A leading Belgium Brewer shared with us their need to reduce the additional costs that are sometime incurred when moving containers of cargo over-seas. These potential fees, sometimes referred to as accessorial charges, include items such as port storage, demurrage and container detention. When looking at the impact of accessorial charges on large-scale businesses where cargo owners manage their own freight procurement with ocean carriers, we find that the total shipping cost can be inflated by around 10-15%. Something the company were keen to address.
Working together with Hillebrand’s business intelligence team, we created a system that would alert the brewer to any shipment that may incur assessorial charges. Having this information ahead of time, allows the shipments operator to intervene, resolve and avoid additional costs.
In just 3 months, the risk management dashboard was created; capable of predicting the value of additional fees, for delays, demurrage and the storage of goods portside. For example, If the firm had procured 10 days demurrage, but their shipment was forecasted to be portside for 12 days, the system would show an alert for 2 days demurrage at the cost stated in their contract.
A cost-saving of over 50% in just one year in the area of accessorial charges, improved supply chain management and a faster route to market
This leading brewer have reported a cost-saving of over 50% in the area of accessorial charges. A figure related to over-seas shipping between 2017 and 2018.
Moreover, the company has seen benefits in other areas of the business, as a result of implementing this project. The visibility over accessorial costs geographically enabled them to analyse worldwide inventory levels, forecasting and replenishment planning and improve their operational model. As a result they have reduced the stock held at destination, minimised dwell time at port and provided a faster route to market.
The solution was recognised by the Association of Business Service Leaders for its ability to increase transparency over costs and subsequently reduce them. The brewer were the winners of the Best Customer Initiative category at the 2018 ABSL diamond awards in Czech Republic.