Op/Ed: Supply Chain Hindered by Cumbersome Regulation

By Ron Atapattu July 1, 2016

Ron Atapattu, Founder & CEO, Overseas Cargo, Inc. (ShipOCI)

The Federal Maritime Commission (FMC), which has always been a valuable resource in supply chain management, announced the formation of a Supply Chain Innovations Teams that will develop commercial solutions to supply chain challenges and related port congestion concerns, which have been an issue in the industry for quite some time. Although I believe that the FMC has made a great impact on the logistics industry, especially supply chain management, I am not sure that this sort of regulation is necessary.

With technology playing a huge rule in the growth of the industry, there are many rules, including bonds, licensing and certifications that are no longer necessary and are creating a bottleneck in the industry. The FMC should be focusing on abolishing these outdated practices and coming up with new, innovative ways to improve international shipping. Modern day logistics are not what they used to be, so it is important to be aware of what is happening in the industry and address these concerns in the best fashion.

For example, in order for a company to get licensed, it has to fill out an extensive application that takes three to six months to be approved in Washington. After the company is approved then it is required to post a bond for $100,000 to validate the license, and then continue to file pricing and terms in tariff publications for FMC compliance. This whole process involves very detailed information that costs thousands of dollars annually just to maintain and be in full compliance with FMC regulatory requirements. Companies require dedicated employees that can handle these sorts of regulatory compliances, which costs money and creates a bottleneck in day-to-day operations. The whole process is cumbersome and is rarely useful in generating business. In the normal course of business, these kinds of government regulations add little value to the consumer.

It is ironic that the same industry that is trying to regulate these issues is unintentionally creating others along the way. The FMC has always been a valuable resource in supply chain management, and can continue to be one for many years to come by staying up-to-date with industry trends and making rules and regulations that go along with them.

As a matter of fact, similar rules and regulations proved to be outdated in the trucking industry, so President Reagan abolished them. So far, this has proved to be a smart move that has allowed the industry to focus on fixing other concerns and continuing to evolve.

The Author

Logistics veteran and Overseas Cargo, Inc. (ShipOCI) Founder & President, Ron Atapattu brings to the table over 30 years of experience handling supply chain management, distribution, transportation, inventory management and warehousing for some of the world’s most recognizable brands, including General Mills and PepsiCO.

Born in Sri Lanka and raised in the U.K., Atapattu brings a global perspective to the clients he serves. He has built his business on providing solutions, not excuses, which has allowed him to grow ShipOCI into the 3PL leader in refrigerated freight and the retail industry in the U.S., Asia, the Caribbean and Latin America.

Atapattu’s engineering background and early exposure to computers paved the way for the development of proprietary software, Rapid Link and eRapidbuy, that gives customers the unique ability to be hands on with their own supply chain management.This type of forward thinking has established a record of excellent service and long-term relationships with ShipOCI customers. To learn more about ShipOCI, visit http://www.shipoci.com/.