Controlling shipping costs is a group effort for SEDA’s membership

By: | at 08:00 PM | Channel(s): People  Interviews  Logistics  

Ryan Turman, business development manager for the Turman Group, took his company global and in the process started some innovative services to control shipping costs, not only for his own company, but also for the forest products industry.By George Lauriat, AJOTYou could say that Ryan Turman, head of business development for the Turman Group, a vertically integrated forest products company, was born into the business. After all, his father Mike Turman started the Hillsville, Virginia-based company in 1967. But when he tried to join the company there were no positions available, so in 2005, Turman found that he had to come up with something on his own. He presented the partners with a plan to take the family business global by going after overseas sales. Although the partners, including his father, didn’t see much merit in the plan, Ryan Turman took a flight to China and came back with 200 containers. When Ryan recalls that first trip, he remembers that some of the accommodations were a little rough. But it was worth it. At the time third parties controlled nearly all the overseas sales of lumber, and there were virtually no direct sales. Most every thing Turman Mercer (the forest products division of Turman Group) sells is dimensional: lumber, kiln dried lumber and flooring. Everything is containerized. If the third party brokers turned off the spigot, business stopped flowing. The idea to expand overseas worked out, and this year the Group expects to handle 2,000 feus globally.
After starting the process of shipping to China, however, almost immediately it became obvious that the shipments were at the mercy of third parties; and that the company, despite the relative success of global sales, simply didn’t have “the purchasing power” to secure the best ocean shipping rates, Ryan said.
Ryan’s solution was to form a “not for profit” association to pool enough forest product shipments with other forest product companies to create leverage with the steamship lines. It was a hard sell, Ryan told the AJOT, “but I didn’t want to leave our global business in the hands of others.” It was a particularly hard sell, because these other forest product companies were Ryan’s competitors - but competitors with a common goal to keep shipping costs down. It took two years to get the program off the ground, but in 2007 the twelve company Southeast Distribution Association (SEDA) was up and running. Their intent was to establish more control over their shipping by dealing directly with the steamship lines rather than with the NVOs. In 2008, SEDA partnered with CV International, a privately held Norfolk, Virginia based freight forwarder (CVI also has a ship agency, Capes Shipping.)
In March of 2009 CVI helped SEDA sign a contract for the association’s first ocean rates. CVI lent a helping hand on the ocean side shipping, Ryan said. Mike Coleman, CVI’s president, helped explain the contract process. Coleman explained how the contract process worked, and why there quite often was so big a difference in ocean shipping rates on containers sent to the same destinations with the same goods.
In 2011 the now 22 members of SEDA control around 10,000 feus and have established 10 contracts. Turman was quick to say that the individual companies still ship much of the forest products under third party arrangements, “From the beginning we wanted to keep it simple. A member can use the contract or not. The contracts act as a way of policing rates so that members know that they are getting a fair shake.”
Southeast Streamline
Another program that Turman initiated was a for-profit “matching” truck hauls plan. Called Southeast Streamline, basically the program is designed to return an import truck to its port of origin with an export load. The program reduces the overall freight costs and the environmental impact. The salient points of the project are as follows: reduce costs for shippers, reward truckers, reduce empty truck miles and thus reduce emissions and reduce port congestion.
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American Journal of Transportation