Trending Now

Building a Resilient Supply Chain with Advanced Predictive…

New Articles

Softeon Establishes Atlanta Office to Strengthen Customer Support Amid Expansion

softeon warehousing warehouse management
Global Logistics, Global Trade Daily, Warehousing

Softeon Establishes Atlanta Office to Strengthen Customer Support Amid Expansion

Leave a comment

Softeon, a leading provider of warehouse management solutions, inaugurates its Atlanta office on February 5th as part of its strategic expansion initiative. This move comes on the heels of Softeon’s recent update and rebranding of its unified WMS and WES solution, reaffirming its commitment to enhancing customer service and positioning itself for further growth.

Jim Hoefflin, CEO of Softeon, expressed the company’s dedication to delivering value to its clientele by tapping into Atlanta’s rich pool of supply chain talent. With Atlanta being a renowned hub for logistics expertise and home to numerous Fortune 1000 companies, the decision to establish a presence in the city aligns with Softeon’s vision of providing top-notch support while capitalizing on opportunities for expansion.

“The expansion into Atlanta underscores Softeon’s relentless pursuit of excellence in meeting the complex needs of businesses through our WMS solutions,” stated Hoefflin. “By leveraging the talent and resources available in Atlanta, we aim to bolster our team and capabilities to deliver unparalleled service to our customers.”

Softeon’s decision to expand into Atlanta reflects a period of significant growth for the company, accentuated by its recent solution update catering to evolving warehouse automation trends. The update introduces features such as robotic interfaces and automation implementation capabilities, positioning Softeon as a frontrunner in addressing the changing demands of the supply chain industry.

“The opening of our Atlanta office marks an exciting chapter in Softeon’s journey, signaling our commitment to providing innovative solutions and exceptional service to our partners,” added Hoefflin. “With this expansion, we are well-positioned to navigate the evolving landscape of warehouse management and meet the evolving needs of our customers.”

tugboat baltimore bridge,global trade,supply chain,francis scott key bridge
Global Logistics, Global Trade Daily, International Trade, News, Ocean Ports

Emergency Shipping Route Opens Following Baltimore Bridge Collapse

Leave a comment

In the aftermath of the collapse of the Francis Scott Key Bridge in Baltimore, Maryland, authorities have swiftly established a temporary shipping pathway to mitigate disruptions to maritime traffic. The bridge collapsed after being struck by the Dali containership, prompting a halt in ship travel into and out of the Helen Delich Bentley Port of Baltimore.

Maryland Governor Wes Moore announced the creation of a temporary channel near the collapsed bridge during a press conference on April 1st. This alternate route, situated to the northeast of the bridge wreckage, aims to facilitate the movement of vessels around the affected area, particularly for essential commercial purposes.

The construction of the temporary channel was overseen by the Captain of the Port (COPT) and is designated for use by commercially essential vessels. The first vessel to utilize this alternate pathway was the tugboat Crystal Coast, towing a fuel barge, on April 2nd, marking a significant milestone in the recovery efforts.

President Joe Biden pledged the full support of the US government in reopening the port and reconstructing the bridge promptly after the incident. US Coast Guard Captain David O’Connell emphasized the importance of the alternate route in ensuring the resumption of marine traffic into Baltimore.

Plans are underway to establish additional channels, including a second southwest route and a third channel to accommodate deeper vessels navigating the area. Meanwhile, international support for the investigation into the bridge collapse has been initiated, with the Maritime and Port Authority of Singapore collaborating with Synergy Marine Pte Ltd to assist the US Coast Guard’s inquiry.

Tragically, the recovery operation also uncovered two bodies from the waters beneath the Francis Scott Key Bridge, underscoring the severity of the incident and the urgent need for comprehensive measures to address the aftermath.

crane african red sea
Global Logistics, Global Trade Daily, International Trade, News, Ocean Ports

Impact of Red Sea Attacks: African Nations Brace for Inflation Surge

Leave a comment

African countries are poised to experience heightened inflation levels and sustained interest rate tightening throughout 2024 due to disruptions in global trade caused by attacks on shipping lines in the Red Sea by Houthi Rebels. This prognosis is outlined in a comprehensive report compiled by Afrexim bank, examining the repercussions of the Red Sea attacks on African trade and macro-economic stability.

The report underscores the mixed impact of the global trade disruption across the continent, with Egypt facing a notable reduction in traffic around the Suez Canal, while South Africa grapples with increased traffic and port pressure due to vessel rerouting through the Cape of Good Hope. Furthermore, the surge in freight costs is expected to permeate consumer goods prices across Africa, exacerbating already elevated inflation levels and potentially prompting further interest rate hikes by Central Banks, which could impede economic growth.

The disruption in the worldwide supply chain, coupled with soaring prices for food and energy, may incentivize local manufacturers to divest from the region if production costs surpass those of competitors in other continents, leading to a projected contraction in Africa’s trade volume by mid-year.

It’s crucial to note that the Red Sea serves as a vital global trade route, accounting for approximately 15% of global shipping traffic, connecting Europe, the Middle East, and parts of Africa. Since November 2023, Houthi Rebels have targeted commercial ships in response to Israel’s actions against Palestinian civilians, resulting in significant disruptions in international trade and the suspension of transit operations by major shipping companies like Maersk, Hapag-Lloyd, and MSC.

African countries have already been grappling with elevated inflation levels exacerbated by the ripple effects of the Covid-19 pandemic and Russia’s war in Ukraine. According to the African Development Bank (AfDB), around 18 countries on the continent closed 2023 with double-digit inflation, further straining consumer spending among vulnerable populations. In response, African central banks have embarked on a monetary policy tightening spree in 2024, with countries like Nigeria, Egypt, Kenya, and Zambia increasing their Monetary Policy Rates (MPR) as a measure to curb inflation.

In conclusion, the Red Sea attacks have triggered a cascade of economic challenges for African nations, necessitating proactive measures to mitigate the impact on inflation and economic stability in the region.

drone
Global Logistics, Global Trade Daily

Drones, Droids, and Delivery Bots: The Future of Last-Mile Logistics

Leave a comment

The world of logistics is on the brink of a major transformation, with the last mile of delivery posing both significant challenges and opportunities for innovation. Last-mile logistics, the final step of the delivery process where goods are transported from a distribution centre to the end customer, has traditionally been the most expensive and time-consuming part of the shipping journey. However, the advent of drones, droids, and delivery bots presents a potential revolution in how businesses approach this final hurdle.

Emerging technologies in automated delivery are poised to drastically reduce delivery times, cut costs, and enhance environmental sustainability. This blog delves into how these innovations could redefine the landscape of last-mile delivery, offering a glimpse into a future where the delivery of packages is faster, more efficient, and more accessible than ever before.

The Rise of Autonomous Delivery Vehicles

With e-commerce sales soaring globally, the pressure on last-mile delivery services has never been higher, making the need for innovative solutions more pressing.

Autonomous delivery vehicles, encompassing drones, droids, and delivery bots, represent the cutting edge of technology aimed at overcoming the inefficiencies of last-mile logistics.

Drones, aerial vehicles that can navigate autonomously to their destination, offer the promise of rapid delivery times by flying directly to customers’ doorsteps, bypassing road traffic entirely. Droids, or ground-based robots, can navigate sidewalks and pedestrian areas to deliver goods, offering a versatile solution for urban environments. Delivery bots, which can range from small sidewalk-bound units to self-driving vans, offer scalable solutions for a variety of delivery needs.

The historical context of these technologies traces back to the early experiments with unmanned aerial vehicles and automated guided vehicles in industrial settings. However, it wasn’t until the last decade that significant advancements in AI, machine learning, and robotics made the commercial use of drones, droids, and delivery bots a feasible option.

Pioneering companies in this space include Amazon, with its Prime Air drone delivery service; Starship Technologies, known for its autonomous delivery robots; and Nuro, which has developed a self-driving vehicle designed specifically for goods delivery. These companies are at the forefront of testing and implementing these technologies, paving the way for a future where autonomous delivery vehicles are a common sight.

As we delve deeper into each type of autonomous delivery vehicle, it’s clear that the potential benefits are immense. However, the path forward involves navigating regulatory challenges, ensuring safety and privacy, and ultimately gaining public acceptance. The journey towards widespread adoption of these technologies will undoubtedly transform last-mile logistics, offering a glimpse into a future where the delivery of goods is faster, cheaper, and more efficient.

Drones in Last-Mile Delivery

Delivery drones are equipped with advanced navigation and communication technologies that allow them to autonomously fly to specific locations. These unmanned aerial vehicles (UAVs) leverage GPS for routing, have collision avoidance systems to navigate around obstacles, and can carry payloads varying in weight, typically up to 5 pounds. Some drones are designed to drop packages from the air gently, while others land to safely deliver goods.

Case Studies of Successful Drone Delivery Services

  • Amazon Prime Air has been a frontrunner in drone delivery, testing drones that can deliver packages under 5 pounds to customers within 30 minutes.
  • Zipline operates the world’s largest drone delivery network, focusing on medical supplies in Rwanda and Ghana. It showcases drones’ life-saving potential by delivering blood, vaccines, and medical supplies to remote areas.
  • Wing, a subsidiary of Alphabet, has launched commercial drone delivery services in Australia, Finland, and the U.S., delivering everything from food to pharmacy items directly to consumers’ homes.

Regulations and Safety Concerns

The widespread adoption of drone delivery faces regulatory hurdles, primarily regarding airspace management, privacy, and safety. Countries are evolving their aviation laws to accommodate drones, with safety being the paramount concern. Drones must navigate complex airspaces without endangering commercial aircraft, and there are significant privacy concerns regarding drones flying over residential areas.

Droids on the Ground

Delivery droids are ground-based autonomous robots designed for urban environments. They navigate sidewalks and pedestrian paths, using sensors and cameras to avoid obstacles and safely reach their destination. These robots are typically equipped with secure compartments that can only be opened by the recipient, ensuring the safe delivery of goods.

Comparison with Drone Delivery – Pros and Cons

  • Pros: Droids are less affected by weather conditions than drones and are capable of carrying heavier payloads. They operate at ground level, which mitigates some privacy and safety concerns associated with drones.
  • Cons: Droids face challenges in navigating crowded or complex urban environments and may be slower due to ground-based obstacles and traffic.

Examples of Current Droid Delivery Services and Pilot Programs

  • Starship Technologies has deployed its delivery robots across college campuses and urban areas, offering a convenient delivery solution for food and parcels.
  • Postmates’ Serve is a robotic delivery service that navigates sidewalks to deliver goods within local neighbourhoods, enhancing local delivery capabilities.

Delivery Bots – The Automated Couriers

Delivery bots range from small robotic units to large self-driving vehicles, all designed to transport goods without human intervention. These bots operate in various modes, from following pre-mapped routes to dynamically navigating through urban and suburban environments. Some are designed for sidewalk use, while others are equipped to travel on public roads alongside traditional vehicles.

Integration with Existing Logistics Infrastructure

The integration of delivery bots into the existing logistics infrastructure involves several key components:

  • Warehousing: Automated warehouses work in tandem with delivery bots, preparing and loading goods for delivery.
  • Routing: Advanced algorithms determine optimal routes, considering traffic, distance, and delivery windows.
  • Customer Interaction: Bots often communicate with customers via mobile apps, providing updates on delivery status and allowing for secure retrieval of goods.

Case Studies Highlighting Efficiency and Scalability

  • Nuro has developed a self-driving vehicle specifically for goods delivery, partnering with major retailers and grocery chains to test and scale its service.
  • FedEx’s SameDay Bot is designed to make same-day and last-mile deliveries more efficient, particularly for last-minute or urgent deliveries within local areas.

Each of these technologies—drones, droids, and delivery bots—offers unique advantages and faces distinct challenges. Together, they represent the forefront of innovation in last-mile delivery, promising to transform how goods are transported soon.

Challenges and Limitations

The integration of autonomous delivery vehicles into logistics, such as those operated by a logistics company in Kolkata or elsewhere, faces a spectrum of challenges and limitations. These can be broadly categorized under technical and regulatory hurdles, privacy and security concerns, and the intricacies of urban and rural delivery landscapes.

Technical and Regulatory Hurdles

  • Complexity in Navigation: Autonomous vehicles need to reliably navigate diverse environments, from densely populated urban areas to remote rural locations.
  • Safety and Efficiency: Ensuring these vehicles can operate safely alongside humans and traditional vehicles is paramount, requiring advanced AI and machine learning technologies.
  • Regulatory Frameworks: Existing laws and regulations are yet to fully accommodate the unique needs and capabilities of autonomous delivery technologies, necessitating updates and new legislation.

Privacy, Security, and Public Acceptance Issues

  • Privacy Concerns: The operation of drones, in particular, raises questions about aerial surveillance and the potential for privacy infringements.
  • Security of Goods: Safeguarding the parcels from theft or damage during transit and after delivery until they are securely retrieved by the recipient.
  • Public Acceptance: Building trust in these new technologies is essential for their adoption, requiring efforts to demonstrate their safety, reliability, and benefit to communities.

The Challenge of Urban and Rural Delivery Landscapes

  • Urban Navigation: Congested streets, high-rise buildings, and dynamic environments pose significant navigation challenges for ground-based droids and aerial drones.
  • Rural Deliveries: The vast distances and lack of infrastructure in rural areas present obstacles for efficient autonomous delivery, potentially limiting accessibility and speed.

The Future Landscape of Last-Mile Logistics

As we look towards the future, the landscape of last-mile logistics is poised for a transformative shift, driven by the integration of drones, droids, and delivery bots.

  • Integration with AI and Machine Learning: These technologies will play a crucial role in enhancing the operational efficiency of autonomous delivery vehicles, enabling better route optimization, obstacle avoidance, and customer interaction.
  • Impact on Employment and Economy: While automation may streamline operations, it also raises questions about the future of employment in the logistics sector. Adaptation and re-skilling will be key.
  • Predictions for Future Integration: Continued advancements suggest a future where autonomous delivery becomes a standard option, offering faster, more cost-effective, and environmentally friendly alternatives to traditional methods.

Case Studies and Emerging Trends

Exploring case studies and emerging trends provides valuable insights into the practical applications and potential of these technologies.

  • Global Innovations: From the streets of San Francisco to the skies over Rwanda, companies worldwide are pioneering new uses for autonomous delivery vehicles, addressing unique local challenges and opportunities.
  • Emerging Trends: The increasing collaboration between tech companies and traditional logistics providers points towards a future where logistics networks are more integrated, flexible, and responsive than ever before.

Conclusion

The potential of drones, droids, and delivery bots to revolutionize last-mile logistics is immense, promising a future where deliveries are faster, more efficient, and less impactful on the environment. Embracing these technologies requires navigating a complex landscape of challenges, but the rewards—improved service, reduced costs, and enhanced sustainability—are well worth the effort. As we stand on the cusp of this new era in logistics, it is clear that innovation, adaptation, and collaboration will be key to realizing the full potential of autonomous delivery vehicles.

 

transfix fraud theft cargo global trade
3pls, Global Logistics, Global Trade Daily, Uncategorized

2024 Brings More Nearshoring and Freight Fraud

Leave a comment

Some market trends continue to take center stage over others as 2024 continues. We’ll see an uptick in fraud and theft as well as increased effects of nearshing on the Southern border. Industry experts need to stay knowledgeable in order to make well-informed decisions in advance of the new year. 

Nearshoring is moving some manufacturing into Mexico versus the Pacific region, and that is changing the way products flow into the U.S. in a great way. I don’t see that being reversed. We’ll continue to see more companies go into nearshoring. In Laredo, Texas, specifically, volume is up roughly 45% from a year and a half ago and capacity is being shifted to the border to meet demand. It’s important for shippers to have inbound capacity so you can properly source the outbound capacity that’s needed to import those goods. That is a challenge and the industry will have an adjustment period before settling in. 

However, the main trend that I want to focus on as we continue into 2024 is fraud and cargo theft in our industry. We’ve all recently heard about numerous fraud and cargo theft stories. We are looking into roughly 50-55% minimum increase of fraud from Q2 2022 to Q2 2023. And, in some lanes, activity is up well into a 200% fraud increase. 

What we’re seeing today seems to be a very sophisticated approach to fraudulent activity that is probably not U.S.-based. Not only does recent fraudulent activity in the industry include spoofing and tracking software, but also setting up fake domains for small and large carriers as well as fake domains for a third-party logistics company (3PL). Industry crimes are getting more and more complicated. Criminals create fake domains for email purposes that look almost identical to an actual 3PL’s domain and companies who do not take a second look will miss the small details and potentially fall victim to such crimes.

Bigger companies are getting better at spotting fraudulent activity but it’s the smaller mom and pop operators that need to be more vigilant. The small one to ten truck carriers may not have sophisticated cybersecurity practices in place to catch this kind of activity. That’s why they have to do their due diligence from where they’re getting a load. They need to always confirm it’s a 3PL that they’ve worked with or it’s a reputable 3PL with freight that’s actually being managed by that 3PL. The small 3PLs that may only cater to warehousing, receiving, and cross-docking, are the ones that need to stay current and educated on recent market developments and ensure there are standard operating procedures in place for every load. Small carriers and 3PLs need to have safeguards in place to prevent an erroneous load from shippers. In turn, shippers need to be involved and conduct due diligence on the personnel at a dock, warehouse or distribution center. Due diligence could be as simple as physically walking to the appropriate area to confirm the carrier picking up the load is the same as it appears on the bill of lading. It’s very easy to sign a rate confirmation and send it without paying attention but those extra few moments are the differentiators between being safe and falling victim to load scammers. Companies need to realize that it’s more beneficial and cost-effective to be proactive instead of reactive.

Industry movers need to keep these trends in mind as we move further into 2024. With a slower U.S. economy, nearshoring developments, and increase in fraud and cargo theft activity only shows that businesses have to be more vigilant and in-tune with market developments so that they can overcome incoming industry challenges head-on. 

Author Bio

Karl Fillhouer is the Vice President of Sales and Operations of Circle Logistics, a privately held third-party logistics company committed to delivering on three core promises to their customers: No Fail Service, Personalized Communication, and Innovative Solutions. Circle Logistics leverages its technology, industry experience, and employee ingenuity to develop industry-leading transportation solutions. For more information, visit https://circledelivers.com/. 

 

crane african red sea
Global Logistics, Global Trade Daily, News

Chinese Crane Manufacturer Denies Cybersecurity Concerns Raised by US Officials

Leave a comment

Shanghai Zhenhua Heavy Industries (ZPMC) has vehemently denied allegations of potential cybersecurity risks associated with its cranes, following scrutiny from US congressional committees. The Chinese state-owned company refuted claims and emphasized its adherence to international standards and relevant regulations, as reported by Reuters.

ZPMC highlighted that its cranes have been extensively deployed in ports worldwide, including those across the United States. The House of Representatives security panels specifically examined ZPMC’s installation of Swiss engineering group ABB’s equipment onto US-bound ship-to-shore cranes. ABB executives were summoned to public hearings in January to address concerns about their collaboration with ZPMC.

In response, ABB clarified that it had supplied equipment to various crane manufacturers, including Chinese firms, who then directly sold the cranes to US ports. ZPMC addressed the concerns raised by the Homeland Security and Strategic Competition committees, emphasizing that their cranes do not pose any cybersecurity risk to ports.

The issue of cyberattacks and industrial espionage between the US and China, two of the world’s largest economies, is not uncommon. However, ZPMC dismissed the allegations, asserting its commitment to compliance and transparency in its operations.

ZPMC, listed on the Shanghai Stock Exchange, boasts a significant presence in the global market, with a fleet of more than 20 transportation vessels, solidifying its position as one of the world’s leading port machinery manufacturers. Meanwhile, ABB, which derives a considerable portion of its sales from China, stands as a key player in the engineering industry, with the US market being its primary source of revenue.

In light of recent concerns, the Biden Administration has announced plans to issue an Executive Order aimed at enhancing port cybersecurity in the United States, underscoring the importance of safeguarding critical infrastructure against potential threats.

global trade unctad baltimore bridge supply chain import
Global Logistics, Global Trade Daily, News

Charting a Course for Sustainable Global Trade: UNCTAD’s Inaugural Global Supply Chain Forum

Leave a comment

Amidst a backdrop of unprecedented global challenges, the inaugural Global Supply Chain Forum (GSCF) 2024 promises to be a pivotal gathering, convening leaders and experts to navigate the evolving landscape of international trade and logistics. Organized by the United Nations Conference on Trade and Development (UNCTAD) in collaboration with the Government of Barbados, this landmark event, scheduled for May 21-24, 2024, aims to shape the future of global trade in a rapidly changing world.

In recent years, the global trade arena has grappled with significant disruptions, ranging from the Covid-19 pandemic to the impacts of climate change and geopolitical tensions. These challenges have not only stress-tested global supply chains but have also underscored the critical need for resilience and sustainability, particularly for developing countries.

At the heart of the forum lies an innovation challenge, designed to inspire solutions that foster greener, more efficient, and resilient global production and distribution networks.

Focus on Resilience and Sustainability

GSCF 2024 will shine a spotlight on the indispensable role of global supply chains in driving economic growth, fostering job creation, and advancing poverty reduction, in alignment with the 2030 Agenda for Sustainable Development.

This forum is part of a broader series of events commemorating 60 years since the establishment of UNCTAD, a stalwart advocate for the Global South. Recognizing the disproportionate impact of supply chain disruptions on vulnerable economies, particularly Small Island Developing States (SIDS) and Landlocked Developing Countries (LLDCs), the forum will delve into strategies for bolstering resilience and sustainability across global supply chains. These strategies encompass everything from trade facilitation reforms to the integration of digital innovations.

Research conducted by UNCTAD reveals that the Covid-induced supply chain crisis led to a 1.5 percent increase in global consumer price levels, primarily driven by elevated maritime transport costs. The impact was even more pronounced in SIDS, where consumer price inflation surged by an additional 7.5 percent.

Strengthening the Backbone of Global Trade: Seaports

Seaports serve as vital gateways for trade, facilitating over 80 percent of global merchandise exchange. The forum will explore avenues for enhancing the resilience of seaports, particularly in vulnerable coastal nations. Additionally, digital solutions, including blockchain technology, will be championed to mitigate emerging risks and safeguard the sustainability of global supply chains amidst the rising tide of e-commerce and cyber threats.

Global Collaboration and Bridging Gaps

GSCF 2024 aims to foster collaboration among stakeholders worldwide, bringing together policymakers, industry leaders, and international organizations such as the International Labour Organization (ILO), the International Maritime Organization (IMO), and the UN Industrial Development Organization (UNIDO). With more than 500 participants from approximately 100 countries expected to attend, and over 100 entities already onboard as partner organizations, the forum promises a rich tapestry of perspectives and insights.

Government ministers of transport will converge to deliberate on a joint declaration, which will feed into forthcoming discussions at the UN’s 4th International Conference on Small Island Developing States, scheduled for late May in Antigua and Barbuda.

In Conclusion

The Global Supply Chain Forum 2024 represents a pivotal moment for charting a course towards sustainable and resilient global trade. By fostering collaboration, innovation, and practical solutions, this forum endeavors to pave the way for a future where trade serves as a catalyst for inclusive growth and shared prosperity.

terminal operations global trade shipping trade red sea houthi Hapag-Lloyd shipping leasing
Global Logistics, Global Trade Daily

Hapag-Lloyd CEO is Bullish on the Second Half of 2024

Leave a comment

Many continue to be bearish in 2024, but Hapag-Lloyd CEO Rolf Habben Jansen is bullish on demand in the second half of the year. In an interview with CNBC, Jansen notes that inventories are depleted and the recovery post-Chinese New Year, February 10th, has been positive. 

Hapag-Lloyd reported a significant drop in 2023 net profit. Shipping rates were at untenable levels during the last quarter of 2023, and the Red Sea crisis further exacerbated the entire industry. Trade continues to be diverted, and while rates are beginning to decline, Asia to West Coast port rates are up 155% year-to-date, and Asia to East Coast ports have increased 129% year-to-date.

Another issue Jansen touched on was the increase in carbon dioxide emissions as a result of Red Sea diversions. Hapag-Lloyd is aiming for net-zero carbon by 2045, but according to Sea-Intelligence, diversions will likely increase emissions by 260% – 354%. The industry at large has added nearly 5% in vessel capacity to neutralize delays, and sailing faster has also augmented capacity by an additional 8% – 10%. 

A big reason, however, why Jansen remains bullish is the new alliance Hapag-Lloyd has formed with Maersk. The two shipping giants announced the Gemini alliance earlier this year and once in place, the alliance is slated to achieve greater than 90% of schedule reliability. Compared with global reliability in the 51.6% range, the upgrade would be a noteworthy improvement. 

Jansen explained that the alliance rests on the use of a spoke and hub system. Common in the larger transportation sector, the spoke and hub system is a distribution network akin to a bicycle wheel. The hub rests in the middle, and the spokes are the carriers (trucks, planes, or ships). The network is more elastic than traditional end-to-end networks, and Hapag-Lloyd and Maersk believe this model will propel them to 90% schedule reliability. 

Speaking of reliability, the 2M alliance between Maersk and MSC will be discontinued in 2025, according to Maersk. Reliability was a driving factor in Maersk seeking out Hapag-Lloyd as a partner, where the efficient turning of containers ensures freight is moved in the most systematic manner possible. Delayed shipments slow the process, whereas increased efficiency would result in appreciable container utilization.

terminal operations global trade shipping trade red sea houthi Hapag-Lloyd shipping leasing
Global Trade Daily, International Trade

Red Sea Global Trade Disruptions: How to Overcome the Chaos

Leave a comment

Global trade has faced many recent disruptions lately due to chaos in the Red Sea, which started as a result of the attacks in Gaza. According to the Council on Foreign Relations, about 6% of global trade and 40% of U.S. container ships traverse the Panama Canal yearly. Per the U.S. Naval Institute, 12% of global trade travels the Suez Canal.

The Houthis, a religious movement, began carrying out attacks on cargo ships traveling through the Red Sea and the Suez Canal in November 2023. Vessels are avoiding these attacks in the vital waterway by sailing around Africa, adding time and cost to the trip. 

Perishable items are shipped in containers, but some items are switched to bulk carriers, which may make these items harder to handle at ports. Plus, container prices have risen by 25% or more. Perishable items have a limited life, so the lengthier shipping times can ruin them and make them unsellable. 

Ocean shipping rates are going up, and several carriers have added surcharges. Shipments are delayed, meaning orders may be canceled as customers become unhappy with shipping times. 

The Panama Canal, which could have been an alternative to the Suez Canal, is also experiencing cargo diversions because of the lack of rain, making the canal too shallow for large ocean liners. Authorities expect the canal will limit capacity to 18 slots per day, down from the pre-drought capacity of 30 ships. 

Significant challenges for international trade include: 

  • Restricted bookings on westbound routes have triggered a surge in freight rates, affecting regions in the Middle East, the Red Sea, North Africa, Europe, the East, the Black Sea, and the West.
  • Freight rates have seen a significant spike, with Asia-Europe rates surging 173%, exceeding $4,000/FEU compared to pre-diversion levels. Asia-Mediterranean prices have doubled, exceeding $5,000/FEU.
  • Carriers have introduced surcharges ranging from $500 to $2,700 per container, further driving prices higher. The FMC granted permissions for carriers to circumvent the 30-day notice for increasing rates, allowing them to bill surcharges immediately. 
  • Disruptions in one region can influence distant markets. Several EU-based auto plants have announced temporary production shutdowns due to delays in obtaining parts from Asia. 
  • Due to Panama Canal congestion, a route initially diverted to the Suez Canal will go towards the Cape of Good Hope, adding ten to fourteen days to the journey and extra costs. Shippers now face a dilemma between bypassing the Cape of Good Hope or returning to the Panama Canal with potential queuing delays.
  • Sea-Intelligence estimates a 5.1%-6% reduction in global shipping capacity, equivalent to 1.45-1.7 million TEU.
  • Companies may need to increase ship numbers on each route to maintain schedules.
  • The crisis prompts strategic reshuffling, reminiscent of past trends redirecting ships from European to U.S. routes during surges in freight prices.
  • The crisis could extend into the second half of 2024. The longer the war in Gaza lasts, the more extended shipping disruptions caused by missile attacks in the Red Sea will continue. 
  • Retailers that rely on sea freight could be more affected by the Red Sea disruption than those that source closer to home. Retailers may see longer lead times for specific products as the Red Sea situation continues. 

How to make global shipments happen

Shippers need to find alternative routes to make sure shipments happen. Routes bypassing the Red Sea might be longer but would avoid the crisis zone. Shippers must implement enhanced security measures for vessels, such as hiring private security firms or coordinating with naval forces for escorts. 

Shippers must be flexible as they navigate higher costs, longer transit times, and economic volatility. When risks like this occur, the ability to mitigate risks and deliver to customers is critical. Diversifying the supply chain to reduce reliance on routes passing through the Red Sea can mitigate the impact of disruptions in the region. Shippers must review insurance policies and risk management strategies to ensure coverage for potential regional disruptions. 

Supply chain networks may need to be redesigned with alternate logistics partners, sources, and suppliers. A supply chain network optimization solution answers “what if” scenarios to improve customer service, operational efficiency, inventory management, risk mitigation, and supply chain resilience. Supply chain network optimization solutions use data from across the supply chain to create a mathematical model representing the entire supply chain network. The model considers various constraints, objectives, and decision variables, including facility locations, transportation routes, inventory levels, and production capacities.

The Red Sea crisis is a wake-up call for companies to localize their supply chains. Shippers should have alternative sources of raw materials so they don’t have to rely on a single source for raw materials, which can make the supply chain vulnerable to disruptions. Having multiple sources allows shippers to negotiate better prices and hedge against sudden price increases from a single supplier. Because of the instability of the times, the availability of raw materials can be affected. 

Utilizing technology, such as tracking devices, predictive analytics, and communication systems, can help shippers better navigate high-risk areas and respond effectively to incidents. 

Seizing Opportunities Amid Uncertainties

  • The looming strike threat in the Eastern United States could expedite the return of cargo volume to the US-West Terminal.
  • Large importers may consider advanced shipment plans or opt for the West Coast route to mitigate potential strike risks.

Circumventing the crisis in the Red Sea requires careful planning, agility in your supply chain, and partnerships with logistics providers that can ensure shipments are shipped on time to the correct location. 

source: https://www.nexterus.com/

 

red sea global trade, houthi attacks, red sea attacks, red sea crisis, houthi rebels
Global Logistics, Global Trade Daily, International Trade, News

How The Red Sea Disruption Is Affecting Industry

Leave a comment

With several big shipping companies diverting their routes away from the Red Sea due to current conflicts, the delivery of shipping containers and consumer goods is taking longer than usual.

As a result of the ongoing Israel-Hamas war, the Houthi group in Yemen – who is openly backing Hamas – has said it is attacking all ships heading towards Israel. However, it is unclear whether all the targeted vessels are actually travelling to Israel, meaning many shipping firms have opted to avoid the busy shipping lane altogether.

In fact, over the past few months, a number of Maersk and MSC container ships have been assaulted by Houthi rebels, which has reinforced the importance for shipping companies to map out alternative routes for the security of their crew members and container cargo.

So, what does this mean for businesses awaiting commercial deliveries? Cleveland Containers, one of the UK’s leading suppliers of shipping containers, explains how the Red Sea disruptions are affecting industries across the country.

What is happening in the Red Sea?

Since the beginning of the Israel-Hames conflict in October, Houthi rebels have been launching rockets and drones against foreign-owned ships navigating through the strait of Bab al-Mandab. This is a 20-mile wide channel separating Yemen on the Arabian Peninsula side and Eritrea and Djibouti on the east African coast.

Andrew Thompson, Chief Executive Officer of the Cleveland Group, which consists of Cleveland Containers, Cleveland Hire and Cleveland Modular, said, “Generally, ships enter the strait of Bab al-Mandab from the south to cross the Red Sea and reach the Mediterranean via Egypt’s Suez Canal.

“But the threat of potential attacks has forced global shipping firms to amend their itineraries, with vessels now cruising around the Cape of Good Hope (South Africa) and then all the way up the west side of the continent.

“This is causing severe delays to shipping deliveries, as the alternative route can extend transit times to at least two or three weeks. And, in turn, the delays are also having a knock-on effect on the operations of sectors and companies all over the UK, impacting stock availability and delivery pricing.”

What sector is being affected the most?

Many sectors, such as retail and construction, are being significantly affected by the Red Sea disruptions, as companies deal with supply chain logjams due to the rerouting of deliveries.

Manufacturing is no doubt one of the industries that has to tackle the harsh consequences of the ongoing situation, too. For example, at the start of 2024, big automakers such as Volvo, Tesla, and Suzuki had to suspend some production across Europe because of shortages in components.

In particular, the UK manufacturing sector has witnessed a decline in operations in recent times, and the Red Sea problems have contributed to hindering the situation even further. As of January 2024, its purchasing managers’ index (PMI) stood at 47.0, with any reading below 50 indicating a contraction.

The current delays are prolonging expected deliveries, causing disruptions to production schedules and increasing financial pressures at a time when companies are already struggling to make ends meet.

The additional costs behind the Red Sea disruptions

The ongoing disruption in the Red Sea means that the cost of delivering goods worldwide is increasing, too.

The forced change in route has increased sailing times by 30%, leading to a rise in fuel consumption and extended work shifts for ship crews.

Not to mention that shipping companies are facing additional port fees as vessels need to stop more often along the way, as well as higher freight expenses overall.

So, ultimately, this is why businesses across the UK are currently having to spend more money on the delivery of products, items, and materials to keep their operations going.

It is also worth noting that the delays of goods leaving China and other parts of the world are escalating demand and impacting availability. Some sectors might be experiencing significant stocking issues, whereas others may not have the materials they need to fuel their industrial processes.

In short, the Red Sea disruptions are causing a slowdown in production, resulting in lower output and an overall loss in revenue for companies all over the country.

As things stand, the threat of Houthi attacks on vessels in the Red Sea is setting back transit times, increasing shipping costs, and putting the financial wellbeing of several sectors to the test.

While it is difficult to make predictions at this stage, the hope is that the situation will ease over the coming months to restore some sort of normality worldwide.