BCG launches xChange to improve shipping efficiency
Unnecessary waste in the shipping container supply chain, where empty containers are ferried to places of demand, is costing carriers money, time and effort, while also affecting the environment. In a bid to reduce waste, BCG launched the xChange. This web-based platform allows carriers to pool their equipment resources to lower the number of wasteful container transactions. According to the firm, a reduction of up to 30% in the movement of empty containers can be achieved, with a reduction in cost for carriers, as well as to environmental externalities.
Waste in supply chains because of idle or poorly placed equipment can create considerable costs for companies. When a significant amount of resources need to be expended to reuse equipment, environmental externalities too come to bear. In the shipping and container logistics industry, recent Boston Consulting Group (BCG) analysis places the cost of moving empty shipping containers at between $15 and $20 billion annually. In addition, it generates an extra 19 million tons of carbon dioxide globally, which is the equivalent of driving more than 90 billion miles in a standard car.
One area in which large costs are being created, due to the linear use nature of the industry, is shipping. Inefficiencies can quickly enter the supply chain due to business practices, geography and poor information exchange. For instance, a carrier moves a container full of wares from A to B, a perfectly good transaction. However, if there are not enough goods for the carrier at B to fill the container, the empty container needs to be shipped to where there is demand, at location A-Z – creating the potential for waste. At location B, however, there might be another supplier that lacks the containers require to shift its goods, because their containers (leased or otherwise) are currently in transit to, or at, location A-Z. If the two carriers were to work together and pool all of the available containers into the most efficient pattern – such that the need to ship empty containers tends towards maximal reduction – then their associated costs, and environmental externalities, can be as far as possible removed from the system.
xChange
In a bid to facilitate between carriers, with respect to their over- or under-supply of containers, BCG has launched the ‘xChange’. The web-based service will provide container owners with end-to-end functionality, enabling them to directly exchange containers, as well as other equipment, with other market participants. The service will provide a range of functionalities, including global transparency into equipment needs and the availability of other players in the industry to provide easier, more streamlined coordination; end-to-end online supported processes, which reduce complexity and facilitate communication among deal participants; live-updates, which can help demand find supply seamlessly; a well-designed interface to make finding requirements straight forward; an integrated data management system, and logging, to reduces recurring workload; as well as a way to rate agreement and reward performance between participants.
According to BCG, the xChange will improve the exchanges among logistics companies and reduce the movement of empty containers by as much as 30%. The xChange officially launched in November 2015 and a number of the largest container carriers in the world are already active on the service.
Ulrik Sanders, a Copenhagen-based partner at BCG and the global leader of the firm’s transportation and logistics practice remarks that: “The main goal in developing BCG’s container xChange is to facilitate exchanges of idle equipment between ocean carriers, container leasing companies, intermodal operators, and other logistics companies.”
Jens Riedl, a Munich-based partner and the firm’s head of transportation and logistics in Europe, adds that “Through a comprehensive end-to-end process management system, we are introducing a ground breaking solution that addresses very real exchange needs.”
