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Demand for Lightweight Vehicles to Foster Automotive Applications of Carbon Fiber

carbon fiber industry
Archives, Global Trade Daily, News

Demand for Lightweight Vehicles to Foster Automotive Applications of Carbon Fiber

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Carbon fiber is well known for its exceptional properties, such as low thermal expansion, high-temperature tolerance, high chemical resistance, low weight to high strength ratio, high tensile strength, and high stiffness. These properties make them a highly popular material in many applications in civil engineering, sports equipment, military, motorsports, and others. Carbon fiber-based components witness robust demand from aerospace, automotive, wind energy, and other end-use industries.

In aerospace and automotive industries, there is a growing emphasis on utilizing lightweight, durable, flexible, materials, such as carbon fiber, to enhance the performance and efficiency of automobiles and aircraft and aid in achieving the emission standards set by various authorities. Owing to this, the materials are quickly replacing aluminum and steel. The global carbon fiber market size is forecast to witness notable growth over the coming years.

Demand in automotive and aerospace applications

The carbon fiber industry share from automotive applications is predicted to expand significantly in the upcoming years. In vehicles, carbon fibers, due to lightweight, high thermal stability and electrical conductivity, are used in various important components, such as disk brakes, wheels, automobile hoods, and others.

Soaring carbon fiber consumption is expected due to the increasing production of cars to cater to strong consumer demand. According to the International Organization for Motor Vehicle Manufacturers, the global production of commercial vehicles and cars was combinedly around 91.78 million in 2019.

From aerospace applications, the carbon fiber industry share is slated to witness considerable growth by 2027. The superior physical strength, low coefficient of thermal expansion, high dimensional stability, and low abrasion characteristics of carbon fibers complement their applications in aerospace antennas, aircraft brakes, and support structures. Recent research and development in the manufacturing process of carbon fiber composites for aerospace applications are likely to boost its consumption in the sector.

For instance, researchers at the University of Sydney have recently developed an upgraded method for recycling carbon fiber reinforced polymer (CFRP) composites, that retain 90% of their original strength and allow their re-utilization in modern commercial airframes.

Flourishing clean energy projects in North America

North America is slated to register a considerable share of the global carbon fiber industry by 2027. The booming wind energy sector in the region is generating strong demand for carbon fiber composites for their use in wind blades. The exceptional fatigue and corrosion resistance property of carbon composites enhance the longevity of wind blades.

Wind energy is one of the major sources of electricity generation in the United States. For instance, approximately 337.5 terawatt-hours of electricity were produced by wind power between January and December 2020, which is equal to nearly 8.42% of all generated electricity in the U.S. Growing adoption of clean energy technologies to reduce emission should positively impact carbon fiber market share across various sectors in the region.

Leading manufacturers of carbon fiber composites are Zoltek, Formosa Plastics Corp, Hexcel Corporation, Toho Tenax (Teijin), SGL Carbon SE, Mitsubishi Rayon Co. Ltd., and Toray Industries. These prominent companies are focusing on R&D activities and leveraging advanced technologies to develop new procedures for carbon fiber manufacturing to reduce costs.

Carbon fibers are a multipurpose material, which has widespread applications across various sectors. Some of its other applications include the fabrication of carbon-fiber microelectrodes, textiles, and flexible heating.

supply chain
Archives, Global Logistics, Global Trade Daily, International Trade

Navigating the 12 Pitfalls of the Global Supply Chain

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With over 30+ years of international trade experience, I have witnessed numerous and repeated errors made by Sales, Purchasing, Logistics Managers, Supply Chain, and International Business Executives.

There are tremendous opportunities and benefits to be derived through global sourcing and foreign business development. Along with these opportunities are considerable challenges, obstacles, and pitfalls. In order to succeed in international business, management must mitigate these concerns through gaining knowledge and implementing processes and controls over import and export operations, including the development of robust training for all personnel.

The following section contains twelve steps companies can take to manage the solutions that will allow the navigation through these challenges and delivering success to the international operation.

These twelve steps create a pathway forward in a concise, straightforward methodology and time-tested process to ensure management accomplishes their desired corporate goals of profits, growth, and sustainability.

Avoid the following:

Step 1: “We have no personal liability”.

There is significant personal liability for individuals who operate in global supply chains.

U.S. Government enforcement agencies, such as but not limited to:

– Department of Justice

– Customs and Border Protection

– Departments of State, Commerce and Treasury

– Bureau of Alcohol, Tobacco and Firearms

– United States Department of Agriculture and the Food and Drug Administration

All above are a few of the agencies that will prosecute both organizations and individuals who are seriously out of trade compliance with their import and export regulatory responsibilities.

While criminal prosecution is a rare occurrence … it does happen every day in the supply chain, somewhere in the world of international trade.

Trade Compliance Management in companies with an international footprint is a necessary evil that needs to be managed and integrated into the fabric of the organization’s culture and business model.

Step 2: “The FOB Term is Always a Safe Incoterm to Utilize”.

The FOB Incoterm has three deadly areas of concern:

-It is used in domestic trade

-It is a gray area in the loading process

-There can be ambiguity when the point in time responsibility and liability shift from the seller to the buyer (exporter to importer).

It is used in domestic trade

For domestic trade in the United States, the UCCP (Uniform Commercial Code of Practice) currently (though in contention) utilizes the FOB term as a “term of sale or purchase”, where there are two primary options FOB Origin and FOB Destination.

Within the UCCP, FOB is defined as:

Uniform Commercial Code › U.C.C. – ARTICLE 2 – SALES (2002) › PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT

2-319. F.O.B. and F.A.S. Terms.

Unless otherwise agreed the term F.O.B. (which means “free on board”) at a named place, even though used only in connection with the stated price, is a delivery term under which:

(a) when the term is F.O.B. the place of shipment, the seller must at that place ship the goods in the manner provided in this Article (Section 2-504) and bear the expense and risk of putting them into the possession of the carrier; or

(b) when the term is F.O.B. the place of destination, the seller must at his own expense and risk transport the goods to that place and their tender delivery of them in the manner provided in this Article (Section 2-503);

(c) when under either (a) or (b) the term is also F.O.B. vessel, car, or another vehicle, the seller must in addition at his own expense and risk load the goods on board. If the term is F.O.B. vessel the buyer must name the vessel and in an appropriate case, the seller must comply with the provisions of this Article on the form of a bill of lading (Section 2-323).

The UCCP Term allows any mode of transit or conveyance.

Some sources claim that FOB stands for “Freight on Board”. This is not the case. “Freight On Board” is not mentioned in any version of Incoterms, and is not defined by the Uniform Commercial Code in the USA.[10] Further to that, it has been found in court that “Freight On Board” is not a recognized industry term.[11] The use of “Freight on Board” in contracts is therefore very likely to cause confusion. The correct term is “free onboard”.

Keep in mind that a huge amount, if not a clear majority of domestic commercial transactions, are sold or purchased on a FOB basis and moved by truck, rail, or air. This would be ok if the FOB Term was the UCCP intent and not intended utilization under Incoterms 2020.

There is a very clear line of confusion between the domestic and international “FOB” terms in selling and purchasing. It is only when it causes a problem when it is seen as an issue.

Free on Board, or FOB is an Incoterm, which means the seller is responsible for loading the purchased cargo onto the ship, and all costs associated with same. At the point, the goods are safely onboard the vessel, the risk transfers to the buyer, who assumes the responsibility of the remainder of the transport.

FOB is the most common agreement between an international buyer and seller when shipping cargo via sea. This Incoterm only applies to sea and inland waterway shipments.

The 2020 edition of Incoterms opened the door for domestic utilization of the FOB term. The FOB UCCP term varies greatly from the FOB Incoterm.

Under Incoterms 2020, the preferred term for domestic utilization, since that door was opened, is FCA (Free Carrier At).

It is a gray area in the loading process

Under Incoterms 2000 and prior, the FOB term transferred risk and cost from the seller to the buyer once the goods passed the ship’s rail.

This factor was changed in the 2010 edition of Incoterms and continues in the 2020 edition. The term now read “…passes when the goods are on board the vessel”.

However, “on board” is not clearly defined. Is that when the goods are placed on the deck, in the hold, not yet secured, secured, etc.?

We had a case in our office, where a U.S. exporter, sold a huge piece of equipment, (25 Tons, $11m in value) to a customer in Europe. It was going to be shipped via ocean, secured in a cargo hold under deck.

During the loading process, the goods were being lifted onto the vessel by a crane and longshoreman crew. In the handling, the equipment was laid down on the deck of the hold several times, while the longshoreman positioned the cargo.

In that repositioning process, the freight was damaged. The issue now became who is responsible, based upon the Incoterm of FOB Port Elizabeth – the seller or the buyer?

Were the goods actually “on board” when they were damaged? The maritime judicial system will eventually resolve that issue and court precedence will be established.

But today there is an ambiguity in defining “on board” in the FOB Incoterm. There are references to being “secured in place”, but it appears ambiguous.

Sellers and buyers need to address these specific concerns in the contract of sale and attempt to minimize the gray areas of liability, that may present themselves when using the FOB term.

There can be ambiguity when the point in time responsibility and liability shift from the seller to the buyer (exporter to importer).

This is the explanation of the FOB term from the Incoterms 2020 edition.

A2 (Delivery)

The seller delivers by placing the goods on board the vessel nominated or provided by the buyer on the agreed date, or within the agreed period as notified by the buyer, or if there is no such time notified then at the end of that period.

There is still a belief that the ship’s rail is the defining point, i.e.: before the notional vertical line above the rail is the seller’s cost and risk, and after is the buyer’s cost and risk. A court ruled that the delivery point was when the goods were on the deck but that then caused the question was the notional vertical line replaced with a notional horizontal one in line with the deck itself and what if the goods were being placed below deck? This ship’s rail concept was removed in the Incoterms® 2010 version. Typically, then, “on board” is taken to mean when the goods are safely on the deck or in the hold. If the cargo needs to be then further secured for transportation such as being lashed or separated with some material or spread evenly throughout the hold for bulk goods like grain the seller and buyer should agree in their contract what is needed and at whose cost and risk this is done.

B2 (Delivery)

The buyer’s obligation is to take delivery when the goods have been delivered as described in A2.

FOB A3 / B3: Transfer of Risk

A3 (Transfer of risk)

In all the rules the seller bears all risks of loss or damage to the goods until they have been delivered in accordance with A2 described above. The exception is loss or damage in circumstances described in B3 below, which varies depending on the buyer’s role in B2

B3 (Transfer of risk)

The buyer bears all risks of loss or damage to the goods once the seller has delivered them as described in A2.

If the buyer fails to inform the seller of where and when the vessel will be presented or if the vessel fails to arrive on time, or it fails to take the goods so that the seller cannot deliver, then the buyer bears the risk of loss or damage to the goods from the agreed date or at the end of the agreed period.

On an operational level, the seller delivered the goods to the terminal, carrier, or other agreed named place, and the goods were not loaded on board as anticipated for an array of reasons, such as but not limited to the carriers having vessel timing or loading issues and the seller appropriately notified the buyer than delivery has been made and risk of loss and damage has passed from the seller to the buyer.

The important aspect to note here is that the buyer expected to take delivery “on board” and now that did not occur as the buyer will take delivery and assume all risks at a point short of “on board”.

In general, Incoterms need to be understood in their entirety including the consequences associated with using the incorrect Incoterm or not understanding the specific responsibilities as the buyer or seller. Incoterms training is a must for all personnel engaged in global trade and more particularly those operating in Procurement, Sales, Operations, Finance, and Customer Service.

Companies involved in international trade using best practices will switch Incoterms 2020 rules in quotations, purchase orders, contracts, commercial invoices, and other commercial documentation when determining the level of responsibilities and costs they want to take on; dividing the responsibilities for risk transfer, costs, and responsibility for carrier selection between the buyer and the seller.

Step 3: Contracts Override Relationships

In international trade, relationships trump contracts. Relationships will drive a successful deal and a long tenure. I have always extolled “you can contract out risk”, but you can seriously minimize and mitigate risk by establishing favored relationships that allow the best opportunity for problem resolution and working out issues that will likely occur over time and trade.

Contracts are important to make the deal have legal standing, but it is foolish to believe that the contract eliminates any risk in the transaction. In fact, sometimes contracts can cause risk when a false sense of security is at hand.

Obtaining legal support is prudent but spending money and time at building relationships with suppliers, vendors, agents, and customers will go a long way in mitigating many of the risks in global trade.

Step 4: Service Providers are Experts in all Aspects of the Global Supply Chain

Just not so! While a small percentage of service providers are clearly experts, professionals, and aligned with teams of knowledgeable staff the majority have serious limitations.

While many have the expertise to arrange affreightment, pick up and delivery many lacks:

-the necessary local connections in all foreign markets

-trade compliance knowledge

-an understanding of how best to eliminate risk and cost from the supply chain

A high degree of scrutiny, vetting, and discerning should take place when choosing service providers, 3PL’s, freight forwarders, and customhouse brokers.

Areas of evaluation:

Service providers can be very valued partners in your global supply chain. Just because they hang out a shingle does not mean they can provide real benefit. Scrutinize robustly and vet diligently. It will pay off in the long run. Having a quality partner will make your job easier and with a greater ability to meet all the challenges successfully.

Step 5: Manage the Supply Chain with Robust Technology

Supply chains that have expansive technology in every aspect of the operation will gain great leverage in performance metrics.

Areas of technology in the supply chain are:

Technology creates efficiency, ease of operations, robust information flow, security, and other benefits. It allows for the highest levels of performance in any organization, but more particularly in the global supply chain. Technology advances forward and expands every day. Keeping contemporary is a challenge that all supply chain executives face.

Cyber Security has grown to be a significant threat. It must be contemplated and managed in every moment and keystroke of the day. There are cybersecurity solutions that must be integrated into all aspects of operation, where there is a technology interface.

Step 6: We have been doing it this way … for over 5 years with no problems.

We hear this often and clearly because a company has not encountered a specific problem, does not necessarily mean things are being done correctly.

A volcano is not a problem until it erupts. The underlying problem is waiting for emergence. Dealing with potential issues proactively and anticipating “what ifs” are a much better option.

Potential problems along with potential betterments must be proactively pursued to assure you do not have serious issues and are doing all possible to reduce risk and cost and/or business process improvements.

Continually updating a logistic SWOT Analysis, risk management assessments and process evaluations are all necessary steps in mitigating any unanticipated problems in the future.

Because no one is complaining does not mean everything is ok. You must be proactive in making sure everything is ok, without assumptions. Err to the side of conservativism as it will prevent future headaches.

The pandemic was a complete disaster and disruption to all global supply chains. Having said that, some good came out of it as companies had time for internal introspection at risk and threats leading to proactive steps in mitigation.

Step 7: We Handed it to the Carrier, so it must be “on board”

Tracking and tracing need to be accomplished at a very detailed and exhaustive level.

Just because you have confirmation that a carrier has received freight, does not assure it made it on board the vessel, aircraft, railcar or truck.

You need affirmation that in fact the goods have actually made it on board the conveyance with an updated ETA, followed up with daily frequency, in case of any unanticipated delays, which occur all the time.

Step 8: We Always Check the Denied Parties List

Many international executives believe their companies are consistently checking and reviewed the various lists making up the “Denied Party Screening” regulations for importers and exporters.

In many years of auditing companies engaged in global trade, only a small percentage is fully compliant with the review, checking and compliance responsibilities associated with Denied Party Screening.

There are available direct connections into the government agencies and numerous third-party technology companies with DPL Screening Capabilities.

Step 9: I am the Ultimate Consignee on these Goods, but not the Importer of Record.

Many companies who are the recipients of imported merchandise who are not participative in the import process believe they have no import responsibilities.

That is potentially and totally incorrect! Customs (CBP) has the right to evaluate any import situation and determine that the ultimate consignee could be considered the “importer of record” and therefore has all the responsibilities as the “importer of record”. This would then require adherence to all import regulations HTSUS, valuation, recordkeeping, etc.

Step 10: Domestic Packing will work for my International Shipments

Claims for loss and damage on international shipments occur every day and a major cause is inadequate packing, marking and labeling.

Just check with any marine insurance companies they will advise of the frequency and the severity of claims occurring on import and export shipments directly attributed to inadequate packing marking and labeling which could jeopardize marine cargo insurance coverage as an implicit or explicit warranty.

Step 11: Do we really need to ensure the shipment?

Loss and damage to international freight is a daily occurrence worldwide. In the overall cost of the global supply chain, marine insurance is an inexpensive purchase offering a high value of the return.

Just looked at what happened this year in the Suez Canal, with the grounding of the Ever Given (Evergreen Lines) which potentially caused losses in excess of $ 1billion.

Direct claims in delays and damage and indirectly caused by a General Average Claim. The fines, penalties, delays and lost cargo is still mounting, as only in early July, has the vessel finally exited the Suez Canal.

Marine cargo insurance is a solid, responsible, value-driven, and best practice purchase for any company shipping goods internationally.

“All Risk”, “Warehouse to Warehouse” with contemporary customized underwriting terms under standard policies are available.

Step 12: Do I need to train my global supply chain team?

The challenges of the global supply chain are numerous and daunting. These challenges can only be met by experienced well-trained managers and staff. The training needs to be consistent, contemporary and robust. Key areas to include are:

-Compliance

-Documentation

-Negotiating Freight

-Sourcing Management

-Logistics Management

-Technology Management

-Warehousing & Distribution

-International Contracts

-Risk and Spend Directives

-Foreign Trade Zones

These outlined above show a handful of the necessary skill sets required for import and export personnel to master. And “training” is the pathway to successful global supply chain management.

Summary:

The twelve examples outlined above provide a synopsis and evidence that mistakes based upon a lack of knowledge and skillsets can cause great disruption in import and export activity in the global supply chain.

Developing resources, providing training, and implementing procedures will assist in mitigating the problems and challenges identified in the above article.

Resources in international business and supply chain management will provide informed intelligence that will allow for making better decisions.

Training and skill set development will better prepare supply chain, import & export executives, managers, and staff to better deal successfully with all the challenges of global trade.

Procedures, protocols, and disciplines in management are always critical to a company’s success in business. In the global supply chain, SOPs are an integral component of freight, logistics, trade compliance, foreign sales, and overseas procurement that assure a company’s success in its international footprint.

The author can be reached at: tomcook@bluetigerintl.com for questions and comments.

logistics
3pls, Archives, Global Logistics, Global Trade Daily, Trucking

Things To Consider Before Starting a Logistics Business

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Are you thinking of starting your own business? Then a transport and logistics business can be a good option because it’s booming at this moment and its growth is not going to come to a halt as people are now more inclined towards things being brought to them at their doorsteps without having to venture out and spend time in doing so. But there are certain things to consider before you finally get ready to start.

Build a customer base

It is seen that people start their business with little capital and solely rely on the revenue to be generated to cover all the incurring costs. In this way, they taste failure at a very early stage of their endeavor. The first and foremost thing to do would be to build a strong customer base by portraying the business plan as transport contacts don’t happen just from anywhere or at any time.

Consider the capital and the cost

Decide on the source of the capital you are thinking of to start the business. It may be from an investor. A bank loan can also be a good option. Considering investing money from your savings should be the last resort. Once the initial capital arrives, chalk out a budget that will cover expenses like maintenance cost, license cost, staff salaries, toll expenses, operating costs, etc. Marketing your business may be too early to think of but that will also involve a lot of money later. Besides, you will have to arrange for the security deposits for the vehicles (if you intend to take lease) you would be using. Insurance cost is another yearly expense to be kept in mind.

So, accurately managing the capital is the most crucial thing to do at the onset of your business. If you succeed in doing so, then you are sure to gain recognition as a reputed transport and logistics association in no time.

Buy the right vehicles

If you are thinking of buying a fleet of vehicles for the business, you should minutely go through the service plans and the warranty the vehicle company is willing to offer. Purchasing the right vehicles depends on two major factors –

a) The type of goods you would be transferring

b) The volume of the supplies the vehicles would be carrying

c) The area (or the distance) you want to cover initially while transporting the goods

d) The terrains your vehicles would be covering

There are other factors to look for before buying the vehicles, but summed up above are the most important ones. Once you have these things sorted out you can easily figure out how to run the business efficiently.

Get a proper training

As a newcomer in this business, you might lack confidence. So, you can get proper professional training carried out by various transport agencies. They will provide you with a certificate after the training process which will give you the much-needed qualification for the business.

Conclusion

Whether you are intending to start with a small van or a huge fleet of trucks, you might face tough competition from your fellow businessmen. Always look for ways to improve your business status. Keeping your customers satisfied should be your priority, not only in this business but in every business.

3D Scanning
Archives, Global Trade Daily, News

Top 3 Trends Influencing 3D Scanning Market Share Between 2021-2027

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The 3D scanning market is estimated to grow at a substantial rate on the back of robust demand for 3D scanning solutions in the aerospace & defense sector for the correct measurement of components and parts. Since the sector complies with strict regulations related to the measurement of parts, authorities use 3D scanning solutions to scan assembled aircraft and its components.

3D scanning software allows for the accurate formation of a 4D image based on the data collected by scanners. The software can be utilized for the scan to BIM and scan to CAD models in the architecture industry.

Long-range scanners are being widely used in the construction sector as they allow scanning of large outdoor environments. Civil engineers use these scanners to measure large areas before starting the construction process. Additionally, there is a rising demand for structured light scanners owing to their ability to scan large objects at high speeds. These scanners provide highly accurate readings that can be analyzed using software to enable the restructuring or recreation of archaeological products.

Given several applications, companies in the 3D scanning market are developing new products. For instance, in 2020, Hexagon announced the launch of its new software plugin which allows full operation of structured light scanners from within a dedicated PolyWorks interface. With such innovations, Global Market Insights, Inc., reports that the 3D scanning market may register around USD 7.5 billion by 2027.

Mentioned below are some of the vital trends driving 3D scanning market expansion:

High demand for optical scanners

Optical scanners are witnessing rising demand as they are able to perform repeatable and highly precise 3D geometrical surface inspections and metrology-grade measurements. These scanners are widely used in reverse engineering applications, especially in the automobile industry. With 3D optical scanners, a highly accurate representation of the 3D printed part is obtained, which makes it an important tool in the manufacturing sector.

Multiple applications in the entertainment & media sector

In the entertainment & media industry, 3D scanning technology can be used to scan people for creating images for an animated movie. It can be used to virtually create an environment by scanning the actual geographic location. Entertainment design firms can make costumes, sets, and props. This technology decreases the cost of 3D movie production and game development, effectively transforming the innovative imagination into reality. Media & entertainment companies are likely to increasingly adopt 3D scanning software to reproduce real-world characters and objects and to construct virtual scenes.

Infrastructure development projects in MEA

The Middle East & Africa is witnessing an expanding construction sector. The growing tourism industry has led to the construction of new commercial complexes and shopping centers. Government organizations in countries like the UAE and Saudi Arabia are emphasizing modernizing and strengthening the infrastructure to ensure economic development. They are also undertaking large-scale transportation infrastructure development projects to maintain global economic competition. Moreover, new airport development projects could propel the regional 3D scanning business.

Source: https://www.gminsights.com/industry-analysis/3d-scanning-market

climate change
Archives, Global Trade Daily, International Trade

Climate Change Plans and the Impact on Global Trade

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Changes in our planet’s climate are the most significant threat to almost any business. Climate change directly affects companies’ costs, as eco norms require many firms to look for environmentally friendly materials and processes.

The resilience of companies to new climate changes depends on a risk management process, a ready-made business plan, and a laid-out governance structure. Alas, many companies don’t have access to relevant climate information, so they don’t plan for or mitigate physical risk.

Facilities, supply chains, working networks, customers, and markets are the first targets that suffer from physical climate risk. For example, supply chains “break down” when natural disasters are affected by a rapidly changing climate.

How does climate affect production?

Climate change significantly increases the price of any production, reducing the speed with which supplies can be delivered. The quality of the goods and services produced also suffers.

Also, production and deliveries are entirely “broken” in timing due to minor delays in components and goods. Companies need to best manage the uncertainty associated with possible significant disruptions occurring in supply chains.

Assessing supply chain risks

Many companies are accustomed to assessing their supply chains from factors related to policy, regulatory, market, and technological nuances. Any unforeseen change in any of these areas puts the supply chain at significant risk, threatening companies’ ability to operate.

Weather is similarly considered in short- and medium-term supply chains. This data helps companies search for other suppliers and enter new financial markets. Proactive forecasting activities allow for short-term changes in supply chain decisions. Alas, this activity is considered inefficient, ad hoc, and short-sighted.

Annual adjustments with supply chain investments that lack long-term understandings of weather and climate trends will become highly problematic. This approach should be bypassed these days. Companies better start understanding the medium- and long-term physical risks in the climate environment.

Instead of planning a year, companies would do well to look a couple of years ahead and invest in those sources at the least risk from the climate.

Decarbonizing Supply Chains

While supply chain decarbonization processes are complex, many firms can capitalize on multiple climate issues by implementing such methods.

Companies in sectors that are most user-driven have higher per-chain emissions than direct emissions. By encouraging suppliers to create zero-emission supply chains, companies can increase their climate footprint to ensure that emissions in the sectors where the situation is most problematic are reduced to accelerate steps to combat climate change.

It’s no secret to world leaders that decarbonizing supply chains look very difficult in practice. Even the leading companies have difficulty with the necessary data and setting goals and standards that their suppliers adhere to.

Involving the entire (fragmented) supplier landscape can be an almost impossible task. The situation looks complicated if the emissions are at the beginning of the chain and collective action is needed to eliminate them.

More than half of the world’s greenhouse gas emissions come from food, construction, clothing, consumer goods, electronics, automotive, trucking, and more. Indirectly, the share is often controlled by a few companies. End-consumer spending will not be able to increase spending in supply chains with zero.

Remarkably, about 40% of each of these supply chain emissions can be reduced by taking advantage of cyclicality, efficiency, and renewable energy sources that will have minimal impact on the price of all products. With zero emissions in the supply chain at the end-user, costs would increase to a maximum of 4%.

Supply chain decarbonization problems are solvable with many steps for each company:

-Create a comprehensive baseline emissions plan that will be gradually filled with actual supplier information;

-Setting ambitious with comprehensive emission reduction goals;

-A complete review of product design options;

-Revision of geographic supply strategy;

-Setting ambitious purchasing standards;

-Working together with suppliers to co-finance emission reduction levers;

-Working together with peers to agree on sectoral goals that increase impact with leveling the playing field;

-Leveraging economies of scale by increasing demand to lower the price of green solutions;

-Developing internal governance mechanisms where emission reduction will be a guiding mechanism.

Preparing supply chains for climate change

Supply chain management needs to be directed toward preparing for the unknown to ensure greater competitiveness and relevance in an ever-changing industrial landscape.

Many companies are now implementing solutions that address the industry’s role in mitigating supply chain risks due to climate change.

There are ways to protect supply chains from physical climate risk. Since most of the population lives near the coast, there is a risk that sea levels will rise, there will be more storms, flooding, and hurricanes, which only exacerbates the growing dangers.

Buying/building a property in a coastal area that lacks coastal flood risk mitigation infrastructure will not be the best idea to implement.

The electric commerce industry uses more materials in packaging that are suitable for recycling or biodegradability – an encouraging sign that consumers are concerned about climate change.

As the dialogue on climate change occurs among consumers and businesses, it is becoming increasingly clear that addressing climate change is already necessary.

Smart contracts and Global Trade: future effect on climate change plans

In recent times, bitcoin and the rest of the blockchain network have triggered the sustainable development of many industries in Global Trade. Smart contracts that run on blockchain will provide the world with just the right new ways to combat climate change and its effects.

However, many companies have missed the potential of smart contracts that are fully trackable, transparent, and irreversible in self-executing contracts that only work on blockchain to combat climate change.

It is no secret that blockchain companies are in no way affected by what happens in the environment. For example, day trading altcoins consistently break records among enticed traders. Smart contracts can help create globally accessible and automated reward systems that directly reward companies for engaging in sustainable practices (regenerative agriculture, carbon offsets, and so on).

The fight against climate change needs a more considerable change in habitual global consumption, and smart contracts could be just the right tool to encourage participation in areas of global “green” direction.

supply chain
Archives, Global Logistics, Global Trade Daily, Warehousing

Supply Chain Executives Implementing Warehouse Visibility Solutions

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The last 18 months have truly tested the supply chain. Between a global pandemic, shipping bottlenecks, and surprising inclement weather, the impacts were felt across various industries. There’s still a shortage of microchips and other consumer goods due to the events of 2020, even as we move on from many pandemic-era consumer needs with items like sporting goods and furniture. Weather, gas line disruptions, and cyber-attacks are now affecting the production of new items, from plastics to chicken wings and meat supplies, and even cheese. Whether it’s the result of a singular event or that of multiple mini disruptors, the supply chain has been struggling to keep up with demand, which makes disruption the new normal. 

Even as experts attempt to navigate ongoing disruption, many supply chains today still have some components or areas that remain disconnected, which ultimately hinders the ability of all businesses involved (from the DC to the 3PL) to understand operations completely. To stay competitive, modern supply chain managing experts are focusing on better visibility and their use of data inside the warehouse, looking to provide better continuous improvement options to their teams as products go in and out of the warehouse – managing disruption before it becomes a transportation issue. Companies that have remained competitive during the last 18 months are turning to warehouse visibility to provide warehouse operators with valuable insights needed to turn analytics data into real-time, actionable process improvements. 

Many leading supply chain experts have found that continuous improvement processes need just that – their own continuous improvement. To that point, a recent industry survey revealed where inefficiencies are taking place within the warehouse, and where a lack of real-time, easy-to-use analytics data is still preventing operators from making integral, real-time decisions.  

Survey Results for Improved Insights 

In March 2021, Merit Mile commissioned an online survey that was presented to approximately 2,500 supply chain and warehouse executives. The survey revealed that over 75% of executives are seeing an increase in efficiency from implementing warehouse visibility technologies, with a quarter seeing between a 10% – 15% increase, and more than half seeing between a 5% – 10% increase.  

In addition, a third said they’re seeing a 10% – 15% increase in operational savings and another half said they’re experiencing a 5% – 10% operational cost savings as a result of warehouse visibility technologies that were implemented.  

Finally, nearly 70% of organizations said they need better visibility into the procurement functions of their warehouse, followed by production and labor (65%), and fulfillment (37%).   

Supply chain systems globally are feeling pressure of various types, with everything from constrained transportation systems, labor workforce challenges and supplier material shortages. What this survey shows is that thousands of supply chain executives realize that the warehouse is central to the entire supply chain operation. Incorporating better visibility regarding what data means to their operation will enable quicker decisions in real-time.  

Transitioning to New Supply Chain Strategies  

Using the data gathered, warehouse executives can now view what they need to implement and improve in order to create the best visibility for warehouse operators. With it now being made clear that almost all supply chain systems need a makeover, most companies have already begun transitioning to new and improved strategies.   

Over the next 12 – 24 months, 72% of businesses said they will be focused on aligning traditional supply chain strategies with both digital and analytics solutions. Sixty-four percent said they’ll be focused on defining an advanced supply chain systems strategy. Another 34% said their focus will be on executions and refinement of newly installed systems and solutions.  

Half of all companies polled said they plan to implement warehouse visibility technologies over the next 12 months. A third of those companies polled said they will be considering the implementation of such systems. These steps are just the first of many to come in order to perfect the supply chain systems and reduce the visibility issues of the supply chain.  

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Sarah Caro has nearly 15 years of experience in the public relations industry working preliminarily in the agency setting. Her expertise lies in the B2B realm, garnering client media placements in top-tier outlets including Forbes, The New York Times and Bloomberg, in addition to top industry-specific outlets. To date, she has worked within the mining and manufacturing, supply chain, automotive, healthcare, technology and non-profit sectors. As Senior Account Executive for Merit Mile, Sarah regularly gets client stories into the hands of the media, making them the go-to source for news stories.   

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Archives, Global Logistics, Global Trade Daily, Imports/Exports

Eliminating Non-Dutiable Charges from Customs Value

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Similar to how taxable income is a primary element to determining income tax, the customs value is used to calculate duty liability. To determine an accurate customs value, companies must factor in certain dutiable additions and non-dutiable deductions. In today’s high-tariff environment, maximizing every deduction is critical and many importers are leaving money on the table. 

For U.S. importers using transaction value, which is “the price actually paid or payable for the merchandise when sold for exportation to the United States,” the focus is often on validating that the enumerated additions to the price are properly declared to U.S. Customs & Border Protection (CPB). While this is a necessary step for maintaining compliance, trade teams should also consider whether they may appropriately deduct or exclude certain charges. 

Historically, these savings opportunities have not been fully explored because the resources required to sustain some of these programs exceeded the savings. However, with the Section 301 tariffs in place for China-origin products, many companies are paying significantly more in duties. Removing these non-dutiable costs can provide substantial savings–making it worth taking a second look at them for many importers.

Eight Overlooked Non-Dutiable Charges

For importers using transaction value, the following savings opportunities should be considered. While some of these programs provide ongoing savings and some are only used in specific circumstances, they all may play a role in reducing the tariff spend. 

1. Freight and Insurance

Foreign inland freight, international freight and insurance costs may be deducted from the transaction value if you meet certain requirements. More specifically, with accurate incoterms and supporting costs and documentation, this can provide long-term cost savings. Importantly, importers must verify that they are deducting the actual, not estimated costs, and that the supporting documentation is adequate. While the requirements around deducting these costs may be daunting, the advances in technology make freight deductions more approachable than ever.

Further, insurance costs may be deducted from the entered value when they are separately itemized and the actual costs (not estimated) are claimed. It is important to verify with sellers that they are providing actual costs because CBP will reject deductions based on estimates, even in cases where the importer paid more than it claimed on the entry.

2. Supply Chain (“Origin”) Costs 

International transportation costs typically include certain other fees, often referred to as “origin costs.” In many cases, CBP considers these origin costs to be “incident to the international shipment of merchandise” and, therefore, possibly excluded from the customs value. Examples of these charges include security charges, documentation fees, and logistics fees. 

On a per-shipment basis, these miscellaneous fees may appear insignificant. However, on an annual basis, they can result in a significant expense for the company by driving up duty payments. As a general rule, the importer must deduct the actual costs, validate that commercial documentation meets all requirements and understand where services are being provided. However, once these steps have been taken, it is likely that little additional work will be required to realize ongoing savings.

3. Warehousing Costs 

CBP has found that warehousing costs paid by the buyer to third parties are not included in the price actually paid or payable of the imported merchandise. However, CBP has distinguished this scenario from instances where the seller, or a party related to the seller, provided this same service and the warehousing costs are included in the price actually paid or payable. In that case, those payments were found to be dutiable and may not be deducted. 

For importers interested in using this opportunity, a careful review of payments and terms of sale should be conducted to validate that the transaction meets all of CBP’s criteria prior to taking this deduction.

4. Inspection or Testing Fees

Often before shipment, an importer will arrange for products to be inspected or tested to validate it satisfies a buyer’s quality standards. Under certain conditions, these fees may be excluded from the dutiable value in instances when they are made to third parties unrelated to the seller of the goods. 

It’s also important to understand that testing that is “essential to the production of that merchandise” is dutiable. In such cases, CBP would consider payments to unrelated third parties for these services as assists that are part of the transaction value. For importers who rely on the seller to perform inspection or testing services, an analysis should be conducted to assess the ROI for engaging a third party to perform these services.

5. Latent Defect Allowances

In certain circumstances, importers may be able to reduce dutiable value post-importation based on repair costs attributable to manufacturing or design defects. For importers with high-value products, such as those in the automotive industry, repair costs can be substantial and this allowance in value provides an opportunity to manage those costs by reclaiming duty. 

With proper planning, a program can be implemented to help ensure the importer does not overpay duty on goods that were defective at the time of import. While there are a number of requirements that must be satisfied to receive a duty refund, high-value importers should explore whether this may be an opportunity for them.

6. Instruments of International Traffic – Reclassification of Packaging

In certain cases, pallets, cartons, hangers and other packaging material may be considered instruments of international traffic (IIT), exempting them from duty. To qualify as an IIT, CBP has determined that the article must meet criteria, including that it is “substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic.” Further, the article must be used in commercial shipping or transportation more than twice to qualify as an IIT. 

For importers whose supply chains include the reuse of certain containers or other materials used to transport international goods, it may be valuable to assess whether these goods qualify as IIT and are, therefore, duty-free. 

7. Post Importation Price Adjustments

When companies make post-importation price adjustments they may be entitled to a duty-refund on the amount adjusted. This typically occurs when downward transfer pricing (“TP”) adjustments are made between related parties, causing a reduction in the products’ customs value. 

For companies that routinely make retroactive transfer pricing adjustments, having in place the documentation to support a refund can have a powerful impact on duty spend.

8. Taxes and Other Fees

Companies may be entitled to deduct Value Added Tax (“VAT”) or Goods and Services Taxes (“GST”) from the declared value of the imports when these payments are refunded. Not only should importers maximize their refunds where possible, but in doing so they open another opportunity for savings. When VAT is remitted by the U.S. importer to the foreign seller, separately identified and refunded to the importer, then the refunded amount is not included in transaction value.

Importers should team with their tax departments and foreign suppliers to understand if VAT refunds are obtained and create documentation that reflects separate itemization of the refunded VAT.

The Big Picture

Potential cost savings through the reduction of non-dutiable charges from the dutiable cost basis of imported goods are often overlooked. However, in this high-tariff environment, these programs can help companies easily achieve cost savings. 

Additionally, with advancements in technology, managing these programs is more straightforward than it used to be. 

Of course, like with any duty-savings program, strong controls must be implemented to preserve compliance. However, as it is likely that steep tariffs will be in place for some time, companies should evaluate which of these programs can help reduce costs, potentially improve the return on investment and then develop an implementation roadmap.

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Andrew Siciliano is a Partner and U.S. Trade & Customs Leader at KPMG LLP. and Elizabeth Shingler is a manager at KPMG’s Trade & Customs Practice.

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Archives, Global Logistics, Global Trade Daily, Trucking

Artificial Intelligence: The Trucking Industry’s Biggest Asset

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About 3.6 million professional truck drivers and another 7.95 million people work in the U.S. trucking industry. It’s an industry well-positioned to benefit from artificial intelligence (AI) technology.

Research firm MarketsandMarkets estimates the AI market within the transportation industry will grow at a compound annual growth rate of almost 18% between 2017 and 2030, and its size increase from $1.2 billion in 2017 to $10.3 billion in 2030.

Truck manufacturers including Daimler, Volvo, Navistar, Paccar and others, have already begun developing autonomous truck technology, for example. Waymo, an American autonomous driving technology development company has also installed self-driving technology in semi-trucks and plans to test on haulage routes in New Mexico and Texas. Tesla plans to deliver its first trucks in 2021. Pittsburgh-based Locomotion, an autonomous trucking technology company, expects to equip at least 1,120 Wilson Logistics tractors with its Autonomous Relay Convoy (ARC) technology starting in 2022.

In addition to autonomous driving, the trucking industry has the potential to reap many benefits from AI technology in accident prevention and safety, fuel efficiency, route optimization and workflow management.

Accident prevention and safety

One hundred percent autonomous driving may be a ways off, but already we’re seeing safety controls incorporated into trucks. For example, a Tesla computer will control its trucks’ semi-autonomous system for accelerating, brakes and steering — though drivers will still need to keep a hand on the wheel.

The Federal Motor Carrier Safety Administration (FMCSA) revised its HOS to provide more flexibility for drivers. However, many drivers still log 11 hours on the road each day — the potential for mistakes increases during the later period of a driving shift. AI-guided semi-autonomous trucks will help reduce safety hazards created from tired or distracted driving.

Fuel efficiency

One commercial truck can use over $70,000 of fuel each year. Multiply this amount by the number of trucks in a fleet, and you can see why trucking companies constantly search for strategies to improve fuel efficiency. AI-guided, self-driven trucks could cut fuel costs up to 15%, according to Plus (formerly Plus.ai). A U.C. Berkeley Labor Center report estimated the industry could save $35 billion in fuel efficiency gains. Additionally, fuel monitoring and idle reporting features within AI-powered fleet management software platforms can help managers monitor fuel usage to reduce waste and costs.

Fleet management and route optimization

AI offers the perfect partner for fleet managers, increasing their effectiveness and helping to streamline and make processes more efficient. For example, these technologies can detect patterns humans might miss, increasing productivity by more accurately pinpointing which drivers to assign certain loads.

Route optimization benefits from AI, too. The technology streamlines route optimization, minimizing drive time and mileage by enabling fleet managers and drivers to find the most efficient, quickest order to schedule stops. AI can process traffic patterns and use algorithms to predict delays, even alerting dispatchers and managers earlier to facilitate load rescheduling or driver rerouting.

Drivers, fleet managers and customers benefit from AI-driven software capable of using real-time data about traffic, weather, and historical data on transit times to provide more accurate ETAs. Because AI constantly evolves, route optimization will become even more streamlined.

Workflow technology

The trucking industry has already benefited from many technology solutions designed to increase productivity and efficiency.

Drivers and fleets can use AI — together with cloud computing, machine learning (ML) and IoT — to move from paper management to digital management processes. Other technology has enabled fleets to identify customers affected by import tariffs, for example, and connect with those customers to develop mitigation strategies.

AI doesn’t just observe data or patterns. It’s capable of predicting potential scenarios based on past patterns. Workflow and fleet management software incorporating AI technology can help drivers and fleet managers with real-time navigation, data monitoring and predictive maintenance alerts. The future of AI within the trucking industry could include other businesses like capacity-as-a-service, predictive on-demand maintenance and shared insurance optimization.

AI’s future in the trucking industry

CB Insights reported that investors dedicated $2 billion to trucking tech startups in spring 2019. The transport and logistics sector represents $26 billion of total startup funding in the logistics industry.

Artificial intelligence has already begun to deliver on its promise to increase productivity, reliability, safety and sustainability within the trucking sector. While not a turnkey solution, AI technology relies on human knowledge to understand what to do. AI won’t replace people — it will reshape their roles and improve their work processes. AI is revolutionizing the trucking industry and promising to not just drive efficiency, but also better experiences for fleet management, drivers, customers and other critical stakeholders.

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Avi Geller is the founder and CEO of Maven Machines. Since 2014, Avi has led Maven’s growth as an IoT platform that serves the transportation industry through real-time, mobile cloud enterprise software. Avi originally hails from Palo Alto, California, but started Maven in Pittsburgh, Pennsylvania due to the city’s impressive innovation and technology resources. Prior to founding Maven, he held international positions with SAP and contributed to the growth of several successful software companies and startups. Avi also has an engineering degree from MIT and an MBA from Northwestern University.

commodity risk management
Archives, Global Logistics, Global Trade Daily

Five Surprising Facts About Commodity Risk Management

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Between a major global pandemic, intercontinental freight capacity shortages, and events that have ground supply chains to a complete halt, it’s been an active 18 months for those managing commodity risk.

We’ve learned a lot of valuable lessons during this period – many of which have helped us compile and create our new white paper exploring commodity risk management maturity. Inside, we explore what it takes to enable a mature approach to commodity risk management that helps commodity managers make proactive decisions and create value even when facing the most severe supply chain crisis events.

The paper looks in detail at the different stages organizations find themselves at along a maturity curve, exploring the characteristics of teams at each stage, and what those teams need to do if they want to push ahead along their journey to maturity. But, it also includes many other insights about the state of commodity risk management maturity today – several of which you may find surprising.

Here’s a quick look at five of the more unexpected takeaways from the paper:

#1: There is such a thing as too much commodity risk data

When organizations recognize the value of investing in their commodity risk management capabilities and start taking steps towards empowering commodity and category managers with greater insights, one of the most common mistakes they make is overwhelming their experts with an excess of charts and data.


Too much data can muddy the waters and make it harder for managers to identify valuable trends and translate data into actionable insights that drive value. For organizations at the earlier stages of the commodity risk management maturity curve, it’s often far more valuable to start small and work with more focused datasets.

#2: Mature CRM isn’t just about data and insights – it’s about culture too

While data, insight quality, insight delivery, and the processes that surround them are all very important factors in commodity risk management maturity, they aren’t the only factors that influence it.

Culture is also extremely important if an organization wants to reach the highest stage of maturity. In the most mature organizations, there’s a culture of respect and acknowledgment of the value that procurement teams can deliver through the strategic management and optimization of commodity risk.

In these teams, stakeholders from across the business take an active interest in the insights generated by and acted on by procurement teams. They understand that commodity risks are fundamentally business risks and can even represent the greatest commercial opportunities available at any given time – and that understanding is reflected in their operations.

#3: A huge number of organizations haven’t aligned intelligence and strategy

Commodity risk management maturity isn’t just about having the right data, insights, or culture either. To have the right impact on the organization, the insights generated, gathered, and used by these teams need to be tightly aligned to their strategic objectives.

No matter how strong, recent, or reliable insights are, if they don’t help the team move towards achieving their goals, or support the overall strategic goals of the business, they’re not going to deliver value.

That’s a huge stumbling point for a lot of teams. They’re actively gathering and using insights, but they’re not seeing the results they need. That’s a big indicator of a strategy that appears mature, but it actually still in the earlier stages of the maturity curve.

#4: Sophisticated AI and data science capabilities aren’t for everyone

Like any other data-driven area of modern business, AI and data science have incredibly powerful applications in commodity risk management. The right capabilities can help teams make the critical leap from reactive decision-making to proactive operations that keep the organization ahead of developing commodity market trends.

However, they’re not for everyone. These capabilities demand significant volumes of clean, structured, and actionable data, and some teams don’t have access to data of that quality. For many organizations, simple forecasting and traditional manual approaches to data analysis can be just as effective for what they’re trying to achieve at their current stage of maturity.

#5: There is no ‘one size fits all’ way to optimize commodity risk management

When you look at the latter stages of maturity, it’s easy to conclude that every organization should be striving to reach that point, using all the technology and intelligence available to enable proactive, value-driving commodity risk management.

In practice, however, that’s not really the case. The level of capabilities required to optimize commodity risk management is proportional to an organization’s risk exposure.

For example, pharmaceuticals companies – where the global supply of active ingredients is relatively isolated against major fluctuations and ingredient costs have little impact on the final market price of drugs – may only need fundamental commodity risk insights to see strong results.

On the other hand, in food processing or oil and gas, where margins are much slimmer, companies need deeper intelligence and stronger insight capabilities to see significant value from their efforts.

Master post-pandemic commodity risk management

Want to learn more about what it takes to manage commodity risk effectively and transform emerging threats into powerful opportunities for value creation?

Download your copy of our new white paper to discover which stage of maturity your organization is at today and get practical advice to advance your journey towards proactive, crisis-ready commodity risk management.

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Archives, Global Logistics, Global Trade Daily, Trucking

Challenges Facing the Adoption of Electric Truck Fleets

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Innovations in electric truck technology present a major opportunity for business fleets. However, these electric trucks have yet to make much headway in the commercial vehicle market.

Despite several notable milestones and significant corporate investment, consumers and businesses have been slow to adopt these new EVs. A handful of challenges will likely need to be addressed before electric trucks become widely adopted.

Maintenance and High Prices May Be Discouraging EV Adoption

One of the most significant barriers to EV adoption remains cost. The heavy-duty lithium-ion batteries needed to power a truck’s drivetrain can still be extremely expensive. This drives up the cost of new electric trucks compared to similar, gas-powered vehicles.

Reliability and maintenance may also pose a barrier to adoption for some fleet owners. While electric vehicles can sometimes be more reliable than gas cars due to their electric powertrain, they can also be just as or more expensive than conventional vehicles to maintain.

Lithium-ion batteries tend to have a long lifespan, but they don’t last forever. Replacing one can be a major expense. Battery replacement costs for early EVs, like the Nissan Leaf, can be up to $5,000, which is near the resale value of the car. This is due to the price of a new battery and the labor needed to replace the old one.

While most EV maintenance is similar to conventional vehicles, simple failures can cause more serious problems due to the complexity and uniqueness of electric powertrains. Entire components found in a standard, internal combustion engine-powered truck are missing or replaced by other parts, like DC-DC converters, reducers and battery control modules.

If a business wants to keep fleet maintenance in-house, servicing electric trucks will require either hiring new technicians who are knowledgeable about electric trucks or training existing employees in EV upkeep.

The experimental nature of many modern EVs and the use of proprietary firmware may also mean adopting electric trucks would require fleet owners to develop a much closer relationship with dealers and mechanics.

As new EVs age, they may face problems that are hard for businesses to anticipate right now. The reliability of these new electric vehicles may be proven over the next few years — but, for the moment, potential maintenance woes may convince fleet owners to wait on upgrading.

Limited Charging Stations and Range Anxiety May Discourage Adoption

Like most consumer EVs, commercial electric trucks also face the charging problem. Drivers can’t rely on the existing infrastructure of gas stations and truck stops to keep them fueled. There’s a constantly expanding network of EV charging stations being built around the country. Still, outside of a few major cities, available stations may not be common enough to provide a reliable source of power.

Range anxiety — or the fear that EVs don’t store enough power to get a driver from home base to destination to a charging station — is likely a major barrier to the widespread adoption of EVs. Even in areas where charging stations are widely available, the capacity they offer may not be enough to charge EVs in a timely fashion.

For example, the 2021 Tesla Model Y has a range of up to 326 miles and takes eight to 12 hours to get a full charge from a 220-volt power station. Higher-voltage power stations are available commercially, and it’s possible to fully charge a Model Y in just an hour and a half with a Level 3 or 440-volt charger.

However, most existing EV charging stations offer just 220 volts. This means fleet owners will likely have to invest in home charging stations and carefully schedule drivers so they can always make it back to fleet headquarters for a recharge. Businesses that adopt electric trucks would be significantly limited by the density and location of existing charging stations.

While several major infrastructure projects and new subsidies will help increase the number of high-power charging stations, it will be a while before chargers are as common as gas stations.

Investment in the EV Market May Make Electric Trucks More Appealing

Major automakers seem to have committed to the growing EV market. It’s a good sign that, while adoption may be slow, some of the challenges discouraging fleet owners from buying EVs may be solved soon.

Ford has made an $11 billion investment in the EV market and is set to begin delivering the electric counterparts to its flagship truck, the Ford F-150, in early 2022. Other Ford EVs include the brand’s all-electric Mustang Mach-E SUV and the 2021 electric Ford Escape. Notably, the price point for Ford’s new electric F-150 is close to the price of the ICE version of the truck. After tax credits, the base electric model may even be cheaper than the gas-powered F-150.

Ford has also argued that the cost of ownership for the electric truck will be cheaper due to lower maintenance expenses and the price of electricity versus fuel.

General Motors, owner of the Ford brand, has long been an EV pioneer. The company launched one of the first few plug-in electric hybrids on the market, the Chevrolet Volt, in 2011. Affordable, modern EVs like these may convince fleet managers interested in electric trucks but have been cautious about investing in an EV upgrade.

At the very least, the rise of new commercial and consumer electric trucks is a good sign that there will be a robust market for used EVs emerging within the next few years. If these vehicles prove to be reliable, preowned models could provide a stepping stone for fleet owners interested in an electric upgrade but cautious about committing to a fleet of all-new EVs.

What the Future of Vehicle Fleets May Look Like

As investment in the EV market increases, commercial adoption of electric trucks and similar vehicles will also grow.

Current barriers to adoption — the high price of EVs, limited charging infrastructure and concerns around maintenance — are serious but aren’t likely to last forever. Prices are falling, the charging infrastructure is improving and more EVs means more mechanics familiar with repairing these vehicles.

In the near future, fleet owners may begin moving away from conventional vehicles to electric ones, but only once these challenges become easier to manage.