[280610.EN.SEA] Distant Early warning Needed To Deal With Breakdown In 'CFS Bypass'

ADEQUATE warning and rapid response to breakdowns in the reverse distribution scheme called the "CFS bypass" or "milk run" are essential in dealing with factory-to-ship snags without losing time and money.
Inevitably problems occur, but the lessons learnt by Hercules Logistics and Forwarding president Ken Mei as he moved LCL consignments from several factories on single truck routes to US-bound ships through China's southern Guangdong province, provide helpful insighty to others adopting the method.

Contracted by a high-volume US retailer, Hercules's Ken Mei set himself the task of saving time and money by staging what has since become known as a "milk run" or a "CFS by pass".

That is, loading goods from several factory sources in the actual container that would board the ship.

This differs from the usual method of having each factory send a truck to a container freight station (CFS), where it is often destuffed, sorted for different consignees and then re-stuffed into a new box to be loaded on a waterfront-bound truck.

This involves the shipper paying for all of a factory's half-empty truck, the freight handling at the CFS itself, plus all the exposure to pilferage and damage such extra handling involves.

Our cost analysis model demonstrates that retailers can save 65 per cent of the pre-carriage expense in Shenzhen by adopting a milk run model instead of each supplier delivering the cargo individually by truck to the CFS.

On the face of it, the “CFS bypass” or “milk run” means a savings galore, but the technique is not without pitfalls, uncertainties and risks of extra costs, which do not nearly play as big a role in the old system.

One typical snag is that the cargo is not ready at the factory door. Sometimes it is, but its documents aren’t.

Countering this may involve collecting cargo from another factory to replace the cargo that was unable to join the “milk run” as originally planned. That means lining up another factory to do it on time.

If, for example, there is an arrangement whereby cargo from two separate factories share the same container, one may replace the other.

And if one factory’s cargo is not ready when the truck comes, or its documents aren’t up to snuff, the trucker must be prepared to turn to a third factory for cargo to keep the ball on the hop.

It is not uncommon for there to be a lack of suitable substitute cargo to fill the container and it may be necessary to scrap the route.

But all this should be known well before the truck is on the road, because the suppliers should supply the information about its inability to meet the schedule well in advance.

Once told, the onus falls on trucker to re-order his next milk run, and tell factories 14 days in advance that they must stand down, that their cargo will be rolled over until the next truck. They may even have to go cap in hand to the CFS again.

Source : TCSM, 19.06.10.