GT Nexus programme promises to cut freight costs

- Last updated on GMT

Related tags: Transport

GT Nexus has launched a global freight optimisation service that
can lead to savings of between 4 to 8 per cent of a firm's total
annual spend for global ocean freight.

The managed service programme, which combines sophisticated optimisation software with process experts to run the system, is designed to enable importers and exporters to rapidly analyse ocean freight proposals, and then secure competitive contracts with the ideal mix of capacity, cost and service.

The programme arrives at a strategic time for shippers, who are now completing the annual bid cycle and negotiating yearly ocean freight contracts. In addition, food suppliers and manufacturers will be very interested whether this technology can lead to cost cuts; as there has been a huge squeeze on the supply of shipping containers last year, caused partly by China's insatiable demand for raw materials and higher fuel costs.

"Where a shipper has a proposal, we can help them identify and understand important cost and service trade-offs,"​ said John Urban, GT Nexus president. "Where they have contracts already, we can analyse those and provide a plan that allocates freight in an optimal way across their carriers to achieve goals for cost, capacity and service."

More than 90 per cent of all goods moved internationally are carried in containers, and more than nine million freight containers arrive at US ports alone each year. This represents an increase of 50 per cent from 2001, largely because of the proliferation of global trade and "just-in-time" manufacturing and retailing strategies.

Urban claims that sophisticated shippers recognise that the cheapest freight rate does not always equal the lowest logistics cost. He believes that scenario-based optimisation can help solve this problem by assigning quantified, financial values to service components such as transit time, capacity commitments, equipment availability, dwell time and sailing frequency.

"Enterprises gain intelligence into the relative strengths and weaknesses of different plan scenarios, and how those affect supply chain business objectives,"​ said Urban. "The result is an optimised execution plan for global logistics - at the lowest overall cost."

Linear programming-based optimisation technology has been applied successfully in other industries and processes, such as manufacturing and production planning. Urban argues that the GT Nexus offering represents a breakthrough for the ocean freight industry, delivering the power of this technology specifically designed and provisioned for one of the most complex and unique areas of spend management - ocean freight service.

He claims that users of the system have uncovered savings opportunities ranging from 4 to 8 per cent of their total annual spend for global ocean freight.

GT Nexus​ is a provider of hosted, on-demand software and services for global logistics and supply chain execution. Backed by a consortium of global shipping lines based in Europe, Asia and the Americas, GTN represents over 45 per cent of the worldwide market for containerised cargo.

Related topics: Processing & Packaging

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