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OCEAN LOGISTICS: CARRIERS

OCEAN LOGISTICS: CARRIERS

The International Maritime Organization (IMO) adopted a strategy this year for reductions by the shipping industry of CO2 emissions. The UN agency adopted goals that would reduce ocean-carrier emissions by 50 percent by 2050, compared to 2008 levels. That matched the position being pushed by Norway’s government and its shipowners’ association and supported by industry groups such as the International Chamber of Shipping (ICS) and Canada’s Chamber of Marine Commerce (CMC).

There are also a number of initiatives being undertaken by individual carriers, ports and even localities to reduce the environmental impact of ocean shipping. These include testing alternative fuels, reducing ship speed, even employing innovative coatings to ships that help improve fuel efficiency.

Advocates of IMO’s adopted plan emphasized that the strategy matches the expectations of the Paris climate agreement and sets global standards. “Agreement upon a mid-century objective for the total reduction of CO2 emissions by the sector, regardless of trade growth, is vital to discourage unilateral action and to provide the signal needed to stimulate the development of zero-CO2 fuels,” said Esben Poulsson, the ICS chairman.

The new greenhouse gas standards represent the second stage of a three-step approach under an IMO strategy agreed to in 2016 for reducing emissions from ships. The first is a set of requirements for ships to collect data on their fuel oil consumption which entered into force on March 1, 2018, with amendments to International Convention for the Prevention of Pollution from Ships (MARPOL).

The reporting requirements under those amendments will begin on January 1, 2019, with data to be reported at the end of each year to the IMO. The purpose is to inform further measures needed to enhance energy efficiency and to address GHG emissions related to international shipping.

Under new Regulation 22A, ships of 5,000 gross tons and above are required to collect consumption data for each type of fuel oil they use. These ships account for 85 percent of CO2 emissions from international shipping. Data will be reported to flag states each year, and the flag state must determine the data has been properly reported and issue a statement of compliance to the ship.

Meanwhile, the IMO’s restrictions on sulfur oxide will come into force in January 2020. Those measures will reduce acceptable SOx levels, from 3.50 percent m/m (mass of sulfur/total mass) today to 0.50 percent m/m in 2020.

According to a report released by European Maritime Safety Agency, methanol and ethanol are good potential alternatives for reducing carbon and sulfur emissions of ship operations. Methanol has been investigated as a marine fuel in a few research projects, two of which involved pilot test installations on ships. The world’s first methanol conversion of vessel’s main engines came on a passenger ferry, the Stena Germanica, in 2015.

Ethanol has not been studied for use on ships but has been used in truck diesel engines for years. Methanol is the simplest of alcohols and is produced mainly from natural gas while ethanol is mainly produced from biomass such as corn and sugar cane.

Challenges to the use of the alcohols include their lower energy density compared to fossil fuels, which will require more fuel storage space on board vessels. The flashpoints of both substances are below the minimum for maritime fuels specified in IMO rules, requiring further evaluation, the report noted.

Methanol and ethanol both have environmental advantages compared to conventional fuels: they are clean-burning, contain no sulfur, and can be produced from renewable feedstocks. Emissions are low compared to conventional fuel oils.

Guidelines are being drafted for the use of methanol and ethanol fuels on ships, for future incorporation in a newly adopted international code for ships using non-conventional fuels. “This,” the report noted, “will facilitate the use of these fuels on board ships.”

Many ocean carriers around the globe have slowed their vessels to save on fuel. An example of a regional initiative comes from Southern California, where last year 10 shipping companies participated in an incentive program to voluntarily reduce speeds in the Santa Barbara Channel region to 12 knots or less. Ship emissions account for over 50 percent of smog-forming nitrogen oxides emissions in Santa Barbara County.

“Since the shipping industry is regulated by national and international organizations, the only way for us as a local agency to address shipping emissions in our region is through innovative strategies,” said Mike Villegas, director of the Ventura County Air Pollution Control District. “The level of participation is very encouraging.” A similar program for 2018 was launched in July and has been expanded to include the San Francisco Bay area.

Efforts to reduce fuel usage emissions also involve changing hull coatings. The vessel COSCO Europe sliced fuel costs by $4.5 million and reduced CO2 emissions by 29,500 tons in the four years since it was coated with an innovative material that limits the growth of organisms on a vessel’s hull and minimizes frictional resistance. Jotun’s Hull Performance Solutions (HPS) system has been applied to over 400 vessels since its launch in 2011. The COSCO Europe is a 2008-built, 10,062 TEU container ship.

“As a company we are committed to delivering optimal value for all our stakeholders and the best environmental performance for our fleet,” said Hou Liping, deputy general manager of COSCO Shipping Lines.

Alfie Ong, vice president of Jotun Marine Coatings, said that more global shipping players are recognizing “that an investment in HPS is low-hanging fruit when it comes to optimizing hull performance.”

There’s good news when it comes to efforts to reduce the environmental impacts of ocean shipping. An ecosystem for fish and marine mammals is flourishing in Long Beach and Los Angeles harbors, according to a report on the water and habitat quality released last year. The survey, conducted through an ongoing partnership between the ports, identified 558 species of plants and animals living on the rocks and pilings in the harbors. That’s 60 percent more than in 2008 and almost double the number cataloged in 2000. Water quality conditions have also improved, with oxygen and phytoplankton measurements higher than ever before.

“There’s growing biodiversity in the harbors, including more birds and marine mammals, and we’re seeing species that cannot thrive in polluted waters,” said Lori Ann Guzmán of the Long Beach Board of Harbor Commissioners. “We should all be proud of these results and continue to work hard to build on this progress.”

Intelligence Report

Supply chain management (SCM) in 2018 is a term so widely used that it’s hard to imagine it’s only been in existence for roughly 35 years. The strategic coordination of processes and functions across a given company’s supply chain, the end goal of good SCM is exceptional value for the customer, all the while removing inefficiencies and bottlenecks along the way. Urban lore has it that the term first surfaced in the early 1980s when a consultant at Booz Allen Hamilton referenced the “management of supply chains, or supply chain management” in an interview with the Financial Times. SCM caught fire and the rest is history.

As with any fundamental, and fast developing business niche, firms need people specialized in that area to gain a competitive advantage. This is where the Master of Business Administration (MBA) in SCM comes into play. A typical MBA program will, of course, touch on SCM concepts, but SCM will be one of perhaps 10 or even 15 concepts within the overall degree. For generalists, an MBA is excellent. But if SCM is the focal point, an MBA in SCM is the intelligent route.

Putting together the pieces and making sure everything functions smoothly are SCM at its core. The MBA in SCM is for you if you enjoy organizing moving parts, managing people (often simultaneously locally and around the globe) and staying on top of global trends. The MBA in SCM provides core business foundations but with a singular focus on operations.

A common question is: What types of jobs are available for folks with an MBA in SCM? To start, such positions as inventory control manager, purchasing manager or vendor managed inventory coordinator are commonplace. These are mid to even upper level positions at some firms which often lead to top-level management positions down the line.

In the eCommerce world, SCM is taking new forms, an omnichannel approach that considers customer preferences digitally across a range of interaction points to meet their requests as efficiently as possible, no matter their location.

The MBA in Operations and SCM from Michigan State University is one of the premier choices for those seeking a higher degree in SCM. While it is hard to pin down which institution first began to offer SCM courses, Michigan State was the first to offer the SCM degree and continues to count on a world-class faculty base and pedagogy that is second to none. Manufacturing Design and Analysis, Integrated Logistics Systems, Total Quality Management and Service Supply Chains are just a handful of the classes incoming students have access to.

Another fantastic option is the MBA in SCM at Pennsylvania State University. To the chagrin of Michigan State, Gartner Inc. rated the MBA in SCM at Pennsylvania State No. 1 a couple years back, propelling this two-year program to the forefront. An interesting wrinkle with the Penn State program is during the last spring term students have the chance to travel abroad as part of the Global Immersion program to witness SCM and other business facets in play at leading firms everywhere from Turkey to China to Peru or India.

The hype around SCM is real and growing. A quick search of leading programs is a great first start, options are plentiful, and the future indeed bright.

AFTER NAFTA

There was some uncertainty over the future of the North American Free Trade Agreement (NAFTA) ever since President Donald Trump took office. The president repeatedly threatened to pull the U.S. out of the agreement, and then claimed he would pursue a pact with Mexico and leave Canada out.

Those fears were allayed in early October when the three NAFTA partners announced the United States-Mexico-Canada Agreement (USMCA). The deal still must be signed by the parties and ratified by their legislatures, but all indications point to a continuing North American trade agreement going forward.

That’s important for companies that benefited from the integrated North American supply chains that NAFTA galvanized. The automobile manufacturing industry is a prime example of how NAFTA contributed to the development of truly North American products.

Trucks carry 63 percent of U.S.-NAFTA freight and are the most heavily utilized mode for moving goods to and from both U.S.-NAFTA partners. Rail is the second largest mode by value, moving 15.5 percent of all U.S.-NAFTA freight, followed by vessel, 6.4 percent; pipeline, 5.7 percent; and air, 3.7 percent.

Trade among the U.S., Canada, and Mexico would no doubt have continued without a new trade agreement or any trade agreement, but the advent of USMCA means that supply chains will be able to operate much as they did before. With that established, manufacturers want to know, “Which transportation and logistics providers are best to get products and components crossborder?” Here is a selection assembled by Global Trade.

 

BNSF Logistics

BNSF Logistics, a wholly owned subsidiary of Burlington Northern Santa Fe LLC, has been beefing up its North American capabilities in recent years, on both sides of the border. The multi-modal 3PL recently announced the formation of a new subsidiary in Mexico, BNSF Railway Servicios de Logistica, a move which further strengthens BNSF Logistics’ service offering across North America. The creation of Logistica, based in Monterrey, Mexico’s third largest city, will provide BNSF Logistics with additional local resources to support Mexico-based customers.

“The Monterrey region is strategically important to our growth plans in Mexico,” says Ray Greer, president of BNSF Logistics, “and having a local presence is key to developing vendor and client relationships.”

BNSF Logistics in recent years has acquired Albacor Shipping., Inc., a Toronto-based company, and the Texas-based EP Team, an air cargo specialist, providing the company with project cargo expertise.

“Industrial and project cargo is playing an important and growing role internationally,” notes Greer.

Much of BNSF Logistics’ industrial products business has been in moving equipment for the oil and gas and wind energy industries.

Landstar

Landstar System, Inc., a worldwide, asset-light provider of integrated transportation management solutions, has provided Mexico crossborder services out of Laredo since 1999, and has moved its operations to a new expanded logistics center. The 31,000-square-foot facility, located on a 50-acre site, accommodates 450 trailers and provides room for future expansion.

The Landstar U.S./Mexico Logistics Service Center features a highly secured C-TPAT certified site, including a 30-bay cross-dock and transload facility, along with a dedicated platform and heavy/specialized freight area with a custom 120-ton, stand-alone bridge crane. The logistics center is one of the largest facilities of its kind in Laredo.

The new yard has a custom-designed 120-ton stand-alone bridge crane to accommodate the ability to transload many of the largest super loads.

“The crane is used to transfer oversize, heavy and specialized loads between various types of platform equipment coming to and from Mexico,” explains Steve Wisnieski, vice president of Mexico Operations at Landstar Transportation Logistics.

Schneider National

Schneider was one of the first U.S. asset-based carriers to expand to both Mexico and Canada, boasting substantial presences in both countries since the early 1990s. Last year, the company announced it obtained the OK for streamlined customs clearance moving to Kansas City Southern Railway’s intermodal terminal near Mexico City. Schneider has also introduced intermodal service between the Southeast and Montreal on a route that bypasses the Great Lakes states.

Intermodal’s traditional selling point has been the trade-off between slower transit times and lower costs, but that analysis doesn’t always hold water when it comes to North American crossborder trade.

“In some cases, the costs of intermodal are the same as over-the-road if you are going to or from a location with constrained capacity,” says Jim Filter, Schneider National’s senior vice president and general manager for Intermodal.

The trade imbalance between Mexico and the U.S. means there is cost to relocating capacity to Mexico for northbound shipments. That’s why Filter has found that intermodal shipping rates northbound from Mexico to the U.S. are comparable to trucks. The same analysis doesn’t  apply to the U.S.-Canada intermodal lane, according to Filter, because of the greater relative balance in trade between those two countries.

Werner

Werner Global Logistics is an asset-based logistics services provider and a division of the well-known trucking company. The company recently added Werner Final Mile services that accommodates deliveries for eCommerce customers throughout North America. Werner provides trucking services from the U.S. to Mexico with its own assets, from loading to crossing border to delivery into the interior of Mexico.

“Technology is a huge part of the services we provide our customers,” says Craig Stoffel, a company vice president. “We are able to provide visibility right down to the individual item level. Today we can execute much of the supply chain hands-free.”

CSX Transportation

The railway’s Valleyfield terminal, 40 miles outside of Montreal, provides shippers additional capacity when shipping freight between the U.S. and Eastern Canada. Opened in late 2014, Valleyfield delivers intermodal access to Canadian distribution and consumption markets. Valleyfield provides on-site border clearance capabilities, facilitated by a 10,000-square-foot, secure container processing facility and access to the Canadian government’s VACIS truck scanning system. This machine is brought on site as required and is capable of more than 25 scans per hour of an entire vehicle to clear freight into Canada.

“The Valleyfield intermodal terminal provides shippers an alternative capacity solution when shipping freight between the U.S. and Eastern Canada,” says a CSX Transportation official. “Shippers converting freight from the highway to intermodal rail are able to secure additional capacity and lower transportation costs thanks to the expansive market reach of the CSXT Intermodal network.”

CSXT Intermodal service between the eastern United States and Mexico is available via a service called Streamline Passport, a door-to-door solution for shippers to more than 100 Mexican locations. Passport rates include all border fees, fuel surcharge and container per diem charges in Mexico. CSXT Intermodal ensures that all customs requirements are met when shipping cross-border freight.

Kansas City Southern 

KCS is the primary rail carrier handling rail shipments to and from the U.S. and Mexico, and its investments in recent years have gone a long way to make U.S.-Mexico cross-border rail quite seamless. Shippers on the KCS enjoy customs pre-clearance—which means that shipments are delivered directly to their destinations without a stop at the border—for faster service than trucks can offer.

The railway’s Mexican arm, Kansas City Southern de Mexico (KCSM), in partnership with Canadian National Railway, provides trans-border services that allow intermodal shipments to cross into Mexico prior to being inspected. The new inspection points are located in Mexico City at KCSM’s Puerta Mexico Intermodal Terminal and Terminal Ferroviaria de Valle de Mexico’s (TFVM) Pantaco Intermodal Terminal.

Last year, Kansas City Southern CEO Patrick Ottensmeyer joined U.S. and Mexican customs officials in the dedication of a new Unified Cargo Processing facility at the Laredo, Texas, railroad border crossing. In addition to sharing security technology and processes between U.S. and Mexico officials, the new facility streamlines the documentation review of northbound trains and conducts Mexico export processing at the U.S. railhead.

“Demand for rail shipments across this busiest international rail gateway in both directions will continue to increase in the future, particularly with growth in U.S. agricultural and future energy exports to Mexico,” Ottensmeyer points out. “New and innovative ways to keep this trade moving securely and efficiently over the border will be needed in the future to expand trade between the U.S. and Mexico and make North America even more competitive.”

 

Commerce Department is investigating antidumping and countervailing duties on shipments of export cargo and import cargo in international trade.

TRENDING: U.S. TO INVESTIGATE IMPORTS OF STEEL RACKS FROM CHINA

Secretary of Commerce Wilbur Ross has announced the initiation of new antidumping duty (AD) and countervailing duty (CVD) investigations to determine whether steel racks from China are being dumped in the United States and to determine if producers in China are receiving unfair subsidies.

The investigations were initiated based on petitions filed by the Coalition for Fair Rack Imports, the members of which are eight companies from West Virginia, California, Pennsylvania, North Carolina, Minnesota, Wisconsin, Virginia and Tennessee. The petitioner estimates that imports of steel racks in 2017 were valued at approximately $200 million.

In the AD investigation, Commerce will determine whether imports of steel racks from China are being dumped in the U.S. market at less than fair value. The alleged dumping margins range from 130.0 to 144.5 percent. Commerce will determine whether Chinese producers of steel racks are receiving unfair government subsidies in the CVD probe.

There are 28 subsidy programs alleged, including five preferential loan and interest rate programs, one debt-to-equity swap program, six income tax and other direct subsidy programs, two indirect tax programs, seven less than adequate remuneration (LTAR) programs, as well as seven grant programs.

Foreign companies that price their products in the U.S. market below the cost of production or below prices in their home markets are subject to antidumping duties. Foreign companies that receive financial assistance from foreign governments that benefits the production of goods from foreign companies and is limited to specific enterprises or industries, or is contingent either upon export performance or upon the use of domestic goods over imported goods, are subject to countervailing duties.

If Commerce makes affirmative findings in these investigations, and if the U.S. International Trade Commission (ITC) determines that dumped and/or unfairly subsidized U.S. imports of steel racks from China are causing injury to the U.S. industry, Commerce will impose duties on those imports in the amount of dumping and/or unfair subsidization found to exist.

During Commerce’s investigations into whether steel racks from China are being dumped and/or unfairly subsidized, the ITC is conducting its own probes into whether the U.S. industry and its workforce are being harmed by such imports. Final determinations from Commerce and the ITC are not expected until the end of the year and/or February of 2019.

LARGEST-EVER ORDER OF NATURALINE GOES TO MSC

Mediterranean Shipping Co., one of the world’s largest ocean container carriers, will lease 2,000 containers chilled by Carrier Transicold’s innovative, natural refrigerant-based NaturaLINE refrigeration system.

NaturaLINE solves the problem of how to use refrigerants effectively and efficiently—to transport valuable items such as perishable food and pharmaceuticals—while helping to protect the environment. The system utilizes repurposed carbon dioxide (CO2), the refrigerant with the lowest global warming potential (GWP) among all container refrigerants currently in use. MSC’s new refrigerated containers—all 40-foot high-cube models—are being leased from SeaCube Containers LLC.

SeaCube Containers LLC of Woodcliff Lake, New Jersey, owns and manages dry and refrigerated shipping containers and generator sets used to power refrigerated containers. The company leases equipment primarily under long-term contracts to the world’s largest shipping lines globally.

“The NaturaLINE unit’s innovative use of CO2 is the first of its kind available on the reefer market,” said Giuseppe Prudente, chief logistics officer, MSC Mediterranean Shipping Co. “By providing higher level of performance in the minus 40 degrees Celsius deep-frozen range, we can add new capabilities for our growing customer base, particularly for seafood and other high-value frozen commodities. Shipping is already one of the most environmentally sustainable forms of cargo transportation, and we are pleased to continue to improve our environmental performance by equipping our fleet with the latest green technologies.”

The ability to achieve minus 40 Celsius was previously only attainable in container systems using a refrigerant with a GWP nearly 4,000 times higher. The NaturaLINE unit has managed this, along with high efficiency, a quiet operation and tight temperature control.

“The NaturaLINE unit, with CO2 refrigerant, takes users directly to an end state by guarding against regulations, environmental taxes and phase outs that other refrigerants will be subject to during their operational lifespan,” said David Appel, president, Carrier Transicold & Refrigeration Systems. “In addition, CO2 is non-ozone depleting, widely available, relatively inexpensive and nonflammable.”

Carrier Transicold recognized the need for refrigeration technology that would neutralize concerns over GWP—in much the same way that it led the industry away from ozone-depleting refrigerants ahead of Montreal Protocol deadlines 25 years ago.

“In taking leadership to provide a natural-refrigerant solution, Carrier Transicold created what is perhaps the most sound investment a leasing company and shipping line can make—a refrigerated container that will not become obsolete in its lifetime due to pressures from environmental legislation,” said Robert Sappio, CEO, SeaCube. “By fulfilling the NaturaLINE unit’s first order of this magnitude, SeaCube is pleased to be part of this important development for the shipping industry.”

MSC will begin taking delivery of its new containers from SeaCube later in the year. The NaturaLINE units will be supported by Carrier Transicold’s global service network.

PROPOSED AUTO TARIFFS WILL HIT U.S. CAR BUYERS IN THE WALLET: REPORT

President Donald Trump’s proposal to impose tariffs on imported automobiles, SUVs, vans, trucks and auto parts prompted warnings from automakers that those measures would reverse the industry’s recent job growth. An analysis by the Peterson Institute for International Economics (PIIE) echoed that view, calculating a five-percent drop in auto sector employment if trading partners retaliate on a hypothetical 25-percent tariff. Trump has stated a preference for that level of duty, although some news reports suggest that the expected levy now stands at 20 percent. The ultimate tariff rate will be based on the recommendation of an ongoing investigation by the office of the U.S. Trade Representative, subject to presidential approval.

A recent PIIE report examined the effects of those tariffs on consumers. Auto tariffs would come on top of tariffs imposed on steel and aluminum imports, which automakers say raise auto production costs by one percent. The proposed auto tariffs, according to the report, will raise car prices significantly, “suppressing sales and pushing some buyers with modest incomes out of the new car market entirely.”

The average price of an entry-level compact car will increase between $1,409 and $2,057, according to PIIE, while the price of a new compact SUV/crossover—the most popular vehicle in America—will rise by $2,092 to $3,066. Upscale versions of the compact SUV/crossover will rise by $4,708 to $6,971, “because of higher imported foreign content, and hence higher taxes paid, for the typical luxury vehicle,” states PIIE.

Because of crossborder automobile manufacturing supply chains, the report also noted, “There are, in fact, no 100 percent ‘made in the USA’ cars.” Many foreign-brand cars are assembled in the U.S. and some contain more U.S. content than similar vehicles bearing Detroit brands.

Airlines carry shipments of export cargo and import cargo in international trade.

Shippers and airlines—an evolving relationship

The question of how shippers should approach air cargo carriers is a complex one, for a number of reasons. Airlines have traditionally eschewed dealing with shippers, even larger ones, to say nothing of those that won’t offer them much business—opting instead to deal almost exclusively with airfreight forwarders and consolidators.

“Customer acquisition at scale is a messy process,” said Zvi Schreiber, CEO of Freightos, an online freight platform. “Customer management can be expensive and hands-on, especially in an error-prone industry like freight.”

But that situation is changing, thanks to increased competition from ocean transportation options and the advent of digital technologies that make it easier for carriers to connect directly with shippers. Shippers of high-value products like pharmaceuticals and other life-science cargoes, especially, may see airlines coming directly after them for business.

Whether a smaller shipper should deal with one or more forwarders or with air cargo carriers directly will depend also on the extent to which a shipper owns and manages its transportation processes. Online retailers, especially, are increasingly relying on air to speed deliveries to their customers. Many of the big ones are also taking ownership of their transportation and logistics, a lesson that should be considered by the up and comers. Outsourcing those functions to one or more forwarders may a good idea, depending on the shipper, but many forwarders are still technology challenged and don’t move at the pace expected in twenty-first century commerce.

That brings us to technology—and why is altering shipper/carrier relationships. The growth in online platforms have created greater transparency in the logistics space—including air cargo—and could make direct relationships between shippers and air carriers more feasible.

The air cargo industry has posted some impressive numbers of late, including a nine-percent growth in global demand last year. But a tight airfreight supply/demand picture continues to push rates up, which is giving shippers pause. Air cargo has appealed to shippers of high-value products like pharmaceuticals, electronics, machinery, and produce, but higher airfreight rates have galvanized an emerging ocean option for pharmaceuticals and other perishables. That competition has interested airlines in developing more direct relationships with shippers.

For large online retailers like Zulily, transportation and logistics have emerged as core competencies. Given the desire of customers to receive their orders quickly, the company often employs airfreight for items that originate overseas.

“We fly our international inbound product,” said Rudy Landram, the company’s vice president for transportation and vendor operations. “and have established automated processes that assist U.S. customs to approve our freight to its destination quickly.”

Zulily’s ownership of freight processes, fulfillment, and deliveries means it stands in a relationship with its vendors similar to that of a third-party logistics provider. And one thing Zulily has in common with leading 3PLs is a bias toward building proprietary systems to manage supply chains, systems that allows the company to be nimble and flexible.

Cutting-edge freight forwarders have taken to deploying systems like Zulily that are proprietary and designed to enhance the customer experience. Flexport, a full-service ocean and air freight forwarder, has deployed a digital platform developed in the last few years to incorporate the latest data analytics and decision support features of modern software. Systems like those provided by Flexport want to shake up airfreight forwarding, while maintaining the status quo of having shippers deal with airlines through forwarders.

“The last holiday season saw a big impact on airfreight with growth in e-commerce and customer expectations for speedy deliveries,” said Stuart Leung, vice president for operations and logistics at Flexport. “Amazon has set high expectations and everyone is trying to catch up.”

Some new technology, such as that offered by Freightos, aims to shake things up even further by changing the cost/benefit equation of user acquisition and encouraging airlines to expand direct sales to small and midsize companies. “We expect to see more carriers using digital channels to sell directly to shippers, even to small shippers,” said Schreiber.

“The new breed of digital freight forwarders ply wares similar to traditional freight forwarders but use technology stacks designed and built bottom-up with the aim to better serve customers,” Schreiber added. “The combination of customer service and automated process means that companies like Flexport are taking enterprise forwarders head-on.”

But the digital forwarders face significant hurdles ahead. “They compete with larger forwarders that leverage volume for lower carrier prices, making it harder to win on price,” said Schreiber. “In addition, as traditional forwarders and carriers steadily digitalize, the competitive edge provided by tech may be eroded.”

Trade is a rapidly evolving business, and, especially for those companies making their initial foray into e-commerce, 3PLs are often the ones that are able to provide quick and flexible solutions. The latest developments could turn some business models on their heads. It’s hard to say what the future holds, but one thing is certain: shippers and their service providers had better stay on their toes.

Ocean carriers are implement digital technologies to help move shipments of export cargo and import cargo in international trade.

Why we love these ocean carriers

As mobile technology and applications become more sophisticated, and ubiquitous in commercial, professional, and everyday settings, shippers have come to expect that ocean carriers provide them with electronic shipment management tools that are sophisticated and easy to use. Ocean carriers have responded with web-based, mobile, and other electronic interfaces with customers and a growing number are providing platforms for shippers to plan, process, and monitor their shipments anywhere, anytime.

These solutions are available through online and mobile platforms as well as through direct system integration to enable cargo owners and freight forwarders to manage shipments and collaborate with business partners. As carriers explore developments in technology, and consider online offerings to benefit their customers, understanding when and how shippers want to receive their shipment information has become important in helping them better manage their supply chains. From the shipper’s perspective, especially in this day and age of alliance domination of ocean container shipping, the the right technology can be an important customer service differentiator.

Why do we love these ocean carriers? Because they are some of the global leaders in implementing digital technologies for the benefit of shippers.

Sealand. “In the old days it was impossible for a small or midsized company to manage their supply-chain needs by themselves,” said Ariel Frias, director of marketing at Sealand, an operating unit of Maersk that handles north-south trade in the Americas. “They required a freight forwarder to do that for them. Technology allows business owners to transfer goods anywhere in the world by booking cargo, looking up rates, and getting quotes online. These technologies empower customers and increase the number of companies that can do business internationally.”

Much of the connectivity between ocean carriers and their customers is now moving from the desktop to mobile devices. Sealand recently introduced a mobile app that allows users to track shipments, share information, and access a user guide to shipping. An update to that app was introduced earlier this year.

Sealand also offers satellite communications on refrigerated containers. Besides monitoring the status of the cargo, this allows cargo owners to obtain the location of a container every 15 minutes.

Sealand is also working with IBM to apply blockchain to its processes. Blockchain technology can be used to connect supply chains together and process the millions of transactions processed each day in the shipping industry among numerous stakeholders.

“We are using blockchain to allow different parties access to data pertaining to a specific shipment with the idea of providing more visibility to the transfer and release of goods,” said Frias.

OOCL. The carrier, which was recently taken over by COSCO but operates independently, offers a suite of services through its website for shippers through the My OOCL Center and through the mobile app OOCL Lite. OOCL also makes use of big data and machine learning techniques to build predictive models and algorithms on vessel movements, including speed changes, route deviations, idling, abnormal stoppages, potential delays, and predictive ETAs.

“By having earlier notice of potential delays,” said Steve Siu, the company’s chief information officer, “we are able to notify our customers more quickly of changes in schedules so that they have timely information to better manage their supply chains.”

OOCL shippers also have access to multiple-carrier tools from CargoSmart, a sister company of OOCL, such as Big Schedules that leverages big data and Internet of Things (IoT) technologies to track vessels’ actual locations, adverse weather conditions, and other indicators that may potentially affect vessels’ schedules.

Yang Ming. Last year, the carrier implemented a new function via LINE bot, a communications app, which allows customers to trace container and vessel status on their mobile devices. That’s in addition to the functionality available on the Yang Ming website, which also includes track and trace.

Yang Ming is working on a blockchain initiative, as well as on internet of things (IoT) and big data analyses. “The important thing behind IoT and big data is the innovation on operational excellence and customer service,” said a company spokesperson. “Consequently, it creates a differentiation for those players who are moving faster.”

TOTE Maritime Puerto Rico. Moving perishable goods such as food and pharmaceuticals has become increasingly important to ocean carriers, including TOTE Maritime Puerto Rico, which serves the mainland United States to Puerto Rico trade. Carriers have implemented new technologies to manage these cargoes more efficiently and to monitor their status to prevent major problems.

TOTE Maritime Puerto Rico purchased 350 new high-tech smart refrigerated containers last year, according to Tim Nolan, of the company’s president. The carrier’s “entire reefer fleet,” he said, “is equipped with machine-to-machine telematics technology that maximizes safety and efficiency of supply chain operations and provides clients crucial real-time, end-to-end visibility of their shipments.”

Zim. The Israeli ocean carrier launched its ZIMonitor product, which allows shippers to track, monitor and remotely control sensitive, high-value cargo stowed in refrigerated containers, in 2015. “One innovative aspect of this program is that we integrated the monitoring device directly into the reefer equipment,” said Rafi Ben-Ari vice president for shipping at Zim. “Another is that we established a 24/7 control tower to take care of problems identified by the monitoring.”

ZIMonitor alerts—which may indicate that a container is unplugged or that its temperature if out of range or that it’s off-route—are available over mobile devices. Customers can receive whatever kinds messages they want at the frequency they request.

Zim’s communications technology is based on cellular service, which means that it can monitor containers while on the road or in the port but not when they are on the high seas. That would require satellite communications which would increase the cost of the service beyond what Zim’s customers are willing to pay, according to Ben-Ari.

For Ben-Ari, the technologies being implemented by ocean carriers will have the effect of “bringing the shipping industry a high level of service.” “The entire industry should invest together in these platforms,” he said. “Everyone will benefit from the effort.”

Commerce Department has imposed countervailing duties on shipments of export cargo and import cargo in international trade.

US issues preliminary countervailing duty on imports of steel wheels from China

The United States Department of Commerce has announced the affirmative preliminary determination in the countervailing duty (CVD) investigation of imports of certain steel wheels from China, finding that exporters received countervailable subsidies ranging from 58.75 to 172.51 percent.

As a result of today’s decision, Commerce will instruct US Customs and Border Protection to collect cash deposits from importers of certain steel wheels from China based on these preliminary rates.

In 2017, US imports of certain steel wheels from China were valued at an estimated $388 million. The petitioners are Accuride Corporation of Evansville, Indiana, Maxion Wheels Akron LLC of Akron, Ohio.

Antidumping duty and countervailing duty laws provide American businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of the unfair pricing of imports into the US. Imports from companies that receive unfair subsidies from their governments in the form of grants, loans, equity infusions, tax breaks and production inputs are subject to countervailing duties aimed at directly countering those subsidies. Commerce currently maintains 456 antidumping and countervailing duty orders which provide relief to US companies and industries impacted by unfair trade.

Commerce is scheduled to issue the final determination on or about January 7, 2019. If Commerce makes an affirmative final determination, the US International Trade Commission (ITC) will be scheduled to make its final injury determination on or about February 21, 2019.  If Commerce makes an affirmative final determination in this investigation and the ITC makes an affirmative final injury determination, Commerce will issue a CVD order.  If Commerce makes a negative final determination or the ITC makes a negative final determination of injury, the investigation will be terminated and no order will be issued.

Enhanced skills are required for workers to produce goods for shipments of export cargo and import cargo in international trade.

Improving skills through workforce development

Policymakers at the state and federal levels have expressed concern over the emerging “skills gap”—the mismatch between the job skills employers are looking for and the skills that applicants in the labor market possess. The skills gap is most acute for middle-skilled jobs, jobs that require training beyond high school but less than a four-year college degree program.

The Workforce Innovation and Opportunity Act (WIOA) is the primary federal legislation that authorizes many training and workforce development services. These services help train job seekers with skills, but administrative hurdles limit its effectiveness.

Congress allocates $4.8 billion for WIOA programs that serve six million participants. According to a recent report from the American Enterprise Institute, few WIOA participants receive and use funding for actual training services. The AEI recommends that policymakers prioritize training and simplify reporting requirements to encourage a healthy marketplace of WIOA-eligible training providers.

The skills gap can be illustrated as follows. Middle-skilled jobs account for 53 percent of the United States labor market, according to analysis by the National Skills Coalition, yet only 43 percent of the labor force is trained to the that level. Estimates have concluded the skills gap costs the US economy $160 billion annually in unfilled labor output, reduced productivity, and depressed earnings.

Recent efforts in Congress and from the White House confirm that policymakers are serious about expanding job-training opportunities, according to the AEI report, but “even with the heightened focus, a shockingly small percentage of individuals leveraging the workforce system combine available Department of Labor training funds with money from other federal and state programs—despite that many more might qualify for additional aid.”

AEI concluded that bureaucratic processes inhibit the effectiveness of workforce training, and policy requirements are not effectively communicated to potential trainees and those who administer the programs. “If the goal is to increase the number of job seekers that participate in high-quality training programs,” the reported concluded, “more can be done to improve the coordination between the Department of Labor and these groups.”

Inland facilities allow ports to handle more shipments of export cargo and import cargo in international trade.

Inland ports speed cargo to the hinterland

The South Carolina Ports Authority cut the ribbon on the site of its second inland port in Dillon in April. Growth in the intermodal sector has driven the success of South Carolina’s first inland port, Inland Port Greer, which opened in November 2013, and handled a calendar-year record of 124,817 rail moves in 2017, 20.4 percent higher than its 2016 volume.

Inland Port Greer, noted a report from Colliers International, the industrial real estate specialists, “is surrounded by 94 million consumers within 500 miles and also serves to extend the Port of Charleston’s intermodal reach by 212 miles.” Inland Port Greer also sits smack dab in the middle of a key emerging industrial market: the Greenville-Spartanburg-Anderson area.

Many seaports are strained to their capacity limits, and increased volumes of containers at coastal ports can also create problems for local warehousing and transportation. Lots of seaports are planning infrastructure improvements, but congestion will still challenge the distribution of containerized shipments to inland retailers, manufacturers, and consumers.

The inland port concept began with the desire to increase throughput capacity at seaports. This means sweeping cargo off the docks to ready the dock for the next vessel. Connecting an inland location via rail allows for large volumes of cargo to be amassed, processed, manipulated, and distributed to a regional population. The lesson for shippers is this: if your business model requires you to speed cargo to the hinterland, consider using gateways with great rail connections to inland ports.

Not every intermodal terminal qualifies as an inland port. Inland ports, experts say, contain three common attributes: scale, rail, and proximity to population centers. Veteran inland-port locations include Dallas/Fort Worth, Chicago, Kansas City, St. Louis, and California’s Inland Empire. Some of these are located 1,000 or more miles from a seaport while others, such as Front Royal, Virginia, 220 miles from the port of Norfolk, were set up as container transfer points to relieve congestion at the seaports and to serve the Washington and Baltimore consumer markets.

South Carolina is not the only port authority to invest in inland ports. Georgia just recently broke ground on an inland port with rail connections to Savannah. Investments in distribution facilities in Lehigh Valley, Pennsylvania, qualify it as an inland port to serve the New York and Philadelphia regions. If it appears that much of this development is in the east, that’s because the expanded Panama Canal has made it easier to import Asian goods through east-coast ports over the last couple of years, leading to increased volumes there.

“Building intermodal infrastructure in our state goes hand-in-hand with the significant investment we are making to our port facilities in Charleston,” noted SCPA president and CEO Jim Newsome.

“Inland Port Greer is one of SCPA’s most successful investments,” Newsome added, “as the growth of intermodal container volume movement in our state and region requires appropriate facilities in the interior to ground loaded and empty containers and to leverage the efficiency and sustainability of rail transportation.”

Inland Port Dillon, 160 miles inland from Charleston, near the North Carolina border, was chosen for is location within the Carolinas I-95 Mega Site and its centrality to a significant base of existing port users. The facility offers overnight access to and from Charleston via an existing CSX main line.

In August, Georgia’s Governor Nathan Deal cut the ribbon opening the Appalachian Regional Port near Chatsworth, Georgia. The inland terminal will be operated by the Georgia Ports Authority and served by CSX. The new rail terminal will have the capacity to handle 100,000 container lifts per year.

“The ARP is part of our initiative that brings services from the coast to communities around the state,” said GPA Executive Director Griff Lynch.

A $92 million investment approved by the Georgia Ports Authority in September will double the Port of Savannah’s annual rail capacity to one-million containers and deliver the largest on-terminal rail facility in North America by 2020.

“It is no accident the GPA is constructing rail capacity,” said GPA Board Chairman Jimmy Allgood. “As part of our strategic planning, our team identified the growing role intermodal cargo would play in GPA’s long-term success.” The added rail capacity will better accommodate longer unit trains, which will provide more frequent service and extend the territory served by Savannah to cities like St. Louis, Chicago, and Cincinnati.

The Port of Virginia reported recently that its inland operations are growing, with volumes at Virginia Inland Port (VIP) and Richmond Marine Terminal (RMT) up 24 percent and 83 percent over the summer. The Virginia Inland Port, an intermodal container transfer facility owned by the Virginia Port Authority, occupies 161 acres 60 miles west of Washington, D.C. The terminal brings the Port of Virginia 220 miles closer to inland markets and enhances its service to the Washington and Baltimore metropolitan areas.

Meanwhile, Pennsylvania’s Lehigh Valley is becoming a hub for ecommerce logistics on the east coast. FedEx Ground constructed its largest facility in the country there in 2016, an 800,000-square-foot building, tot distribute online sales purchases across the northeast. The Lehigh Valley, once a manufacturing Mecca but no longer, has added 56 million square feet of warehousing space in the last few years, more than any comparable region in the country. Online shopping demand has motivated developers to replicate the Inland Empire on the east coast, with Lehigh Valley sites drawing imported goods through the Port of New York and New Jersey.

The increased speed of ecommerce deliveries has redrawn the map for distribution space in Pennsylvania. Previously, central Pennsylvania towns such as Harrisburg and York attracted large distribution centers because of their access to several metropolitan areas and the abundance of cheap land. But more recent developments made the Lehigh Valley more attractive because it is much closer to New York City. The Interstate-78/Interstate-81 corridor of eastern and central Pennsylvania has been the fastest growing industrial market in the country over the last six years, exceeding the growth rates of other leading markets such as Houston, Columbus, and the Inland Empire. Walmart, Dollar General, Uline, Ocean Spray, and PetSmart are among the tenants of new distribution space in the Lehigh Valley. Samsung Electronics and Isuzu Motors have also signed large warehouse leases.

Continuing gains in inbound container volume at US ports, according to Colliers, is the most important driver for warehouse demand connected to seaports. “These factors,” Colliers concluded, “are expected to…expand demand in secondary markets near inland ports and large population centers.”

Energy efficiency means more shipments of export cargo and import cargo in international trade.

Report: Energy efficiency employs 2.25 million Americans

Energy efficiency added more new jobs than any other industry in the entire United States energy sector in 2017, and now employs 2.25 million Americans, according to a new jobs analysis from E4TheFuture and the national, nonpartisan business group E2 (Environmental Entrepreneurs).

The new report, “Energy Efficiency Jobs in America 2018,” finds energy efficiency workers now outnumber elementary and middle school teachers, and are nearly double the number of Americans who work in law enforcement.

“This good news buoys us beyond politics to unite a focus on the positive,” said Steve Cowell, president of E4TheFuture. “We have long known that energy efficiency is a major source of jobs, and by conservative estimates, about one in every hundred US adults now works in energy efficiency. Efficiency is also a key strategy for meeting multiple policy objectives. It saves money, improves health, lowers carbon emissions and creates local jobs that cannot be outsourced.”

The report highlights energy efficiency’s growing economic importance. Efficiency added 67,000 net jobs in 2017, making it the fastest-growing job category in the energy sector. Energy efficiency employs twice as many workers as all fossil fuel industries combined. Efficiency workers now account for 35 percent of all US energy jobs.

“We all know energy efficiency creates savings for consumers and businesses with every month’s electric bill,” said Bob Keefe, executive director of E2. “We also now know that energy efficiency creates millions of jobs all across America. These are good-paying jobs at your neighborhood construction company, upgrading windows and installing insulation; at your hometown HVAC contractor, installing heat pumps and high-efficiency air conditioners; at your local factory, manufacturing Energy Star appliances and LED lighting systems; and at thousands of related companies nationwide.”

Among the states, California leads energy-efficiency employment with 310,000 jobs, followed by Texas (154,000), New York (117,000), Florida (112,000), and Illinois (87,000). Seventeen states now employ more than 50,000 workers and the 25 states with the most energy efficiency sector jobs all now employ over 30,000 workers (1.9 million total). Only four states saw a decline in energy efficiency employment in 2017.

With workers in 99.7 percent of US counties, energy efficiency has become a nationwide job engine integral to state and local economic growth. More than 300,000 energy efficiency jobs are located in America’s rural areas, and 900,000 jobs are found in the nation’s top 25 metro areas. One out of every six US construction workers are involved in energy efficiency, as are more than 315,000 manufacturing jobs, according to the report.

More detailed breakdowns of energy efficiency jobs for all 50 states and the District of Columbia – including job totals for every state’s congressional and legislative district, and maps of each state’s top counties — can be found here.

In other key findings, 11 percent of energy efficiency jobs are held by veterans, nearly double the national average for veterans’ share of employment. In 40 states and the District of Columbia, more Americans work in energy efficiency than work with fossil fuels. Construction and manufacturing make up over 70 percent of US energy efficiency jobs. More than one-million energy efficiency jobs are in heating, ventilation, and cooling technologies. Energy efficiency employers are expecting nine-percent job growth in 2018. Energy efficiency now employs workers in 3,000 of America’s 3,007 counties. Small businesses are driving America’s energy efficiency job boom, with 79 percent of energy efficiency businesses employing fewer than 20 workers.