How Did My Coffee Cup Get Here?

September 19, 2010 11:53 AM

I am sitting here drinking coffee from a Crate & Barrel jumbo mug (ie reasonably specialist item), made in China. What journey did it take from its origin in China to get to my kitchen? I'm particularly interested here in how freight & distribution of specialist items works - ie if you're shipping rice, I'm guessing you just fill an ISO container with rice and send it off, but if you've got lots of weird little things, how is the contents, packing, count, destination etc of a container determined?
posted by forallmankind to travel & transportation (21 answers total)

Having worked in retail (and even retail of things like the thing you describe!) - there is usually someone, at some level of the process who designs packaging and shipping solutions.

Often it's a particular way that the items need to be packed into the box, the number of items per box, as well as additional packing materials to protect the item. This is usually somewhat standardized - there are certain sizes of boxes, certain materials available, certain even numbers of quantity they like to fit into each box. (dozen and gross are popular, iirc).

If memory serves, from the point of the items arriving at the store, it goes something like this. A truck shows up at the store (usually after hours) with pallets of standardized boxes. Each box will contain X quantity of Y merchandise. For linens, it might just be a certain number of linens wrapped in plastic and chunked into a box. For glassware, there will be a little cardboard support system and a specific way that each piece fits into the box. For crystal or other especially delicate things, the packaging might be more elaborate - that's probably part of why such items are more expensive than your typical rinkydink mugs and tumblers.

For a shop like Crate & Barrel where they are moving a large quantity of breakable items, there is probably a line in a budget somewhere that allows for Z number or percentage of loss via breakage.

I'm not sure, though, what happens at domestic warehouses and order fulfillment points, vs. what happens on the docks or at the factory in China. But that's what it's like when it arrives at the store.

Somewhat unrelated, but I've heard that IKEA cuts costs by having the designer of the item factor efficiency of overseas shipping into the original design of the piece. Which implies that, at some companies, this is done in-house and not through some outsourced shipping solutions firm.
posted by Sara C. at 12:19 PM on September 19, 2010

This is really a question about logistics.
posted by dfriedman at 12:52 PM on September 19, 2010

See also:

The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
posted by AsYouKnow Bob at 12:53 PM on September 19, 2010

This is one of the tasks I do at work. I order containers of product from an overseas manufacturer.

Honestly it is a very straightforward process.

I place my order with the manufacturer. They almost always have multiple minimum orders for a particular product. This really varies depending on size. In my case the minimum order is 5 of a certain model. Depending on the manufacturer, you can have multiple products and multiple models of the products.

Minimum for the entire order in my case is 1250 pieces. I could fill that requirement with one model or with 250 different models. 5/1250 minimum. Basically the minimum order for most manufacturers of products is whatever fills up the container. They make their money by volume. Sell, Sell, Sell. Yes someone will figure out how to pack the container to its maximum carrying capacity. This can have multiple limitations also. There are weight limitations on containers that many people forget about. See here for specs

Once the order is placed, the product is packed in durable crates for shipping. Durable in this case simply means whatever holds the product effectively. If I ordered 1250 bouncy balls, the manufacturer would probably just put them into huge boxes. If I ordered engines, they might bolt them down to pallets or a racking system that fits into a container. Glassware, into boxes of say 50 each that have internal cardboard supports so the glass doesn't rub each other or support weight in an undistributed fashion. etc...

The manufacturer loads up the product into a shipping container and has a container service pick it up from their facility. The trucking company now can either take it to a train depot that then forwards it on to the shipping docks or simply drives to the shipping docks for delivery to the awaiting vessel. This is all for product that is overseas. If it is on the same continent, either it goes to a train station that sends it on to the next destination or it will pay a trucking company to haul it over the road to the customer. Just take this process in reverse to get the product to the retailer.

In the case of a Crate and Barrel mug, They are ordering 10k's of those things. Everything gets shipped to distribution warehousing for Crate and Barrel as one store could never sell 10k coffee mugs before they get outdated usually. Specific quantities are then allocated to various locations and shipped with many other products such as crates and barrels. :) Distribution warehousing allows a company to maintain logisitcal controls on their purchases and stock distribution. Many smaller companies don't move enough product to warrant a distribution warehouse. It all just depends on the product you're selling and the volume of product you are moving.

In closing, your Crate and Barrel mug is not a unique and individual snowflake. Both links posted above spell it out also. Logistics baby.
posted by Gravitus at 1:04 PM on September 19, 2010 [4 favorites]

We haven't heard much yet about freight / ground transportation. What port would goods arrive in, before being trucked (or transported by train?) to a Louisiana retail outlet?
posted by salvia at 1:18 PM on September 19, 2010

Ha, I once almost took a job working for a guy who imported large terracotta pots for the garden. This was his method. A particular type of pot (say the shiny blue three foot tall pot) would always be packed in a crate that was X dimensions with Y number of its fellows. The next type of pot would have a different size crate. He had his secretary use CorelDraw to manipulate predrawn rotatable rectangles representing the crates and the container to estimate how much could be fit in, though, he said, they often didn't pack it the way the secretary planned, but better, fitting in even more crates than expected.


Then we had a massive drought, and I wondered if the guy was able to stay in business. Given the rate he offered, prolly.
posted by b33j at 1:35 PM on September 19, 2010

What port would goods arrive in, before being trucked (or transported by train?) to a Louisiana retail outlet?

I don't know, but, quite possibly Long Beach or Los Angeles, or Savannah maybe or Charleston. The main container routes from China don't seem to head up into the Gulf even though some do go to the East coast (looking at Evergreen and CSCL's schedules anyway; Maersk Lines' website seems slightly broken and the rest of it involves too many pdfs.

Evergreen would like to make a point of their environmental credentials and mentions that they can ship across the USA from West Coast ports using the railways (with double-stacked containers to save space!).
posted by Lebannen at 1:51 PM on September 19, 2010

So then Crate & Barrel are only going to order from a manufacturer who can deliver a minimum of a container's worth of product, right?

What about cost - say, container by truck to Shanghai, ship to Long Beach, train to mid-west, truck to distribution centre?
posted by forallmankind at 3:55 PM on September 19, 2010

They don't use containers for grain. Rice and wheat are shipped using "dry bulk carriers".
posted by Chocolate Pickle at 3:57 PM on September 19, 2010

So then Crate & Barrel are only going to order from a manufacturer who can deliver a minimum of a container's worth of product, right?

Because most of Crate & Barrel's products are exclusive to their stores, they probably contract directly with a Chinese manufacturer to fabricate their designs. But, yeah, when the orders are put in for exactly how many Rudolf The Red Nosed Reindeer serving dishes to stock during the Holidays this year, somebody has to do the math and make sure they order a quantity that is compatible with efficient shipping.
posted by Sara C. at 4:02 PM on September 19, 2010

ie reasonably specialist item

I don't see why you think this would be a low volume item. According to wikipedia, C&B has 170 stores and does about $1.3 billion a year in sales. Even the most obscure little doodad in their store is going to be shipped in large quantities so I don't think they're much concerned about the fact that they have to round their orders to the nearest 2k or whatever so as to never have to worry about partly filling a container.
posted by Rhomboid at 4:31 PM on September 19, 2010

Crate and Barrel story from 08.
posted by Ideefixe at 4:57 PM on September 19, 2010

Thanks everyone! A quick trip to the library and I have a copy The Box, which I'm sure will answer any more questions I have.
posted by forallmankind at 11:32 PM on September 19, 2010

This is what I do for a living.

Honestly it is a very straightforward process.

Respectfully, I disagree. Having spent ~4 years in retail operations management and ~4 years consulting primarily in Supply Chain Management (SCM, which is really what this question is about, not just simple Logistics), and now ~2 years in the developing world building modernized Supply Chains here, I think I can say with some experience that: the variance is endless.

but if you've got lots of weird little things, how is the contents, packing, count, destination etc of a container determined?

It depends on a seemingly infinite number of factors: the item in question (mug, rice, etc. ad infinity), who is producing the item and where and in what volumes, how the item is packed for shipping, how the item is to be transported from factory to port, how the item may or may not be combined with others for container packing, all the varieties of customs and port logistics and the ship in question and when it is being loaded and what its port of destination will be, all of the entry customs, unloading, dunnage, duties, etc., whether it is loaded to road or rail at the port of destination, all of the overland shipping to distribution centers, warehouse management of the stock, how it is then shipped to Final Delivery Points, how it is housed in stock at the retailer in question, how it is moved to sales floor and the Point of Sale system tracks its sale and interacts with replenishment systems somewhere to tell a buyer / planner that they now need to kick off the whole damn process again now that their stock has been depleted. And that's just off the top of my head.

I spent the better part of a year once designing the business logic and managing the technical development team for a container-loading software that would guide one of the largest drug-store chains in the world on how to optimize the management of how they loaded and shipped the massive amounts of product they imported from China. Here's the high-lights of the insane logic puzzle we were trying to break down:

- 4 primary manufacturing hubs in China, each with endless numbers of various factories supplying the endless unique items bought in bulk to be imported. 4 transit warehouses in each of these where containers would be packed for transit to the US.

- 3 primary ports of entry (Los Angeles, Oakland, and I think Baltimore?). These are mainly limited to the biggest ports with the best ability to move the most product at the lowest prices, but also sometimes determined by the company that's moving the product, where their primary receiving warehouses are located, etc.

- 7 different regional warehouses where stock is stored in advance of orders from corporate based on individual store stock levels.

- A pretty much infinite combination of road and rail options over which the containers, once processed at port, can be transported to said 7 warehouses. Containers are unpacked at warehouses and then returned to port typically on the same reverse route. Items are broken down from their pallets in the warehouses and then re-combined onto new pallets to be loaded to company trucks for delivery to stores.

- 4 primary container sizes used by the industry today: 20', 40', 40' High (+ ~2 feet of space taller), and 45'. Most ships / cranes / ports / train-cars / tractor trailers are designed to be able to fit these primarily. 40' is the most commonly used.

- Weight and volume maximum limitations of what each container can max out at. See this image - like any other shipping container, but when you look closer at the writing on the door, you see:

Max GR: Maximum Gross Weight of the total shipping container (laden weight). Add Tare to Net to equal this number.
Tare: Weight of the empty container with no goods in it.
Net: Maximum weight of goods that the container can handle.
Cu. Cap: Maximum cubic capacity the container can take.

(This is where it gets interesting.)

So, with all of these limitations, we are looking at a literally infinite number of possibilities of product volumes we might combine from 3 different source locations, onto 4 choices of container size, to 3 receiving ports, to 7 regional warehouses, via a wide choice of over-land shipping routes. But let's just throw routing out the window for the time being and focus purely on one container and how best to pack it. We called this "batteries vs. pillows."

Some containers will "cube out" (i.e. reach their cubic capacity or use up most of the usable "space" inside a container) before they reach the container's weight maximum - the natural example here is pillows or plush dolls. But not all containers. Some might be packed with very heavy things like batteries or high volumes of liquids - in such instance the container would "weight out" (i.e. reach the maximum weight capacity for the container) before it "cubes out" - meaning empty space would be shipped in the container. So basically you'd have a container with 2-foot high stacks of boxes of batteries and 8' of air being shipped on top of that.

But, if you're already shipping the container, there are more optimal solutions of mixing products within the different containers sizes to achieve maximum container loads for your money. Enter batteries vs. plush dolls. Let's say you remove one layer of batteries from that really heavy container. You've bought yourself just a tiny little bit more cubic capacity, but you've also bought a ton more weight, which you can fill with pillows - right up to the top. Bingo: full container load (FCL) - the optimum for any retailer actually involved in the shipping logistics side of their business.

But wait - remember: this retailer ships ALL KINDS of things. Let's say in this instance we are working with a 20' container - for heavy batteries the cost effective solution is, almost always, to work with the smallest container possible. So you've got your layer of batteries in there, but all that space on top you could fit pillows. But pillows weigh next to nothing and you're probably still not going to have nearly approached the max weight with them even though you are cubing out. Enter the mug in question: maybe 1' of batteries, 3' of boxes of mugs, and 6' of pillows still gets you to the max cube capacity of the container and closer to the max weight of the container, thus netting you an even higher savings on your shipping in the long run, because if you do it right, you have more flexibility with each container that follows.

So theoretically you pop a very huge (and seasonally shifting) product catalog into a database that the container optimization software can read from, and then you plug in all the variables of what volumes needed to go where, where they were coming from, when they needed to go, and how they could best combine across those 4 container sizes based on the aforementioned limitations of destination, timing, etc..

Having fun yet? We realized at one point that some of the stuff we were probing into for the system logic was pushing on the borders of math problems that still have not yet been solved (full on Good Will Hunting shit that I'll never come close to even being able to speak to even at any sensible capability).

Now, of course, you want to know about that mug in particular. Well, you take C&B's product mix, where their stores are located, whether they have internal warehousing (or outsource to 3rd party logistics suppliers (3PLs)), where the warehouses are located, what ports they primarily receive through and why, where the factories are located (likely primarily in China), etc. etc. etc.. Its different for each product, each retailer, and you could really make a case study of the way anything in your kitchen arrived there, but they all follow the same similar path.

The interesting thing is that the path started even before the factory where it was made: it started out as raw materials - where did they come out of the ground (grown, chopped down, mined, etc.)? Where did they need to be processed as raw materials? How were they then shipped to the factory? What else was needed in the process to make/manufacture them? And then the journey in question starts from there.

SCM at a very high strategic level breaks down its functions into the following procedural steps: Plan (planning what you'll need but also planning your networks, logistics, container packing, warehouses, etc.), Make (manufacture / build / etc.), Source (someone procures / buys the shit in question), Deliver (truck it, load it, ship it, unload it, rail it, truck it, empty it into your warehouse, store it, pack it up into your truck, send it to FDP), and Return (what do you do with your over-stocks? what about defective products for return? warranties? servicing? etc.).

Really your question is focused mainly on the Deliver step, but its important to understand it in light of the other steps, all of which are interactive, and sometimes and many factors depending, some of the steps will come in different orders than how I listed them above, while others might occur multiple times. For just your one mug. And then you get to the end of it all, there in your kitchen, and you find a crack in your mug, and you - Joe Consumer - you kick off the whole process in reverse (reverse logistics, or the Return function, at large). You just couldn't leave well enough alone, could you?

This is long, so here's my tl;dr: how did your mug / rice / everything else get there to your kitchen? It depends. And it probably involved a container at one point.
posted by allkindsoftime at 2:23 AM on September 20, 2010 [145 favorites]

So then Crate & Barrel are only going to order from a manufacturer who can deliver a minimum of a container's worth of product, right?

Not necessarily. Yes, CB is probably dealing with exclusive factories, but if there's 2 or 3 or 40 factories all next to each other, they can order specialized items from many and they can be packed in a secondary location prior to shipping in combined containers.

What about cost - say, container by truck to Shanghai, ship to Long Beach, train to mid-west, truck to distribution centre?

Again, entirely depends. How far is the factory from Shanghai? Is Shanghai even your best port option? There's so many options in China right now its ridiculous - I remember watching a video that made the claim that an equivalent of 1 ship per second leave China these days packed with exports (have no idea if that's accurate or not, but the point is the numbers are probably hard to comprehend). Is Long Beach the best destination port? It might be, but what if you have rush product on board and the ship will have to wait at sea for 2-3 days before a mooring becomes available?

Generally shipping by rail inland is the optimal route, but again, all depends on where your warehouses / distribution centres are and whether they are close enough to rail ports to facilitate this. If you have a distro center up in Portland and there's not decent rail network north-south along the Pacific Coast, you're going to truck that route, whilst the goods going to Chicago will go rail 100% of the way, and those going to St. Louis might be rail to Chicago and then truck the rest of the way. I have no working knowledge of the rail networks and their efficiencies, my point is that its a mix.

I'm not trying to dodge your question by not giving you a dollar figure here, the point is just that there are SO MANY factors that it would probably take a cross-functional team of people at CB to sit down and do the analysis that is going to help you arrive at that figure for just that one specific container.

when the orders are put in for exactly how many Rudolf The Red Nosed Reindeer serving dishes to stock during the Holidays this year, somebody has to do the math and make sure they order a quantity that is compatible with efficient shipping.

Yes, but not necessarily. Its helpful if there's somebody to do this, but not all retailers invest the effort to analyze their cost structure in this way. For the ones that do, though, you have to remember that based on other factors, they may sometimes even target an inefficient shipping model. The example I'm thinking of is that say this Christmas, the Rudolf Razor Jet Scooter is all the rate and CB wants to drive foot traffic to their store, so they stock up on these and maybe even lose money to undercut their competition and sell them at a loss, on top of the fact that they were already expensive to ship. But damn if they didn't make up for that in spades with all those serving dishes they sold in the meantime.
posted by allkindsoftime at 2:45 AM on September 20, 2010 [12 favorites]

I also work in logistics, but only in procurement and only for a year so my knowledge of operational stuff is pretty limited. I can, however, help you out on the following:

What about cost - say, container by truck to Shanghai, ship to Long Beach, train to mid-west, truck to distribution centre?

There's all sorts of complicated stuff to do with Terms of Sale that determine who pays what here, but for now let's assume that your supplier will only pay the FOB costs up to the "ship's rail". Today's tariff rates for a standard 40ft container from Shanghai port to Chicago rail ramp (hardly mid-west, but a potential distribution hub) would be in excess of $5,000 per container.

In reality however, the importer would negotiate reduced rates or (more likely) hire a logistics agency to do the whole thing for them (increased purchasing power=cheaper rates).

As for routing, Maersk suggest this would go from Shanghai to Seattle (~15 days) and then via rail to Chicago (~5 days).

Again, in reality this may not be an optimal routing and the logistics brains will work out an entire supply chain plan, but this is just an example. Most shipments to the US will go through Long Beach or Oakland on the West Coast, Houston or New Orleans in the Gulf, and Charleston/Savannah/Norfolk/New York/Montreal on the East Coast.

Here is a list of the world's busiest ports to keep you... well, busy.
posted by Acey at 3:30 AM on September 20, 2010 [1 favorite]

Sorry, when I said "See this image - like any other shipping container, but when you look closer at the writing on the door" it should have had the link in it like it does here now.
posted by allkindsoftime at 8:20 AM on September 20, 2010

Intermodal transport is the cobbled-together stream of various things that carry other things from one place to another. Your mug was almost certainly in a container at one point - a modular unit that can be moved from a tractor-trailer to a lift on a dock to a space on a cargo ship to another dock (and possibly into a customs shed) to a train carriage to a different train carriage because the container's route required a shift from one track gauge to another, then back to a trailer truck and into a warehouse - and then in smaller conveyances as necessary until it winds up in your sink being washed.

The process is both straightforward and complex, because the big pieces are pretty clear: it takes about this long for a container ship to go from Shanghai to Oakland, and that ship carries a lot of containers. However, is C&B big enough to command their own freight train schedules or are they looking for open space on existing trips, or are they holding partial loads at smaller depots until a train or truck with existing space can piggyback them on? It's that dance at the smaller end of the supply chain that was so fascinating, and it's where some enterprising start-ups are working to facilitate communication between depots, truckers, importers, and everyone else involved in the transaction.
posted by catlet at 11:55 AM on September 20, 2010

Having fun yet? We realized at one point that some of the stuff we were probing into for the system logic was pushing on the borders of math problems that still have not yet been solved (full on Good Will Hunting shit that I'll never come close to even being able to speak to even at any sensible capability).

That's "just" knapsack with two constraints instead of one. One of the class of NP-Complete problems.

What it boils down to is: if you try to optimally pack discrete items into a given volume or weight so as to maximize the value of things packed, you will run into an exponential number of reasonable possible solutions. The only known method to find the best solution is to check all of them. For 200 items, that means something like 2^200 possible solutions: far too many to actually check all of.

"Fortunately", there are "good" approximation algorithms that can often get you to within 90-99% of optimal.

Not to derail too much, but many of the steps here involve similar problems. Much of the incredible efficiency gains in transport (and other industry) over the last n (30? 50?) years involves the ability to solve larger problems of this type close to optimal in reasonable time.
posted by enkiwa at 4:15 PM on September 21, 2010 [2 favorites]

I work at a very large (thousands of employees and hundreds of offices) freight forwarding and logistics company. Although I haven't been working in this industry long at all and am in an entry level position, I now have a general idea of what is done to get air cargo from point A to point B (I work in the air section of my office). A company like mine makes this complex process much easier for companies and allows them to devote more resources to their "core" business.

-The shipper and the importer agree on what is made, what is packed (what allkindsoftime covered), and what the terms of payment will be, such as the "FOB" terms that Acey described.

-Either the importer, exporter, or both contact our offices. We figure out what they are moving and who is paying and let them know how much it will cost. We have relationships with truckers, airlines, shippers, warehousers etc. that allow us to negotiate the best pricing possible, plus we consolidate the freight of various customers which allows us to provide decent rates to the customer who isn't shipping 30,000 kilos of t-shirts.

-From this point on we negotiate with mainly third parties to pick this shipment up, stop at a warehouse most likely, load it on a plane, fly it to the destination, unload it, de-consolidate it, and then deliver it. Brokerage teams are working on both sides to get these shipments cleared and properly taxed in a timely manner.

Hypothetically, (for air shipments), a customer doesn't have to deal with the logistics side of their business much besides packing their freight nice and tight and sending off a few emails. Most customers, however, are a little more involved than that.

Air shipments are almost always more expensive, but they allow you to move freight in a matter of a couple days, as opposed to the weeks it takes via ocean. Accordingly, air shipments are typically extremely urgent and important.
posted by Defenestrator at 8:32 PM on September 21, 2010

I think I fell in love with allkindsoftime.

What a great answer.
posted by DrtyBlvd at 3:53 AM on September 23, 2010 [1 favorite]