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Air Freight Market Update

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Air Cargo, Archives, Global Logistics, Global Trade Daily

Air Freight Market Update

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Many freight forwarders are showing a continued growth trajectory for air freight shipping. Perhaps it is a sign of the times, as shippers are continuing to use different strategies to work around persistent and significant supply chain disruption. To keep high-priority shipments moving, shippers have, at times, been choosing air over ocean in recent years.

However, overall demand for air freight dropped slightly in January this year, which may have shippers wondering – does this mean we may start to see demand and capacity levels regulate? Will air freight no longer be as necessary this year? The short answer is no, not anytime soon. In fact, demand for air freight is forecast to increase this year amidst significant capacity constraints and continued high depend for goods along with the need for inventory replenishment. While demand did drop early 2022, air freight will continue to be a key strategy for shippers.


 

For Many, A New and Necessary Strategy

A January 2022 C.H. Robinson customer research study confirmed that a significant number of shippers are using new strategies to manage through continued disruption, which has included a shift of more freight from ocean to air. Specifically, 52% leveraged new modes, ports, or trade lanes during the pandemic that they plan to continue using in 2022. And, over a quarter of shippers (28%) say that a top strategy was transporting freight by air that had previously been by ocean.

Interestingly, many have said shifting strategies has been a silver lining to the pandemic, with 44% of shippers reporting that one of the positive outcomes of the past year and a half is that they used new transportation strategies they hadn’t in the past, creating more choices for their business.

We continue to see interest from our customers in charter flights and ocean-to-air conversions, especially for moving high-priority freight such as we did for a customer moving emergency COVID-19 test kits when Omicron surged in January. Additionally, high tech and heavy industries such as automotive have leaned on air freight to help catch up with demand and mitigate high levels of disruption.

An Alternative to Ocean Port Congestion

Continued uncertainty in ocean shipping is likely to continue motivating ocean-to-air conversions. Port congestion is still causing significant delays, with vessels sitting at anchor for days waiting to berth. Global schedule reliability is at its lowest recorded level since 2011.

We’re advising shippers to consider the estimated average delays in vessel schedules (7-30 days depending on the port) and add them to the overall expected transit time to ensure proper planning to meet delivery schedules. In addition, long anchor times outside U.S. ports will cause vessels to be late on their return to Asia.

While the ongoing congestion at the Ports of Long Beach and Los Angeles, specifically, has resolved a bit in recent weeks, inventory is still backed up in transit from trans-Pacific routes. Additionally, trans-Pacific routes coming from China will continue to operate at a high level of variability due to stringent COVID-19 protocols, leaving shipments vulnerable to more delays.

In general, to help mitigate these issues, we’re advising shippers to move ocean freight two to three months in advance of normal timelines as opposed to the traditional 4-5 weeks. But, in cases where that isn’t possible, air freight can be a helpful alternative to keep shipments moving.

Latest Air Market Trends

As shippers consider air, it’s important to stay updated on trends that will affect capacity and pricing. While recovery times at airports remain elevated relative to pre-COVID-19 conditions, there are fewer extreme delays. However, throughout March and into Q2, global demand for air freight is expected to creep up and congestion will likely return.

Globally, the return of passenger flights has been slow and inconsistent. Surges in the COVID-19 Omicron variant continue, and markets with stricter policies are putting downward pressure on air capacity. That said, lowering of travel restrictions in some key markets may lead to capacity additions. It’s also important to consider using surface transportation when an outbreak arises, with past unforeseen shutdowns, C.H. Robinson has helped multiple companies shift their freight to another airport via truckload to keep their freight moving.

Tips for Next Steps

Overall, as shippers continue trying to navigate disruption and decide how best to move freight, here are some of the most impactful ways we’re seeing them find success:

-Seek creative solutions – Consider what different modes, trade lanes, or inland transportation strategies can keep shipments moving. It might be something new.

-Use information and technology – Find tools that provide timely market updates, visibility into shipments, and the predictability needed to know when to adjust.

-Closely communicate and collaborate with supply chain partners – Especially in this kind of market, it’s good to have a partner that can provide a range of options from global forwarding to surface transportation to customs and more. Working closely together, you and can better understand challenges coming from all sides be able to quickly adapt to changing circumstances.

To help stay updated on market trends and how they will impact capacity and pricing, check out the monthly updates on our Global Freight Market Insights page.

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Archives, Global Shippers 101, Global Trade Daily, International Trade

C.H. Robinson: Millions at Stake for Shippers Awaiting Decision on China Tariff Refunds

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Businesses importing from China may get a second chance to take advantage of Section 301 tariff exclusions, which were designed to provide financial relief, adding up to thousands or even millions of dollars in savings for companies, on some products being imported to the U.S. from China. At the start of 2021, a majority of these tariff product exclusions expired, increasing duty fees for shippers, and adding strain in an elevated supply chain cost environment. Now, these tariff savings are back on the table for consideration.

USTR Comment Period is Open Until December 1

About one week remains to petition the United States Trade Representative (USTR) to reinstate 549 of these expired product exclusions, which would introduce retroactive refund potential for shippers. If the USTR rules to reinstate the refunds next month, shippers would be able to file for refunds as far back as October 15. In that two-month period alone, there is potential for millions of dollars in retroactive duty refunds, and that doesn’t include the future savings these exclusions could provide shippers who are likely not going to see supply chain congestion and shipping cost relief even as 2022 begins.

When considering whether to reinstate the exclusions, the USTR will focus primarily on factors such as changes in the global supply chain, domestic product availability and effort spent on domestic sourcing by importers, and whether there is adequate domestic capacity for producing the product in question in the U.S.

What This Means for Shippers

Not only does this targeted tariff exclusion process provide a financial opportunity for shippers now, but it also introduces the potential for additional exclusions to come to light in the future, according to recent statements by the USTR. However, many current trade measures are not expected to change soon. The office has acknowledged that trade reform between the U.S. and China is ongoing as the relationship evolves with the new administration.

Still, the potential for reinstated refunds next month presents an opportunity for shippers to better understand their financial position, discover what they may be able to reclaim, and determine what impact that may have on their shipping operations.

To help provide shippers with an information advantage, C.H. Robinson has developed an automated U.S. Tariff Search Tool. The tool streamlines what can otherwise be hours of tedious tariff data analysis. Shippers can input their organization’s HTS codes and receive information about their eligibility under the tariff exclusions as well as better understand their total landed cost analysis – including their costs to import, recovering duties previously paid, and reducing their duty exposure via trade agreements.

Shippers can submit comments to the USTR at this webpage: Home (ustr.gov) and get more information on the impact this could have on the trade community here: Recent Trade & Tariff Perspectives | C.H. Robinson (chrobinson.com).

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Archives, Global Logistics, Global Trade Daily, Ocean Carriers

AN OVERVIEW ON COMPLIANCE IN OPERATIONS AND MANAGEMENT

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Shippers across the globe are sure to be confronted with new disruptions when navigating international markets–regardless of the shipping method put into place. Gone are the days when minimal compliance efforts are overlooked or passed off as acceptable. In the modern trade arena, compliance and accuracy are everything.

Tack on the pandemic, an ongoing trade war and what seems like a constantly shifting trade landscape, and compliance efforts can seem downright daunting and costly–especially to and from the U.S., according to Ben Bidwell, director of North America Customs and Compliance at C.H. Robinson.

“Former U.S. Deputy Attorney General Paul McNulty once said, ‘If you think compliance is expensive, you should try non-compliance.’ When shippers make mistakes, it can become costly and not just in terms of freight delays, but it can lead to seizure of goods and even jail time for those who are involved,” explains Bidwell. 


The C.H. Robinson executive shares that not only do shippers have to be more careful now than ever when trading across borders, but simply understanding the evergreen trade landscape and various barriers is a critical part of successful operations.

“Challenges in today’s trade market include Section 301, punitive tariffs, forced labor concerns and more,” Bidwell says. “But shippers cannot afford to forget about basics such as the U.S. Customs List of Trade Priority Issues, for example. Customs has certainly not lost sight of that list, and the importing community can’t afford to lose sight of it either.”

Different challenges require unique, strategic approaches in management. The constant shifting of these challenges depends primarily on the country in question, the products being shipped and local customs regulations. This is where automation, advanced technology and access to critical information can serve as significant game-changers for your customers and operations.

Trade & Tariffs Insights, a page on the C.H. Robinson website, “brings the latest challenges, changes and more wrapped together for importers and exporters to utilize and understand,” Bidwell says. “This resource helps shippers get the information they need–not only to remain compliant but to also keep them updated on the latest changes and potential changes that could impact their business.”

Staying informed with rock solid information is becoming ever more important, Bidwell notes.

“Visibility, access to your data and data analytics are critical in running a compliant and successful supply chain,” he says. “It equals not only results in compliance, but also duty savings, duty mitigation opportunities and overall awareness.”

C.H. Robinson’s Navisphere platform does exactly that. The data analysis tools (Carrier, Insight and Vision) capture key elements in the importing and exporting process while providing a clear path of data-backed insights and next-step actions. Navisphere leaves the guessing out of the process and enables customers to make informed decisions and cost analysis. Additionally, the different Navisphere tools serve as an extension in predictive data allowing shippers to proactively plan their next move.

“Shippers can go in and see where they are paying the most in duties and taxes by country, by specific commodity, by shipper, etc.; they can see all of that data side-by-side,” Bidwell says. “This feature gives them the opportunity to make informed decisions and assist with weighing, should we look at alternative sourcing options, for example.”

Another trending issue within the importing and exporting landscape is forced labor compliance. Bidwell shares that the penalties for such compliance issues–regardless of whether the importer is aware—are costly and can lead to the ultimate seizure or destruction of the goods in addition to severe civil penalties.

“Anytime you are shipping across borders, it is important to have a compliance program in place and that your company has individuals or a team dedicated to reviewing and maintaining that program,” he adds. “C.H. Robinson has worked with thousands of companies related to this. At the end of the day, our role is to act as an extension of their team, to not only get them up to speed on what they need to be doing from a compliance perspective, but in the long-term acting as a reliable partner to ensure their ongoing compliance.”

Shippers must keep in mind that customs has eyes on their shipments and implementing proactive rather than reactive measures will greatly benefit the business in the long-term. Bidwell advises that to ensure compliance measures are met and maintained, costs are inevitable. It really boils down to when these costs are enforced.

“Compliance is an investment. It may cost more on the front-end but skipping out on that investment could cost you tenfold in the long term. As far as other supporting elements with compliance efforts, I recommend going back to the data analytics and visibility of your own data, because that information can be telling, and it allows you to identify anomalies as they occur.”

Investing in a solid compliance strategy is not just for shippers, it is a critical piece to the entire process, throughout the whole supply chain. With the labor shortage being felt in almost every industry, the logistics sector cannot afford to skip out on the creation and adherence to acceptable compliance efforts. When employees are professionally trained and informed on upcoming changes within the market, your business benefits.

“It’s about getting back to basics and not losing sight of all of the baseline compliance that comes with importing and exporting,” Bidwell says. “It is easy to get lost with all the changes that are happening with trade policy and a very volatile market. Companies must ensure that they do not lose sight of traditional basic compliance, because that stuff hasn’t gone away, and customs certainly hasn’t stopped.”

C.H. Robinson provides solutions for their customers at the local level and across the globe. Ensuring all bases are covered through customs and compliance experts enables the customer to rely on these resource experts to advise on how to ensure their supply chain is compliant. 

To learn more about C.H. Robinson’s Navisphere technology platform or other offerings, please visit chrobinson.com/en-us/technology/navisphere/.

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Ben Bidwell is the director of North America customs and compliance at C.H. Robinson. Ben joined C.H. Robinson in 2004 and became a Licensed Customs House Broker in 2007. Throughout his career at C.H. Robinson, he has consulted and resolved a wide range of customs disputes for clients involving classification, country of origin, marking violations, seizures and protests for products ranging from hospitality goods, automobile tires, apparel and textiles, toys and other consumer retail goods.

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Archives, Global Logistics, Global Trade Daily, Ocean Carriers

Three Supply Chain Risk Management Lessons You Can Learn from the Suez Canal Block

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The Ever Given vessel is floating, but the ship is not out of hot water. In fact, Egyptian authorities said it will remain in the Suez Canal until they are compensated by the vessel owners for the damage, labor, and disruption caused. Although the cargo on the Ever Given is still at a standstill, other ships have been able to freely move through the canal over the past few weeks.

Even still, the effects of the Suez Canal block will continue to ripple far beyond the cargo that remains stuck on the Ever Given. The influx of delayed cargo has disrupted offloading schedules at ports, delivery schedules for shipping companies, and even orders sent directly to consumers. As an industry, it’s imperative for us to learn from this and develop strategies to minimize the impact of similar blockages should they happen in the future.

Now that we can view the incident in hindsight, I wanted to share three risk management lessons you can take away from this to create a healthier supply chain.

1. The entire supply chain can be impacted by one accident

Although the Suez Canal handles only 13% of global trade, its blockage rippled through the supply chain worldwide. The BBC reported that 369 ships were stuck waiting for the Ever Given to be refloated. Not only did all those ships have significantly delayed cargo, but the disruption created a backlog of cargo that continues to be felt today at ports, warehouses, shipyards, retail locations, and ultimately, by customers.

For an example of the negative effects this sort of delay can have, let’s look at perishable deliveries. Perishables are on tight delivery schedules that ensure the product arrives at its destination fresh and ready for purchase. Adding a week to the delivery timeframe for perishables can kill the entire supply chain. Even if the goods are still delivered in acceptable condition, they will not be able to spend as much time on shelves, resulting in a massive amount of food waste and lost profit.

The Suez Canal block has also affected supply chains through the ships that were rerouted from the canal. These ships will arrive later than expected and have a higher potential for damaged cargo as they spent more time navigating through rough seas. This may delay shipments, cause inventory shortages, and create logistical difficulties at various offloading points.

We have yet to even see the full range of effects that this mishap will have on the global supply chain, but it has proven that any incident in the supply chain ripples out to points all across the globe.

2. Flexibility is key

Congestion and disruption can always get worse. Because shippers and even logistics experts can’t always predict exactly what will happen, it’s important to have a plan for every eventuality. Planning ensures that you remain flexible and meet your goals, regardless of the obstacles faced along the way.

To remain properly flexible, you need to have a broad range of options on hand. For example, at C.H. Robinson, we assist our clients through our suite of global services. We use a diverse array of services to ensure that our clients are supported, no matter the situation. For instance, when approaching ocean shipping, we leverage full container load (FCL) and consolidation less than container load (LCL) ocean services to create a diversity of options for our customers. Not only does this allow them to choose the option they desire, it also provides them with alternatives should anything unexpected occur.

Additionally, using the insights gained from logistics technology, in particular from supply chain connectivity technology, can help you see what a supply chain error or delay will affect, making it easier to get ahead of the effects before they derail your operation.

Ultimately, this is all in pursuit of resiliency. Because there are so many moving parts in the global supply chain, it’s unreasonable to expect that each part will always be in sync. An excellent logistics plan with an excellent logistics partner combine to ensure resiliency against even the most unexpected events.

3. A risk management strategy is no longer a luxury

Since the global supply chain has grown so large and so complex in the 21st century, risk management strategies have become a necessity. In most cases, customers expect that they are a given. In the case of the Suez Canal incident, none of the ships stuck behind the Ever Given ever expected that the Suez Canal would be blocked, and no one on the Ever Given expected to become lodged in one of the world’s most vital trade passages. Regardless of expectations, these accidents occurred, and everyone was scrambling to mitigate the risk.

Because no one can predict such incidents, it’s vital to have risk management strategies in place well before any issues occur. Even before the Suez Canal blockage, the importance of risk management for ocean shipping had been increasing. In February, we touched on the increase in vessel accidents over the past year. In that article, we discussed how to prepare for a vessel accident, and many of the same lessons that we imparted there apply to this situation.

Specifically, the two most important pieces of advice that carry over are purchasing maritime insurance and working with a provider with a global suite of services. We’ve already discussed the importance of working with a reputable, well-connected provider, but it bears repeating that a provider with a global suite of services can correct issues faster and more effectively than you could on your own.

Maritime insurance is something that we highly recommend purchasing whenever you engage in ocean shipping. Imagine how you might feel if you were carrying a large amount of produce that rotted while you were stuck in the Suez Canal. Even worse, imagine you were the managing company of the Ever Given, now being asked to pay up to $1 billion by the government of Egypt for the affair. If you found yourself in this situation and did not have maritime insurance, your company could quickly find itself sunk by a combination of lost revenue and damages. Even on a smaller scale, if you were shipping cargo through rough seas and a single container were lost or damaged, having insurance would save you from stressful financial headaches.

Spare yourself trouble by staying prepared

Issues like the block in the Suez Canal have a lot to teach shippers and logistics experts about the interconnected nature of global supply chains. To provide the highest possible level of service to your customers, consider the plans that you have in place for when something goes wrong in the supply chain.

Ready to protect yourself against supply chain disruptions? Connect with our global network of experts to see how C.H. Robinson can provide solutions for your business.

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Archives, Global Logistics, Global Shippers 101, Global Trade Daily

How Will Ocean and Air Market Conditions Affect Your Shipping Decisions?

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Global transportation—like many industries—has faced unparalleled disruptions over the past year. Now, as we head into 2021, there are new and different challenges added to the mix.

Many of our global shipping customers are up against the clock with Chinese New Year (CNY) approaching, while also navigating potential changes from a new U.S. administration. Of course, fast-changing consumer behaviors, port congestion, and continued uncertainty around the impact of COVID-19 continue to bring changes to the market as well.

Today I’m going to focus on how the ocean and air shipping markets have been affected and steps you can take to successfully account for these and other events.

Greater market demand overall

The global logistics market is forecasted to grow over 17% in 2021. And only a month into the year, that growth seems to be on track due to heightened demand across major global trade lanes. Volumes between China and the United States have increased by 30% compared to this time last year. It is likely the demand will continue past CNY, which falls on February 12, this year.

We historically see a spike in demand before CNY, but this year looks different from past years. Many companies are stockpiling and replenishing stock rooms in the wake of COVID-19 disruptions. And with a continued need for PPE and the dramatic uptick in ecommerce shopping, it’s no wonder there’s greater amounts of freight being moved right now.

Demand and disruption in ocean shipping

Ocean shipping capacity and port congestion

You’re most likely to see the most congestion and capacity constraints when shipping via ocean service in early 2021.

Significant increase in demand and equipment shortages in Asia have led to longer dwell times for vessels, which inevitably delays export shipments. In the United States, carriers continue to reduce the amount of exports in order to reposition empties back to Asia. Additionally, the uptick in vessel accidents due to inclement weather has added to the delays. Companies whose freight went overboard are not the only ones impacted, in fact the recent incident with ONE APUS resulted in all remaining freight being unloaded in Japan for further inspection. Inspections and transloading are likely to add considerable delays to a container’s journey.

Historically, ocean carriers announce the percentage of capacity that will be removed from the market during CNY. However, with the continued high demand and equipment shortages likely to continue through March, carriers have announced they will only remove 2-4%. This is down from the average 15-20% that we’ve seen removed in previous years.

Demand and disruption in air shipping

COVID-19 vaccine distribution

Air passenger travel is still down, and capacity for air cargo remains tight. Today, COVID-19 vaccine distribution has had minimal impact on capacity, but we’re closely monitoring the situation as it could and likely will change rapidly.

The majority of COVID-19 vaccines will not require inter-continental airlift, however, when doses do need to be transported via air, many airlines are already prepared to reposition capacity. When this happens, expect heavy demand from both Europe and India. And if/when this capacity is pulled from today’s already tight air market, your global supply chain may need to pivot in response.

With new COVID-19 strains and outbreaks, many countries are now requiring pilots and airline crews to quarantine or limit overnight deliveries. These changes will likely add to the inconsistencies and put pressure on air freight costs.

Successfully overcome shipping challenges

Monitor global events

Shipping across borders inevitably means customs and global compliance will play a vital role in your supply chain. It’s important to keep abreast of the changing global trade climate so your company can remain compliant and avoid customs delays. This is especially true with a new U.S. administration in place and Brexit in full swing.

While President Biden has indicated he does not plan to focus on trade and tariff changes immediately, he has already expressed his intention to approach trade differently than the previous administration.

Additionally, shippers both in and out of the UK will need to stay up to date on changing regulations as Brexit continues to progress, and any change may directly impact many supply chains.

Establish a plan for disruptions

Despite the challenges, it is possible to mitigate delays due to congestion and equipment shortages. We’ve been able to help multiple customers avoid 10+ day delays by routing shipments through a different port or shifting freight across modes.

Instead of trying to keep up to date about market changes from several news sources, you can trust a single information source to help you see how market trends will impact capacity and pricing. C.H. Robinson’s Global Forwarding Insights webpage provides a clear picture of rapid shifts in ocean and air capacity by aggregating current market information, like I shared above, in one easy to view place. With trade lane level detail, these market insights provided by industry experts are presented with an easy to understand summary of past and present market conditions so you can maintain flexibility, adapt to potential disruptions, and prepare for the most complex shipping challenges.

To dig deeper, connect with your logistics provider to develop a disruption action plan which is key to creating an agile, flexible, and well-rounded supply chain.

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Archives, Global Logistics, Global Trade Daily, Trucking

The Demand Supply Chain: How to Win as the Bar Continues to Rise in the Retail Industry

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The year 2020 was a year unlike any other, and supply chains were more front and center than ever before. This is especially true in the retail space, as a surge in ecommerce and pandemic-driven demand volatility increased the rate of change in an already rapidly evolving industry. For many, a complex global supply chain became even more challenging to navigate. As we kick off 2021, those complexities are still present, but with a new year comes new opportunities to innovate and address some of the biggest challenges for our retail and consumer packaged goods (CPG) customers, such as:

-Planning environments are complex and can lead to costly surplus Days of Inventory on Hand (DOH)

-There’s a desire to meet and exceed heightened consumer expectations

-Industry volatility and logistical complexity creates a risk of high on time in full (OTIF) fines

-Increased reliance on the transportation spot market due to industry planning uncertainty

-Transportation requests for proposal (RFPs) are labor-intensive and can be out of alignment with customer needs

Annual transportation RFPs can take up to half a year to conduct and can become quickly out of date. This challenge has become more prominent as market unpredictability has continued to disrupt these plans. There are two main variables to blame: Changes in demand or sales, and shifts in supply and demand in the transportation market. But those two functions only come together once a year, if ever—when bids are being prepared and shippers are trying to predict what they have to bid out. After that, they really don’t talk to each other.

When demand for a certain product explodes, you can overload the carrier who signed on for less. You start paying more immediately for backup carriers, or worse, pay much more if you go to the spot market to procure trucks.

Retail and CPG shippers need innovative solutions to help them overcome these challenges and succeed today and into the future.

This is why I am excited about C.H. Robinson’s recent partnership with SAS, a trusted analytics powerhouse, to bring end-to-end supply chain processes and technology solutions that connect demand and inventory planning data with procurement and transportation data, in real-time. This solution is delivered through a powerful combination of C.H. Robinson’s information advantage and technology built by and for supply chain experts, and SAS’ demand planning and forecasting technology and expertise.

We’ve joined forces to unify two functions that have often worked in autonomous siloes, demand planning, and transportation optimization. Our partnership creates a first-of-its-kind integration of demand planning data and real-time transportation data that will drive smarter, more agile supply chains.

Steering a supply chain from a centralized operation like this will allow companies more fluid adjustments in scheduling, transportation optimization, and responses to changing consumer demand while inventory is still moving on the ground.

Our retail and CPG customers, both at C.H. Robinson and SAS, look to us for cutting-edge solutions that will help them succeed in the marketplace. As we continue to listen to the pain points within the industry, we are working together to create solutions that will enable shippers to reduce inventory, improve service, increase savings, and gain efficiencies.

Reduce inventory

-Reduce inventory levels with a demand-powered supply chain. Carrying inventory is a major expense. Some safety stocks are needed when it isn’t possible to plan and adapt to changing conditions in real-time, which this solution now enables you to do.

Improve service

-Provide more predictability to carriers in real-time, letting them know what is changing in demand.

-Align the largest pool of reliable transportation capacity to the specific needs of your demand plan.

Increase savings

-Spend less on spot market procured freight, by allocating your freight the way carriers want it. In most of 2020, spot market rates were around 30% higher than the previous year, and are usually much higher, at times double, than contract planned rates.

-Reduce fines for late, missed, or incomplete deliveries which can be common in retail.

Gain efficiencies

-Spend less time on your annual procurement event by taking advantage of SAS’ and C.H. Robinson’s technology tools that help you rely less on the static annual plan.

We are just getting started. Today, our solutions are focused within the retail space, but we recognize there are opportunities to expand beyond that as other industries face similar challenges.

I am looking forward to continuing to partner with SAS to bring innovative solutions to the table that will help shippers overcome industry challenges.

If you are interested in learning more, you can view our recent press release. And, if you are ready to discuss these solutions, connect with our experts.

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Archives, Global Trade Daily, News

C.H. ROBINSON AND SAS JOIN FORCES TO UNLOCK NEW ERA OF DYNAMIC BUSINESS PLANNING FOR RETAIL AND CPG COMPANIES

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Today, leading global logistics company C.H. Robinson and world-renowned data analytics company SAS announced a partnership to rewrite the way global supply chains work as they become increasingly more complex. Until now, supply chain demand planning and shipping execution often worked in autonomous siloes without connection, digital integration, or real-time visibility. This partnership will solve that problem by creating a first-of-its-kind offering: an end-to-end supply chain solution that integrates inventory and demand signal data with real-time transportation data. Steering a supply chain from a centralized operation like this will allow companies more fluid adjustments in scheduling, carriers, and responses to changing consumer demand while inventory is still moving on the ground.

Retail and CPG (consumer packaged goods) companies in North America will benefit first from this integration, although it is designed to eventually fill the gap between business and logistical planning across all industries.

“The C.H. Robinson and SAS collaboration uses data and analytics to solve a gargantuan supply chain problem: agility,” said Brian Kilcourse, retail and CPG analyst at RSR Group. “As 2020’s shortages illustrated, COVID pushed retailers and consumer goods companies over the supply chain cliff. The C.H. Robinson-SAS partnership combines data from retailers and consumer goods companies with logistics and transportation data to build faster, more resilient, cost-effective shipping methods that honor traditional models while clearing a path for needed innovation.”

According to SAS’ Richard Widdowson, Vice President of Global Retail & CPG Solutions, the future winners in transforming retail supply chains will be those who change their mindset from long-term planning to agile planning by effectively leveraging data to make adjustments in real time. “Powered by SAS and mobilized by C.H. Robinson, this partnership helps companies see their supply chains in a new light,” Widdowson said. “It will help make opportunities and challenges visible as they happen so our customers can accomplish more – even during a disruption of pandemic proportions.”

Within an integrated data loop, SAS triggers a demand plan which feeds into C.H. Robinson’s dynamic transportation procurement tool. In turn, that connects into the world’s largest supply chain management platform, Navisphere, to provide real time visibility of inventory, which then links back and informs SAS’ Intelligent Planning suite. This means a retailer or maker of packaged goods, for example, can connect its corporate demand plans to products and freight on the move. They then can better react to real-time changes in demand, such as surge in consumer interest, and real-time changes in transportation factors, such as inclement weather.

“By establishing this unprecedented information loop, we are transforming the procurement process and giving companies the information advantage and flexibility needed to better compete in today’s rapidly evolving transportation marketplace,” said C.H. Robinson’s chief commercial officer Chris O’Brien. “Rather than relying solely on an annual transportation contract event which frequently becomes out of sync with real-world variables, we can build a more dynamic procurement plan that can flex based on real-time changes in product demand and the transportation market. More than ever, supply chain agility, based on real-time data, can be a competitive advantage for companies.”

“Our work with C.H. Robinson and others at the MIT FreightLab has shown that the freight transportation industry needs innovation in procurement and demand-planning to reduce cost, minimize risk, and increase the level of service for shippers,” said Chris Caplice, Executive Director of the MIT Center for Transportation & Logistics (CTL) and FreightLab. “This partnership helps move the industry forward in the right direction of a more responsive and agile transportation procurement solution.”

For more information on the SAS and C.H. Robinson partnership, or to request a demo of the integrated tools, visit CHRobinson.com/SAS.

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About C.H. Robinson

C.H. Robinson solves logistics problems for companies across the globe and across industries, from the simple to the most complex. With nearly $20 billion in freight under management and 18 million shipments annually, we are one of the world’s largest logistics platforms. Our global suite of services accelerates trade to seamlessly deliver the products and goods that drive the world’s economy. With the combination of our multi-modal transportation management system and expertise, we use our information advantage to deliver smarter solutions for our more than 119,000 customers and 78,000 contract carriers. Our technology is built by and for supply chain experts to bring faster, more meaningful improvements to our customers’ businesses. As a responsible global citizen, we are also proud to contribute millions of dollars to support causes that matter to our company, our Foundation and our employees. For more information, visit www.chrobinson.com (Nasdaq: CHRW).

About SAS

SAS is the leader in analytics. Through innovative software and services, SAS empowers and inspires customers around the world to transform data into intelligence. SAS gives you THE POWER TO KNOW®.

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Archives, Global Trade Daily, International Trade

How Your Business can Take Advantage of Section 301 Tariff Refunds

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If you’re a U.S. company importing from China, you may have tens of thousands or even millions in tariff refunds waiting for you. With two-thirds of Chinese origin goods subject to Section 301 tariffs, companies large and small have been impacted since they were implemented in 2018 amid a U.S.-China trade war. Currently, 301 tariffs are extremely broad, covering industries from food and beverage, industrial supplies, transport equipment, consumption goods, and fuels and lubricants, to name a few. And now is your chance to get a refund on some of those extra duty payments via 301 exclusions before a vast majority of them expire on Dec. 31. These exclusions offer just the kind of cost-savings so many companies are looking for as we face a volatile economy and pandemic.

Taking advantage of duty recovery

If you’re not familiar, the Office of the United States Trade Representative (USTR) implemented the exclusion process for 301 tariffs when they were first enacted in 2018. This opportunity provided businesses the chance to request an exclusion and/or submit for duty recovery on exclusions that were already available.

Looking across our own customers, we identified a potential duty recovery refund of roughly $980 million. However, we found the timeliness and complexities of navigating the amount of exclusions can be overwhelming for small and large companies alike. And we get it, without the right data, technology, and expertise the process to compare your HTS codes against hundreds of exclusions can take hours, and that’s without considering that over 96% are product-specific which requires an even deeper level of analysis. With C.H. Robinson’s technology built by and for supply chains and a global suite of services, we’re able to decrease the amount of time needed in the complex and lengthy refund recovery process. Through our global trade experts and single, multimodal, global technology platform Navisphere®, we utilize data comparison and analysis tools to quickly reveal your refund potential.

We have already helped hundreds of companies take advantage of the refunds for which they qualify. One of the companies we assisted was Wheel Pros, a large wheel design, and distribution company, in submitting for a substantial refund. Keep in mind, large refunds are not only for large companies, our global trade experts have helped multiple small and mid-sized businesses uncover and submit for large refunds.

Keeping up with global trade changes

While the majority of current exclusions are set to expire on Dec. 31, we’ve been around long enough to know the only constant in global trade is change. So, we also created a Trade & Tariffs Insights webpage to help you keep up with it. It’s like having your very own global trade concierge service with weekly updates on the changing global trade marketplace along with custom insights and commentary from our leading global trade experts to help you make sense of it all. Trade and Tariff Insights cover topics like tariffs, exclusions and any other trade or compliance issues you need to know about. That way, you can focus on operating your business.

To learn more, visit Trade & Tariffs Insights. You can also reach out to one of our trade experts to explore your refund potential for 301 tariffs before time runs out.

supply chain
Air Cargo, Archives, Global Logistics, Global Trade Daily, Ocean Carriers, Warehousing

How to Best Prepare for Current (and upcoming) Supply Chain Disruptions

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Weekly meal planning is a recurring event in our household. Although this activity is not particularly exciting, every Saturday my wife and I sit down to plan out our family meals. This process helps us avoid the mid-week supermarket scramble, as well as sidestep overspending on items we don’t actually need. Sound familiar? Supply chain planning is no different when it comes to yielding efficient results, especially this year.

It’s no secret the way companies ship their freight has shifted due to COVID-19. C.H. Robinson is great at helping customers secure capacity and optimize their global freight across our suite of service offerings as their needs evolve. Due to COVID-19 market changes, our global team of supply chain experts has spent extra time securing expedited less than container load (LCL) capacity for companies that can work with extra lead time. Another big change is how many ghost or charter flights are used to make up for lost capacity from the mass decline in global passenger travel.

However, COVID-19 is not the only event putting pressure on the freight market now. And with passenger travel not expected to recover until 2024, proactive solutions are needed to avoid current and upcoming disruptions.

Prepping for peak shipping season and new tech launches

When it comes to maximizing your global freight, it’s important to take seasonality into consideration. Peak shipping season for global air freight historically begins in October, and we’re already anticipating a busy peak season due to the unbalanced relationship between supply and demand. Even if air freight volumes were consistent or less than previous years, there is a lot less capacity to work with. Additionally, ocean shipping is experiencing a busy peak season now as companies prepare for the holiday shopping surge.

Consumers are also eagerly awaiting new technology releases—including the iPhone 12, Sony PS5, Xbox, and more. High priced commodities, like consumer electronics, primarily ship via air. And while consumer tech launches are not uncommon during the holiday season, the lack of passenger planes aren’t helping the situation this year. This, combined with the volume surge in other commodities related to peak shipping season and continued demand for personal protective equipment (PPE) creates a tighter market.

What can global shippers do to combat tight capacity?

The key is to remain flexible and remember it’s never too late to start planning. Although some items, such as technology, tend to move by air, global shippers can consider shifting other commodities to expedited LCL or expedited full container load (FCL) service to mitigate disruption and stay agile in a tight global freight market.

However, for those shippers that truly depend on air capacity, shifting modes isn’t always an option. So, while ghost flights were a reactive solution for many this past spring, C.H. Robinson took our own planning advice and proactively chartered weekly 747 cargo flights from China to the U.S. from October to November, as well as Europe to the U.S. until the end of the year. Capacity on a 747 cargo aircraft can hold up to five times more freight than an average ghost flight. And our global network of experts knew proactively purchasing that space was necessary as global shippers face peak season, PPE from Asia, and a recovering economy out of Europe. We’re already seeing this approach drive solutions for our customers.

Looking forward to COVID-19 vaccines

COVID-19 vaccines are on the horizon. Once one or more is available for global circulation, it will likely create a significant ripple effect throughout supply chains. Even if your company is not directly connected to distributing or manufacturing a vaccine, the time to start planning alternative modes or routes is now.

Like technology, vaccines primarily ship via air to monitor the temperature and deliver them to market quickly. According to IATA, 8,000 747 flights would be needed to distribute a single dose of the vaccine to 7.8 billion people around the world. Although a vaccine with this large of a global magnitude is new, we can get a sense of the supply chain reaction by looking back at the height of global demand for PPE. Throughout the spring we saw airlines, 3PLs, carriers, companies, and government agencies go above and beyond, working extra hours and expediting products in order to create and deliver PPE around the globe quickly. It’s likely we’ll see the same comradery with the vaccine—pulling manpower and capacity away from other shipping needs.

Although we know air freight will play a vital role in distributing vaccines, last -mile is also an important area companies and logistic professionals are planning for. Last-mile planning will be especially important in countries where road or manufacturing infrastructure may be underdeveloped. However, keep in mind whether your company is involved in vaccine distribution or not, it’s still likely your supply chain will be impacted by higher transportation rates or additional capacity constraints across modes.

Final thoughts

As the pandemic spread across the globe, we saw air cargo rates rise to unprecedented levels. Airlines and cargo operators continue to adapt quickly to this dynamic market. Now it’s time for companies to evolve, too. Never before has a balance between proactive planning and flexibility been so important.

Planning ahead and using forecast data can be the difference needed to turn a dysfunctional supply chain into a strong, agile one that is ready to face this volatile market. We know logistics can’t exist in a world of absolutes. This makes it difficult to prepare for today’s (and tomorrow’s) disruptions—or even to know where to begin. That’s where C.H. Robinson comes in. Utilizing our information advantage, you can rely on our people to bring you smarter solutions across your global supply chain. Reach out to one of our experts today to start the conversation.

3PLs
3pls, Archives, Global Trade Daily, Stories

10 3PLS KILLING IT WITH DISTRIBUTION LOGISTICS

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The third-party logistics (3PL) industry did more than $200 billion in revenue in the U.S. in 2018, according to Armstrong & Associates. That figure is double what it was just a decade ago. Rising labor costs, tight shipping capacity and a general need for companies to cut distribution costs are all fueling the growth.

Here are 10 3PLs that are making noteworthy advancements in the world of distribution logistics.

C.H. Robinson

Already one of the largest 3PLs in the world, C. H. Robinson is in the process of acquiring Prime Distribution Services, one of the nation’s leaders in retail consolidation services. “Prime Distribution Services is a high-quality growth company that brings scale and value-added warehouse capabilities to our retail consolidation platform, adding to our global suite of services,” said Bob Biesterfeld, C.H. Robinson CEO, in January. Prime currently operates five distribution centers throughout the U.S., totaling about 2.6 million square feet. With nearly $20 billion in freight under management and 18 million annual shipments, C. H. Robinson earned the top slot in Armstrong & Associates’ Top 50 U.S. 3PLs for 2018.

Holman Logistics

Headquartered in Kent, Washington, Holman opened in Portland back in 1864. Today, it’s one of the leading logistics firms in the Pacific Northwest, though it also manages facilities throughout the nation. The company offers public and contract warehousing (with 7 million square feet of warehousing space), manufacturing logistics, plant support, transportation, collaborative logistics and order-fulfillment services. In terms of distribution, Holman handles both truckload and LTL deliveries, as well as spotting and shuttle services. Some of Holman’s biggest customers are Hill’s Pet Nutrition, Kimberly-Clark, General Electric appliances, Dr. Pepper/Snapple Group, Dole Pineapple, Kerry Foods, Cargill and Morton Salt.

Anchor 3PL

For customers that deal with hazardous materials, logistics can be a tricky, even dangerous proposition. If it’s going the 3PL route for distribution, it’s imperative that it find a company that thoroughly understands the demands of hazmat logistics. While not a large firm, Anchor 3PL operates a 140,000-square-foot warehouse that has 40,000 square feet dedicated to hazmat. Based in Salt Lake City, Anchor regularly deals with chemical and hazmat storage and distribution, works with fire and safety departments, stays on top of the thousands of legal requirements for storing and transporting hazardous materials and maintains relationships with all the regulating authorities.

Kanban

Even with the Trump Administration’s 2018 tariffs on imported photovoltaic panels, the solar industry is booming. Located in eastern North Carolina, in the heart of domestic solar energy production, Kanban is using its thorough knowledge of the industry and logistics to help customers with warehousing and distribution of solar panels. With a million feet of warehouse space, Kanban was able to both assist customers with high-volume warehousing before the tariffs took effect, and then offer solutions for companies that had to change course once the tariffs started. The company also offers logistics assistance for aerospace, food processing and automotive industries.

Cardinal Health Specialty Solutions

Moving pharmaceuticals around the country requires more than simply a cold chain distributor. In 2011, Cardinal began using a special non-toxic, environmentally friendly insulated tote to keep products between 2°C – 8°C (36°F – 46°F) during shipment. The result keeps the supply chain safe as well as prevents possible spoiled or adulterated products from re-entering the supply chain. For vaccine storage and shipment, Cardinal’s commercial refrigeration units are only calibrated using devices from the National Institute of Standards and Technology (NIST). It’s no surprise that Cardinal Health moves one out of every six pharmaceutical products in the country.

Cerasis

Since 1997, Cerasis has specialized in less than truckload (LTL) freight management. In fact, close to 95 percent of the company’s business has been in the LTL realm. Not only does this make sense for those wishing to move smaller volumes of freight, but it’s also perfect for e-commerce shipping. Cerasis is based in Minnesota but maintains offices in Oklahoma and Texas. GlobalTranz acquired Cerasis in January 2020. “Combining with GlobalTranz allows us to continue this history while providing our customers with increased service offerings and access to capacity,” said Cerasis President Steve Ludvigson shortly after the acquisition.

Expeditors

Based in Seattle, Expeditors operates 322 locations in more than 100 nations. Though it handles logistics for a variety of industries, Expeditors has considerable experience and expertise in the automotive world. Its customers include both original equipment manufacturers and tier suppliers, and it uses its sprawling global network—which includes more than 25 million square feet of warehouse space—to track items at the part or vehicle identification number level. Expeditors’ distribution services even include light manufacturing, labeling, product localization, inspection and product rework and compliance.

BDP International

Moving oil and gas around the world is complex, even in the realm of international logistics. No shipment is the same, and regulations are often changing. But BDP has long specialized in moving fuel, so it understands pricing, procurement, heavy lift and turn-key rig mobilization. In terms of distribution, the company operates facilities all around the world (including Dallas, Houston, Los Angeles and Philadelphia), and uses extensive barcode scanning technology to keep track of everything. The company even offers its own BDP Smart Tower application, which allows customers to monitor asset locations, maximize asset utilization and coordinate maintenance and repairs to keep equipment downtime at a minimum.

Qualex

In 1990, Qualex opened as a dock-to-dock delivery company for Southern California furniture makers. Since then, it’s evolved into a full 3PL firm with tightly integrated warehouse and transportation services, though it still specializes in the furniture industry. For each customer, Qualex sets up an Electronic Data Exchange (EDI), which channels replenishment orders directly into its own Warehouse Management System (WMS), making logistics practically invisible.  Full distribution services include confirmation receipts, the automatic emailing of proof of delivery, inventory status reports, installation job status and even emailed photos of product condition upon delivery.

United Natural Foods, Inc.

Since grocery profit industry margins hover around just 2 percent, outsourcing logistics is practically mandatory. With its 2018 acquisition of Supervalu Advantage Logistics, United Natural Foods Inc. (UNFI) became a leader in grocery industry logistics. In fact, it’s the largest publicly traded grocery distributor in the nation. And its warehouse facilities are cutting edge—some have radiofrequency devices that guide selectors to stock, while others are completely automated, ready to deliver aisle-ready pallets to retail stores. SuperValu also ran all the logistics for four regional warehouses belonging to Krogers, the second-largest grocery chain in the country.