International Trading Freight Optimization models

Industry Vertical and the Company:
Over 25 different manufacturer-exporters based in India in areas as diverse as Engineering Exports, Auto-components, Cycles, Polyester& Cotton Yarn, Building Materials, etc.

The Challenge:
The international competitiveness of several products was seriously compromised by the ‘cost of freight’ from India to the country of consumption. This challenge was more severe in cases of ‘containerized cargo’ for manufactured products which are internationally treated as commodities.

Given the volume and prescribed weight limits on different types of containers (20-feet, 40-feet, high-cube, reefer etc.), the challenge was to maximize quantity of the invoice-able-product exported in the container, by minimizing the distribution packaging material without compromising on international packaging standards.

Our Approach:
Some products are weight-constrained, i.e. they reach the tear-weight limit of the container long before the container’scapacity is fully-utilized (1 TEU usually is 8’ x 8’ 6” x 20’ – 1360 cu.ft, 24 tons tear-weight in case of a 20 foot container)

Conversely, some of the other products are volume-constrained i.e.container is full even before the gross weight reaches the prescribed weight limit.

A model was developed to identify the ideal distribution packaging load-size and shape that allowedfor maximum possible number ofSKUs (invoiceable)to bestuffed into the container. The algorithm adapted for each product-type,enabled automatedcheckingof different permutations possible with each packaging size given the weight and volume constraints of the container-type.

The Outcome:
Reduction in the ‘Cost of freight per KG/SKU’ rangedfrom 10% to 40% which helped the products to become internationally competitive, while simultaneously delivering several collateral-benefits like reducing the rejection-rate, reducing the handling-costs, packaging-material disposal costs, etc.

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