February 21, 2025 in PODCASTS
Optimizing Logistics: Insights from APL Logistics’ Origin Operations with Waldo Basilla
April:
Hello everyone and welcome to the APLL Pulse Podcast, where you can uncover new insights from the logistics and freight forwarding industry through the seasoned experts at APL Logistics, a global supply chain provider. We’ll help you keep pace with the current topics impacting businesses and advance your logistics strategy.
Well, hello everyone. Today, we want to welcome Waldo Basilla to the podcast. Waldo is our chief operating and commercial officer for Asia. And for those who don’t know, APL Logistics is in over 60 countries with a heavy presence all throughout Asia, including not only China in North Asia, India and Bangladesh in South Asia, but also all throughout Southeast Asia, which includes Vietnam, the Philippines, and, of course, Singapore, where Waldo is based. Waldo, thank you so much for joining us.
Waldo Basilla:
Thank you very much, April. I’m glad to be here. Excited to be here.
April:
Well, Waldo has been in the supply chain industry for over 30 years and has a wealth of experience, which helps guide our company as we address the constant changing nature of the logistics industry. While there are so many topics we could cover with Waldo, today, we are going to focus on our origin operations. So Waldo, to start us off, can you give a brief explanation of what origin operations consist of?
Waldo Basilla:
Thank you, April. Good question. I’d like to give you a brief overview how this thing started. A lot of manufacturing was done in the United States. In the mid-seventies or the eighties, people have started to outsource manufacturing to Asia. So a lot of brands at that time partially going to Asia. As people started to grow their outsourcing and manufacturing to Asia, people have started to move more and more. What had happened in the past, people were shipping in LCL boxes. LCL, which means less-than-full-container loads. Well, that led to a lot of costs or big buyers in the United States. So big famous brands started to reach out to APL Liner, at the time. We obviously came up APL Liner, and they asked our leaders at that time to say, “Hey, can you help us do some consolidation if I buy something from China?” At the time, it was mostly from Korea and Taiwan. Can you get multiple vendors. “Can you help them consolidate, put them all in one box and ship?” And that’s the genesis of our operations.
Thereafter, APL created a product called Origin Consolidation, and that’s Origin’s operations. We started to get purchase orders. We started to move from simply catching cargo and moving them in bulk to the United States. And has since then evolved. It evolved further. Now we look at purchase order, purchase order lines, purchase order at SKU levels. So therefore we do manage not only moving bulk of shoes, but we’re also now looking at what SKUs? What types of shoes were moving to what destination? So things have evolved, but that’s what we do. We work on the physical aspect, we work on the purchase order and we provide the technology to make sure those cargoes reach a destination in full, on time, and now recently at the lowest CO2 emissions.
April:
Oh, yes. Oh, yes, our Sustainability area is happy to hear that. Thank you for that explanation. I think that was really helpful and I think people need that, because not everybody understands what the origin operations really consist of, so thank you for that. Let’s jump now into the area of flow optimization. Can you describe the concept and why it is important for shippers to consider inventory flow from origins all the way to destinations?
Waldo Basilla:
In the past, people would just simply buy stuff and push them to the destination DC’s. As a consequence, what could happen would be you’d get orders that you don’t really need at a certain time, not demanded at the market yet. So what happens? You push products to the DC’s. It fills up the DC’s and it stays there for a very long time. Sometimes even stays there and you realize later on you really don’t need those products because those are products that are not in demand. You had forecasted it. Some buyers, especially in our retail space, they make those orders 360 days. They plan what’s going to be sold next year and then became 180 days and later on. Can you imagine that red sweatshirt that you thought will be salable, next year? Would you think that would still be the case? Not necessarily. In the mid-2012 to 2015, people started to look, “How do I optimize that flow?” And that’s where we started to look, people look at what they call flow optimization, demand-driven supply chains, meaning to say I flow cargo depends on what the market needs.
Unfortunately, and we all suffered from it, COVID, right? When COVID came, all the disruptions came with it. Number one mostly was that we now have all of a sudden shutdowns of manufacturing. We now have a shutdown, those carriers were uncertain about schedules. the ports were congested, so you can now see the lead times going from 30 days transport. Sea freight lead times almost 80 to 90 days, so totally unpredictable. What happened was that a lot of inventory was simply pushed to the United States. They were happy to have their inventory in the United States or Europe for that matter or wherever on site, even if they know they’re not sure if the customers would want it because they had a just-in-case inventory mentality, which means, “Just in case somebody needs it, at least I don’t get stocked out and I have somebody ready available.”
Those days have passed. Post-COVID, things have drastically changed. The demand has come down, inflation has gone up. The cost of building a large inventory is extremely expensive, right? With 8% cost of inventory, everybody started to look at optimizing their inventory. Everybody started to look at improving their operating costs, right? So what’s happened now, we call flow optimization. Flow optimization basically says at the onset, at the origin, how can we help our customers look at moving cargoes to the destination that are more likely to be consumed. Point number one, what’s the right levels of inventory? Do you need the red sweatshirt? Do you keep it in Asia until they’re needed? Number one. Number two, do you all have to push them to a distribution center? Could you bypass a distribution center and be closer to your market?
So the question is optimize the flow. Optimization flow means that you don’t only improve your overall inventory levels, but you also use the right mode of transportation, what is the right mode of transportation? What’s the right mode of containers to ship? So now you’re looking at the most optimal way of shipping because what it does is it provides product availability. All customers are only asking for two things. Number one, product availability. Number two, lowest cost. The third one is lowest emission. They’re only asking about the same regardless of vertical. So our goal is to make sure the product is available, the right product, the right time at the lowest cost and low emission. And that’s optic flow optimization, and we at APLL have focused our efforts on creating solutions around this, and that’s what we’re bringing to the table that’s going to be different moving forward.
April:
Right. Because we have to focus on those timely deliveries. As you’re talking, it does remind me how things have changed and changed so quickly. Like what we expect, the big company out there that’s delivering every day to everybody, makes us feel like we can get everything in two days. It’s just changing what expectations we have and then that makes the companies have to change to find a way to have flow optimizations so that they can meet those expectations. Alright, so we’ve talked about the overview of it and a little bit about how it works. Are there any specific actions that you want to highlight that we take in our origin operations to ensure that timely delivery of shipments?
Waldo Basilla:
Many, many things. Over the past two, three years, when we started under Thad’s leadership, we started to have strategic development in Asia, catering specifically to flow optimization. Number one is building the right nodes. Nodes are areas where you catch cargo. So for example, do you have the right nodes in China? The right nodes where it’s close to the customer, the right nodes that are going to be flexible, meaning to say I can move that node to any export location. In the past you would have a node that’s close to export location, like in Shanghai and Xi’An. Now can you build those nodes in a catchment that’s more relevant to the vendor.
Do you have the right ability to function in those nodes? So in these nodes, what you mean by function, nodes that we have today in the past were basic CFSs. Basically, we just capture, and what we’re moving towards to now is a multifunctional node, which means that node can be first basic CFS. Consolidation shipping, can be an inventory hub, which means I can hold cargo and drop orders and move accordingly. Support postponement decisions of allocations, and number three would be also a fulfillment center. A fulfillment center is where that particular node in Asia could fulfill a demand of a certain store or a certain person in the United States. So multifunctional nodes, that’s one, and that node development is now happening in China, it’s now happening in Vietnam, in Indonesia, in India and across the board. In multiple areas across the board, we’ve built that.
Number two, we’ve also developed the connection of freight connection. Freight is an integral part. The ability to plan, optimize the freight solution. Not everyone needs air. Not everyone needs sea. So what’s the right optimal solution? We have the ability now to offer our customer the right air, air OG, or the sea freight solution that meets the speed requirement.
We’ve implemented a lot of what we call predictions. If you talk about predicting what needs to be done, what needs to be shipped, the ability to use predictive analytics, we’ve introduced in our operations. Number one, how do we use that? First, carrier. The carrier is probably one of the most uncertain portion of the transit time. Over the past 3, 4, 5 years, the reliability has sunk from 80, 85% to about 65%. That means if your transit time before was 30 days, it is now probably 45 days or more. What we’ve done as an introduction to the market is we’ve done predictive carrier analytics. This basically says we have now the capability using the universe of shipments that we’ve handled over the past many years, and it’s updated every quarter, is what is the actual performance of a specific carrier to a certain port? Where do they actually do 30 days, and what probability do they do that? These services, this prediction, we provide our customers to be able to enable them with their carrier management strategies. That’s part one.
Part two, using purchase orders, we use predictive analytics to estimate and predict what’s going to come up of the factories. This is what we call future flow. When we say a factory, a pre-purchase order issued 90 days out prior to handover date, prior to get handed over to us for shipment, we now have the ability to predict what will really come out. Let’s say I issue a purchase order. If it’s a hundred thousand units, those a hundred thousand units does not necessarily come out on the day of handover. We predict what will actually come out.
On that basis, we make the planning, which is very important. We now plan what gets on board the ship. We also plan what needs to be a destination DC. Beyond the physical aspect of simply handling cargo, we’re now planning the need, the shipment to the in-DC or required dates of destination. What does it do? Flow optimization. We plan that. We plan the carrier performance, we plan the future flow, and therefore we plan carrier booking.
Before we get the carrier booking, we also plan support the nodes to create what’s the best. We create decision stages. We allow our customers to make decision changes in allocation within the time they create the purchase order all the way, gets handed over to us. What it does is what you call the postponement. We allow our customers to say, “Why don’t you postpone that decision instead of shipping…” If you thought 90 or 180 days out, the purchase order will be delivered to a certain destination. What if we allow you the capability to postpone that decision like 90 or 180 days later if you bring decisions that are closer to reality are more precise? We allow them to do that, we build nodes around that, we build technology around that. Our customers will reduce inventory and all that.
The prediction of what comes out allows us to predict what is required of the vessel space. So when you book with carriers, carriers always provide our customers X number of the use as a commitment. But our ability to future-predict what comes out with preciseness, in many of our customers, we have predicted the high level of preciseness, what comes out, that precise booking is now transferred to the carrier, and the carrier truly loves precise bookings. They hate it when you say, “I’ll book a hundred,” and you only bring 50, because that’s space that is lost. So if you have a 90% accuracy to your booking, you get the space. So what it provides, accuracy, improves our booking. We’re now integrated with carrier to our CBSM solution, we’re now integrated with carrier, so we now see visibility from multiple milestones up to care booking.
The last piece that we’ve recently added, you’ve heard of OrderPilot. OrderPilot is the tool that enables a lot of this, the planning part. It’s a fantastic tool. We’re probably one of the best in the market to deliver this. This allows people to plan, simulate flows. In the period of disruptions, the ability to simulate flows, let’s say, for example, if all of a sudden there’s a strike in LA and you want to reroute, you can simply use this tool to say, “This is the best routing,” which also provides you impact to cost and impact to lead time. It’s amazing what we can do today. I think a lot of predictive analytics, simulation tools, and planning, and nodes.
April:
I’ve been in this industry only about eight years or so, something like that. And I think back to then because I started with IT, and I think back to when we were talking about how are we going to use this data? How are we going to use this to help people? And now to see where it’s come, it’s just amazing, and the evolution of that and just how helpful that is for customers. They have things now that they would’ve dreamed of having 10, 20 years ago. That’s pretty cool to be a part of that, be part of helping the customers be able to predict what’s really going to happen. Save them the heartache of those bad decisions, you know?
Waldo Basilla:
Right. Absolutely. And the good thing about what we’ve done in the past, it’s not only the solutions and tools that we’ve put in place, we’ve added fantastic people. You can’t do all of this unless you have the brains, or the energy, or the enthusiasm of our people. And we have a lot of that in our organization today. I left the company for three years. And I came back, and I saw a lot of energy, enthusiasm, and I credit the leadership of this organization.
April:
Yeah, I totally agree with you. In fact, when you were talking, that’s what kept going through my mind. It’s like this combination of technology and people. Because you can’t do it with just one side of that equation. You have to have both sides, and I agree with you, that’s what we bring to the table pretty well.
So let’s talk about technology since we’re kind of going off into that area. So how has technology and modernization really impacted our origin operations in Asian facilities?
Waldo Basilla:
A lot. So I think I was also very excited when I came back because one of the things Thad told me when I came back, I say, “We’d like you to introduce automation in Asia.” “Wow, sure. We love that. We’ve always wanted to do that.” Over the past couple of years, we’ve done a few things. We’ve started an automation modernization program in Asia. Number one, we’ve implemented conveyor gantry cranes with scanners and dimensioning. In the past, what we did was manual. We would take cargo off the containers and put them away and load them onto containers. Now we have gantry cranes that unload them quickly from the containers. They’re put away and set aside so we can move them and scan them all at the same time. That improve productivity. And what’s more important is data capture. We’re now able to capture the cargo or inventory identification. You can identify the cartons inventory as soon as possible, number one.
Number two, we also introduced what we call the dock scheduling systems. Now, in the past, trucks just came over. We would have long lines of trucks. They’ll be waiting for, worst case, a day. It gets congested during Chinese New Year, or in Indonesia Eid or what they call Lebaran, and all these other festivals in Asia or holidays. We now have the ability to link booking and appointments at the dock. So we minimize conditions, we align and do all of that, and we sequence that.
Number three, we’ve introduced WMS. In the past we had WMS, but not on a consistent basis. Our facilities now have WMS. Similarly, it captures information immediately. It allows us to get inventory, visibility of what we have in the warehouse, what we have in terms of planning, which enables planning and eventually enables the creation of an ASN. We mentioned about the prediction, but we also now talked about visibility. We used to have a product called DataGuaranteed. We’ve now enhanced it. We’ve enabled it, we made it a lot stronger.
We’ve now created the ability to have visibility from multiple milestones integrated with carriers. We have a multi-pronged attack on visibility. We have a combination. Number one, we use core information. That’s a carrier EDI, which continues to be a core information. But what’s different from APLL? We’ve added aggregators. People are using, let’s say people like FourKites, people like p44. We integrate that information also. The third piece, we also integrate people from terminals. We get information from terminals, and finally we have a team. We now have a team of people in our GBS centers in Manila that rationalize, normalize the information, make sure that the information is correct. That enables us to get precise information from multiple sources and give our customer the right visibility information, which I don’t believe the aggregators… So that’s a unique capability that we have today.
April:
And it highlights, again, the technology plus the people. It can’t happen without them.
Last question, I’m going to pick your brain one more time. One more question I have for you. So how has the deployment of electric vehicles, which I know we have out there, impacted the domestic distribution in Asia?
Waldo Basilla:
Sustainability initiative in Asia is going really fast, and I think Eva, Eva James, she just moved to Asia last year, and she’s driven a lot of energy to that aspect. So there are two components of what we’re trying to do. Number one is we’ve built a network. Part of the node development is building sustainable network. We now have two Gold-certified LEED facility, high standard, one in Indonesia, which will be formally launched in April, and we also have the Palwal facility in India, the first and only industrial LEED Gold-certified facility in Palwal, India. Can you imagine that? We’ve also introduced EVs. We now have electric vehicles in Shanghai, in Yantian, and in India. We’ve also introduced electric vehicles in Manila, and we’re going to further push that forward as an agenda. We’re going to introduce more electric vehicles to move containers in Vietnam and Indonesia. As we speak, we’ve given the approval to acquire these types of vehicles. So that will be a major program for Asia. What it basically does is it helps our customer reduce their scope 3 emissions. And we’re a big part of their scope 3 emissions. That’s a big thing. Aside from helping our customers, it also helps the governments where we work in, with their green initiatives in their countries and, of course, our global initiative.
April:
Well, thank you, Waldo. You’re always such a wonderful source of information. I so appreciate you coming on the podcast with me and sharing this with everyone.
Waldo Basilla:
Thank you very much, April. It was a fantastic session, and I sure hope we can do it again. Thank you for having me.
April:
Thank you. And we’ll see you all next time on the Pulse Podcast.
Thanks for joining us today. If you like what you heard or if you have any questions about today’s episode, reach out to us at Global_Marketing@APLLogistics.com. Make sure to subscribe to us on your favorite podcast apps. You’ll also find us on LinkedIn or visit us at APLLogistics.com. We’ll see you next time on the APLL Pulse podcast.
Thanks for joining us today. If you like what you heard or if you have any questions about today’s episode, reach out to us at global_marketing@apllogistics.com. Make sure to subscribe to us on your favorite podcast apps. You’ll also find us on LinkedIn or visit us @apllogistics.com. We’ll see you next time on the APLL Pulse Podcast.
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