New Articles

Container Availability: From Shortage to Congestion?

container availability

Container Availability: From Shortage to Congestion?

Container ports all over the world, with the exception of China, are faced with imminent congestion when a multitude of boxes sent for shipment from factories in Asia arrive at their import destinations. As the infection rate of the COVID-19 in China declined and production resumed, a large number of containers that had piled up in China have finally sailed to Europe and North America. 

With Container Availability Index (CAx) values of 0.17 (20DCs) and 0.33 (40DCs), it seems like the Port of Shanghai is back at full productivity. In the past couple weeks, containers had piled up – CAx values of greater than 0.6 indicate a surplus of equipment – due to multitudinous blank sailings, something that would normally not happen often. Being able to forecast the development of the next 3 weeks, the CAx values for Shanghai will decrease from 0.41 for 20DCS in week 14, indicating that equipment will become more scarce again.

However, the effects of COVID-19 have dramatically affected consumer demand in the US and Europe. Buyers have begun to cancel orders as most of these countries are now in a severe lockdown situation and warehouse capacity is being maxed out. The incoming containers are most likely causing congestion, and incurring storage and demurrage charges at, for instance, the Port of Los Angeles or the Port of Hamburg.

With CAx values of 0.38 (20DCs) and 0.57 (40HCs) for Hamburg and values of 0.82 (40DCs) and 0.3 (40HCs) for Los Angeles, the Container Availability Index also forecasts increasing equipment volumes in these ports. The forecast takes millions of containers tracked through Container xChange into account, helping shipping companies make container sale, lease or repositioning decisions. 

The next couple of weeks will tell us if the COVID-19 situation eases in the western world. To remain competitive, especially European freight forwarders and shippers are expected to increase their usage of SOC containers in order to avoid demurrage charges. 

eaglerail

THE EAGLERAIL HAS LANDED: CEO MIKE WYCHOCKI PUSHES A “NO BRAINER” WHEN IT COMES TO MOVING SHIPPING CONTAINERS AT CONGESTED PORTS

It’s amazing where new logistics solutions come from. They are usually born by veteran shippers with visions on how to improve an existing operation. Or it can be a customer or customers seeking help in conquering a specific challenge that eventually resonates throughout the industry.

Then there is the inception of Chicago-based EagleRail Container Logistics’ signature solution. It can be traced to a pitch meeting for a new monorail in Brazil that was attended by a port authority official who was there more as a cheerleader than a participant.

Watching a Chicago marketing man’s PowerPoint presentation about his company’s passenger monorail system to local leaders in São Paulo eight years ago, the port representative, Jose Newton Gama, marveled at how the magnetic levitation (Maglev) trains holding people would be suspended under overhead tracks.

Then the Brazilian known by friends as Newton raised his hand.

“Excuse me?” he asked the Americano. “Could your system be adapted to hold shipping containers?”

That had never occurred to project designers, whose monorail cars for passengers are much lighter than would be required for cargo containers hauled by ships, trucks and freight trains. But the marketing man shared Gama’s question with his colleagues in the Windy City, and that planted the seed that eventually bore EagleRail Container Logistics.

Chief Executive Officer Mike Wychocki was an early investor who eventually bought out that marketing man, but the first EagleRail system is named “Newton” after the Brazilian who now sits on the company’s board of advisors. “He’s a great guy,” says Wychocki during a recent phone interview. “Newton is our biggest cheerleader.”

Wychocki’s no slouch with the pom-poms himself, having pitched EagleRail at 40 ports in 20 countries over the past five years. His company, which has offices around the world, is developing its first prototype in China, and studies are underway at six ports as EagleRail sets about raising $20 million in capital. (The window for small investments had just closed when Wychocki was interviewed. His company has since shifted its focus to large investors.)

The way ports have operated for decades left no need for a system like EagleRail’s. Big ships dock, cranes remove containers stacked on their decks and each box is then moved onto the back of a flatbed truck that either hauls it to a distribution center or an intermodal yard. Until recent years, no one really thought of disrupting the process because, as Wychocki puts it, “you could always find cheaper truck drivers.”

However, truck driver shortages, port-area air pollution and congestion caused by the time it takes to load and unload ever-larger ships have prompted serious soul searching when it comes to short hauls. Expanding the size of ports is often not an option due to the cities that have grown to surround them. This has led to the creation of large container parks for trucks and/or freight trains within a few miles of ports, but getting boxes to those remains problematic—at a time when megaships are only making matters more difficult.

“There is an old saying that ports are where old trucks go to die,” says Wychocki, who ticks off as problems associated with that mode of moving containers pollution, maintenance and fuel costs, as well as the issues of public safety because some drivers essentially live inside of their vehicles, which can attract prostitution and leave behind litter and human waste. Adding even more of these dirty trucks would necessitate more road building, which only adds to environmental concerns.

With ground space at ports a constantly shrinking commodity, tunneling underground may be viewed as an option. But Wychocki points out that many ports have emerged on unstable ground like backfill, and water, power and sewer lines are usually below what’s under the streets beyond port gates. The idea of a hyperloop has been bandied about, but it would require emptying shipping containers at the port, loading the contents into smaller boxes, sending those through to another yard, and then repacking the shipping containers on the other side. “That defeats the whole point” of relieving port congestion, the EagleRail CEO says.

Ah, but every port has unused air space, which is what Wychocki’s company seeks to exploit. “If an Amazon warehouse can lift and shuttle packages robotically,” he says, “why not do the same with a 60,000-pound package? Go to a warehouse. See how Amazon works with packages. They use overhead light rails. It’s an obvious idea, so obvious. It’s a no brainer when you think about it.”

Yes, Amazon also uses drones, but can you imagine the size it would have to be to carry a 60,000-pound shipping container? Wychocki sees a suspended container track as an extension of the cranes on every loading dock worldwide, which is why EagleRail systems are also all-electric and composed of the same crane hardware to avoid snags when it comes to replacing parts.

However, Wychocki is quick to note EagleRail is not a total solution when it comes to port congestion. He calculates that among the short-haul trucks leaving a port, 50 percent are going to 500 different locations, many of which are different states away, while the other half is bound for just a couple nearby destinations. EagleRail is geared toward the latter, and the problem with getting containers to them “is not technological; it’s who controls the five kilometers between the port and the intermodal facility,” he says.

Lifting equipment at ports “is exactly the same in all 200 countries,” he adds. “The part that is not the same is the back end. What is the port’s configuration? Where do the roads come in? What we do is form a consortium and build it with each local player, such as the port authority, the road authority, the national rail company, the power company. Getting everyone involved helps get procurement and environmental rights of way.”

He concedes that getting everyone on board “varies by location,” but when it comes to environmental concerns “everyone’s kind of wanting to do this because it means fewer trucks, and the power companies would prefer the use of electricity (over burning diesel). It sounds harder than it is to get everyone rowing in the same direction.”

Wychocki points to another bonus with EagleRail: It allows for total control of one’s intermodal yard because containers come and go on the same circular route—all day long. “We take this on as a disruptive business model,” he says, noting that short-haul trucks generally involve the use of data-chain-breaking clipboards and mobile phones. EagleRail systems track containers on them in real-time, rolling in all customs paperwork and billing invoices automatically.

“It’s amazing, I just came from the Port of Rotterdam, where I was a keynote,” Wychocki says. “Even the biggest ports in the world like Antwerp were saying, ‘This is great. Why isn’t anyone else doing it?’”

Actually, EagleRail accidentally created direct competition. Wychocki explains that during the initial design phase, his company worked with a foreign monorail concern whose cars used what were essentially aircraft tires rolling inside a closed channel. Concerns about maintaining a system that would invariably involve frequently changing tires—and thus slowing down operations—caused EagleRail to reject that design in favor of another third-party’s calling for steel-on-steel wheels. The designer with tires is pressing on with its own system and without EagleRail.

“I’m glad we didn’t go that route,” says Wychocki, who nonetheless expects more serious competition once EagleRail systems are up and running. Fortunately for the company, there are plenty of ports bursting at the seams that cannot wait that long. Wychocki says a question he invariably gets after pitching EagleRail is: “Where were you 10 years ago? Usually, there is an urgency.”

That’s why “our goal was to get out of the gate fast, build market share and our brand and create a quasi-franchise network,” says Wychocki, whose business model has EagleRail owning 25 percent of a system while the port and other local entities own the rest.

He estimates that within 10 years, 12 EagleRail systems will be operating. If that sounds like a pipe dream, consider that his company’s newsletter boasts 3,000 subscribers before a system is even up and running. Wychocki does not credit “brilliant marketing” for that keen interest. “It’s because every port’s problems are getting worse. Everyone is squealing about what to do with these giant ships that cannot be unloaded fast enough. They are desperate.”

compliance

U.S. Regulators Focus on Compliance Efforts in Enforcement Decisions Involving International Companies

Over the past few years, U.S. regulators have made it clear that having comprehensive and effective compliance policies covering trade is a must, regardless of the company size, location or industry. The government’s move to formalize the importance of compliance programs is a clear signal of what it expects and a harbinger of what is to come.

Why Is Trade Compliance Important Regardless of the Company’s Location?

Trade compliance should be the goal of every global company, in particular as a risk mitigation measure and a positive value proposition. A compliance program serves as a security blanket for large financial institutions accustomed to dealing with regulations, small startups with a cloud-based platform, and even companies with no physical presence in the United States. A trade compliance program lays the groundwork for international companies on how to conduct business in or with the United States.

With changing industry regulations, it is critical to keep up to date and have a compliance program that is effective. Failure to have a strong compliance program could result in increased legal exposure, potentially leading to fines and penalties as well as negative publicity associated with an enforcement action. Maintaining an effective trade compliance program could help companies mitigate penalties for potential violations, and is ultimately cost-effective. For example, last year, the U.S. government imposed $1.3 billion in penalties on cargo firms, penalties that could have been mitigated with robust compliance programs.

 Avoiding U.S. Sanctions

Engaging in the complex global supply chain may be a financial win, but it requires formalized diligence procedures to ensure your company does not run afoul of the law. The Department of Treasury’s Office of Foreign Assets Control (OFAC) has released guidance encouraging organizations to employ a risk-based approach to sanctions compliance and focus on five essential components: senior management commitment, risk assessments, internal controls, testing and auditing, and training. To incentivize companies to engage in international transactions, OFAC also provides that in the case of a violation, it will give favorable consideration to companies with effective sanctions compliance programs and that the existence of such a program may mitigate a civil monetary penalty.

OFAC is not just issuing guidance, it is increasing its enforcement efforts involving both U.S. and foreign entities. It continues to designate more non-U.S. entities that have helped evade U.S. sanctions. For example, several Chinese shipping companies were found to have violated North Korean sanctions, and as a result, were blocked from doing business in the U.S. or with U.S. parties. In January 2020, Eagle Shipping, a Marshall Islands ship management company with headquarters in Stamford, Connecticut, agreed to pay $1,125,000 to settle its potential civil liability for 36 apparent violations of the Burmese Sanctions Regulations. The violations involved Eagle Shipping’s affiliate in Singapore entering into a chartering agreement with Myawaddy—an entity identified on OFAC’s List of Specially Designated Nationals and Blocked Persons. Eagle filed an application with OFAC requesting a license authorizing it to carry sand cargoes purchased from Myawaddy but continued its dealings while the OFAC application was pending. OFAC ultimately denied the license, but Eagle resumed its dealings with Myawaddy, carrying cargo from Burma to Singapore.

Among the aggravating factors, OFAC considered Eagle’s status as a sophisticated shipping company, which should have had expertise in international trade and global shipping transactions. Among the mitigating factors, OFAC considered Eagle’s efforts to develop and implement a formal sanctions compliance program with specific policies and procedures for compliance screening, transaction checklists, and red-flag identification tools.

Compliance Under Commercial Export Laws

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS), which administers U.S. commercial export control regulations, also has published comprehensive guidance for companies working to develop or shore up compliance materials. In its guidance, BIS identified the following elements as foundational in creating an effective Export Compliance Program (ECP): management commitment, completing regular risk assessments, obtaining proper export authorization, record-keeping, training, compliance audits, addressing export violations and taking corrective actions, and maintaining your ECP. Like OFAC, BIS emphasizes the importance of tailoring your ECP to your organization and business based on size, volume of exports, geographic location, and other relevant factors. Companies that fail to comply with regulations that govern export controls have experienced significant penalties.

The U.S. export control laws govern not only U.S. companies, but also certain export activities of foreign companies dealing with the export of certain products, technology, or services from the United States to a foreign country. For example, most recently, BIS imposed substantial export and reexport restrictions on Huawei, a Chinese company, and its 68 non-U.S. affiliates in connection with Huawei’s violations of U.S. export laws specific to the Iranian Transactions and Sanctions Regulations. As part of that action, BIS restricted any export, re-export, or transfer of U.S.-origin technology, commodity, or software to Huawei and its entities without an export license.

This enforcement action ultimately impacted both the U.S. and non-U.S. businesses, including big and small tech companies, suppliers, importers, shippers, and financial institutions. Separately, in 2017, the U.S. government imposed a $1.2 billion criminal fine against ZTE, a Chinese telecom equipment company, for shipping U.S.-origin telecommunications equipment to Iran and North Korea. These two cases have affected how U.S. and foreign companies view their compliance programs; they also have incentivized the development and implementation of more robust compliance programs, including vetting procedures and sanctions checks that ensure adherence to the U.S. export control regulations.

Recommended Steps for Ensuring Compliance and Mitigating Risk

-The benefits of having a compliance program in place when a mistake happens are significant. When creating your tailored trade compliance policies and procedures, remember the following:

-Compliance programs should include a comprehensive, independent, and objective testing or audit function to ensure that your business is aware of how its programs are performing.

-Programs should be updated regularly in light of constantly changing regulatory and business environments.

-Ensure that your compliance program has comprehensive coverage to track all parties involved in import and export transactions.

-Even products that seem harmless can be used in ways that companies do not intend. As an organization, you are responsible for knowing how your products will be used and for avoiding government-prohibited end uses.

-Watch for red flags on BIS’s published list.

-Watch for “deemed” exports, which are released in the United States of technology or source code to a foreign person. Such a release is deemed to be an export to the foreign person’s most recent country of citizenship or permanent residency, which may require a license or even be prohibited.

Now more than ever, government offices and agencies are providing the industry with guidance on how best to comply with trade regulations. However, this also means that companies can no longer claim ignorance of trade regulations. Today, companies participating in the global marketplace must take proactive preventive measures to ensure compliance, mitigate risk, and minimize potential penalties.

_______________________________________________________________

 Doreen Edelman and Zarema Jaramillo are attorneys at Lowenstein Sandler.

businesses

How Businesses can Weather COVID-19: Start with Empathy to Employees

Major U.S. businesses are adjusting operations, laying off employees or reducing hours in response to the coronavirus outbreak.

It’s uncharted territory for the nation, and companies from large brands to small businesses, like everyone else, are operating without a playbook to deal with an unprecedented public health threat that will also have economic implications. How businesses adjust to the pandemic and respond to this “new normal” is critical to the future of their business.

“The most important part is showing empathy to employees – now more than ever in these uncertain times,” says Ed Mitzen (www.edmitzen.com), founder of a health and wellness marketing agency and ForbesBook author of More Than a Number: The Power of Empathy and Philanthropy in Driving Ad Agency Performance.

“While every company is dealing with the effects of the COVID-19 outbreak, it’s important to keep in mind that your employees are being affected in more ways than one. Added challenges to daily life now include your partner working next to you, your children being home from school, and having to keep an extra close eye on elderly relatives. In these unusual circumstances, people will notice which companies are treating their employees with empathy and compassion and which are not.”

A business leader’s response during a time like this defines who they are as a leader.

Mitzen thinks this challenging time could be used by business owners to assess their company culture and consider that how they treat employees is central to that culture and vital for business results. He explains how leaders can show empathy to employees, strengthen company culture and drive performance:

Lead with support, not force. “Culture starts at the top, and the best results come when leaders support their people and help them get the most out of life, rather than trying to squeeze them to work harder and harder,” Mitzen says. “People can sacrifice for the job for only so long before they burn out. It may sound counterintuitive, but sometimes prioritizing life over work actually improves the work product. Once you hire good people, you don’t have to push them with crazy deadlines to squeeze productivity out of them.”

Build a team of caring people. “Business is a team sport,” Mitzen says. “To have an empathetic culture, you need people who care for each other and work well together. Build teams by looking for people who lead with empathy.  Don’t hire jerks. People who are super-talented but can’t get along with others tend to destroy the team dynamics, and the work product suffers.”

Define a positive culture – and the work. Showing empathy to employees can be an engine generating creativity and productivity. “The internal culture at a company defines the work the company produces,” Mitzen says. “Culture influences who chooses to work for you, how long they stay, and the quality of work they do. And the core of the culture is empathy, starting with employees and extending to customers and the communities that you live in. There’s a strong connection between a healthy work culture, which inspires people, and the work customers are receiving. That kind of company makes sure customers are treated the same way they are being treated.”

“Now more than ever, empathy, kindness and compassion are important values to keep at the forefront of your organization,” Mitzen says. “Business leaders can take the lead in doing the right thing, starting with their employees.”

_________________________________________________________

Ed Mitzen (www.edmitzen.com) is the ForbesBook author of More Than a Number: The Power of Empathy and Philanthropy in Driving Ad Agency Performance and the founder of Fingerpaint, an independent advertising agency grossing $60 million in revenue. A health and wellness marketing entrepreneur for 25 years, Mitzen also built successful firms CHS and Palio Communications. Fingerpaint has been included on the Inc. 5000 list of fastest-growing companies for seven straight years and garnered agency of the year nominations and wins from MM&M, Med Ad News, and PM360. Mitzen was named Industry Person of the Year by Med Ad News in 2016 and a top boss by Digiday in 2017. A graduate of Syracuse University with an MBA from the University of Rochester, Mitzen has written for Fortune, Forbes, HuffPost, and the Wall Street Journal.

paper

Spain’s Production of Corrugated Paper and Paperboard Posted Solid Gains over the Last Decade

The revenue of the corrugated paper market in Spain amounted to $635M in 2018, flattening at the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). Overall, corrugated paper consumption continues to indicate a relatively flat trend pattern. The pace of growth was the most pronounced in 2011 when the market value increased by 14% year-to-year. In that year, the corrugated paper market reached its peak level of $806M. From 2012 to 2018, the growth of the corrugated paper market remained at a lower figure.

Production in Spain

In 2018, the amount of corrugated paper and paperboard produced in Spain amounted to 947K tonnes, approximately reflecting the previous year. The total output volume increased at an average annual rate of +3.6% over the period from 2008 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded over the period under review. The most prominent rate of growth was recorded in 2017 when production volume increased by 14% against the previous year. Over the period under review, corrugated paper production reached its maximum volume in 2018 and is expected to retain its growth in the near future.

In value terms, corrugated paper production totaled $624M in 2018 estimated in export prices. Overall, corrugated paper production continues to indicate a relatively flat trend pattern. The growth pace was the most rapid in 2010 when production volume increased by 15% against the previous year. Corrugated paper production peaked at $832M in 2011; however, from 2012 to 2018, production failed to regain its momentum.

Exports from Spain

In 2018, the corrugated paper exports from Spain stood at 22K tonnes, going up by 40% against the previous year. Overall, corrugated paper exports, however, continue to indicate a pronounced contraction. The pace of growth was the most pronounced in 2018 when exports increased by 40% against the previous year. Over the period under review, corrugated paper exports attained their peak figure at 32K tonnes in 2008; however, from 2009 to 2018, exports failed to regain their momentum.

In value terms, corrugated paper exports amounted to $23M (IndexBox estimates) in 2018. Over the period under review, corrugated paper exports, however, continue to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2018 when exports increased by 40% year-to-year. Over the period under review, corrugated paper exports reached their peak figure at $25M in 2008; however, from 2009 to 2018, exports failed to regain their momentum.

Exports by Country

France (11K tonnes), Saudi Arabia (6.5K tonnes) and Portugal (3.6K tonnes) were the main destinations of corrugated paper exports from Spain, with a combined 97% share of total exports.

From 2008 to 2018, the most notable rate of growth in terms of exports, amongst the main countries of destination, was attained by Saudi Arabia, while the other leaders experienced mixed trend patterns.

In value terms, France ($9.1M), Saudi Arabia ($7.9M) and Portugal ($2.3M) constituted the largest markets for corrugated paper exported from Spain worldwide, together accounting for 82% of total exports.

Portugal recorded the highest growth rate of exports, in terms of the main countries of destination over the last decade, while the other leaders experienced more modest paces of growth.

Export Prices by Country

The average corrugated paper export price stood at $1,045 per tonne in 2018, approximately mirroring the previous year. Over the last decade, it increased at an average annual rate of +3.1%. The pace of growth was the most pronounced in 2011 an increase of 36% year-to-year. The export price peaked at $1,202 per tonne in 2015; however, from 2016 to 2018, export prices failed to regain their momentum.

Prices varied noticeably by the country of destination; the country with the highest price was Saudi Arabia ($1,209 per tonne), while the average price for exports to Portugal ($631 per tonne) was amongst the lowest.

From 2008 to 2018, the most notable rate of growth in terms of prices was recorded for supplies to Mauritania, while the prices for the other major destinations experienced mixed trend patterns.

Imports into Spain

In 2018, the imports of corrugated paper and paperboard into Spain stood at 5.6K tonnes, falling by -3.8% against the previous year. Over the period under review, the total imports indicated a mild increase from 2008 to 2018: its volume increased at an average annual rate of +1.6% over the last decade. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, corrugated paper imports increased by +114.3% against 2016 indices. The growth pace was the most rapid in 2017 with an increase of 123% year-to-year. Over the period under review, corrugated paper imports reached their peak figure at 7.1K tonnes in 2011; however, from 2012 to 2018, imports remained at a lower figure.

In value terms, corrugated paper imports amounted to $6.4M (IndexBox estimates) in 2018. Overall, corrugated paper imports, however, continue to indicate a notable increase. The growth pace was the most rapid in 2017 with an increase of 140% y-o-y. In that year, corrugated paper imports attained their peak of $7.3M, and then declined slightly in the following year.

Imports by Country

Germany (1.8K tonnes), France (1.4K tonnes) and Italy (1.1K tonnes) were the main suppliers of corrugated paper imports to Spain, with a combined 78% share of total imports. Slovenia, Portugal, China and the UK lagged somewhat behind, together accounting for a further 24%.

From 2008 to 2018, the most notable rate of growth in terms of imports, amongst the main suppliers, was attained by Slovenia, while the other leaders experienced more modest paces of growth.

In value terms, the largest corrugated paper suppliers to Spain were Germany ($2.7M), France ($1.7M) and Italy ($1.3M), together comprising 87% of total imports. Slovenia, Portugal, China, and the UK lagged somewhat behind, together comprising a further 24%.

Among the main suppliers, Slovenia experienced the highest growth rate of imports, over the last decade, while the other leaders experienced more modest paces of growth.

Import Prices by Country

The average corrugated paper import price stood at $1,144 per tonne in 2018, coming down by -8.3% against the previous year. Overall, the import price indicated a slight increase from 2008 to 2018: its price increased at an average annual rate of +1.4% over the last decade. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. The pace of growth appeared the most rapid in 2010 when the average import price increased by 26% against the previous year. Over the period under review, the average import prices for corrugated paper and paperboard attained their peak figure at $1,248 per tonne in 2017, and then declined slightly in the following year.

Prices varied noticeably by the country of origin; the country with the highest price was the UK ($1,536 per tonne), while the price for Slovenia ($900 per tonne) was amongst the lowest.

From 2008 to 2018, the most notable rate of growth in terms of prices was attained by Germany, while the prices for the other major suppliers experienced more modest paces of growth.

Source: IndexBox AI Platform

global

Latest and Greatest Global Traders on the Move

Per our usual update, below is a list of the latest global trade movers and shakers impacting operations and creating higher standards in leadership. This is a comprehensive list for now, but we will continue to track ongoing recognitions for the next “Global Traders” spotlight. For now, let’s dive into major players across multiple sectors…

James I. Newsome III, the president and CEO of South Carolina Ports Authority, is among five global shipping leaders to be inducted into the 2020 International Maritime Hall of Fame, the Maritime Association of the Port of New York and New Jersey announced.

Joining Newsome in being honored May 13 at the Grand Hyatt Hotel in New York City are: Lisa Lutoff-Perlo, president and CEO, Celebrity Cruises Inc., Miami, Florida; James R. Mara, president emeritus, Metropolitan Marine Maintenance Contractors’ Association, Rutherford, New Jersey; Dr. Nikolas P. Tsakos, president and CEO, Tsakos Energy Navigation Corp., Athens, Greece; and Lois K. Zabrocky, president and CEO, International Seaways Inc., New York.

Sergio Sabatini was recently named president and Gord Anutooshkin was promoted to chief operating officer (COO) at Denver, Colorado-based OmniTRAX,  the fastest-growing railroad in North America. Sabatini reports to OmniTRAX CEO Kevin Shuba. Anutooshkin, who had been senior vice president of Operations, reports to Sabatini, who had been COO.

Rob Russell, previously of Progressive Rail and Union Pacific Railroad, recently joined OmniTRAX as SVP of Marketing and Commercial Strategy.

Atlanta, Georgia-based Nolan Transportation Group, one of the largest and fastest-growing non-asset truckload freight brokerages and 3PLs in North America, recently named Geoff Kelley as its president. Kelley had most recently served as chief operating officer at Coyote Logistics, a subsidiary of UPS.

Consolidated Chassis Management (CCM) promoted Michael Mitchell to senior vice president and chief operating officer. Mitchell, who has been with CCM since its 2005 launch, had been serving as interim COO. Speaking of CCM, a leading cooperative chassis pool manager in intermodal freight transport, its CEO Michael Wilson was recently elected to a three-year term on the Containerization & Intermodal Institute’s Board of Directors. So have Dr. Noel Hacegaba, deputy executive director of Administration and Operations at the Port of Long Beach, and Gregory Tuthill, chief commercial officer at SeaCube Container Leasing.

Katherine Harper has been named chief financial officer (CFO) at BDP International. Harper comes to the Philadelphia, Pennsylvania-based global logistics and transportation solutions company from AgroFresh, a produce freshness solutions company.

Jeffrey M. Barlow was appointed CFO at Paxxal Inc., shipping platforms provider based in Noblesville, Indiana.

Rich Kurtz is the new director of National Accounts for BOLT Systems. He comes to the Nashville, Tennessee-based fleet management and freight tracking software company from Trimble Transportation.

The Oxnard Harbor District Board of Commissioners, which oversees California’s Port of Hueneme, recently voted unanimously for Jess Ramirez to serve as its president. First elected to the board in 1992, Ramirez has served as president five times before, and he worked as a longshoreman at the port for 51 years, prior to retiring last year.

Meanwhile, Celina Zacarias has been appointed to the commission. The senior director of Community and Government Relations for the California State University, Channel Islands and chairwoman of the Oxnard Chamber of Commerce was appointed to fill the vacancy that came with Oxnard Harbor District Commissioner Dr. Manuel Lopez’s passing.

nominations

Global Trade Magazine Accepting “Women in Logistics” Nominations

Global Trade Magazine officially opened nominations for its May/June cover story, “Women in Logistics” beginning this week through the end of March. This marks the publication’s second annual feature spotlighting leading female executives reshaping the way companies approach industry disruptions. The ideal candidate has a proven track record of creating long-term solutions impacting various sectors including transportation, warehousing, shipping, and supply chain management.

“As we continue to see a rise in female leaders within the logistics industry, I wanted to take recognition to the next level for female executives fostering positive company culture while displaying exemplary leadership all industry players can learn from,” said Eric Kleinsorge, Publisher and Chairman of Global Trade Magazine. “Last year’s cover story was a huge success. We received a lot of positive feedback from our readers and we’ve already received impressive nominations for this year’s feature.”

Among leading ladies featured in the 2019 issue included Joan Smemoe of RailInc., Jane Kennedy Greene of Kenco, Wendy Buxton of LynnCo Supply Chain Solutions, and Barbara Yeninas and Lisa Aurichio of BSYA. This year’s selected nominees will be selected based on factors including tenure, industry relevance, impact on the industry, the health of relationships with employees, with a high emphasis on their workplace culture approach. Nominations will be limited to one executive per submission and participants can enter their executive of choice until March 31st at 5 p.m.

“I encourage workers from around the globe to take a few minutes and submit female leaders that have changed the way they view leadership and have made a positive impact on their career and industry. It’s important to the evolving culture of global companies to recognize these women for their dedication to the industry and the workers that make success possible,” Kleinsorge concluded.

To submit a nomination, please click here or call (469) 778-2606 for more information. 

turkey

Germany, Spain, and Poland Are the Largest Markets for Preserved Turkey Meat in the EU

IndexBox has just published a new report: ‘EU – Prepared Or Preserved Meat Or Offal Of Turkeys – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

The revenue of the preserved turkey market in the European Union amounted to $2.3B in 2018, remaining relatively unchanged against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price).

Over the period under review, preserved turkey consumption, however, continues to indicate a mild drop. The pace of growth appeared the most rapid in 2011 with an increase of 12% y-o-y. The level of preserved turkey consumption peaked at $2.7B in 2014; however, from 2015 to 2018, consumption failed to regain its momentum.

Consumption By Country

The countries with the highest volumes of preserved turkey consumption in 2018 were Germany (124K tonnes), Spain (88K tonnes) and Poland (57K tonnes), with a combined 54% share of total consumption. These countries were followed by France, the UK, Greece, the Netherlands, Hungary, Portugal, Italy, Belgium and Bulgaria, which together accounted for a further 35%.

From 2007 to 2018, the most notable rate of growth in terms of preserved turkey consumption, amongst the main consuming countries, was attained by Hungary, while preserved turkey consumption for the other leaders experienced more modest paces of growth.

In value terms, Germany ($572M), Spain ($353M) and France ($287M) constituted the countries with the highest levels of market value in 2018, with a combined 54% share of the total market. These countries were followed by Poland, the UK, Greece, Portugal, Belgium, Italy, Bulgaria, Hungary and the Netherlands, which together accounted for a further 35%.

The countries with the highest levels of preserved turkey per capita consumption in 2018 were Greece (2,075 kg per 1000 persons), Spain (1,887 kg per 1000 persons) and Germany (1,512 kg per 1000 persons).

From 2007 to 2018, the most notable rate of growth in terms of preserved turkey per capita consumption, amongst the main consuming countries, was attained by Hungary, while preserved turkey per capita consumption for the other leaders experienced more modest paces of growth.

Market Forecast to 2030

Driven by increasing demand for preserved turkey in the European Union, the market is expected to continue an upward consumption trend over the next decade. Market performance is forecast to accelerate, expanding with an anticipated CAGR of +1.6% for the period from 2018 to 2030, which is projected to bring the market volume to 598K tonnes by the end of 2030.

Production in the EU

The preserved turkey production totaled 512K tonnes in 2018, dropping by -4.6% against the previous year. The total output volume increased at an average annual rate of +2.3% over the period from 2007 to 2018; the trend pattern remained consistent, with only minor fluctuations being observed in certain years. The pace of growth was the most pronounced in 2017 with an increase of 8.1% year-to-year. In that year, preserved turkey production attained its peak volume of 537K tonnes, and then declined slightly in the following year.

In value terms, preserved turkey production amounted to $2.2B in 2018 estimated in export prices. Over the period under review, preserved turkey production, however, continues to indicate a relatively flat trend pattern. The growth pace was the most rapid in 2011 with an increase of 17% year-to-year. In that year, preserved turkey production attained its peak level of $2.6B. From 2012 to 2018, preserved turkey production growth remained at a somewhat lower figure.

Production By Country

The countries with the highest volumes of preserved turkey production in 2018 were Germany (129K tonnes), Spain (89K tonnes) and Poland (69K tonnes), with a combined 56% share of total production.

From 2007 to 2018, the most notable rate of growth in terms of preserved turkey production, amongst the main producing countries, was attained by Germany, while preserved turkey production for the other leaders experienced more modest paces of growth.

Exports in the EU

In 2018, the preserved turkey exports in the European Union totaled 122K tonnes, going up by 9.2% against the previous year. The total export volume increased at an average annual rate of +4.5% over the period from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded in certain years. The pace of growth appeared the most rapid in 2008 when exports increased by 19% y-o-y. Over the period under review, preserved turkey exports reached their maximum in 2018 and are likely to see steady growth in the near future.

In value terms, preserved turkey exports amounted to $474M (IndexBox estimates) in 2018. The total export value increased at an average annual rate of +2.9% over the period from 2007 to 2018; however, the trend pattern remained relatively stable, with somewhat noticeable fluctuations being observed in certain years. The pace of growth appeared the most rapid in 2008 with an increase of 32% y-o-y. The level of exports peaked in 2018 and are expected to retain its growth in the near future.

Exports by Country

The Netherlands was the major exporter of prepared or preserved meat or offal of turkeys exported in the European Union, with the volume of exports resulting at 41K tonnes, which was approx. 34% of total exports in 2018. Germany (21K tonnes) held the second position in the ranking, followed by Poland (13,041 tonnes), Belgium (8,602 tonnes), Italy (8,022 tonnes), France (6,983 tonnes), Hungary (6,934 tonnes) and Spain (6,045 tonnes). All these countries together held near 58% share of total exports.

From 2007 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by the Netherlands, while exports for the other leaders experienced more modest paces of growth.

In value terms, the largest preserved turkey supplying countries in the European Union were the Netherlands ($134M), Germany ($106M) and Belgium ($49M), with a combined 61% share of total exports.

In terms of the main exporting countries, the Netherlands recorded the highest rates of growth with regard to the value of exports, over the period under review, while exports for the other leaders experienced more modest paces of growth.

Export Prices by Country

In 2018, the preserved turkey export price in the European Union amounted to $3,900 per tonne, remaining relatively unchanged against the previous year. Overall, the preserved turkey export price, however, continues to indicate a slight reduction. The pace of growth appeared the most rapid in 2011 an increase of 16% y-o-y. The level of export price peaked at $5,155 per tonne in 2008; however, from 2009 to 2018, export prices stood at a somewhat lower figure.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was Belgium ($5,720 per tonne), while Poland ($2,839 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Spain, while the other leaders experienced a decline in the export price figures.

Imports in the EU

In 2018, the amount of prepared or preserved meat or offal of turkeys imported in the European Union stood at 107K tonnes, rising by 13% against the previous year. In general, preserved turkey imports, however, continue to indicate a significant drop. The pace of growth appeared the most rapid in 2018 with an increase of 13% y-o-y. The volume of imports peaked at 152K tonnes in 2007; however, from 2008 to 2018, imports failed to regain their momentum.

In value terms, preserved turkey imports amounted to $403M (IndexBox estimates) in 2018. In general, preserved turkey imports, however, continue to indicate a perceptible shrinkage. The growth pace was the most rapid in 2018 when imports increased by 14% against the previous year. Over the period under review, preserved turkey imports reached their peak figure at $601M in 2008; however, from 2009 to 2018, imports failed to regain their momentum.

Imports by Country

Germany (16,239 tonnes), France (11,509 tonnes), Hungary (7,889 tonnes), the UK (7,614 tonnes), Greece (7,423 tonnes), the Netherlands (6,661 tonnes), Italy (6,577 tonnes), Belgium (6,314 tonnes), Spain (5,158 tonnes), Austria (5,019 tonnes), Portugal (4,455 tonnes) and Ireland (4,418 tonnes) represented roughly 84% of total imports of prepared or preserved meat or offal of turkeys in 2018.

From 2007 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by Hungary, while imports for the other leaders experienced more modest paces of growth.

In value terms, the largest preserved turkey importing markets in the European Union were Germany ($60M), France ($51M) and the Netherlands ($32M), together comprising 35% of total imports. The UK, Belgium, Greece, Italy, Austria, Portugal, Spain, Ireland and Hungary lagged somewhat behind, together accounting for a further 47%.

Hungary experienced the highest growth rate of the value of imports, among the main importing countries over the period under review, while imports for the other leaders experienced more modest paces of growth.

Import Prices by Country

The preserved turkey import price in the European Union stood at $3,777 per tonne in 2018, standing approx. at the previous year. Over the period under review, the preserved turkey import price, however, continues to indicate a relatively flat trend pattern. The growth pace was the most rapid in 2008 when the import price increased by 22% y-o-y. Over the period under review, the import prices for prepared or preserved meat or offal of turkeys attained their peak figure at $4,847 per tonne in 2011; however, from 2012 to 2018, import prices remained at a lower figure.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was the Netherlands ($4,854 per tonne), while Hungary ($1,577 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by the Netherlands, while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

pandemic

Global Trade After the Pandemic

The staggering impact of the coronavirus pandemic on world trade is still reverberating and will for many months. Businesses are struggling to adjust to the current challenges that travel bans and factory stoppages present to their firms. They are concerned about how to keep their employees safe, informed, and on the payroll in the face of a dramatic economic turndown. But once this pandemic is over, what will its lasting impact be on global trade? How will the trade environment change and how will successful companies respond?

The jury is still out

What the final economic and personal toll of the coronavirus will be to the U.S. and global economy remains to be seen. It may take several months or years to ride out the pandemic and sort out the first stage economic loss that it will leave in its wake. The coronavirus pandemic has already drawn comparisons to the 9/11 attacks and the 1987 and 2008 recessions as far as its overall impact on the U.S. and global economy. It is a uniquely painful moment for international business, especially in regards to the movement of people and products. The recent lock-downs throughout the European Union and the travel ban from Europe to the United States, for example, have no historical precedents. Much like the world looked to regulatory changes in the wake of 9/11 or the financial cascade of problems from 2008, they will again as this initial impact recedes and governments assess how they failed to prepare for this pandemic and how they can help curtail the damage of such occurrences in the future.

Worker safety and transportation screening will be promoted

Unions, companies, and government regulators are already looking at how working conditions will need to change to better protect employees who work in the global trade trenches. From airport workers to longshoremen, workers in many key industries are exposed to cargo and passengers from overseas that potentially could be carrying new diseases across borders. The potential costs of improved detection and phytosanitary procedures will eventually be passed to consumers, but these expenses will be difficult issues to negotiate for industries that have already been hammered by first the U.S.-China trade war and then the dramatic world-wide reduction of traffic flow due to the pandemic.

Much as the terrorist attacks of 9/11 and related incidents gave rise to a host of new security measures at ports and borders, the spread of the pandemic will eventually be the subject of substantial discussion, public hearings, and eventual regulatory changes.  Governments will look for systems that would help them to better screen for potential pathogens at transportation nodes, which may include longer periods of isolation for cargo, and longer lines at the airport for global travelers (not to mention more tax funds to set up these screening and control systems).

Air and cruise industries: only the strong will survive

Passenger airlines and the cruise industry will not likely recover from the economic impact of the pandemic without some substantial government assistance. Even with that financial support, both industries will face substantial challenges to get back to a healthy volume of traffic as the pandemic brought both cruise and air traffic to a standstill. Coming on the heels of ‘flight shaming’ and a wide-spread movement to reduce their carbon emissions, as well as the Boeing crashes and 737 MAX delays, the airlines were already in a delicate position. The pandemic was the knock-out punch.  In the short term, airline CEOs such as British Airway’s Alex Cruz have noted that this is a “crisis of global proportion like no other we have known.” Airlines are projected to lose as much as $113 billion in 2020 alone. Cruises have faced similar challenges, essentially given a ‘death blow’ by the U.S. State Department warning to avoid cruise ships and port lockdowns in the Mediterranean.

What will change as a result?

The economic results of the pandemic have had some additional first-tier effects beyond border safety and damage to the transportation industry. For example, commentators have already noted that the pandemic has forced us into a great virtual working experiment. Insurance companies and their clients will be looking closely into (and likely litigating over) the responsibility for losses as a result of the pandemic. Governments will look to fix the problems we are already seeing in regards to testing and readiness. But what are the secondary effects of the pandemic for businesses? How can companies position themselves to survive and possibly benefit from the changing business landscape that awaits us?

Invest in strategy and security expertise as well as sourcing flexibility

Is this the coronavirus pandemic an isolated incident? Not according to the World Health Organization (WHO), which warns that ‘global catastrophic biological risks’ may be seen on a more regular basis in the coming decades. On top of that natural risk, consider that terrorist organizations have also seen the remarkable disruption caused by the pandemic and may attempt to weaponize biological weapons. It is a risk that governments have known about for some time, but seems even more realistic now that we’ve seen a pandemic in action and the challenges that governments face in attempting to contain it.

This future risk should result in companies spending more time and energy on both corporate strategy and security. The increasingly volatile state of the global markets means that companies will need to beef up their existing forecasting and modeling capabilities. On the risk side, security of employees and far-flung assets will take on a new urgency in the wake of the pandemic. Preparing a company that can flex and adapt in volatile times will mark the difference between companies that thrive and those that go bankrupt. Many companies will also be doing a complex overhaul of their logistics and production concepts.

The US-China trade conflict, and other isolationist tendencies that will linger after this pandemic, will encourage companies to both look closer to home for their production as well as to value the benefit of having alternative sources.  Countries like Canada, Mexico or Latin America will seem more attractive after this experience to U.S. companies. In Europe, sourcing within the EU makes much more sense once the factors of reliability and local access are properly factored into cost comparisons.

The Bottom Line

This pandemic will break firms that cannot handle the financial strain of such a dramatic and abrupt downturn. Government investment and bailouts will allow some to keep their heads above water, but others will simply disappear. Those that do survive will find a different global trade environment: one that demands a greater focus on logistics flexibility and security and the ability to succeed in an international business environment that has new regulatory boundaries which will challenge ‘just in time’ concepts and put a greater value on diverse and more local sourcing. As with all challenges, this situation will also bring opportunities – companies whose products foster virtual communication in businesses and provide equipment that can identify and protect workers from biological agents will see a new surge in interest.  Global world trade will not be killed by this pandemic, but it will have a different and potentially more chaotic nature.

____________________________________________________________________

Kirk Samson is the owner of Samson Atlantic LLC, a Chicago-based international business consulting company that offers market research, political risk assessment, and international expansion assistance. Mr. Samson is a former U.S. diplomat and international law advisor who lived and worked in ten different countries.

ecommerce business

How Coronavirus Impacts Ecommerce Business and Beyond

There is no vaccine to prevent the spreading Coronavirus, yet, and that holds lessons for ecommerce businesses and the people who work at them. Today, we’re facing a time to prepare and hopefully limit exposure and risks at work.

For businesses, preparation and the possibility of illness are going to reshape the day-to-day. After reviewing scenarios and government guidance (here’s your list of cleaners that can take out COVID-19), we’ve put together some thoughts on the most significant impacts we’ll see soon and how companies can respond to protect their people best.

Sending people home is best but expensive

Many ecommerce businesses are small shops, though we’ve been impressed to see some grow significantly in recent years. It’s always a fantastic thing to witness, but their scrappy nature usually means staff are perpetually busy and wearing multiple hats.

Unfortunately, that might mean the COVID-19 threat will hit you especially hard.

Your best bet to keep everyone at work safe is to let anyone go home when they feel even the slightest bit sick. If that happens, document the person arrived and left, plus who they came into contact with at work — employees and anyone who might’ve visited — and how they got to work. This can help medical professionals who are already going to be stretched thin.

The best practice here is going to cost you, but it could also save your team from significant harm, and that is to pay your team to stay home. Help people use their sick days and vacation time if they have it. If someone doesn’t, review your budget to see what you can offer.

If people can’t afford to stay home, they come into work even when sick. That’s a danger none of us can afford right now.

Wash your hands and everything else

There is a little bit of a silver lining in the ecommerce world: most of the products moving through your warehouse are going to be safe. You’re watching for people above all else.

This is because most coronaviruses, including COVID-19, struggle to live on surfaces. So far, we haven’t seen evidence of contaminated food products, which is generally where you’ll first see illnesses spread by products/goods.

For products, the risk is a “smear infection” where someone coughs or sneezes onto a product or package, and a new person touches that and then their face. The virus is believed to have a short lifespan in smear cases, so your team should be relatively safe. Maximize their safety by prioritizing handwashing. Have your team wear gloves at all times, but still make them wash up after unloading a truck.

What ecommerce and other businesses will want to be aware of is the route their goods are taking to get to warehouses. If something is passing through areas where there’s been an outbreak or if you learn that a delivery person for a specific company has fallen ill, pay extra close attention to cleaning these products and packages.

For goods that have been traveling to your company for days or weeks by ocean, there’s minimal product risk from that leg of the trip, but local infections may be possible. Air travel is fast enough that you could have higher smear risks.

So, wash hands, wear gloves, and clean everything as you go.

Alternatives may become scarce

Some impacts are already rippling through the global supply chain. One significant shift is that companies are scrambling to find alternative sources for products and raw materials. Not only are prices for some materials already rising, but there’s growing lane congestion.

This will be a double hit for businesses.

If you’re not manufacturing your own goods, then you need someone to do it for you. New partners can be expensive to source. At the same time, your competition will be turning to them as well. Also happening concurrently, manufacturers will be looking to secure new sources of raw materials. Shifts, such as nearshoring production and buying local, all come with increased costs and supply chain changes.

The other impact is that it could generate more congestion for local delivery and fulfillment options. Companies may face the cost of shipping their goods rise, as well as see delays in fulfillment times. Those delays are already happening in areas where there have been cases of the virus.

Your business will pay more, but you might not be able to pass on additional expenses to customers. Delays in fulfillment times will hit the ecommerce sector hard because customers already expect two-day shipping options. Now, you’ll have to tell them it could be longer and cost more, which may see them take their business elsewhere.

Outsourcing will increase

Expect companies to start diversifying the way they get goods to customers. One particular method is going to be outsourcing fulfillment to companies that have multiple warehouses. It’s a smart way to avoid supply chain bottlenecks because it minimizes the chances that a local outbreak will impact your entire fulfillment operations.

For some ecommerce companies, this outsourcing may come with a small benefit of reaching customers more quickly (once they get stock to third-party logistics providers), while also protecting some workers. If we see sustained infections and spreading of the virus, there’s a potential that many small ecommerce businesses will start outsourcing their entire fulfillment operations.

In the short-term, that could cause some issues with warehouse space and fulfillment staff. In the long run, it might cause cost reductions and lead to greater product availability.

Companies who can figure out how to avoid delivery slowdowns — such as large ones able to own and use their own delivery fleet — will dominate the market. The U.S. has faced a truck driver shortage for years, and growth in outsourcing may help curb some of that, but it would come with higher wages for those who have a greater potential risk of being exposed to the Coronavirus and other health concerns.

Our world will look different tomorrow

We’ve fully embraced the gig economy and home delivery, and there’s a potential it all comes crashing down. Whether these employees continue work amid growing exposure (and even after becoming sick) or if services start slowing down, it’ll impact the daily lives of many Americans.

Businesses will also face changes in the way we bring people to the office, help staff pay for healthcare, and what processes we no longer choose to do to protect ourselves. The global, interconnected supply chain is already changing, and nothing but time will tell us how profound and varied this impact is.

_____________________________________________________________

Jake Rheude is the Director of Marketing for Red Stag Fulfillment, an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.