
Process Improvements
Service Level Improvements
Consolidate Information System
Supplier Management
12
TTI Ocean Freight Offer and Expectations
TTI OFFERS
TTI EXPECTATIONS
Regular, Year Long, High
Volume Support and Contract
Lower Stable Rates – No
PSS/GRI
Yearly Rates
Fulfilled MQC Commitment
Stable Space Provision
Reasonable Volume Forecast
+/-10% (Port Pairs)
Reliable and Predictable
Schedules
Immediate Uncomplicated
Centralized Decision Making and Transparency
Communication
No Low Season Shopping
Measurable Performance (KPIs)
Opportunity for Long Term
Relationship
Worthwhile High Level
Relationship
Stable Supply Chain
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The 6 Year Experience
2007
- 2013
+19%
Before Currency
14
Logistics Confessions
2007
No Fuel Concession
2009 & 2011 Renegotiated Europe Contract
2008/2009
Christmas and Spring Shopping USA
15
TTI Summary of Contracted Carriers
2007 - 2013
2007 - 2008
2008 - 2009
2009 - 2010
2010 - 2011
2011 - 2012
2012 - 2013
Rank
Carrier
Rank
Carrier
Rank
Carrier
Rank
Carrier
Rank
Carrier
Rank
Carrier
1
A
1
G
1
A
1
J
1
A
1
G
2
B
2
E
2
H
2
D
2
G
2
A
3
C
3
F
3
B
3
A
3
F
3
B
4
D
4
C
4
E
4
B
4
J
4
I
5
D
5
G
5
C
5
B
5
J
6
B
6
D
6
H
6
H
7
A
7
I
7
K
7
M
8
L
Ranking trend & Behavior:
OPPORTUNITY
FEAR
COURAGE / STABILITY / STRATEGY
GREED
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Prevalent Patterns of Erratic Carrier Behaviour
Lack of Self Confidence
• Have you heard?
• Follow my leader?
Lack of Reality
• 5 or 6 GRIs to Europe
• USD2500 B/E to West Coast!!
• Not a large impact on the sales price!!
• BAF destroyed goodwill (TTI Experience)
Understated Value of
• FOB, CIF, NVOs, BCO’s; Small, Medium,
Customers & Relationships
Large
Confused Strategy/If At All
• Long Term/Short Term
• Q3/4 2011 Bad NVOs
• Q3/4 2012 Bad BCO’s
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Reality and Changes – Now and Future
Dropping Global Demand
Less Peaks and Troughs (Surges)
Over Supply of Capacity – 13500T./Vessels
Ecommerce
Capital Supply Squeeze
Increasing Industry Price Volatility
Complete Transparency
18
Visible Improvements
Pricing Discipline and Stability
Strength of USA Market
Clever Disposition of Vessels
Recognition of Long Term Relationships
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Suggestions for Moving Forward
Index Linked Contracts with BCO’s
Be Realistic; Resist Science Fiction
Have a Strategy and Recognize It
Value Long Term Customer Relationship
Be Courageous
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The Last Word
“People of the same trade seldom meet together, even
for merriment and diversion, but the conversation ends
in a conspiracy against the public, or in some
contrivance to raise prices.”
- Adam Smith, The Wealth of Nations
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THANK YOU