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Investing in Supply Chain Technology Will Give You a Competitive Edge

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Archives, Global Logistics, Global Trade Daily, Trucking, Warehousing

Investing in Supply Chain Technology Will Give You a Competitive Edge

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The COVID-19 pandemic brought about many changes, some of which were more unexpected than others. Anyone with a stake in the logistics industry saw unprecedented supply chain shortages and disruptions that impacted everyone. Materials foundered in warehouses with no one to transport them to factories for manufacturing. Completed products collected dust because no drivers were available to carry them to their final destination. It even threw a wrench in Christmas 2021, making it harder for consumers to get their hands on artificial trees.

Some of these issues have begun to fade, but there are still challenges facing the supply chain industry. How can investing in new supply chain technologies give companies a competitive edge?

The Last Mile Is Evolving

While 2020 wasn’t the first year where e-commerce and online orders started to take precedence over physical storefronts, adding a global pandemic to the mix made having that option more essential. It allowed people to stay home as much as possible while still ensuring they had everything they needed or wanted throughout the lockdowns. Consumers have grown accustomed to fast delivery, but their definition of fast is different from what most might typically find in the logistics industry.

One recent survey found that 96% of consumers equate “fast” delivery with “same-day” delivery. Barely half of the retailers offer that delivery option, but that consumer definition means it is essential to shorten the amount of time those last-mile deliveries take. Supply chain innovations and new technologies can help bridge the gap between what the consumer perceives as fast and the reality that defines the logistics industry as it currently stands.

Artificial Intelligence (AI) Is Making Its Mark

The logistics industry as a whole generates massive amounts of data every single day. Supply chain data, consumer information, manufacturing details, and everything in between gets collected and stored. This data is often stored where companies can access it, but it’s usually just a mish-mash of numbers in its raw form. Making sense of that information is often beyond what even the most skilled business owner can manage – at least on their own.

Experts anticipated that more than half of companies in the supply chain industry were planning to begin investing in artificial intelligence systems for their companies by the end of 2021. This is a 15% increase year-over-year for this industry alone. In the long run, AI will likely add trillions in value to the industry in the coming years. This trend is picking up speed, but there is still plenty of time for existing companies to get in on the ground floor and adopt it before it transitions from niche to necessity.

Changing Best Practices With Robotics and Automation

Robotics and automation is a field that often earns a lot of negative attention and press because of its threat to human jobs. People are afraid that robots will steal jobs, and this sort of hidebound attitude has often led to industries that are otherwise on the cutting edge of their field shunning advances. In supply chain operations, experts expect robotics and automation to grow steadily over the next five years, especially in any situation where a robot can take over a dangerous or high-risk task.

Introducing robotics and automation can help companies overcome existing problems, especially regarding functionality and fulfillment. Warehouses that still rely on manual picking methods aren’t going to keep up with the growing demand when competing against companies that have already purchased and implemented automated picking systems.

Removing Humans From Some Equations

A lack of skilled workers, especially in the trucking industry, has presented a unique challenge for those working with supply chains. Having all the materials in the world doesn’t mean much when no one is available to haul those materials from warehouse to factory or from factory to consumer. There was a shortage of 80,000 truck drivers by the end of 2021, and experts estimate that will double by 2030.

The technology is almost ready for self-driving trucks that could help offset this growing labor shortage. They will never fully replace the need for human drivers, but they could help fill in the gaps while the trucking industry makes the necessary changes to rebuild its ranks. The demand for skilled drivers will never disappear, especially when the weather turns sour. Still, these self-driving alternatives could help ensure materials and finished products promptly reach their destinations.

Warehouse Optimization Is Key

Warehouse layout options haven’t changed much in the last few decades, but change is a necessity if companies are hoping to keep up with the increased demand. Warehouse optimization is essential to manage the increasing number of orders. Often, something as simple as rearranging the inventory so the most frequently purchased items are closer to the picking and packing stations can help, but that isn’t always enough.

Warehouse management systems – software designed to sort through and manage all the data a warehouse produces – are one piece of the puzzle. These, when paired with the artificial intelligence and machine learning systems mentioned above, can create a network that will increase productivity and supply chain efficiency. Robotics and automation will also play a role, removing some of the human element, especially in regards to inventory management and picking orders. The goal here isn’t to eliminate human workers entirely, but to make their jobs easier through AI and other advanced supply chain technology so they can carry them out more efficiently.

Overcoming Supply Chain Challenges in the Future

No one could have anticipated the challenges that arose during the COVID-19 pandemic. Now, companies need to work to recover from those challenges and overcome any new problems that might occur in the future. New technologies can help give companies an edge in an already ultra-competitive industry. For those that haven’t already started considering these changes, now is a perfect time – the calm between storms – to begin researching how it could work for them.

The demand for e-commerce and the supply chains to support it isn’t going to go away anytime soon. Now is the time to start adopting these new technologies so companies can start getting ahead of the competition.

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Archives, Global Logistics, Global Trade Daily, Special Reports

5 Key Retail Industry Trends for 2022

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2021 was a year of adjustments in which the economy slowly recovered from the outbreak of the Covid-19 epidemic, a year that many believed would mean a return to normalcy, but the new Omicron variant rocked the world once again as a fresh reminder that, no, Covid has not gone away yet.

What do the next twelve months have in store for us? In 2022, we will continue to reshape the world with one thing in mind: to build our new reality… A direction that major retailers and brands were already beginning to move towards by reorganizing their channels and resources.

Looking to the future, Alfredo Pérez, International Business Development Manager at Tiendeo, explains the trends and tools that will be used by retail sector leaders and professionals, derived from his Hot Retail Trends 2022 study*.

1. Increased focus on e-commerce and digital channels

Changes in shopping habits have led to the digital channel becoming the preferred means of connecting with consumers. According to statistics, digital marketing (83%), social networks (73%) and e-commerce (63%) are positioned as the most relevant media for marketers in Latin America. The leading role that e-commerce is playing in the region is evident, 7 points higher than the international average.

In fact, in pursuit of ensuring greater traceability of campaigns, content personalization and automation strategies, retailers and brands have opted to implement the digital transformation of the consumer industry, encouraging constant interaction with the customer in both online and offline channels, resulting in 57% of marketers favoring digital channels while 41% lean towards offline channels.

2. Long live social shopping!

With 64% of the world’s population shopping via social media1, marketers are clear on where they are going to spend their advertising dollars. According to the Tiendeo study, 58% of retail executives will increase their advertising spend on social media in the next 12 months.

Although social shopping is a well-established trend in other parts of the world, this year the retail sector in Latin America will exploit the benefits of social shopping to the fullest. Accenture estimates that by 2025 the largest volume of sales in this channel will be in clothing (18%), electronics (13%) and home (7%).

3. Customer experience above all else

The main challenge facing retailers today is to identify the right time and channels to engage with both potential and repeat customers in order to offer them a seamless and frictionless shopping experience.

According to the Hot Retail Trends 2022 study, for 44% of marketing professionals, user experience is the most important aspect to consider in their strategy. Under this premise, retail is developing multi-touch strategies such as ROPO (Research Online and Purchase Offline) so that the consumer can have different alternatives and conversion points when shopping, whether on the web, e-commerce, or in the physical store.

4. More innovative stores

Digital mannequins that learn about your favorite items and guide you through the aisles, cashierless self-checkout stores, smart shelves that verify product availability or virtual try-on sessions, yes, these are the stores of the future.

Perez adds “With the incorporation of breakthrough technology (augmented reality, artificial intelligence, etc.) throughout the sales process, we will see increasingly autonomous stores that allow consumers to find what they are looking for almost instantly, receive the immediate attention they need, try it before buying it and also (why not) pay for it quickly, making a simple purchase a multi-sensory brand experience”. Retailers such as Walmart and Carrefour have already taken the plunge into this new way of interacting with customers in order to compete with the e-commerce giants.

5. Focus on the circular economy 

Customer concern for the environment has led retailers to reassess their strategies to be more environmentally conscious in order to find a balance between economic growth and sustainability.

In sustainable practices such as the Circular Economy where production cycles are closed to make the most of natural resources, the role played by digital tools is key. In 2021 many retailers began to implement more sustainable marketing actions with the digitization of the promotional catalog, long considered the key to generating brand awareness. This type of model favors the reduction of industrial waste by up to 80%.

Thus, industry professionals will step up their investment in digital advertising to communicate with customers, and this year digital channels will account for 86% of budget allocations, while offline media (outdoor advertising, catalogs, etc.) will account for 14%. 

*Study conducted in EMEA and LATAM based on the opinion of 358 directors and brand managers in the consumer sector in multiple categories (supermarkets, home, fashion, electronics, beauty, toys, DIY, pets, sports, health and travel) between November 8, 2021 and December 13, 2021.

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Air Cargo, Archives, Global Logistics, Global Trade Daily, Trucking

In this Fraught Time for Supply Chain and Freight, not all Vendors are Partners

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Throughout the pandemic, Zoom became a lubricant for organizations to keep moving and stay connected. Sales calls, internal team meetings, external events like webinars and conferences — many of us turned to this tool for necessary face-to-face communication, and it’s been vital.

But as critical as Zoom has been, they’re still just a vendor for all of us. They offer a service, and we pay them for that service. It’s transactional, plain and simple.

That’s a parallel we can all draw to other vendors too. Though it’s become a common turn of phrase to refer to vendors as partners (and especially for your vendors to refer to themselves as your partner), you shouldn’t confuse the two terms. They’re not synonymous.

Vendors are bought. Partnerships are earned.

Elevating every vendor to partner status cheapens the word and dilutes what an actual partner contributes to your company and your goals. It can also cause you to misallocate resources and energy to the wrong relationships and potentially cause you to steer your organization in the wrong direction.

Over the last few years, we’ve all faced our own trials and difficult times. It’s been easy to see the value of partnerships and relationships. But it’s when things are calm that these bonds are really forged. If you don’t build the right partnerships when times are good — with your carriers, with your freight forwarders, with the right vendors — you’re not going to be their priority when times turn tougher.

What’s the difference between a partner and a vendor?

To me, a vendor simply wants to sell you more of their service, even if it’s not the right move for your business.

A partner, on the other hand, is a listener.  A sounding board. A confidant. A partner lives in the trenches with you, understands your business, and understands how you go to market in business. A partner brings expertise and suggestions that empower decision-making. A partner doesn’t always make a sale just because they can; a partner understands when their current technology doesn’t fully solve the problem. A solution that complements and enables the business process may or may not include my technology as part of that solution stack. As a partner rather than just a vendor, I owe it to you to tell you that. A partner prioritizes the long-term relationship and the health of your business over their own short-term profits.

Partners may sometimes say no, and they know when to say no. They have a responsibility not to go down a bad path or let you go down a bad path, even if it would mean a bigger check for them.

That’s when the partner becomes a trusted advisor and a member of the business team. After all, business partnerships have to start with the same foundation as personal relationships — trust, openness, honesty, empathy, and communication.

I have a relevant story to share. When I came to Chain.io two years ago, a part of my final interview process for a sales position with the executive team was to provide at least two references. Easy, right?  Of course. However, there was a catch: those references have to be customers that I had done business with. The Chain.io executives interviewing me wanted to make sure my customers would vouch that I had been a partner and not just a vendor. I clearly had the goods because I got the job, but I loved that they asked for customer references and saw my relationships with customers as a prerequisite for the job.

Key Takeaway

Vendors are a key part of any business. We all rely on them, and we all need them. That network looks different at every company. Perhaps if you’re lean, you can get by with only a few dozen vendors. If you’re a larger company, you may have hundreds of different vendors.

Your circle of partners will be much smaller than that, but much deeper. They’ll be the ones you can turn to in times like we’ve found ourselves over the past 18 months — the ones who will prioritize your business, your goals, and your long-term success, even if it means they’re not closing a sale.

Plus, there’s usually another great bonus when working with the right partners: They’re much more willing to buy the nice dinner and the craft IPA.

Cheers!

____________________________________________________________

As head of Shipper Sales for Chain.io, Dan focuses on helping anyone shipping goods around the world get more connected to supply chain vendors, customers, software platforms, and more. Dan is passionate about using technology to provide visibility, clarity, and ease to complex supply chain challenges that require integrating multiple generations of technologies.

Past roles include VP of eCommerce for conDati, VP of Digital Performance Management at Blue Triangle, VP of Digital Strategy at SOASTA. He’s also worked with IBM Rational, Lockheed Martin, and Mercury/HP Software.

He lives in Saint Augustine, Florida.

Dan has presented his work at many conferences including the South Florida Agile/DevOps days, StarEAST, MobileWeek, Big Data TechCon Boston, Jenkins User Conference (East), several Meetups, and at itSMF events around North America, as well as the itSMF National Conference, multiple Gartner Conferences, and many local and regional events on a variety of topics in performance engineering and the SDLC.

You can find DAn at @DanBoutinUST or at a conference or meet-up near you.

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Archives, Departments, Dispatches, Trucking

A HOT 2021 FOR TRUCKING BRINGS A BLAZING 2022 FOR TRUCKING ALLIANCES AND ACQUISITIONS

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Record earnings and cash flow in 2021 allowed carriers to add drivers, new and improved trucks and other equipment to keep up with an ever-demanding supply chain. But many trucking industry players did not stop there, forming alliances and purchasing competitors to position themselves for even greater rewards in 2022 and beyond.

On Jan. 5 of this year, GEODIS, a global transport and logistics giant, and Nashville, Tennessee-based CoreTrust, a leading commercial group purchasing organization and division of HealthTrust, announced a strategic alliance that will expand CoreTrust Logistics’ truckload freight offering to include a comprehensive full truckload (FTL) managed transportation solution. By tapping into the GEODIS network of more than 1,000 asset-based carriers, as well as its world-class managed transportation capabilities, CoreTrust members can enjoy better rates and end-to-end FTL shipment management, the companies contend.

Well known supply chain challenges—like finding a place to store goods, let alone drive them—have inflated prices for shippers, something that will be eased by the alliance, swears CoreTrust Assistant VP David Pollard. “Truckload rates have increased 25 to 30 percent, yet our members are confirming cost avoidance and significant savings with this comprehensive solution,” he said. “Even in this inflationary market, this alliance is driving achievable and quantifiable value across full truckload transportation for CoreTrust members.”        

Which explains why other concerns are hooking up with one another. Phoenix, Arizona-based Knight-Swift Transportation, which is one of North America’s largest and most diversified freight movers, made big moves in the less-than-truckload (LTL) space by buying AAA Transportation for a reported $1.35 billion in July and RAC MME Holdings for another $150 million in December. 

Knight-Swift’s goal of establishing a nationwide LTL network is helped greatly by acquiring AAA Transportation, whose roots date back to 1951 when an Alabama log hauler purchased a struggling truck line. AAA went on to blanket the Southeast, Southwest and Midwest, while Chicago-based RAC MME—the parent company of Midwest Motor Express and Midnite Express—has the upper Midwest and Northwest covered.  

RAC stands for Red Arts Capital, which partnered with Prudential Capital Partners, Brightwood Capital Advisors and several family offices in 2019 to acquire MME from the Roswick and Greenstein families, who founded the company in North Dakota in 1918. “With MME, we found the ideal opportunity to invest in an excellent business with an extensive network, including most metropolitan areas across its network geographic footprint,” explained Nicholas Antoine, co-founder and a managing partner at Red Arts Capital. “We are proud of our contributions to the company’s over 100 years of growth and service to the region, and believe that Knight-Swift provides MME the ideal home for its next phase of growth.”

In September, ArcBest acquired Chicago-based truckload broker MoLo Solutions for $235 million plus the potential for future earnout payments. Getting four-year-old MoLo, which expected 2021 revenue of around $600 million, propelled Fort Smith, Arkansas-based ArcBest to a Top 15 U.S. truckload broker with access to more than 70,000 carriers.

“ArcBest’s timely investment further accelerates growth by increasing the scale of our asset-light business, and MoLo’s proven ability to cultivate significant shipment growth with large shippers will be highly complementary and synergistic,” said Judy R. McReynolds, ArcBest chairman, president and CEO. “This acquisition capitalizes on our terrific business momentum and positions us to enhance value for all of our stakeholders, including our customers, employees, communities and ArcBest shareholders.” 

MoLo CEO Andrew Silver, who landed at ArcBest as part of the deal, said the partnership also “further advances the opportunity we have to achieve our vision. MoLo has been able to reach $600 million in annual revenues with only 500 shippers; in doing this deal, we can now tap into ArcBest’s 30,000 existing shippers and offer them the same level of service we’ve been providing our existing customers. In addition to that, we can now offer our customers a breadth of services we couldn’t before, including owned assets, increased drop trailer capabilities, LTL, expedited, outsourced transportation management, and more.”

Summertime deals were in the offing for 65-year-old Werner Enterprises, which acquired an 80% stake in Pennsylvania-based TL carrier ECM Transport Group for $142 million and final-mile carrier Nehds Logistics of Monroe, Connecticut, for $64 million.

“The addition of ECM’s skilled drivers, nondriver associates and terminal network strengthens our portfolio by adding short-haul expertise in a segment in which consumer demand and supply chain needs are growing,” said Derek Leathers, Omaha, Nebraska-based Werner’s chairman, president and CEO. He was similar in his praise of Nehds: “The addition of the Nehds operations, management team, talented staff and strong customer relationships to the Werner family represents a significant step forward in our Final Mile delivery program.” 

RLS Logistics is a leading cold chain 3PL, but it also offers managed transportation services and an LTL brokerage unit. With locations in Utah, Tennessee, Pennsylvania and its home state New Jersey, RLS spent 2021 adding partners in California, Massachusetts, Texas and another in the Keystone State.

However, you had to hop the northern border for the biggest deal of the year by LTL network size: Canadian trucking and logistics provider TFI International acquiring UPS Freight for $800 million in January 2021. Heading to the negotiating table with 38 terminals, the Montreal-based company walked away with 197 more facilities across North America—as well as about $3 billion in revenue.

Once the deal officially closed, TFI CEO Alain Bédard told analysts that 75% of his operations would be in the U.S., plans were afoot to aggressively bring down costs—and that the acquisition was unlikely to be the only collaboration with Atlanta-based UPS. More to come in 2022?

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Archives, Global Logistics, Global Trade Daily, Warehousing

Here’s How Supply Chain 4.0 Makes Your Organization More Efficient

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There’s a growing interest in Supply Chain 4.0 technology, especially as logistics professionals cope with stock shortages, port delays, and other challenges. Advanced tech can boost productivity in warehouses and all other points of a product’s journey to its destination. Here’s a closer look at what supply chain management can do for those who invest in it.

Facilitating Productivity and Reducing Worker Strain

Hard physical labor is a regular occurrence for people who have many supply chain jobs. Getting relevant training about how to bend, lift, and avoid strain from repetitive tasks can pay off in helping them stay injury-free and able to give maximum output. However, some companies are also investing in robots to help even more.

In one case, a distributor of adult incontinence products pursued robotic palletizing to streamline its receiving process. An associate begins by scanning a label on a carton to tell the robot a product is on the way that must be unloaded soon. The robot then refers to 20 patterns stored in its memory to decide how to build a pallet based on the incoming items. Once the robot creates the pallet, the goods go to a picking location or storage area.

There are many other opportunities to incorporate robots into Supply Chain 4.0, too. Some autonomous mobile robots bring goods to warehouse workers so those employees don’t have to leave their workstations and take the extra time and energy to replenish what they need.

Other robots work beside supply chain employees, saving them from some of the more laborious or error-prone tasks. Robotic machines excel at duties that require them to do the same movements for hours on end. They don’t get tired and, as a result, can prevent fatigue in humans.

Minimizing Packaging Waste

Supply chain management technology can ensure that each product shipped out of a warehouse has just enough packaging to protect it for the rest of its journey. Packaging has seen numerous user-friendly improvements over time. Creating perforations in materials lets people tear off pieces of cardboard or bubble wrap without using scissors.

Often, these perforations create a clean opening, helping people use the package for other reasons rather than throwing it away. Plus, many food wrap packages have integrated blades that let users cut the foil or parchment at the desired length. These examples show how smart packaging decisions can reduce waste, thereby pleasing consumers and helping manufacturers conserve resources.

However, there’s still room for improvement. Most people can recall occasions where they ordered a small item online and received it in a gigantic amount of packaging. That’s an unwanted outcome for everyone involved. However, Supply Chain 4.0 could make such situations happen less frequently.

Amazon developed a system that uses computer vision and machine learning to determine the type of packaging a particular item needs. The model can detect an object’s size, plus packaging details, such as whether an item is inside a plastic bag or a glass bottle. It also recognizes perforated parts of the package.

When the model has sufficient confidence in the ideal package for a given item, it can select it automatically, which increases efficiency. However, when the confidence level is lower, the system can flag that instance. In such cases, a human reviews the specifics and makes a judgment call. This approach helps Amazon meet its aims to cut down on packaging used. However, it also means items should arrive well-protected, but not overly so.

Achieving Better Visibility With Supply Chain 4.0

Supply chain management can get tricky because it often involves predicting demand based on known factors and making educated guesses about the unknown ones. What makes a certain product highly desirable worldwide while seemingly similar items don’t sell nearly as well? Which steps should supply chain professionals take to avoid long-term outages? Technology can help address those all-important questions.

One study found that artificial intelligence-driven demand planning caused a 50% drop in the product volume affected by extreme forecasting errors. Then, overall forecasting mistakes went down by a third. Those outcomes likely occurred because artificial intelligence can efficiently process large amounts of data and pick up on things humans would miss without technological help.

Decision-makers at computing brand Dell created a digital model of the company’s supply chain to help it cope with the ongoing semiconductor shortage. That tool enables running various simulations so that leaders can plan how to best handle the most likely scenarios.

One way Dell uses the simulated situations is to determine which products will probably become increasingly difficult to source. The company compensates by designing many items with interchangeable or reusable parts as one practical strategy for dealing with current and near-future conditions.

In another case, Unilever unveiled a digital twin that found the optimal batch time by calculating how long it took to produce the necessary quantities of shampoo. Having that data enables consistent production output and helps managers spot bottlenecks within a factory or elsewhere that could cause supply chain strain if left unaddressed.

Measuring Outcomes With Data and Metrics

Supply Chain 4.0 technologies typically don’t give optimized outcomes immediately after implementation. Instead, people in authority must examine the available data and make relevant tweaks accordingly.

Fortunately, that’s becoming easier to do with data analysis tools and sensors that automatically gather data for future review. Perhaps a factory leader hoped to increase weekly output by at least 25% after installing several logistics robots. A platform that collects and analyzes real-time data could show how close the facility is to meeting that goal.

Alternatively, a company may deal with a persistent problem of machines breaking down unexpectedly and significantly hindering the workflow. Connecting smart sensors to the problematic equipment could make it easier for maintenance workers to identify issues before they cause factory shutdowns.

Many decision-makers are understandably hesitant to invest in a lot of Supply Chain 4.0 technology at once. They’d prefer to see evidence of the positive effects of such spending first. Luckily, it’s progressively easier to get it.

A manager could start by calculating the money lost due to equipment failures. They could then measure how much smart sensors save by alerting people to issues before those machines become inoperable. Since so many connected technologies can gather data, they prove whether certain investments provided the efficiency gains people hoped for at the outset.

Supply Chain Management Technology Is Undoubtedly Valuable

These examples show how moving ahead with Supply Chain 4.0 plans could generate impressive results. However, that doesn’t mean people will get those advantages in all cases. They can massively raise their chances of success by considering the biggest supply chain obstacles affecting a business and how advanced technologies could help resolve them.

________________________________________________________________________

Emily Newton is an industrial journalist. As Editor-in-Chief of Revolutionized, she regularly covers how technology is changing the industry.

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3pls, Archives, Global Logistics, Global Trade Daily, Ocean Carriers

How to Prepare for Global Logistics in 2022

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2021 was a difficult year in global logistics due to ongoing volatility. We worked alongside customers navigating the Suez Canal block, hurricanes and cyclones, port and terminal closures due to COVID-19 outbreaks, customs and trade changes, labor shortages and more.

I’ve been in the industry since 1997 and I have never seen this level of continual disruption across the entire supply chain for this length of time. However, with this year’s volatility, I was also given a front-row seat to a new level of hyper collaboration –  including individuals going out of their way to help each other, more strategy sessions between shippers and forwarders, and continually leaning into historical data and current market insights to find smarter solutions.

As we approach another potentially volatile year, I wanted to provide key strategies for global shippers to consider.

Seek creative solutions across the entire supply chain

At year-end, we typically see a jump in demand as shippers meet quarter-end quotas and prepare for the upcoming Lunar New Year, during which many factories in China shut down. However, in early 2022, shippers will also be juggling potential delays from the Winter Olympics which will be hosted in Beijing throughout February. All of this is amid a strained supply chain market, which will take time to ease.

As you prepare for 2022, consider what different modes, trade lanes, or inland transportation strategies you can implement in your supply chain. For example, while it may not be feasible to transport 100% of your freight via air, air freight continues to be the fastest way to replenish inventory, so prioritizing specific freight can help keep cargo moving. In fact, C.H. Robinson is running on average 15-17 air charters a week globally for customers looking to avoid the congested ocean ports, and we don’t expect that number to decrease at the start of the new year.

Additionally, as demand and rates will likely continue to stay elevated through the beginning of next year, less-than-container load (LCL) shipping is a strategy to consider. Typically, space for LCL shipments is easier to find especially in a constrained capacity market, since you are only looking for some container space versus an entire empty container. We also continue to see large cost savings with expedited LCL services compared to today’s airfreight environment.

Keep in mind, LCL shipments are not going to bypass congestion at the ports, so inland strategies need to be considered. Currently, many ocean carriers are looking to move more IPI (interior point intermodal) cargo versus focusing on port-to-port. We were able to help increase the flow of cargo inland for our customers by sending more 53-foot containers so cargo on the smaller 40-foot ocean containers can be efficiently consolidated in the larger ones and loaded onto trucks or trains to be taken to inland destinations more quickly. Overall, this increased our container capacity by 25% in Southern California.

As you can see, looking at only one portion of the supply chain or one mode can only get you so far. It’s important to consider all areas to keep your cargo moving.

Utilize data and technology

Although this past year has rendered a lot of unique situations and 2022 may do the same, historical data can still help us find solutions. Finding common trends and themes in your cyclical data can give you an information advantage to make smarter decisions for your supply chain.

Additionally, the right technology tools can give you the visibility and predictability you need to adjust. For example, with the ongoing port congestion and delays, C.H. Robinson enhanced the vessel routing and tracking features within our transportation management system, Navisphere®, to increase the efficiency and accuracy of port ETAs and automatically send updates if changes were discovered. This is important because ocean shipping is only one piece of the equation. Having visibility to changes in real-time gives our team and customers a chance to react and adjust other tactics down the road.

Look to global trade opportunities

While congestion and shortages continue across transportation modes, one area where you may find opportunities for savings is in your global trade strategy. Since each country’s trade policies are unique and can change, it’s important to have regular meetings with your trade advisor to break through the complexity of your total landed costs, including understanding your costs to import, identifying duty recovery possibilities, and reducing your duty exposure via trade agreements.

For example, our team has helped shippers identify thousands to millions of dollars in tariff refunds alone. If you import into the U.S., you can easily check for potential savings and refunds with our online Tariff Search Tool. And, if you’re sourcing from other countries, our team can create a customized sourcing report sharing potential cost savings or avoidance opportunities.

Final Thoughts

While there is no one-size-fits-all approach, the above options provide shippers with strategies to help mitigate delays and identify potential savings as we enter another potentially unpredictable year.

Shippers have had to become increasingly nimble and informed over the past year, and going into 2022 it’s critical to remain agile, be open to alternative solutions, and stay informed on the latest market insights.

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Archives, Global Logistics, Global Trade Daily, International Trade

SUPPLY CHAIN CRUNCH: RESILIENCY STRATEGIES OF TOP-PERFORMING COMPANIES

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While U.S. port congestion and worker shortages have persisted for years, the continued ripple effect of the pandemic’s global supply chain disruption, coupled with the ecommerce boom and lack of retail inventory, has exacerbated the supply chain crunch to crisis levels. Throw in skyrocketing freight costs, container shortages, and the impending International Longshoremen Workers Union contract renewal and the outlook for short-term relief is well out of reach. Indeed, results from a recent benchmark survey from Descartes Datamyne indicate the supply chain crisis will continue well into 2022—tough news for those organizations without solid mitigation strategies in place.

MAJOR CONTRIBUTOR: The stuff economy

Multiple factors are contributing to the global supply chain challenges, but increased consumer demand for “stuff” is a major trigger. The pandemic has changed the economic fundamentals of consumer buying behavior, with Americans shifting away from experience-based spending (e.g., travel, events) towards stuff-based purchases focused on durable (e.g., furniture, exercise equipment) and nondurable (e.g., clothing, groceries) goods—and this buying trend shows no signs of slowing down.

According to U.S. import data, container import volume in November 2021 continued to pummel the supply chain: 34% higher volume than November 2019 and 12% greater than November 2020. In fact, only one other month in the prior two years (October 2020) had a higher container import volume. Transportation industry operators are operating at full capacity and are not expecting a decline in shipping demand from their customers well into 2022.

With TEU volume hovering between 2.4M and 2.6M TEUs monthly for the remainder of 2021 and likely continuing through 2022, capacity will be unable to keep pace with demand. The operational consequences of the global supply chain crisis—containers stacked in Asia, high container “rolling” rates, and unprecedented wait times for vessels at U.S. West Coast ports—are not going away any time soon.

STORE SHELVES ARE LIGHT

For many retailers, stock levels are precariously low as supply chain woes continue. While manufacturing and distribution capacity declined, particularly in the Asia-Pacific region, consumer demand in the U.S. grew and retailers have been unable to replenish their shrinking inventory of finished goods. In fact, the inventory to sales ratio decreased by more than 30% since 2019, according to the U.S. Census Bureau.

Going forward, many retailers are deciding to hold more inventory as a hedge against greater supply chain uncertainty. As a result, retailers will be buying more than what they need in the short-term to build their stocks to larger acceptable levels. This strategy will continue to put more pressure on supply chains and logistics operations, even after the peak holiday season ends this year.

Like retailers, manufacturers are facing similar inventory challenges, from semiconductor chips for auto manufacturing to lithium-ion batteries for electric vehicles. In a recent fireside chat with investors, Hau Thai-Tang, the Chief Operations & Product Platform Officer at Ford Motor Co., noted that “what’s different about today versus prior years is that there’s no float or buffer in the inventory.” The pandemic-driven supply chain issues have “fundamentally changed the way we’re thinking about procurement and design,” shining a light on the shortcomings of the just-in-time inventory model for capital-intensive systems with long lead times and interdependencies on other industries, Thai-Tang said.

supply chain RESILIENCY: technology & data lead the way

Forward-thinking companies have recognized that the global supply chain crisis is more than a short-term problem, with the majority believing that bottlenecks could get worse over the next few years. So how are businesses coping with the supply chain crunch? Descartes’ benchmark survey examined the supply chain resiliency strategies of carriers, logistics providers, importers, and shippers from around the world to uncover how organizations are responding to the supply chain challenges.

The survey revealed that top-performing companies—logistics providers and importers alike—have pinpointed ways to navigate the chaos. Investment in technology is their primary strategy to keep the business moving forward in the face of ongoing and severe supply chain disruptions. Specifically, top performers favored global trade intelligence solutions to help them rapidly identify new suppliers, markets, customers, and trade lanes to optimize their existing supply chains.

The survey found that high-performing companies were investing in HTS and HS classification and landed cost calculation software to analyze the financial viability of new trade networks. It also found these companies were relying on denied party screening solutions to vet new trade chain partners, from suppliers and customers to logistics companies.

Investment in global trade data solutions enables international businesses to re-evaluate their supply chains rapidly and constantly, a process critical to minimizing delays and boosting resilience. In the current supply chain crisis, organizations that fail to adopt this strategy as best practice risk losing market share to more agile competitors.

looking ahead

The forward outlook is a good news/bad news story of economic and employment growth driving increased pressure on global supply chains. While the most recent employment numbers were shy of the Federal Reserve’s robust autumn predictions, the continued opening up of business will drive job growth and consumer spending, which will continue to exert pressure on global supply chains.

With the latest forecasts pointing to current supply chain bottlenecks persisting through 2022, companies involved in international trade must find ways to build supply chain resilience. One of the most effective strategies for retailers and other importers is to leverage global trade intelligence solutions. By expediting trade data analysis to determine the most expedient and cost-effective routes and modes of transport, global trade data solutions can help companies optimize global supply chains to build market differentiation, bolster customer satisfaction, and come out the other side of this crisis in good shape.

automotive
Archives, Commentary, Global Trade Daily

Automotive Logistics Solutions and Transport Services In 2022

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Have you ever wondered about the processes that go into delivering your vehicle to you? Rest assured there is a lot that goes on in automotive logistics. You might think that it is as easy and smooth as your usual online purchases, but there is a whole process going on before your car can arrive at its final destination.

Automotive Logistics and Transportation Services

First, let us look into what automotive logistics really is.

The automotive supply chain is composed of all stakeholders. This includes companies and individuals that are relevant to the automotive industry, including international and commercial shipping, storing, and even local delivery professionals.

This whole process involves active mobility of all automotive parts, including components and replacement parts, and final products. Furthermore, the active involvement of organizations such as maintenance and repair providers is also essential in making the whole chain operate successfully. Services of such organizations like Autobedrijf Geesteren play an important role in maintaining the quality of our vehicles. They provide their expertise in making sure that vehicles are in the best condition at all times.

Once you receive the car, there is the maintenance aspect by car service experts. If you’re in the transport industry you will understand why you need professional services. Keeping the vehicles in top running order will be critical.

The automotive industry has long been one of the most profitable industries. So, in 2022, it is expected to even grow bigger as new technology is introduced.

Below are some of the things we can expect from this industry.

Automotive Logistic Forecast 

2020 and 2021 experienced major disruptions due to the Covid-19 pandemic. Some companies had to shut down, thereby affecting supply. Social distancing and quarantines made it impossible to continue work as usual. But now, the world is starting to adjust back to normal.

While there may not be a full return to normalcy anytime soon, things are looking up. We can expect interesting trends and solutions to come into play and automotive industry players have a lot to look forward to.

The auto dealer forecasts an increase in demand for transport as operations resume. There is also an opportunity for partnerships with logistics companies. The challenge will come in ensuring timely deliveries and reducing lead times.  

But that’s not all. The automobile industry faced a slowdown during the outbreak of the pandemic. There was a disruption in the manufacturing and supply chain of automobiles. Thankfully, 2022 may see the resumption of services. There is great positivity in the sector as players gear up to fill in any gaps.  

Autonomous Vehicles to Make an Impact

The interest in autonomous vehicles is not new. But, the focus has largely been on the consumer, rather than the logistics sector. The impact of such cars in the transport sector is gaining interest. Major logistics companies like UPS and DHL are making a foray into determining the viability of autonomous delivery cars. The companies see benefits in terms of higher efficiency and a reduction in operational costs.  

Autonomous vehicles can take care of a significant challenge in the supply chain. The American Trucking Association estimates a shortage of about 80,000 truck drivers. The situation is so dire that it could be twice that number by 2030. Lack of drivers means goods do not reach the shelves or customers. It is a great concern that needs addressing. But, therein lies the opportunity to look for sustainable solutions. Autonomous cars may free up the dependence on human labor.  

Investor Interest in Innovations Is Increasing 

Autonomous trucks are generating significant interest amongst investors. As of 2019, they have injected $11 billion into startups working on autonomous trucks. One such company is Aurora that is on track to go public.

Other startups include Embark Trucks, Plus and Simple, Waymo, and Locomation. And, traditional truck makers and auto parts dealers are not taking chances. They understand the direction the industry is going. That is why many are entering into partnerships with tech companies.   

It will be interesting to see whether the industry can have fully self-driving trucks. It might not happen within 2022, but we can expect plenty of reports on pilots or demonstrations from the startups.           

Role of the Internet and Artificial Intelligence 

Internet-connected vehicles will become more commonplace going forward as connectivity enhances communication. Drivers can get information on road safety, weather, road congestion/condition, accidents, or speed limits.  

Remote diagnostics and system updates will be easy with vehicle-to-cloud connectivity. Companies can monitor and get real-time data on vehicle location. Such information increases security and allows for the prediction of arrival times. The Internet of Things (IoT) will impact every step of the supply chain. It will enhance communication between manufacturers and logistics companies.   

Artificial intelligence is already part of the automobile manufacturing industry. The applications are numerous including supply chain optimization and vehicle assembly. AI also takes care of mundane, repetitive tasks. The teams can focus on other core areas. These include research, innovation, and design.  

Yet, all those functionalities do not uncover the full potential of AI in the automobile industry. The technologies have a significant role to play in predictive monitoring, quality control, and early detection of defects.  

AI allows teams to collect data that improves the decision-making process. Logistics companies can use such to make predictions — like best carriers or modes of transportation for maximum reliability and profit. Auto companies can forecast demand by understanding the customer’s purchasing behavior.  We predict a future where AI commands a much larger space in the industry. 

Overcoming Logistics and Transportation Challenges

As the world moves to 2022, those in the logistics and transport sectors must overcome several challenges. The pandemic has some great lessons to teach, including the need for better preparedness through solid contingency plans.

Creating agile solutions must take center stage as we move closer to the new year. The sector has to look into ways to cut down costs, and quick solutions are available in things like process automation and the use of AI. Data analysis can, for instance, help with route optimization. Real-time data provides road condition information while truckers can take the best routes to ensure they meet deadlines. AI will improve efficiency thus cutting down on production times. All these benefits will trickle down to the end-users. 

Innovations like autonomous cars will increase efficiency. They also provide a contingency plan to avoid challenges like driver shortage. Industry players must work together to come up with sustainable solutions.  

Technologies like blockchain may provide a solution to fraud cases. Transport and logistic companies can manage inventory better. The technology does not allow for data alteration, without raising a flag.

And, the real-time insights will make it easier for the companies to communicate with customers. Efficient inventory tracking and management will enhance operations all around.  

Final Thoughts

2022 will be a time for recovery for many industries. It is clear that the pandemic will cross over into the New Year. The good news is businesses are stabilizing once again. There will be greater adoption of technologies like IoT, AI, and blockchain. The aim is for higher efficiency at lower costs.

The automobile and transport sector has a lot to look forward to. Autonomous vehicles may hit the streets in a big way. Perhaps the most exciting will be seeing a self-driving truck. With the level of interest amongst startups and investors, it may happen sooner than we can predict.

freight
Archives, Global Logistics, Global Trade Daily, Ocean Ports

MOVING FORWARD: GLOBAL TRADE’S TOP FREIGHT FORWARDERS OF 2021

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Established in 1980 to meet the needs of a newly deregulated domestic transportation market, Armstrong & Associates provides unparalleled third-party logistics market research. With offices smack dab in Middle America (Milwaukee and Madison, Wisconsin, to be precise) and a newsletter that is emailed to more than 88,000 subscribers globally, A&A, as the hep cats call it, churns out market estimates found in media accounts, trade publications (like you-know-who) and securities filings by publicly traded 3PLs,

One thing consumers of A&A’s research gobble up every year is the Top 25 Global Freight Forwarders List. The 2021 version (see accompanying chart) includes rankings based on 2020 gross revenue and freight forwarding volume.

Once again, DHL, Kuehne + Nagel, DB Schenker, DSV Panalpina, Sinotrans, Expeditors and Nippon Express take the power positions, but there are also new entrants: Apex Logistics International and CTS International Logistics.

Wherever your company falls (or does not fall) on the list, it is important to consider that we are (fingers crossed) coming out of unprecedented times in the ocean freight shipping game. A shipping container shortage led to a massive spike in freight rates. Of course, during the height of the pandemic, production and trade halted, leaving ocean carriers in limbo—and many are still trying to regain their sea legs. 

Yes, the busiest trade routes are humming again. The Long Beach/Los Angeles port complex experienced a 23% spike in volume in December 2020 compared to the previous year and, despite the pandemic, the second busiest December in their history. On the opposite coast, the ports of Charleston, South Carolina, and Savannah, Georgia, also dealt with massive influxes in traffic.

Ports that did not share in that success can at least take solace in knowing congestion has created fresh headaches for the industry leaders. Maersk and MSC have pulled certain carriers from their regular rotations in the short term. Timing shipments, so products can navigate through offshore parking lots and reach store shelves in time for the holidays, has become the sweet science. 

Meanwhile, many shippers say they’re operating at losses to meet their global customers’ demands. Keep in mind this is at a time when investing much more into that magic bullet known as digitization is all the rage. The aforementioned Maersk is using technology to streamline freight booking, particularly spot booking. CMA CGM, Yang Ming Marine and Hapag-Lloyd also introduced freight booking tools. And artificial intelligence (AI) is growing as a major force in global shipping.

Here comes another headache: The reliance on tech increases the risks of cyberattacks. Since 2017, nearly half of the top 10 freight carriers worldwide were victims of digital security breaches, including a $300 million loss from Maersk due to a ransomware cyberattack.

While noble, sustainability efforts create another money-sucker for ports and logistics companies. The freight shipping industry represents approximately 2.2% of all global greenhouse gas emissions, which expected to rise by 50% by 2050 if action isn’t taken. Carriers are doing their part by switching to more environmentally friendly fuels, such as liquified natural gas (LNG). Around 13% of new vessels ordered this year are LNG fueled, because a clean planet = priceless.

ARMSTRONG & ASSOCIATES
2021 TOP 25 GLOBAL FREIGHT FORWARDERS LIST

2021 Rank*

Service Provider

Gross Revenue 
(US$ Millions)**

Ocean 
(TEUs)

2020 Rank
1 DHL Supply Chain & Global Forwarding 28,453 2,862,000 1
1 Kuehne + Nagel 25,787 4,529,000 1
2 DB Schenker 20,761 2,052,000 2
2 DSV Panalpina 18,269 2,204,902 3
3 Sinotrans 12,174 3,750,000 4
4 Expeditors 10,116 1,091,380 5
5 Nippon Express 19,347 660,152 6
6 CEVA Logistics*** 7,416 1,081,100*** 7
7 C.H. Robinson 15,490 1,200,000 9
8 Kerry Logistics 6,867 1,019,924 10
8 UPS Supply Chain Solutions 11,048 620,000 8
9 GEODIS 9,135 866,631 12
10 Bolloré Logistics 5,265 761,000 11
11 Hellman Worldwide Logistics 2,972 905,100 12
12 Kintetsu World Express 5,750 640,063 13
13 Agility 4,018 771,000 14
14 Yusen Logistics 4,248 764,000 14
15 CTS International Logistics 2,160 1,021,007 Not listed
16 Hitachi Transport System 6,346 662,000 16
17 DACHSER*** 6,591 492,440 15
18 Toll Group 7,260 523,300 18
19 Maersk Logistics (DAMCO) 6,369 401,369 17
20 Apex Logistics International 2,274 190,000 Not Listed
21 Logwin 1,292 698,000 19
22 Mainfreight 2,467 347,638 21

 

* Ranking also factors in a forwarder’s air cargo shipments by metric tons.

** Revenues and volumes are company reported or Armstrong & Associates, Inc. estimates. Revenues have been converted to US$ using the average annual exchange rate in order to make non-currency related growth comparisons. Freight forwarders are ranked using a combined overall average based on their individual rankings for gross revenue, ocean TEUs and air metric tons.

*** Includes LCL shipments.

freight
3pls, Archives, Global Logistics, Global Shippers 101, Global Trade Daily

Logistics Providers Have a Higher Calling than Freight’s ‘Middleman’

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Since the domestic onset of the COVID-19 pandemic last March, logistics providers and freight brokers have had to deal with two extremes in the market — and in short succession.

In the initial economic fallout in the first few months of the pandemic, freight volumes sank, and so did per-mile rates. There simply weren’t enough loads to go around for all of us who make a living moving freight, and the slowdown happened so fast, we were all left searching for answers.

At least I know here at Circle Logistics, we weren’t immune to that sudden freight vacuum.

But then as the recovery gained steam, freight volumes hit a warp speed, seemingly making up for lost time last spring and due to consumers spending money on hard goods rather than services or entertainment.

Behind that pendulum swing, logistics providers this year have faced a tall task in keeping up with the demands of their shippers. There’s been a dearth of transportation capacity, and 3PLs have often had to book loads at a loss to make sure we take care of our shippers.

Between freight volumes slamming the brakes in spring of 2020 and then mashing the throttle this year, I’m sure we as an industry will glean many lessons from the trials we’ve weathered.

But there’s a fundamental lesson staring us in the face right now: We have to pivot our industry away from transactional deals and work to create real, trusted relationships with each other.

This involves all of us — shippers, brokers, and carriers. We’re at a precipice in the logistics industry, and it’s incumbent upon all of us to heed the requirements of this new world. That starts with ditching the old ways and forging a path in which mutually beneficial relationships rule, and in which we utilize those relationships to help manage the current crisis and any future events that occur.

For freight brokers and 3PLs, first and foremost, this starts with shedding the label of a freight  industry “middleman.” That might have been true of yesteryear’s freight broker. You know the type — the guy at a desk working a big landline phone with four or five different lines connected into it. But it absolutely cannot be true of a modern logistics provider.

We need to be viewed as a valued, trusted source of market information and trucking capacity by our shipper customers. And we must be viewed as a business partner of our carriers — a sales team working to find loads that fit their lanes and rates, a dispatcher trying to get them backhauls, and someone who they’d turn to for a load over taking a chance on a random broker from a loadboard, even if it pays a little better.

By building these relationships on both sides, you can ward off the situation where shippers try to pit 3PLs and brokers against each other in negotiations. Or the situation where you try to squeeze a carrier for a few pennies a mile on a one-and-done load and then find you need their service a few weeks or months later for a different load.

Will every freight transaction be this way? Of course not. Logistics providers still have to turn to loadboards to find carriers, and carriers will still have to utilize some one-time deals to reposition or simply keep the wheels turning.

Also, shippers’ procurement managers will still mostly be working to find transportation services at the best cost for their company. They still have a boss to answer to, too.

But what I hope has become a stark realization during these turbulent times is that we’re all in this business together, for better or worse. Shippers need their freight hauled. Carriers need loads to move to keep their operations afloat and their bills paid. And freight brokers and 3PLs, more than ever, are the conduit to bridge those two parties’ needs.

In an 18-month span which has seen both ends of the spectrum — carriers unable find loads at sustainable rates and shippers unable to find capacity — the new calling for freight brokers has been laid bare: We must work to build the relationships that keep goods moving and keep the supply chain chugging. Anything less is a step in the wrong direction.