APL Logistics and Con-way Freight have partnered to offer a service for shipments of goods from China to the U.S. that are less than the size of a standard container.
The service, called OceanGuaranteed, offers an alternative to air freight and eliminates some of the risks associated with less-than-container load, or LCL, shipments. Goods are shipped on APL vessels from Hong Kong, Shanghai and Shenzhen, China, to Los Angeles, where they are picked up by Con-way for domestic shipping. Any shipments that fail to reach their destination by the service’s stated date receive a 20 percent discount.
Bill Villalon, vice president of product development at APL, said transportation consulting firm MergeGlobal was used to conduct market research and identify common problems associated with other services that offered LCL shipments. The research found that those opting to move goods by plane often did so out of a need for reliable service rather than one for faster delivery.
“Customers told us there was really no good option between a full container load and air freight, which is extremely reliable but 10 times as expensive,” said Villalon.
LCL shipments are often avoided because they generally require working with several freight-carrying organizations and multiple transfers of goods, according to Villalon. Cargo might be mingled with other goods, a practice that raises security concerns and increases the likelihood of delays. Space on the ship may not be guaranteed and once the goods arrive, there is a host of other issues that can prevent the goods from immediately being delivered. Air capacity is also often strained during peak season shipping months, according to Villalon.
“Typically, you have a third party that is a forwarding operator that is contracting with an ocean carrier,” said Villalon. “They may or may not have priority on the ship.”
APL has the advantage of being able to control how goods are loaded onto its ships, making sure the OceanGuaranteed LCL shipments are loaded last in China and are first off in Los Angeles. To allay security concerns and the risk of goods being held up in customs, Villalon said APL will keep customers that have been certified by the Customs-Trade Partnership Against Terrorism separate from those that have not. APL and Con-way have also linked their computer systems to ensure a smooth transfer of the goods from ship to truck.
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“By physically expediting the process on and off the vessel and coupling that with Con-way’s network, putting those two pieces together takes variability out of the process,” said Villalon.
Test shipments are under way and a formal launch of the service is expected to take place Sept. 5.