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Calculating the True Value of a WMS: Top Cost Savings for Manufacturing Companies

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Calculating the True Value of a WMS: Top Cost Savings for Manufacturing Companies

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When manufacturing companies consider the digitization of their supply chain, many opt to delay their project because of the investments required to acquire and implement new technology solutions. In so doing, however, they deprive themselves of their operational and financial benefits.   

SaaS solutions like the SOLOCHAIN WMS have made efficient technology solutions far more affordable than ever before. Nevertheless, a WMS still remains a significant investment to smaller manufacturing companies. However, it’s important to keep in mind that a WMS or ERP’s TOC is not indicative of the system’s actual value – at least, not in and of itself.

Any investment in supply chain infrastructure must be evaluated by relating the TOC to the ROI an operator stands to achieve. It is therefore essential that operators rigorously understand the kinds of savings and gains a given technology solution can yield to make an informed decision regarding its value.

In this paper, we look at five ways manufacturing companies achieve tangible and intangible savings and gains thanks to the SOLOCHAIN WMS.

1. Roasting Coffee to Customers Satisfaction, for Less

A coffee roasting, packaging, and distribution company is putting out a great product and garnering the attention of major players the likes of Walmart, Target, and Menards. To benefit from these new revenue streams, the manufacturer must comply with distinct customer requirements, from packaging to labeling to shipping.

With the SOLOCHAIN WMS integrated with its ERP system, the manufacturer can rely on automated compliance processes and ensure that all shipments meet their customers’ requirements. At all stages of the production and distribution cycle, employees are informed of the customer’s requirements through intuitive interfaces on handheld devices or computer stations.

Thanks to these efficiency gains, the manufacturer is able to achieve a throughput that meets the increased demand instead of having to invest in new real estate, new material handling equipment, and a larger labor force.

2. Manufacturing Cosmetics in an Attractive Work Environment

Some savings generated by the SOLOCHAIN WMS are easily quantified. Others are more intangible, but nevertheless very real.

Most manufacturers these days have trouble attracting and retaining qualified warehouse workers. For a cosmetics manufacturer, this was true before the pandemic hit and it has become a real thorn in their foot today. Labor shortages are now affecting manufacturing and distribution activities to the point where they cannot meet productivity targets. Delays in shipments are having an impact on service levels. Meanwhile, a high turnover rate leads to significant training fees and further operational penalties.

The SOLOCHAIN WMS supports workflows from production processes all the way to shipping. Thanks to clear instructions on intuitive interfaces, activities in the warehouse are more efficient and the cosmetics maker can meet its productivity targets with fewer employees.

Implementing the WMS on handheld devices similar to iPhones and Android platforms, the younger generation of workers find their work environment much more pleasant. This helps the cosmetic maker achieve a higher retention rate, which in turn reduces the training budgets.

By relying on a smaller workforce and retaining more of its employees thanks to an improved work environment, the company can meet its productivity targets and ensure customer satisfaction while saving on labor costs.

3. A Production Flow That Never Drops the Ball

The benefits of traceability might be more obvious in the Food & Beverage industry, but the truth is that all manufacturers stand to make important savings by keeping track of the items that go into making what they produce.

Through SOLOCHAIN’s traceability and automated order cycles capabilities, a baseball equipment manufacturer can keep an eye on quantities produced as well as every item consumed in the process. Management can configure the WMS so that it automatically generates POs to procure items once a certain quantity threshold is reached. In that way, SOLOCHAIN ensures that production is never halted because items are missing on the shelves.

With management in charge of determining thresholds, the system also bypasses the risk of human errors, avoiding that too many, or to few items are ordered. This leads to an optimal use of the warehouse’s storage capacity, which saves the baseball equipment manufacturer from having to make unnecessary investments in their physical infrastructure.

4. Your Counts

Weekly inventory cycle counts force a manufacturer of audio-visual equipment to close areas in the warehouse. This slows down productivity and cuts into the manufacturer’s margins. Thanks to SOLOCHAIN’s inventory management capabilities, the company can save on the costs of long weekly cycle counts.

Once implemented on handheld scanning devices, SOLOCHAIN enables the manufacturer to keep track, in real time, of the quantity and location of every item in the warehouse. While they perform cycle counts, employees are continuously supported in their activities with clear instructions, which drastically cuts down on the time required to complete their tasks.

Today, the manufacturer is attaining inventory accuracy levels of 99.6% and working on eliminating weekly shutdown periods altogether. Thanks to SOLOCHAIN’s support, annual counts can be performed in a single weekend, ensuring that their production of a5. Thinking Ahead: Intelligent Manufacturing  audio-visual equipment never misses a beat.

A food processing facility specialises in the production of organic packaged meals that are delivered daily to various organic grocers in the region. Their products are gaining in popularity and demand is on the rise. The number and complexity of customer orders are quickly overwhelming their pen & paper fulfilment processes. The resulting production and shipping errors are now eating at the manufacturer’s profits and affecting customer satisfaction levels.

The SOLOCHAIN WMS facilitates Just-In-Time Delivery through automated full cycle order management. Thanks to the system’s support, order fulfillment at the food service manufacturer is now virtually errorless. Clients are satisfied and demand is on the rise again. Meanwhile, lesser returns lead to lesser losses, which in turn saves the organic meal maker from welting margins.

About Generix Group

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more. 

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U.S. and EU Impose Sanctions in Connection with the Crisis in Ukraine: A Detailed Look

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On February 21, 2022, President Biden issued a new executive order targeting the breakaway regions known as the Donetsk People’s Republic (“DNR”) and Luhansk People’s Republic (“LPR”, and together with the DNR, the “Covered Regions”) in eastern Ukraine.  On February 22, 2022, President Biden announced further sanctions, specifically designating two major Russian banks and three close associates of Russian President Vladimir Putin, and imposed increased restrictions on dealings in Russia’s sovereign debt.  On February 23, 2022, the EU adopted, a set of new Regulations and Decisions implementing asset freezes and travel bans notably against senior Russian officials and close associates of President Putin, financial restrictions limiting Russia’s access to the EU’s capital and financial markets, and trade restrictions targeting economic relations with the Covered Regions. The actions follow President Putin’s formal recognition of the independence of those breakaway regions and react to the continued involvement of Russian military forces.

New U.S. Sanctions

February 21, 2022 Executive Order

The February 21 executive order largely extends the existing restrictions on the Crimea region of Ukraine and applies them to the Covered Regions.  In particular, the executive order prohibits:

-New investment in the Covered Regions;

-Importation into the U.S. of any goods, services, or technology originating in the Covered Regions;

-Exportation, reexportation, sale or supply from the United States or by a U.S. persons of any good, services or technology to the Covered Regions; and

-Any approval, financing, facilitation, or guarantee by a U.S. person of prohibited transactions.

The executive order further authorizes the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) to add to the Specially Designated Nationals (“SDN”) list any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

-To operate in the Covered Regions;

-To be a leader, official, senior executive officer, or member of the board of directors of an entity operating in the Covered Regions;

-To be owned or controlled or acting on behalf of any person blocked under the executive order; or

-To have materially assisted or supported any person blocked under the executive order.

However, although some individuals in the Covered Regions have been previously designated under the Crimea-related authorities, no person has been designated yet under the executive order as of the date of this alert.

Simultaneously with the issuance of the executive order, OFAC issued six general licenses to permit otherwise prohibited activity in the Covered Regions.  Most significantly, General License 17 authorizes all transactions that are ordinarily incident and necessary to the winddown of transactions in the Covered Region until March 23, 2022.  Note, however, that a specific license from OFAC would still be required for any transactions with an SDN designated under the executive order.  The other five general licenses authorize the following activity:

–General License 18– authorizing the export or reexport to the Covered Regions of certain agricultural, medical, and COVID-19 related products and services;

–General License 19– authorizing transactions that are ordinarily incident and necessary to the receipt or transmission of telecommunications in the Covered Regions;

–General License 20– authorizing transactions by the United Nations and other specified non-governmental organizations;

–General License 21– authorizing transactions related to non-commercial, personal remittances to the Covered Regions; and

–General License 22– authorizing transactions related to the exportation of services or software from the United States or by U.S. persons that are incident to the exchange of personal communications over the internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, and blogging.

One key question following the issuance of the executive order is how the specific territories of the Covered Regions will be determined.  This may be particularly challenging, given the shifting borders of the DNR and LPR throughout their prolonged conflict with the Ukrainian government.  We anticipate that OFAC will seek to clarify this question through the guidance in the form of responses to “Frequently Asked Questions” in the coming days.

February 22, 2022 Actions

On February 22, 2022, in a speech in which President Biden stated that “Russia has now undeniably moved against Ukraine,” he announced “the first tranche of sanctions to impose costs on Russia,” promising to “continue to escalate sanctions if Russia escalates.”  Subsequently, OFAC issued a press release detailing the specific actions, all of which were taken pursuant to the existing Executive Order 14024, which included the designation of two major Russian banks and three close associates of President Putin as SDNs as well as restrictions on transactions involving Russian sovereign debt.

Specifically, the two Russian banks targeted are the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (“VEB”) and Promsvyazbank Public Joint Stock Company (“PSB”), along with 42 of their subsidiaries.  The designations were made pursuant to a contemporaneous determination issued by Treasury Secretary Janet Yellen that Russian financial institutions are eligible for sanctions under Executive Order 14024 (previously, determinations had also been made on April 15, 2021, with respect to the technology sector and defense sectors).  Both banks are state-owned institutions and play key roles in servicing Russia’s sovereign debt and defense contracts.  Further, in connection with PSB’s designation, OFAC designated the following five Russian-flagged vessels in which PSB has an interest:

-Baltic Leader (IMO: 9220639), a cargo vessel;

-Linda (IMO: 9256858), a crude oil tanker;

-Pegas (IMO: 9256860), a crude oil tanker;

-Fesco Magadan (IMO: 9287699), a container ship; and

-Fesco Moneron (IMO: 9277412), a container ship.

In addition, three close associates to President Putin – including the Chairman and CEO of PSB and two sons of previously designated oligarchs – were added to the SDN list.  As a result of these designations, U.S. persons are prohibited from virtually all transactions with the listed parties or entities of which they own fifty percent or more, directly or indirectly.  In addition, “significant” transactions with these entities could create secondary sanctions liability under Section 228 of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”).

OFAC also issued a new Directive 1A under Executive Order 14024, which replaces the prior Directive 1.  The effect of the new Directive 1A is to expand existing sovereign debt prohibitions to cover participation in the secondary market for bonds issued after March 1, 2022 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation.  Specifically, Directive 1 previously prohibited U.S. financial institutions from, as of June 14, 2021, participating in the primary market for bonds issued by Russia’s Central Bank, National Wealth Fund or Ministry of Finance, or lending funds to those organizations.  Directive 1A keeps those prohibitions in place, and additionally prohibits U.S. financial institutions – effective March 1, 2022 – from participating in the secondary market for bonds issued by the listed organizations.  Note that OFAC clarified in FAQ guidance that the fifty percent rule does not apply to Directive 1A so that entities owned by the institutions identified in Directive 1A are not themselves automatically subject to the restrictions.

In conjunction with these restrictions, OFAC also issued General License 2, which authorizes transactions involving the servicing of bonds issued by VEB prior to March 1, 2022, and General License 3, which authorizes a winddown period with respect to VEB through March 24, 2022.  No similar general license has been issued yet regarding transactions involving PSB.

Potential Further Action

The Biden Administration has also implied that additional multi-lateral sanctions could be forthcoming, indicating an incremental approach.  A Fact Sheet issued in conjunction with the February 21, 2022 executive order explained that the executive order “is distinct from the swift and severe economic measures we are prepared to issue with Allies and partners in response to a further Russian invasion of Ukraine. We are continuing to closely consult with Ukraine and with Allies and partners on next steps and urge Russia to immediately deescalate.”  As also noted above, President Biden characterized the February 22, 2022 actions as the “first tranche” of sanctions and kept open the possibility for “escalation” depending on how Russia responds.  An embargo on semiconductors and advanced technology has reportedly been considered as part of a second tranche of actions if Russia escalates or continues its incursion further into Ukraine.

New EU Sanctions

February 21, 2022 Designations

On February 21, the Council of the European Union (“EU”)  imposed travel bans and asset freezes (including a prohibition to make funds or economic resources available) on five new individuals “for actively supporting actions and implementing policies that undermine or threaten the territorial integrity, sovereignty and independence of Ukraine,” bringing the total number of designated parties to 193 individuals and 48 entities on the EU’s list of parties subject to Ukraine-related sanctions.

The new designations include members of the State Duma of the Russian Federation, who were elected to represent the annexed Crimean peninsula and the City of Sevastopol on 19 September 2021, as well as the head and deputy head of the Sevastopol electoral commission.

February 22-23, 2022 Actions

On February 22, the Presidents of the European Council and European Commission jointly announced that an additional package of restrictive measures will be swiftly adopted by the EU in reaction to Russia’s latest aggression against Ukraine, which the EU sees as “illegal and unacceptable” under the Minsk Agreements, which stipulate the full return of the Covered Regions to the control of the Ukrainian government.

The same day, Josep Borrell, the High Representative of the Union for Foreign Affairs and Security Policy, urged Russia “to reverse the recognition, uphold its commitments, abide by international law and return to the discussions within the Normandy format and the Trilateral Contact Group.” Borrell later announced in a joint press conference with French Minister for Europe and Foreign Affairs Jean-Yves Le Drian that the 27 Member States had unanimously agreed on a new package of sanctions.

The new package has been swiftly adopted and published in the Official Journal of the EU on February 23 through 4 Council Decisions and 5 Regulations amending EU’s current sanctions program targeting Russia progressively strengthened since 2014, which already included:

-Individual restrictive measures consisting of travel bans and assets freezes on designated individuals and entities;

-Comprehensive restrictions on economic relations with Crimea and Sevastopol, including (i) an import ban on goods from Crimea and Sevastopol, (ii) restrictions on trade and investment related to certain economic sectors and infrastructure projects, (iii) a prohibition to supply tourism services in Crimea or Sevastopol, and (iv) an export ban for certain goods and technologies;

-An import and export ban on trade in arms as well as an export ban for dual-use items for military end-users or end-use in Russia;

-Financial restrictions limiting access to EU primary and secondary capital markets for certain Russian banks and companies;

-Economic restrictions limiting Russia’s access to sensitive technologies and services that can be used for oil production and exploration.

As announced, the new package of sanctions is quite wide-ranging and intended to “hurt [Russia] a lot” in the words of High Representative Borrell.

First, the legal acts of February 23 (Council Implementing Regulation (EU) 2022/260 and 2022/261 ; Council Decision (CFSP) 2022/267) formally designate individuals and entities which will be subject to individual restrictive measures, namely a travel ban and an asset freeze, in the Union. The new designations target:

-336 members of the Russian State Duma who voted for the recognition of the two self-proclaimed republics; and

-22 decision-makers involved in the illegal decision in addition to 4 entities (Internet Research Agency, Bank Rossiya, PROMSVYAZBANK and VEB) financially and materially supporting, or benefiting from them, those operating in the Russian defense sector and having played a role in the invasion such as senior military officers, as well as individuals engaging in a “disinformation war” against Ukraine.

The legal acts (Council Implementing Regulation (EU) 2022/259 ; Council Decision (CFSP) 2022/265) also provided for a derogation from the application of the new restrictive measures targeting Bank Rossiya, PROMSVYAZBANK and VEB. The competent authorities of a Member State may authorize the release of certain frozen funds or economic resources belonging to these Russian banks, or the making available of certain funds or economic resources to those entities, under such conditions as the competent authorities deem appropriate and after having determined that such funds or economic resources are necessary for the termination by August 24, 2022, of operations, contracts, or other agreements, including correspondent banking relations, concluded with those entities before February 23, 2022.

Moreover, further financial restrictions limiting Russia’s access to the EU’s capital and financial markets will now apply (Council Implementing Regulation (EU) 2022/262 ; Council Decision (CFSP) 2022/264) including notably:

-A prohibition to directly or indirectly purchase, sell, provide investment services for or assistance in the issuance of, or otherwise deal with transferable securities and money-market instruments issued after March 9, 2022 by Russia and its government, the Central Bank of Russia or any person or entity acting on behalf or at the direction of the said Central Bank;

-A prohibition to directly or indirectly make or be part of any arrangement to make any new loans or credit to the above-mentioned persons and entities;

-The current prohibitions applicable to securities giving the right to acquire or sell such transferable securities are extended to the securities giving rise to a cash settlement determined by reference to transferable securities.

Finally, the legal acts (Council Implementing Regulation (EU) 2022/263 ; Council Decision (CFSP) 2022/266) introduce extensive trade restrictions targeting economic relations with the Covered Regions of Donetsk and Luhansk, on the model of those already targeting Crimea and Sevastopol including:

-A prohibition to import goods from the Covered Regions into the EU and to provide, directly or indirectly, financing or financial assistance as well as insurance and reinsurance related to such imports;

-A prohibition to (i) acquire any new, or extend any existing participation in ownership of, real estate in or located in the Covered Regions, including the acquisition in full of such an entity or the acquisition of shares therein, and other securities of a participating nature of such an entity; (ii) grant or be part of any arrangement to grant any loan or credit or otherwise provide financing, including equity capital, to an entity in the Covered Regions, or for the documented purpose of financing such an entity; (iii) create any joint venture in the Covered Regions or with an entity in the Covered Regions; and (iv) provide investment services directly related to these prohibited activities;

-A prohibition to sell, supply, transfer or export goods and technology listed in Annex II suited for use in the transport, telecommunications, energy, oil and gas and mineral sectors, to (i) any natural or legal person, entity or body in the Covered Regions, or (ii) for use in the Covered Regions;

-A prohibition to provide, directly or indirectly, technical assistance or brokering services related to the goods and technology listed in Annex II, or related to the provision, manufacture, maintenance and use of such items to any natural or legal person, entity or body in the Covered Regions or for use in the Covered Regions;

-A prohibition to provide, directly or indirectly, financing or financial assistance related to the goods and technology listed in Annex II to any natural or legal person, entity or body in the Covered Regions or for use in the Covered Regions.

-A prohibition to provide technical assistance, or brokering, construction or engineering services directly relating to infrastructure in the specified territories in the mentioned sectors, independently of the origin of the goods and technology; and

-A prohibition to provide services directly related to tourism activities in the Covered Regions.

The new restrictive measures entered into force on February 23, the date of their publication in the Official Journal of the EU.

Potential Further Action

In reaction to the latest events, Olaf Scholz, Germany’s Chancellor, announced that Germany will halt the certification of Nord Stream 2, a gas pipeline designed to bring natural gas from Russia directly to Europe, a decision welcomed by both High Representative  Borrell and President Ursula von der Leyen.

On February 23, 2022, President Biden announced that he would direct OFAC to sanction Nord Stream 2 AG – a wholly owned subsidiary of Gazprom, which is already subject to U.S. sectoral sanctions – and its corporate officers.

The EU had warned it will leave the door open to the adoption of more wide-ranging political and economic sanctions at a later stage should Russia use “the newly signed pacts with the self-proclaimed “republics” as a pretext for taking further military steps against Ukraine.” As President Putin declared war against Ukraine and escalated military action on February 24, President Michel of the European Council urgently convened an extraordinary meeting of the European Council. EU leaders intend to meet later today to discuss further restrictive measures that “will impose massive and severe consequences on Russia for its action, in close coordination with our transatlantic partners.”

The Member States will also keep a close eye on Belarus, which is said to have “aided and supported the Russian actions” in Ukraine, and the EU is ready to enlarge the listing criteria “to target those who provide support or benefit from the Russian government – the oligarchs, in plain language,” if needed.

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3 Insightful Decisions That SOLOCHAIN WMS Can Assist Manufacturers With

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The digitization of supply chains is well underway. SaaS solutions, such as the SOLOCHAIN WMS, have made it easier for manufacturing companies to reap the operational benefits of new technology solutions, rapidly obtain ROI, and stimulate growth. 

In this blog, we take a quick look at the three scenarios that illustrate how the SOLOCHAIN WMS not only improves daily operations on the floor, but also provides management crucial information to help leaders make better decisions. Find out how SOLOCHAIN concretely enables more efficient and cost-effective activities in the warehouse and paves the way to better client experience, sustained growth, and higher margins.

Planning Production in a Time of Supply Chain Disruptions

Many pieces and parts go into making a forklift that usually must be acquired from various vendors. When supply chain disruptions leave items blocked in container yards here and there across the coast, it quickly becomes difficult to determine when the needed pieces will be delivered. This severely limits a manufacturer’s ability to plan production and, consequently, to adequately manage clients’ expectations.

SOLOCHAIN gives a forklift manufacturer the ability to manage orders and locate incoming items across all channels from one easy to read interface. Once SOLOCHAIN is integrated with their ERP and their vendors’ systems, the manufacturer can the leverage the WMS to identify every container, every truck, and every facility where ordered items are located, as well as any changes to delivery dates. Thanks to that data, the manufacturer can precisely determine production calendars, find alternative solutions when need be, and keep their customers apprised.

Maintaining high service levels in a time of disruptions gives the forklift manufacturer a competitive advantage that opens new possibilities for growth.

Making Candy Bars that Make Everyone Smile

Manufacturing in the food & beverage industry requires that operators pay attention to a variety of details: FIFO across different temp zones, items consumed in a batch, customer shelf-life requirements, etc. To ensure its commercial success, a candy bar processing facility must be able to rely on the right data so that items are consumed at the right time and processed products are efficiently picked and shipped that meet the client’s standards.

SOLOCHAIN supports all activities in the processing facility, from the reception of ingredients to the production of processed goods to shipping the candy. At every step, adaptable mobile workflow and graphical tools are accessible to employees on intuitive, easy to read interfaces. Dashboards provide them the right information to ensure that items are handled properly and efficiently. SOLOCHAIN will, for example, communicate FIFO data to employees picking ingredients, guaranteeing that stocks are efficiently consumed and losses are avoided. It will also inform employees of a client’s shelf-life requirements, making sure that picked items meet their standards and are not returned, which avoids costly penalties.

Meanwhile, SOLOCHAIN affords management granular visibility on crucial information: who is performing what task, details regarding production progress, all inventory modifications in real time, and the status of orders fulfilment. Thanks to intuitive dashboards and detailed reporting capabilities, the SOLOCHAIN WMS enables faster order fulfillment, improved customer satisfaction, and, ultimately, higher margins.

Download WMS SOLOCHAIN Product Sheet Here

Efficient Recalls at the Ice Cream Factory

While all manufacturers do their best to steer clear of having to perform recalls, they remain a part of the game. The real differentiator between competing companies is how well recalls are managed. The key, of course, is to achieve recalls that are precise and expedient. By doing so, operators avoid crippling financial penalties and maintain the high service levels that have allowed them to build strong customer confidence over time.

Thanks to its powerful traceability capabilities, SOLOCHAIN informs a manufacturer such as an ice cream maker of all the items that were consumed in a batch. Moreover, it allows the ice cream maker to rigorously trace each and every one of these items, from vendor to customer. And if that wasn’t enough, the WMS also contains a visual tool that makes it easy for employees on the floor to verify, understand, and comply with FDA regulations.

SOLOCHAIN therefore makes it easy for the ice cream maker to precisely identify which lot of cream was problematic, which batches of ice cream consumed that cream, and which must consequently be recalled. SOLOCHAIN let management know of the exact location of every unit from these batches, enabling them to make precise and efficient recalls. Thanks to SOLOCHAIN, no good ice cream goes wasted!

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more.

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4 Ways the IoT Helps Optimize Cold Chain Logistics

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Industry 4.0 technology can help to make cold chain logistics much easier to manage. Internet of things (IoT) devices are already used in a wide range of industries to gather real-time information on business processes.

In the cold chain, IoT technology can help businesses track important data on shipments — potentially allowing them to prevent temperature excursions and provide better data to stakeholders.

Here’s how businesses are already using IoT to optimize their cold chain logistics.

1. Temperature Monitoring

A key feature of IoT devices is their ability to monitor the temperatures that cold chain shipments are exposed to.

By attaching an IoT temperature monitor to the outside of a package or pallet, sensors can be used in a variety of transportation modes — including trucks, rail freight or air cargo — to continuously track the temperature of food items, important pharmaceuticals and other items that need cold chain logistics.

These sensors will gather and report this data in real-time. Because IoT sensors can automatically store data on the cloud, all relevant stakeholders can have access to the temperature data that they collect.

In the event that an IoT sensor detects a temperature excursion, an alert system can automatically notify managers, drivers, administrative staff and other workers — allowing them to take action to prevent spoilage.

Stored data can also be used to improve processes, identify bottlenecks and determine fault in the event that an excursion causes spoilage. At any time after a sensor collects temperature data, stakeholders can review captured information and trends — or use analytics software to automatically extract valuable insights from historical temperature data.

IoT temperature tracking devices can also monitor other aspects of a shipment’s journey — for example, a combination vibration, light and temperature sensor can monitor for heat as well as exposure to light, shocks, vibrations and sudden stops.

Many cold chain products don’t just require low temperatures. Many vaccines that need cold chain logistics, for example, may spoil or lose potency if exposed to light. Sudden shocks can also risk damage to vaccine containers and packing materials.

IoT devices that monitor for temperature can also help to monitor for these potential threats.

2. GPS and RFID Shipment Tracking

IoT devices are also excellent at tracking the current location of a shipment or individual product. By using technology like GPS or RFID, it’s possible for an IoT device to gather information on a shipment’s movement.

With GPS, this information will be in real-time. With RFID, the system will depend on RFID readers installed at important locations that continuously scan for RFID tags. These systems will provide instant updates whenever an RFID tagged shipment arrives at a warehouse, fulfillment center, retail location or delivery destination.

These systems can automatically alert stakeholders when an item is on the move, allowing them to track the position of all their shipments, 24/7. The same IoT device can be used to monitor both temperature and location.

The same technology can also help businesses and logistics providers offer better delivery estimates to their clients. With real-time tracking, it’s much easier to accurately forecast when an item will arrive at a destination.

3. Automated Reporting and Cloud Data Storage

Because IoT devices are connected to the internet and can collect data continuously, they can also be used for automatic report-generation and cloud data backups.

For example, data from an IoT device can be automatically delivered to relevant stakeholders or stored for monthly documentation of important information.

In addition to delivering data to the cloud, an IoT device can send information to logistics management platforms, where the information can be analyzed by stakeholders with the help of dashboards and other data visualization tools.

The device can also stream information to AI-powered analytic tools, allowing businesses to use the IoT data to power delivery time or temperature excursion prediction algorithms.

These algorithms can help businesses see a crisis coming based on patterns in IoT data, potentially long before the issue would be obvious to a manager or analyst following the data on their own.

4. Equipment Health Monitoring and Predictive Maintenance

In addition to monitoring shipments directly, IoT devices are also an excellent tool for tracking the performance and health of cold chain equipment — including delivery vehicles, warehouse machinery and even HVAC systems.

Existing IoT performance monitoring systems can track a wide variety of performance and environmental variables. Information from these systems can help businesses track machine performance and health.

For example, an IoT fleet may capture information on a machine’s timing, vibration, temperature and lubrication. If one of these variables leaves its safe operating range, the system can automatically notify site technicians.

IoT devices may also measure local temperature, humidity and CO2 levels, allowing managers of a warehouse or fulfillment center to know if local environmental conditions may be negatively impacting the performance of a site machine.

Equipment monitoring is already a popular application of IoT devices in many industries, meaning that cold chain logistics professionals wanting to adopt the technology have access to a large and growing market of IoT equipment monitoring solutions.

Experts predict that the market is on track to grow quickly over the next few years, meaning that logistics companies will have access to even more options in the near future.

With enough data, businesses can also use IoT devices to lay the foundation for a predictive maintenance system. These are systems that use AI and IoT machine performance data to predict a machine’s maintenance needs.

By analyzing information collected from IoT devices, it’s possible to predict when a machine will need maintenance or repairs.

These systems can also alert managers when they predict that machine failure is imminent — allowing for an emergency shutdown that can help to prevent significant damage to a machine that may result in more expensive repairs and greater downtime.

How IoT Devices May Help to Transform the Cold Chain

With new IoT devices, cold chain logistics providers may be able to streamline their operations. A fleet of IoT devices can provide crucial information on both shipments and the equipment used to move them.

Cold chain professionals are already using IoT devices to prevent spoilage and more effectively monitor shipments as they move from location to location.

IoT devices can also lay the foundation for predictive analytics algorithms that can accurately predict delivery times or machine maintenance needs

_______________________________________________________________

Emily Newton is an industrial journalist. As Editor-in-Chief of Revolutionized, she regularly covers how technology is changing the industry

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Archives, Global Trade Daily, International Trade, Special Reports

Is It Time to Reignite North American Manufacturing?

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For the last four decades, manufacturing jobs have left North America. While this has led to lower prices for consumer goods, the supply chain issues laid bare over the last two years have demonstrated the unwritten costs inherent in this shift to foreign imports. Thousands of container ships are stranded in the Pacific Ocean, and many factories overseas are months (or even years) behind schedule. As a result, the cost of items has risen sharply for industries ranging from retail to automotive to construction, and caused brands to focus on how to reintroduce manufacturing to North America on a wider scale. 

The Plot of Every Springsteen Song  

Manufacturing jobs have been leaving North America since the 1970s, partly due to the perception that the industry has changed in ways North American workers wouldn’t like. But this is largely untrue — manufacturing jobs pay higher wages than comparable “blue collar” positions, and many come with benefits. Before the labor exodus, manufacturing jobs could support whole towns through a middle-class lifestyle. Showing the benefits of these rewarding industrial positions is North America’s best bet to reinvigorate the working middle class that fuels our consumer economy, while helping North American workers learn key technical skills for the new job market. But to do so, we’ll have to change those mistaken perceptions. 

Workers aren’t the only ones who would benefit from bringing manufacturing back. Smaller or midsize companies find themselves at a serious recruiting and production disadvantage, even before international shipping went awry. Unlike bigger companies who both have a larger stockpile of goods and talent and who can pay to expedite deliveries, smaller businesses are left adrift with their late arrivals. For these companies, investing in North American manufacturing can secure their supply chains and intellectual property while planting deeper roots in their communities. 

The Smart (Factory) Advantage  

Cutting-edge technology can give North American manufacturing the edge it needs to compete with inarguably cheaper services overseas. We are in the midst of the “Fourth Industrial Revolution” wherein the manufacturing sector integrates ideas like artificial intelligence, the Internet of Things, and Smart Factories. This increased use of machine learning and automation means the sorts of factories we can build in North America will be more productive than those overseas, while giving employees new opportunities to learn and grow. Those employees will be required more to maintain and program the machines than to assemble stock by hand, and the training they receive will also make for a more agile working class on the continent. 

Potholes and Speed Bumps  

Of course there will be challenges in reinvigorating North American manufacturing. Modern products, especially the electronics so central to our lives, require worker specialization. Even if a smart factory is automating every step, workers must know exactly what those steps are and how to ensure they’re being automated correctly. This advanced training is part of the overall cost of “scaling up” but in the end serve to illustrate the importance of manufacturing and the careers available for those who embrace the learning and development available in the industry. 

And speaking of supply, the manufacturing exodus has caused continental supply chains to atrophy, and these will need to be redeveloped to make delivery from North American factories to North American stores as fast as it is to those same stores from foreign factories. With today’s major trucker shortage, that rehabilitation is easier said than done.  

Embracing Challenges  

Many North American companies should seriously consider taking these hard but necessary steps to bring their manufacturing efforts back in-house. Not only would the investment pay off in greater independence and control over stock, but also reinvigorate industrial employment sectors in supply chains and manufacturing. While the current status quo is efficient when everything is going right, the past few years have proven how fast everything can go wrong. In those situations, the advantage lies with companies that can provide their own supply of goods and recruit and retain workers who have intimate knowledge of the products and processes.   

_________________________________________________________

Carl Schweihs is President and Chief Operating Officer of PeopleManagement, TrueBlue’s workforce management division specializing in onsite and contingent workforces. He leads three staffing businesses – Centerline Drivers, SIMOS Solutions and Staff Management | SMX, combining innovative, technology-based solutions with workforce strategy to help bridge talent gaps and prepare tomorrow’s supply chain talent for the future.   

food
Archives, Global Trade Daily, International Trade, News

Surge in Production Costs May Put Pressure on U.S. Food Industry

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The food and beverage industry has many growth drivers but also some constraints. As a non-cyclical industry, there is a constant demand for food, which helps drive some growth in the industry.  Profit margins in food production and processing, however, are becoming thinner and are facing some pressure due to the highly competitive nature of this industry. Companies are facing higher commodity price volatility, disease outbreaks and weather events, which may well affect profitability and growth.

While the U.S. food and beverage industry has fared well in comparison to worldwide industry performance during the pandemic, and insolvencies have been lower than expected, due to a surge in U.S. food production costs, companies are seeing tighter margins even as higher prices are being passed on to consumers. The U.S. food and beverage output is still forecast to grow by 1% in 2022 – much less growth than seen in the past several years, however.

The recent wave of the Omicron variant felt around the globe may affect plans for a smooth path in 2022. Many businesses, specifically those in hospitality and food service subsectors, are still struggling to absorb the shocks from the beginning of the pandemic, according to a recent food industry trends report from Atradius. The absence of tourism and travel at the height of the pandemic and new variants of COVID-19, are cause for a slow rebound to the economic recovery in that subsector.

The U.S. is currently seeing the highest food price inflation since 2008 and food prices are expected to continue to rise in 2022, at least until the supply chain issues are resolved. As government subsidies disappear, pressures will mount for the U.S. consumer.

Subsectors

-Beverages: A more positive prognosis this year, with solid growth and sufficient liquidity. Beverages have seen much innovation and product development, adding to its positive performance.

-Meat and Dairy: Remains neutral as higher operating and production costs remain high and impact profit margins.

-Food Services: This sector will be the slowest to rebound from the effects of the pandemic and is much more susceptible to future Covid-19 variants.

Trends for 2022

Food will always be a necessity and consumers enjoy cooking at home, as well as dining at restaurants. Demand will always be high in the food industry, however, it is also highly competitive. Healthy and innovative products are key for food companies and restaurants to remain competitive in this landscape.

During the pandemic, food delivery skyrocketed, and this trend will persist in 2022. Options for plant-based and health-focused alternatives continue to increase as consumers demand more choices in this area. Raw material costs and lack of skilled employees will continue to be an issue for the sector in the coming year.

The credit risk assessment remains fair over the next 12 months (for nonpayment and insolvencies). Businesses that are able to effectively pass on price increases while maintaining enough labor and production capacity to meet ongoing demand will find themselves better situated in the coming months.

Sharon Benfer is a Senior Risk Underwriter at Atradius

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Archives, Global Trade Daily, Imports/Exports

U.S. Orange Juice Prices Skyrocket on Low Output in Florida

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IndexBox has just published a new report: ‘World – Unconcentrated Orange Juice – Market Analysis, Forecast, Size, Trends and Insights‘. Here is a summary of the report’s key findings.

Instigated by low production in Florida, the monthly average retail price for 16 oz of orange juice concentrate in the U.S. peaked at $2.65 in December 2021. Although U.S. orange juice output is expected to drop, global production is forecast to rise by 11% to over 1.9M tonnes in 2022 due to high output in Brazil.

Orange juice prices skyrocketed in the U.S. on decreased production in Florida. The monthly average retail price for 16 oz of orange juice concentrate in the U.S. peaked at $2.65 in December 2021, rising by 14% from the figure of December 2020.

According to IndexBox estimated based on USDA data, U.S. orange juice production is forecast to drop by 6.5% y/y to 215K tonnes in 2022 owing to reduced output in Florida, where plantations were affected by citrus greening. U.S. ending stocks are projected to remain stable at the level of 246K tonnes this year.

Global production is expected to grow by 11% y/y to 1.9M tonnes thanks to increasing outputs in Brazil and Mexico, offsetting U.S. and EU production declines. World’s consumption is set to match production but continue its long’term downward trend.

Brazil’s orange juice production is projected to rise by 16% y/y to 1.1M tonnes in 2022. Mexico is forecast to produce 170K tonnes, 25% more than a year earlier.

EU orange juice production is set to fall by 10% y/y to 70K tonnes on reduced volumes of fruits available for processing. To compensate for the losses, the EU is projected to ramp up imports, primarily from Brazil.

Global Orange Juice Imports by Country

In 2020, global orange juice imports soared to 2.9M tonnes, jumping by 16% compared with 2019 figures. In value terms, orange juice supplies expanded rapidly to $2.1B (IndexBox estimates).

The countries with the highest levels of orange juice (single strength) imports in 2020 were Belgium (626K tonnes), France (498K tonnes) and the Netherlands (459K tonnes), together comprising 54% of the total imports. Germany (306K tonnes) ranks next with a 10% share, followed by the UK (9.4%), the U.S. (7.9%) and Canada (4.5%).

In value terms, France ($376M), Belgium ($284M) and the Netherlands ($241M) were the most significant orange juice (single strength) importing markets worldwide, with a combined 44% share of global imports.

In 2020, Belgium recorded the highest growth rates of imports, expanding purchases fourfold, while supplies into other countries experienced more modest paces of growth.

In 2020, the average orange juice (single strength) import price amounted to $704 per tonne, shrinking by -7.9% against the previous year. There were significant differences in the average prices amongst the major importing countries. In 2020, the country with the highest price was Canada, while Belgium was amongst the lowest.

Source: IndexBox Platform

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Archives, Global Logistics, Global Shippers 101, Global Trade Daily

GLOBAL SHIPPING CRISIS: NO QUICK FIX

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With spring only a short time away, the shipping and logistics crisis continues to wreak havoc throughout the global supply chain, showing little sign of relenting. While recent data from the Federal Reserve Economic Data (FRED) and Descartes Datamyne™ point to a slight softening of economic indicators (although not enough to suggest a change in the levels of disruption), U.S. import volumes continued to break records in January and amplify supply chain and logistics challenges.

The big picture reveals ports are still struggling to handle the increased import volumes, as the pandemic continues to limit consumers’ service-based expenditures in favor of durable and non-durable goods purchases. Factors such as lengthy port wait times, labor and container shortages, the backlog of containers waiting to be emptied or transported, and the uncertainty of the impending International Longshore and Warehouse Union (ILWU) contract negotiations continue to disrupt the supply chain.

With no clear indicator of when the pressure on supply chains and logistics operations will begin to lift, importers and logistics service providers (LSPs) must hold the line as they contend with ongoing supply chain challenges.

SHIPPING VOLUMES SHIFT TO EAST COAST PORTS

While November and December 2021 showed a slight decline in U.S. import container volume, January 2022 rebounded to post a record volume of 2.47M TEUs. Compared to January 2021 and pre-pandemic January 2020, January 2022 volumes increased 3% and 14%, respectively, placing further strain on an overwhelmed global supply chain.

In an attempt to mitigate the impact of record-breaking import volumes, LSPs and importers continue to shift volume eastwards, away from the major West Coast ports. Container import processing declined for the third month in a row at the Port of Los Angeles, down 1.3% in January 2022—and down 25.4% since its high in May 2021.

On the opposite coast, the Port of New York/New Jersey processed the most containers for the second consecutive month. Similarly, the Ports of Savannah and Houston experienced increases of 6.8% and 17.4%, respectively, and their highest volumes of the last nine months.

RETAIL SIGNS

The FRED retail inventory-to-sales ratio illustrates the relationship between the end-of-month inventory values and monthly sales and is an important indicator of retailers’ ability to keep goods on physical and virtual shelves to meet consumer demands.

The latest update (November 2021) showed a slight improvement—an increase of 0.02 to 1.09—and may provide a faint glimmer of hope for importers and LSPs. Unfortunately, the ratio is still hovering near historical lows, as retailers grapple with empty shelves and frustrated customers. While there’s a possibility that retailers will be able to catch up on depleted inventory positions during the “slower” winter sales months, it’s too early to tell.


THE CULPRIT: CONSUMER DEMAND FOR GOODS

The amount of goods purchased by consumers is one of the most significant drivers of heightened global shipping volumes. Accordingly, the ratio of consumer expenditures on goods vs. services is one to watch. For the latest reported month (December 2021), the goods-to-services ratio dropped 1.8% to 51.6%.

This slight downward shift may signal softer import volumes going forward; however, January container import volumes remained in the massive 2.4M to 2.6M TEU range that persisted throughout 2021, contributing to the ensuing chronic supply chain disruptions (e.g., delays, variability, etc.).

With the pandemic still dampening expenditures on service and experienced-based businesses (e.g., travel, restaurants, entertainment), consumers will continue to spend more on goods than services—but for how long?

PANDEMIC STILL A FACTOR

As the U.S. and Europe start to make the shift towards living with the Omicron variant, China has taken a different approach; Beijing’s zero-COVID strategy could exacerbate global supply disruptions. China has strict lockdown protocols in place when a local outbreak occurs. If (when) lockdowns occur, the flow of goods could slow to a crawl or stop altogether, directly impacting manufacturers that rely on parts from China to produce their goods.

With Omicron cases receding across most of the U.S., half of the states have abandoned mask mandates and other pandemic-related protocols which could lead to a temporary spike in COVID-19 transmission, intensifying worker shortages and supply chain bottlenecks.

On an optimistic note, the Omicron surge did not dampen the employment market as anticipated. A low Federal Reserve Unemployment Rate is another economic indicator of a continued strong economy and higher demand for goods. Unemployment in the U.S. rose by a nominal 0.1% to 4.0%, according to the early February jobs report. Approaching the historical non-wartime low of 3.5%, the unemployment rate is down from 6.2% in February 2021—and down from the dizzying peak of 14.7% in April 2020. In addition, a surprising 467,000 jobs were created in January, a much larger increase than the roughly 150,000 forecasted new jobs.

NEXT STEPS

With shipping capacity constrained, importers should maximize profitability in the short-term by rationalizing SKUs to ship higher-velocity and higher-margin goods. If feasible, companies should shift volumes away from West Coast ports to alternate, less congested ports to reduce wait times.

LSPs should focus on keeping the supply chain resources they have, especially drivers. Leveraging route optimization technology, shippers and LSPs can help retain drivers by building trips to reduce stress and improve drivers’ quality of life.

To build resilience into the supply chain, importers and LSPs should focus on supply chain predictability. By shifting the movement of goods to less congested transportation lanes, they can improve supply chain velocity and reliability.

Looking a bit further out, companies can mitigate reliance on over-taxed trade lines by evaluating supplier and factory location density. Although density enables economies of scale, the pandemic-related logistics capacity crisis exposed the downside of this operational strategy.

THE FINAL WORD

While the slight reduction in the personal consumption of goods might be a positive sign, other indicators, such as the retailer inventory-to-sales ratio, need to measurably improve to take the pressure off the U.S. logistics infrastructure in 2022. And with January’s container import volume at record levels and shipping and container prices skyrocketing, importers and LSPs are facing a congested and frustrating year ahead. Companies must prepare for more lasting impact by implementing tactics to address capacity constraints in the short-term, while taking steps to build long-term supply chain resilience.

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Archives, Global Logistics, Global Trade Daily, Trucking

8 Commonly Overlooked Maintenance Tasks in Modern Truck Fleets

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Maintenance is a crucial part of managing any fleet. Professionals know this going into the industry, and regular repair schedules are a standard part of most fleets’ operations, but many may not be thorough enough.

While most fleet managers understand the importance of changing their oil and rotating their tires, other maintenance tasks go overlooked. Here are eight commonly overlooked processes that should have a spot in every maintenance checklist.

1. Checking Brake Pads

Checking brake pads to ensure they have proper thickness is a standard part of many maintenance checks. However, commercial fleets often don’t check them frequently enough.

Since long-haul trucks are 20 to 30 times heavier than average passenger vehicles, they require far more force to stop. As a result, their brake pads wear out faster than even large consumer vehicles, requiring more frequent replacements. Many brake pads can also be difficult to see on a vehicle with multiple axles, so it’s easy to skim over this process.

Commercial fleet repair professionals frequently see truck brakes worn down to the brake caliper. Considering how much costlier caliper replacements are compared to brake pads, fleets should check their brakes more often.

2. Battery Testing

Another maintenance task that often goes overlooked in commercial fleets is battery testing. While most maintenance stops include checking to ensure electronic components are working correctly, they don’t check the battery itself. This is insufficient, as there are often no external warning signs of battery life draining until it’s entirely dead.

While truck batteries last several years, long-haul shipments can take their toll on this equipment faster than some may expect. For example, vibrations break down internal battery components, so traveling over miles of roads in poor condition will deteriorate batteries. To avoid any unplanned downtime, every maintenance check should involve testing batteries and, if necessary, replacing them.

3. Considering Idle Time

Any fleet manager or driver knows the importance of changing their trucks’ oil. However, many fleets may take too long to check and change their oil because they don’t consider truck idling time.

While newer vehicles can go 7,500 to 10,000 miles between oil changes, driving isn’t the only thing that works the engine. Spending a significant amount of time idling, as most commercial trucks do, also wears out the engine and its oil. Despite this degradation, many fleets overlook it because they go by what the odometer says, which doesn’t account for idling.

To account for idle time, fleets should change their oil more frequently than they would normally. Frequent checks can help determine when oil changes should happen. Internet of things (IoT) sensors can provide even more insight, alerting drivers and managers when to change their oil.

4. Preventing Corrosion on Underride Guards

Another maintenance task that’s easy to overlook is checking for rust on underride prevention guards. Since these parts don’t actively affect a truck’s performance, they often don’t come to mind when inspecting components for corrosion. Despite that, enough corrosion could make them weak, ultimately not preventing underride accidents if a crash occurs.

Workers should always inspect underride guards closely to ensure they’re not corroding, including looking at their underside and back. If there’s some rust, workers can use a biodegradable, non-acid-based rust remover. Acid removers can be expensive and cause disposal problems, so it’s best to avoid them.

5. Refrigerated Trailer Maintenance

Fleets that use refrigerated trailers should also be careful not to overlook their refrigeration systems. If these trailers start to fail, they could lead to spoiled products, costing companies thousands and costing fleets their reputations. This maintenance can also be easy to forget about since refrigerated trailers carry unique concerns that may not be immediately apparent.

Moisture can break down insulating materials faster than normal, so teams must check for leaks and moisture inside the trailer. Similarly, they should look for any punctures or tears in the walls and ensure the trailer doors seal properly. IoT temperature sensors can help inform these inspections, alerting workers of irregular fluctuations or rising internal temperatures.

6. Testing Collision Sensors

Many newer trucks come with sensors to detect potential collisions and keep drivers aware of their surroundings. Things like automatic braking and lane departure warning have significantly reduced collisions, so they’re becoming increasingly popular. As drivers rely more heavily on these systems, fleets must ensure they work properly.

The sensors themselves are the most important part to check with these systems. If they get dirty, misaligned or broken, they may not detect what they’re supposed to accurately, potentially leading to crashes. Consequently, every maintenance stop should include checking these sensors to ensure they’re safe.

Cleaning sensors and cameras will help them achieve maximum accuracy. Workers can also pull diagnostic trouble codes (DTCs) from the truck’s onboard computer to see if there are any issues.

7. Looking for Leaks in Fluid Hoses

Most maintenance stops involve checking all of a vehicle’s fluids. Part of that inspection that may go overlooked is checking the fluid hoses, not just the reservoirs. A truck may have plenty of coolant, wiper fluid, oil or other fluids, but a dipstick test may not reveal smaller leaks in the hoses that could cause problems down the line.

Fluid checks should go beyond measuring levels with a dipstick. Even if these tests reveal a reservoir is full, maintenance workers should check under the truck to see if any hoses have leaks. If they do, they should replace them immediately, as even a small leak could cause substantial problems after a long drive.

8. Downloading Software Updates

Today’s trucks are technological marvels featuring a wide array of digital technologies. Since this abundance of technology is a relatively new trend, many fleets forget that proper maintenance now includes some IT considerations. More specifically, fleets must ensure all of their trucks’ onboard software is up-to-date.

Some devices may have an option to automatically download updates, which fleets should enable. If that’s not available, drivers should regularly check for updates and download them as soon as they’re available. If one driver notices a new update, they should inform the whole fleet to everyone can ensure their trucks feature the latest software.

Since 86% of commercial fleets today use telematics, they should apply this to these devices as well. Any IoT devices need regular software updates to stay safe from cybercrime and reach optimal performance.

Don’t Overlook These Maintenance Steps

Maintenance is one of the most important parts of running a fleet. While these eight steps are not the only parts of a sufficient maintenance stop, many fleet managers overlook them, leading to unnecessarily high costs and risks. Incorporating these tasks into maintenance schedules will keep fleets efficient and safe.

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Archives, Global Logistics, Global Trade Daily, Ocean Carriers

HOW TO PREPARE FOR THIS YEAR’S CHALLENGES AND OPPORTUNITIES

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Twenty twenty-one was a difficult year in global logistics due to ongoing volatility. We worked alongside customers navigating the Suez Canal block, hurricanes and cyclones, port and terminal closures due to COVID-19 outbreaks, customs and trade changes, labor shortages and more.

I’ve been in the industry since 1997 and I have never seen this level of continual disruption across the entire supply chain for this length of time. However, with this year’s volatility, I was also given a front-row seat to a new level of hyper collaboration–including individuals going out of their way to help each other, more strategy sessions between shippers and forwarders, and continually leaning into historical data and current market insights find smarter solutions.

As we begin another potentially volatile year, I wanted to provide key strategies for global shippers to consider.

SEEK CREATIVE SOLUTIONS ACROSS THE ENTIRE SUPPLY CHAIN

At year-end, we typically see a jump in demand as shippers meet quarter-end quotas and prepare for the upcoming Lunar New Year, during which many factories in China shut down. However, in early 2022, shippers are also juggling potential delays from the Winter Olympics in Beijing throughout February. All of this is amid a strained supply chain market, which will take time to ease.

As you prepare for the year ahead, consider what different modes, trade lanes or inland transportation strategies you can implement in your supply chain. For example, while it may not be feasible to transport 100% of your freight via air, air freight continues to be the fastest way to replenish inventory, so prioritizing specific freight can help keep cargo moving. In fact, C.H. Robinson is running on average 15-17 air charters a week globally for customers looking to avoid the congested ocean ports, and we don’t expect that number to decrease in the near future.

Additionally, as demand and rates will likely continue to stay elevated, less-than-container load (LCL) shipping is a strategy to consider. Typically, space for LCL shipments is easier to find especially in a constrained capacity market, since you are only looking for some container space versus an entire empty container. We also continue to see large cost savings with expedited LCL services compared to today’s airfreight environment.

Keep in mind, LCL shipments are not going to bypass congestion at the ports, so inland strategies need to be considered. Currently, many ocean carriers are looking to move more interior point intermodal cargo versus focusing on port-to-port. We were able to help increase the flow of cargo inland for our customers by sending more 53-foot containers so cargo on the smaller 40-foot ocean containers can be efficiently consolidated in the larger ones and loaded onto trucks or trains to be taken to inland destinations more quickly. Overall, this increased our container capacity by 25% in Southern California.

Indeed, looking at only one portion of the supply chain or one mode can only get you so far. It’s important to consider all areas to keep your cargo moving.

UTILIZE DATA AND TECHNOLOGY

Although 2021 rendered a lot of unique situations—and 2022 may do the same—historical data can still help us find solutions. Finding common trends and themes in your cyclical data can give you an information advantage to make smarter decisions for your supply chain.

Additionally, the right technology tools can give you the visibility and predictability you need to adjust. For example, with the ongoing port congestion and delays, C.H. Robinson enhanced the vessel routing and tracking features within our transportation management system, Navisphere, to increase the efficiency and accuracy of port ETAs and automatically send updates if changes were discovered. This is important because ocean shipping is only one piece of the equation. Having visibility to changes in real-time gives our team and customers a chance to react and adjust other tactics down the road.

LOOK TO GLOBAL TRADE OPPORTUNITIES

It’s unclear whether we’ll see a reinstatement of certain Section 301 China duty exclusions. At press time, the House and Senate had yet to reach consensus on the legislative proposals. If passed, it would be effective through the end of this year.

While congestion and shortages continue across transportation modes, one area where you may find opportunities for savings is in your global trade strategy. Since each country’s trade policies are unique and can change, it’s important to have regular meetings with your trade advisor to break through the complexity of your total landed costs, including understanding your costs to import, identifying duty recovery possibilities and reducing your duty exposure via trade agreements.

For example, our team has helped shippers identify thousands to millions of dollars in tariff refunds alone. If you import into the U.S., you can easily check for potential savings and refunds with our online Tariff Search Tool—www.chrobinson.com/en-us/resources/insights-and-advisories/trade-tariff-insights/hts-search/—and, if you’re sourcing from other countries, our team can create a customized sourcing report sharing potential cost savings or avoidance opportunities.

OCEAN FREIGHT UPDATE: GLOBAL

Forecasting remains essential. For this new year, we strongly encourage forecasting six to eight weeks minimum as a best practice. Considerations for staying consistent include:

-Prioritization

-Variability in SKUs/parts

-Smoothing volumes week-to-week

It’s important to be flexible in all facets of a shipment life cycle including:

-Carriers

-Equipment

-Modes

-Routing

OCEAN FREIGHT UPDATE: NORTH AMERICA

-Port congestion continues to strand vessels and equipment. In Los Angeles/Long Beach (LALB) there are more than 90 vessels with an average 18-30-day dwell. Seattle and Tacoma are experiencing an average of 12 days to berth, while Savannah still has more than 20 vessels waiting at anchor.

-South East Asia transshipment hub ports are also impacted, causing heavy delays on non-direct services via Asia.

-Overall capacity is affected by ongoing port congestion in many trade lanes. Vessels are oftentimes delayed back to their origin, missing scheduled port calls to unload empty equipment, and pick up new laden exports to the United States.

-Schedule reliability and operational constraints are forecasted to continue.

OCEAN FREIGHT UPDATE: OCEANIA

-The supply chain in Oceania continues to be negatively impacted by the global supply chain disruption. Terminal congestion and suspension of pro forma berthing windows are having an impact on shipping schedules.

-Our teams are exploring diverse options in moving longstanding containers to help customers mitigate significant delays.

-The impact of port delays around the world is likely to keep freight costs high on all outbound trades.

FINAL THOUGHTS

While there is no one-size-fits-all approach, the above options provide shippers with strategies to help mitigate delays and identify potential savings as we begin another potentially unpredictable year.

Shippers have had to become increasingly nimble and informed over the past year, and now in 2022, it’s critical to remain agile, be open to alternative solutions and stay informed on the latest market insights. 

________________________________________________________________

Mike Short is president of global forwarding at C.H. Robinson. The Eden Prairie, Minnesota-based company solves logistics problems for companies across the globe and across industries, from the simple to the most complex. With nearly $20 billion in freight under management and 18 million shipments annually, C.H. Robinson is one of the world’s largest logistics platforms. Their global suite of services accelerates trade to seamlessly deliver the products and goods that drive the world’s economy. With the combination of our multimodal transportation management system and expertise, they parlay an information advantage to deliver smarter solutions for more than 119,000 customers and 78,000 contract carriers. Learn more at www.chrobinson.com.