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Global Shipping Trends: What to Expect in 2020

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Global Shipping Trends: What to Expect in 2020

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Now that the fireworks are over and New Year’s resolutions are set, it’s time to prepare for global shipping in 2020. And that means looking at ongoing trends and changing regulations. One thing’s for sure, freight forwarding never has a dull moment.

Recapping 2019’s top global shipping disruptors

Before we jump into expectations for this year, let’s set the stage by looking at some of the top events in 2019 that may have affected global shipping strategies around the world.

Geopolitical uncertainties

From the ongoing Brexit discussion to the China-U.S. trade war and the trade conflict between Japan and Korea, these and other disruptions caused serious challenges to the transportation industry.

Preparation for International Maritime Organization (IMO) 2020

While the latest revisions didn’t go into effect until January 1, 2020, preparation for the changing IMO requirements was well underway in 2019. The requirement to reduce sulphur oxide emissions from 3.5% to 0.5% was a drastic change that will likely continue to affect shipping costs and capacity availability.

E-commerce expectations

With the growth of e-commerce and high-tech products flooding our markets, air freight is a go-to mode of transportation for many shippers—any time of year.

To best understand how these and other mode-specific changes will affect your 2020 shipping year, let’s break them down by service.

Ocean service in 2020

In the past, ocean shipping followed the basic law of supply and demand. When demand increased, rates went up. When demand decreased, rates dropped. This often occurred regardless of carrier profitability. But that is changing, which could reshape expectations for 2020.

Carriers controlling capacity

Today’s ocean carriers are quick to withdraw capacity when demand changes. By adjusting the amount of equipment available, ocean carriers are better able to ensure demand remains tight enough to protect their profits. This is a successful technique because there are fewer ocean carriers than in the past, allowing for a quicker reaction when supply and demand shifts.

Increasing carrier costs

While ocean carriers can control capacity to help ensure rates remain compensatory, we can still expect some level of imbalance due to the IMO 2020 mandate, which increases carrier costs.

Driver and drayage capacity shortages

California Assembly Bill 5 (AB-5) went in effect on January 1, 2020, which limits the use of classifying workers as independent contractors rather than employees by companies in the state. This may affect the availability of the number of dray carriers in the busiest ports. This, in turn, can drive drayage costs up.

Air service in 2020

Last July, we posted about ongoing uncertainty in the air freight market. The good news is that air freight service has stabilized a bit since then. While we’re predicting a somewhat stable air freight market for the year, this could obviously change if there is some catalyst that changes the speed products need to come to market.

Stable demand expectations

We expect demand for air freight to remain stable for the time being. Many organizations continue to focus on managing expenses and are looking for cost-effective, efficient options for delivering on short timelines without breaking the budget.

Capacity to hold steady

Capacity will also likely remain stable. Most new capacity is coming in the form of lower deck. Pure freighter capacity will continue to move based on market yields that make sense from a carrier standpoint. There may be some capacity growth in off-market locations, based on passenger demand.

Customs compliance in 2020

It’s always smart to have a customs compliance program that aligns with your business goals, which is especially true this year. Customs and Border Patrol (CBP) has several customs changes slated to take place in 2020, and now’s the time to prepare. If you haven’t reviewed your customs program recently, our customs compliance checklist may help.

CBP moving away from ITRAC data

According to CBP, they will be eliminating Importer Trade Activity (ITRAC) reports in favor of the Automated Commercial Environment (ACE) system. If you don’t already have an ACE portal account, now is the time to get one to ensure all your customs data is available to you when you need it most.

CBP’s continued focus on compliance and enforcement

CBP will continue to scrutinize tariff classification and valuation in an increasing post-summary environment. As the United States Trade Representative (USTR) continues to provide exclusions, many importers will depend on brokers to submit refund requests via post summary corrections (PSCs) or protests. CBP often requires additional data and/or documentation to ensure that tariff classifications and valuations are correct. It is imperative that you maintain a high degree of confidence in your compliance program and can substantiate any post summary claims with CBP.

Increasing Importer Security Filing (ISF) penalties

Throughout 2019 we saw CBP issuing more ISF penalties for inaccurate and/or untimely submissions. This will likely continue and could become a growing issue in 2020.

Disruptors affecting the industry in 2020

While certain trends and regulations only directly affect a single mode or service, there are still plenty that affect freight forwarding in general. Looking at 2020, it’s probably safe to say that the following disruptors will continue to affect the year ahead.

Broadening of sourcing locations

While there may be an end in sight to some of the trade war uncertainties, the initiative to broaden sourcing locations beyond China will likely continue. Southeast Asia has already seen clear benefits of this and will likely continue to see manufacturing growth in 2020.

Switching sourcing strategies can also bring risks, including capacity availability, infrastructure support, and geopolitical stability. While China will continue to be the largest exporter into the United States, we simply cannot deny the trends that continue to show volume shrinkage from China.

Accelerated evolution of technology

Significant investment in technology and transportation platforms continues to accelerate across the industry. Beyond private equity groups, well-respected and established providers like C.H. Robinson are making investments that will reshape logistics. These growing technological investments will continue to create value across the supply chain.

While this opens new options for shippers and carriers alike, you may likely need to spend more time researching which technology option is the best fit for your own organization. After all, the right technology offers tailored, market-leading solutions that work for supply chain professionals and drive supply chain outcomes.

Prepare for the year ahead

Overall, 2020 will be a great year for strategizing. Continuous improvement efforts—including a close look at service levels and mode choices—will help reach your short- and long-term supply chain goals.

Looking for a provider that can help in the coming year? C.H. Robinson has a global suite of services backed by technology and people you can rely on that will make 2020 preparations smooth and effective. Connect with an expert today.

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BluJay and Damco Take Partnership to the Cloud

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Global freight forwarding provider, Damco announced the extension of its partnership with supply chain software and services provider, BluJay Solution this week through a multi-year agreement. The agreement enables the ongoing usage of the Transportation Management for Forwarders platform, now on the cloud through an anticipated upgrade.

“We’ve seen the capabilities added in the past few years – the game has really been upped, and it’s critical in our industry to keep moving forward with technology to stay ahead,” said Martin Ring, Global Chief Operations Officer at Damco. “Damco will take advantage of the continually enhanced functionality available from BluJay to run our business as efficiently as possible.”

Increased efficiencies, productivity, and streamlined customer communications are a few of the named benefits to come through the extended partnership, adding to the eight years between the two companies. File management remains the top priority for Damco and will continue focusing on the accurate and timely solutions benefiting its customer base such as integrated customer solutions.

“BluJay is delighted to continue our partnership with Damco. This relationship evolution is truly indicative of the value customers realize with greater solution adoption over time, supported by people who are committed to their success,” said Chris Timmer, Chief Revenue Officer for BluJay.

“We value the history of our partnership with BluJay,” added Ring.  “Damco has appreciated working with BluJay’s experts for so many years, and they will take us from today to tomorrow to support our business objectives.”

Archives, Global Trade Daily, News

Women in Logistics: Kim Maready, VP of Accounting and Finance, Old Dominion Freight Line

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When it comes to exemplary leadership, Old Dominion – a leading provider in LTL and transportation logistics, takes implementing its core values of integrity and greatness to the next level. Through its strong relationships both externally with its customers and internally with each individual working for the company, these values are what keep its employees working towards the Old Dominion vision. With her passion for mentoring and leadership, Kim Maready, Vice President of Accounting and Finance for the company, is a prime example of the way Old Dominion takes her position in leadership one step further by shaping employees through a fresh, unique approach. It was this very approach combined with the culture at Old Dominion that ultimately peaked her interest to join the team in 2014.

“I think the Old Dominion culture places a tremendous amount of value on its people. It is a family-oriented culture and once you join the family, you really feel that. I felt that as an outside service provider. They not only cared about their own success, but they cared about my success as a provider,” she said. “A lot of other large public companies haven’t found that magic really. It’s all about the business and I think that comes through the profitability, or lack thereof, of some companies because ODFL recognizes that it’s profitable because of its people and the amount that they give to our customers every single day.”

Kim has served Old Dominion for five years, bringing with her over 20 years of experience in the middle market Fortune 1,000 space. Prior to her onboarding with Old Dominion, she worked as a partner. It was through her time serving the company that convinced her the Old Dominion culture was different.

“They were a client of mine for six years, so I knew the company well, the leadership team well, their environment, and core values. I spent time serving a lot of different companies across a lot of different industries from banking to manufacturing, to retail, consumer products, technology, and other transportation companies,” she said. “What interested me in Old Dominion was the culture – the leadership team, the value they place on their people, and the integrity that’s here at the company.”

In her role as VP of Accounting and Finance, she does a lot more than oversee the financials. Mrs. Maready takes her passion for mentorship and aims to create a strong team that feels valued and respected by challenging them to take their ideas and concerns to the leadership team. Old Dominion prides itself in its “Open-Door” Policy that gives every person at the company a voice. This approach bolsters the company’s vision to create the next generation of employees that carry on the core values of integrity, honesty, and transparency while managing risks. This policy serves as another differentiator among competitors.

“If you’re trying to innovate and get processes that aren’t working anymore to change, and you’re having roadblocks with those changes or don’t know where to take your ideas, you can come in to any of these 20 or so people and have a discussion and get action around that discussion while having someone that can champion it with their authority or help remove those roadblocks. I think that really mitigates a lot of our risk and it really is unique to this organization. I’ve seen a lot of companies and I haven’t heard of other companies embracing that quite like we do,” she adds.

Beyond the company’s robust customer base and successful operations, Old Dominion boasts a large organization of employees that value excellence day in and out. It’s through these valued employees that Old Dominion serves its customers while creating competitive advantage. The value Old Dominion places in its employees follows the wise saying from Richard Branson: “Whatever industry a company is in, its employees are its biggest competitive advantage.”

“In the short term it’s my responsibility and my team’s responsibility to really grow the next generation of leaders and to help them understand our culture, our core values of integrity, and ensure that we have the right leaders in place two decades down the road from now to maintain the culture and the unique environment that we have. It’s beyond just looking at the debits and the credits that some expect us to be talking about and thinking about every day,” she added.

Kimberly S. Maready currently serves as Principal Accounting Officer for Old Dominion Freight Line, Inc., a position she has held since May of 2017. Mrs. Maready joined ODFL in February of 2014 as the Vice President – Accounting and Finance and is responsible for directing ODFL’s accounting operations, financial reporting, payroll, tax and financial planning. Prior to joining ODFL, Mrs. Maready spent 21 years with Ernst & Young LLP, including 9 years as partner in the Assurance and Advisory Services practice. Her finance and accounting experience spans across multiple sectors including banking, retail, technology and transportation. Mrs. Maready holds an accounting degree from North Carolina State University and is a licensed CPA in the state of North Carolina. She has served as an active board member of Goodwill of Central North Carolina and the Winston-Salem Children’s Museum and the advisory boards of N.C. State’s Poole College of Management and Appalachian State University’s Walker School of Business.

Archives, Global Trade Daily, News

British International Freight Association Reveals “Apprentice of the Year”

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The British International Freight Association (BIFA) released the name of this year’s winner for the Apprentice of the Year category during the annual Freight Service Awards competition – a competition boasting 30 years of success.

Thomas Turner of Panalpina World Transport was announced as the winner during the 30th Freight Service Awards luncheon on January 17 at the Brewery in Chiswell Street, London.

The final determination is a carefully selected by a panel of sponsors and independent industry specialists that review each entrant submission identifying progress to-date, goals for the future, and impressions of the industry.

This category is one of two specifically aimed at the younger demographic and is sponsored by Outsource Training & Development. The award category first made an appearance in April 2018. following the introduction of the International Freight Forwarding Specialist Apprenticeship.

“In 2018, freight apprenticeships came to the fore, and we are pleased that there has been keen interest in the new category,” Robert Keen, BIFA’s Director General, said.

For more information on other category winners, please visit: BIFA.org

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Global Expansion Continues for Peli Biothermal

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Temperature controlled packaging company Peli Biothermal announced the continuation of global expansion efforts under new leadership from  Dominic Hyde, VP of a high performance, cost effective temperature controlled shipper rental program, Crēdo™ on Demand.

“My first year with Peli BioThermal has been extremely positive with ongoing developments benefiting our global customers, who represent eight of the top 10 pharmaceutical manufacturers worldwide,” Hyde said. “In 2018, we increased our temperature controlled container fleet size by 90%, while increasing our revenue by 90% and we are well positioned to further accelerate our growth in 2019.”

Peli Biothermal will continue growing its global footprint in addition to convenience and flexibility options for customers in 2019, as seen in 2018 with the expertise and development oversights from Hyde.

Hyde commented:

“Our growing footprint of network stations and drop points are planned to exceed 100 sites by early 2019, representing a significant investment to support the continuing worldwide growth within the pharmaceutical and biomedical industry.

“We have been busy in 2018 signing multiple freight forwarders and integrators worldwide, increasing our convenience and flexibility for customers by selecting the best locations and organisations to speed the journey of their temperature controlled shipments around the globe.

“I look forward to the exciting developments planned for 2019 as Peli BioThermal continues to lead the market with its innovative technology and advanced passive systems.”

Source: Peli Biothermal

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Calling all logistics sector leaders

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Logistics industry leaders can now prepare and plan attendance for the G7 Logistics Network 3rd Annual Conference scheduled for February 19-22, 2019 in Hua Hin, Thailand. Attendees are given the opportunity to participate in a meet and greet cocktail reception, keynote speeches, one-on-one meetings followed by a gala dinner.

The conference enables global logistics executives, members, partners and companies to connect and network while learning key initiatives while developing business relationships focused primarily on freight forwarding companies. G7N General Manager Murray Backhouse will kick-off the conference in an opening welcome speech day one. To follow is the Plenary Session and candid one-on-one sessions and networking opportunities with global freight forwarding industry members.

“Relationship that was built during the conference with the G7N team, old members and the new partners from all over the world is what I personally enjoyed the most,” explained G7N member Elsa Lan of Golden Wall. “Sometimes we don’t only talk about business but we also had the chance to get to know each other and became friends which is the extra bonus.”

Registration officially opened this month for the 4-day conference paired with a luxury stay option at Avani Hua Hin Resort & Villas – one of the finest beach resorts in Thailand. Those who register in November are entered entered for a chance to win an upgraded stay in the Deluxe Jacuzzi Suite.

About G7 Logistics Network

G7 Logistics Networks is a fresh and forward thinking logistics network of independent freight forwarders from around the globe. The G7N management had seen the need for a logistics network with a professional but energetic approach. The next generation of logistics professionals are driving their companies and G7N is the network for the future of smart and independent freight forwarders.

For more information about registration, visit: www.g7conference.com

Source: X2 Global Media 

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Logistics Costs For US Companies Climbed in 2013

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Lombard, IL – Logistics costs for US-based businesses climbed by 2.3 percent last year to $1.39 trillion, according to the latest State of Logistics Report (SOL), released by the Council of Supply Chain Management Professionals (CSCMP) and Penske Logistics.

According to the SOL, the first five months of 2014 “have had the strongest freight performance since the end of the Great Recession, with freight shipments up 13.1 percent.”

Yet, the report said, logistics as a percent of US gross domestic product (GDP) declined for the second year in a row, “indicating that the logistics sector is not keeping pace with the growth in the overall economy.”

Based on the SOL, Penske Logistics sees moderately improving US economic conditions, in the form of better dedicated contract carriage growth; a solid near- and long-term automotive sector outlook; and an improving manufacturing sector, also evidenced in the May reading published by the Institute for Supply Management that showed the fastest pace of manufacturing growth this year.

The nation’s supply chain sector, the report said, “faces distinct challenges, including a significant employment gap in the form of a serious shortage of truck drivers to handle the immense amount of inventory that needs to be moved around the country.”

To address this problem, the SOL said, “the industry is raising driver wages, but it remains the most pressing issue hampering sector growth. In fact, by the end of last year, despite strong inventory growth at warehouses, SOL recorded a record low rate of shipments, with inventory not moving swiftly enough, and the cost to store inventory rising. “

This employment gap/driver shortage “could continue to take its toll on the industry, and is an interesting phenomenon to juxtaposed against the labor force participation rate, which sits at historic lows.”

The SOL found that trucking costs topped the list of transportation costs in 2013 at $657 billion; railroad costs came in at $74 billion; water (ocean and inland waterways), $37 billion; air, $33 billion; and freight forwarder costs, $38 billion.

06/18/2014