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EOC Application Case Logistics Optimization in CSAV: - Group 3

Compañía Sud Americana de Vapores (CSAV) is one of the world's largest shipping companies that faced challenges with imbalance, uncertainty, and coordination of empty container logistics worldwide. To address this, CSAV implemented an Empty Container Logistics Optimization (ECO) system. The ECO system helped CSAV reduce inventory costs, empty container times, and increase container turnover and overall profits by optimizing empty container movements globally through improved forecasting, coordination, and decision-making.

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Anup Akashe
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101 views

EOC Application Case Logistics Optimization in CSAV: - Group 3

Compañía Sud Americana de Vapores (CSAV) is one of the world's largest shipping companies that faced challenges with imbalance, uncertainty, and coordination of empty container logistics worldwide. To address this, CSAV implemented an Empty Container Logistics Optimization (ECO) system. The ECO system helped CSAV reduce inventory costs, empty container times, and increase container turnover and overall profits by optimizing empty container movements globally through improved forecasting, coordination, and decision-making.

Uploaded by

Anup Akashe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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EOC Application Case

Logistics Optimization in CSAV

-Group 3

1
OVERVIEW

● Compañía Sud Americana de Vapores (CSAV) is one of the world's largest shipping
companies.
● It operates almost 700,000 containers of which less than 10% was owned by them and
rest by third-party.
● There were four main logistic challenges faced by them i.e., Imbalance, uncertainty,
information handling and sharing, and coordination of interrelated decision worldwide.
● To overcome all these problems they came up with one solution i.e., Empty Container
logistic Optimization (ECO)
● It was found that ECO helps reduction in inventory cost, reduction in empty time per
container, increase in container turnover as well as increase in overall profit of the
company.

2
Q1. Explain why solving the empty container logistics
problem contributes to cost savings for CSAV
Major Operational Cost associated with containers:
● Rent
● Payroll
● Maintenance & Repair
● Transportation Cost

Impact of Solving the empty container logistics problem:


● Operational cost which is caused due to leasing, repositioning, loading and discharging
activities get reduced due to the ECO system, which provides vital information
regarding inventory levels, container repositioning flows, and the leasing and return of
empty containers.

● Solving the empty container logistics problem contributes to cost savings for CSAV by minimizing
logistic costs

3
Q2. What are some of the qualitative benefits of the
optimization model for the empty container movements?

● More accurate calculations of safety stocks, leading to 50% reduction in


inventory stock
● Data-driven decisions regarding inventory levels, container repositioning
flows, and the leasing & return of empty containers
● Empty time per container cycle drops down to almost half in the next year,
which led to 60% increase in average empty container turnover
● Storing, loading and discharge operations took lesser time than usual
● Excess cost per full voyage also reduced

4
Q3 What are some of the key benefits of the
recasting model in the ECO system implemented by
CSAV?

The forecasting model processes data from all the regional offices
and feeds the resultant information to the inventory model,
resulting in the following benefits:
● Predicting the demand for containers, which helped in
placing optimal orders
● Reduce forecasting errors in previous model implemented &
maintain lower safety stocks
● Predicting empty containers’ statistics, which lead to save
logistics cost
● Helps anticipate change in the market and accordingly set
goals & plans

5
Q4. Perform an online search to determine how other
shipping companies handle the empty container problem. Do
you think the ECO system would directly benefit those
companies?
Internal Solutions:
● Container Leasing
● Container Substitution
External Solutions:
● Intra channel solutions : Depot -direct &
Street turn
● Pool sharing

6
Q5. Besides shipping logistics, can you think of any other
domain where such system would be useful in reducing cost?

● Fast moving consumer goods


● Healthcare
● E commerce
● Freight Transport (Road, Train,
Aircraft)

7
THANKYO
U

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