Twenty twenty-one 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 find smarter solutions.
As we begin 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 are also juggling potential delays from the Winter Olympics in Beijing throughout February. All of this is amid a strained supply chain market, which will take time to ease.
As you prepare for the year ahead, 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 in the near future.
Additionally, as demand and rates will likely continue to stay elevated, 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 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.
Indeed, 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 2021 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
It’s unclear whether we’ll see a reinstatement of certain Section 301 China duty exclusions. At press time, the House and Senate had yet to reach consensus on the legislative proposals. If passed, it would be effective through the end of this year.
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—www.chrobinson.com/en-us/resources/insights-and-advisories/trade-tariff-insights/hts-search/—and, if you’re sourcing from other countries, our team can create a customized sourcing report sharing potential cost savings or avoidance opportunities.
OCEAN FREIGHT UPDATE: GLOBAL
Forecasting remains essential. For this new year, we strongly encourage forecasting six to eight weeks minimum as a best practice. Considerations for staying consistent include:
-Prioritization
-Variability in SKUs/parts
-Smoothing volumes week-to-week
It’s important to be flexible in all facets of a shipment life cycle including:
-Carriers
-Equipment
-Modes
-Routing
OCEAN FREIGHT UPDATE: NORTH AMERICA
-Port congestion continues to strand vessels and equipment. In Los Angeles/Long Beach (LALB) there are more than 90 vessels with an average 18-30-day dwell. Seattle and Tacoma are experiencing an average of 12 days to berth, while Savannah still has more than 20 vessels waiting at anchor.
-South East Asia transshipment hub ports are also impacted, causing heavy delays on non-direct services via Asia.
-Overall capacity is affected by ongoing port congestion in many trade lanes. Vessels are oftentimes delayed back to their origin, missing scheduled port calls to unload empty equipment, and pick up new laden exports to the United States.
-Schedule reliability and operational constraints are forecasted to continue.
OCEAN FREIGHT UPDATE: OCEANIA
-The supply chain in Oceania continues to be negatively impacted by the global supply chain disruption. Terminal congestion and suspension of pro forma berthing windows are having an impact on shipping schedules.
-Our teams are exploring diverse options in moving longstanding containers to help customers mitigate significant delays.
-The impact of port delays around the world is likely to keep freight costs high on all outbound trades.
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 begin another potentially unpredictable year.
Shippers have had to become increasingly nimble and informed over the past year, and now in 2022, it’s critical to remain agile, be open to alternative solutions and stay informed on the latest market insights.
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Mike Short is president of global forwarding at C.H. Robinson. The Eden Prairie, Minnesota-based company solves logistics problems for companies across the globe and across industries, from the simple to the most complex. With nearly $20 billion in freight under management and 18 million shipments annually, C.H. Robinson is one of the world’s largest logistics platforms. Their global suite of services accelerates trade to seamlessly deliver the products and goods that drive the world’s economy. With the combination of our multimodal transportation management system and expertise, they parlay an information advantage to deliver smarter solutions for more than 119,000 customers and 78,000 contract carriers. Learn more at www.chrobinson.com.