Every month, OVRSEA meets its shippers to discuss the latest freight and logistics news and talk about the current challenges of the sector. This week, our team exchanged views on the market with Joseph Appert, Managing Director for Babymoov North America, the childcare specialist which celebrates its 25th anniversary this year. He looks back at the health crisis that totally disrupted the company's supply chain and shares his vision of post-crisis transport.
Hello Joseph, can you present yourself?
Hi! Thanks for having me. I'm currently the Managing Director for Babymoov North America based in NYC where I've lived for the last seven years. In my role, I touch on logistics, and everything else that relates to the business, whether it's compliance, marketing, sales, and of course supply chain. My goal is to make Babymoov a household name for parents in North America.
Can you tell us more about Babymoov in terms of logistics?
Babymoov is a global company which has 5 warehouses throughout the world : one in Asia, two in Europe, and two in North America. Our production is split between Europe and Asia.
We sell a variety of products, and are therefore present in different categories. We have items that are very light and small, but some products are a little bulkier, and aren’t as easy to ship. We ship our goods through ocean freight.
What are the main challenges you are facing right now?
Our current challenges are likely the same for our competitors and any consumer good manufacturers. The pandemic has affected the way we do business as we constantly need to adapt and stay alert to changes. As a global business, there are more and more external factors that impact our industry, whether environmental, political, or societal.
Prices have gone up dramatically over the past couple years. Going into first quarter of 2022, prices are much higher than they were 12 months ago and even higher than they were 24 months ago. Regarding the delays, it's longer than it has ever been, while the levels of service are all worse than before the pandemic.
I mean, what makes up the cost of the product is essentially three main elements, right? It's the raw materials, the labor, which is the added value of the product, and then the global shipping. All three have been dramatically challenged over the past couple of years. I’m not even talking about domestic shipping which has also been under big stress in 2021 because the US is a big territory, pretty much the size of Europe alone.
How did you adapt to those changes (rising costs and delays)?
We must anticipate more and change the way we approach logistics. Before the crisis, the trend was going towards “just-in-time manufacturing”, which is having exactly the number of products that you need. It's ideal because you pay less for storage domestically and this worked fine before.
Now, here we are, we have to change our approach. We must anticipate shipments weeks in advance to decrease the margin of error and take into account the unexpected delays that have become the norm. My advice is to focus your energy on what you can control and have as much safety as you can, like a safety stock for each product.
What are the consequences of anticipation in terms of shipments and organization?
We ship less frequently, but bigger volumes. We do more mixed containers – bigger containers with mixed products – and we try to avoid 20 footers. That's been key to optimize our costs.
We have also streamlined our communication. Before, we had too many layers : the manufacturer, the Babymoov ordering team, the local warehouse, and the freight forwarder. With OVRSEA, all parties involved now have direct access to all the necessary information and documents under one common platform, allowing faster responses.
How do you plan to face those challenges in the mid and long-term?
We're currently negotiating an annual contract instead of paying the spot rate. If you’re large enough and can afford a fixed contract, that's beneficial to have visibility on the business and control of the rates. Having visibility is priceless.
In the long-term, we will need to be strategic about where we manufacture our products. When we're talking about delay, it's not just a consequence of the lead time for production. Relocation makes sense given the volume of goods we are producing for the North American market coupled with the fact that it is a solution to help reduce delays, environmental impact, and shipping costs. Why would we be making products on the opposite side of the world with some of the materials that are coming from many different places as well?
Have you ever read The Merchant, OVRSEA’s dedicated newsletter for the US?
OVRSEA launching in the US and sharing a US-focused newsletter will help me to stay up to date on the shipping industry. It's more important than ever in my job to stay alert and be aware of changes in the market. Having a way to stay informed that's easy to digest is a huge resource that every other shipper should be looking at. I look forward to reading the next edition!