“If you are in the logistics industry, then you’re in the right place. Every week I’ll be bringing you the latest insight from our profession. This is not just the latest news, but how it will influence your logistics, so you can stay one step ahead and make the most of it.
Let’s work smarter, not harder.”
David Buss, CEO of DB Schenker, USA
New Shipping Legislation
Legislation aimed at restraining the power of the container shipping industry, which has seen prices increase during the pandemic, ran through the House last week and could head to the Oval Office for a signature as soon as this week.
The administration believes the law, which is designed to slash the bargaining power of container shipping companies and their industry alliances, will address a critical bottleneck in global supply chains — an issue economists widely believe is a key factor driving inflation.
That said, it’s not that clear cut. Many professionals in our industry caution that supply chain fixes for inflation can be elusive and that interfering with the logistical channels can have unexpected consequences.
Whether it’s the right economic call or not, is not for debate here – the reality is that it is going through the legal system right now. What is up for debate is how you react to this news, and how you forward plan your supply chain considering possible changes on the horizon. Do you have the right logistics partner advising you?
Your Supply Chain is Board Room Important
In March 2020, the arrival of the COVID-19 pandemic delivered global supply chains a rude awakening. More than two years later, amid China’s strict zero-COVID policy and the ongoing fallout from Russia’s invasion of Ukraine, it’s not new news that supply chains face their most acute crisis in decades.
In a post-pandemic world, supply chain and logistics will make or break profits. As businesses try to acclimatize the centrality of logistics to their operations, both technology adoption and capital allocation have become top of the agenda. Changes forecast to take years—and even decades—to occur are happening in a much shorter time.
Industrial surveys have found over and over that U.S. businesses want to “reshore” substantial parts of their operations back home. The appetite for reshoring is acute in critical sectors like pharmaceuticals, semiconductors, and defense hardware, and Congress is paying attention (see story above).
Businesses are prioritizing supply-chain visibility and resilience more than ever.
If you are a supply chain professional, you should have a direct line into your board room. The profitability and long-term viability of your busines could rely on it. When that call comes, make sure you have one of the largest supply-chain companies backing you up. With over 150 years of experience, we’ve weathered a recession or two.
Secure Your Cargo
The latest data from Verisk Analytics Inc.’s CargoNet suggests that cargo theft is on the rise. Higher-value goods such as vehicles and electronics are targeted, as inflation pushes up the cost of goods in the supply chain.
Estimated cargo theft losses in the United States and Canada jumped to $19 million in the first quarter of this year, a 73 percent increase over the prior-year period even as the number of reported thefts remained unchanged at 319.
The average loss value in the first quarter was $232,000, a 68 percent increase over the same period last year and more than double the average loss value
Companies can take steps to reduce the risk of theft, including installing tracking technology and hard-locking devices, using teams of drivers, and avoiding theft hotspots. When you use DB SCHENKERsmartbox, you get unparalleled transparency, security, and savings; including the monitoring of cargo conditions, increased lead-time and GPS real time tracking via web (24/7)
US is Stepping Up International Trade Negotiations
In the past week the US has been stepping up negotiations on international trade.
US Trade Representative announced May 25 – under enforcement action of the United States-Mexico-Canada agreement – dispute settlement consultations with Canada over the handling of its dairy tariff-rate quota allocation measures. There are claims of allocation denial to eligible applicants and failure to fully allocate its annual dairy quoters in a timely manner.
On the other side of the globe, US Commerce Secretary Gina Raimondo said Tuesday that the US is mulling adding more Chinese firms to the government’s banned entity list, which effectively blocks access to US exports. The US says some firms on the blacklist have aided China’s military operations by providing resources and know-how.
US firms are barred from selling some types of technology to Chinese companies because they’ve been designated as threats to national security by the Commerce Department’s Bureau of Industry and Security.
To stay ahead of the upcoming changes, shippers should use a leading global logistics company that offers single source comprehensive risk management & transportation compliance solutions, including cargo insurance, customs bonds, trade documentation, and compliance.
What Automotive Manufacturers Can Learn From Big Tech Companies
“It takes 2,500 parts to build a car,” Peter Hasenkamp, former head of supply chain strategy for the Tesla Model S, once said, “but only one not to.”
Latest research suggests that in 2021, automakers were obliged to cancel plans to build ten million cars. It is forecasted that they will cancel a further seven or eight million in 2022 and four million in 2023, as demand for semiconductors outstrips supply by 10 per cent.
How can business leaders prevent this from ever happening again? Very simply, they need to transform the way they interact with their suppliers. That’s every mission-critical company in their supply chain. And not just the semiconductor supply chain — while the shortage of semiconductors may be keeping them awake at night right now, in the future their sleep may be interrupted by a shortage of some other critical components — such as, batteries or tires.
Interestingly, when the semiconductor crisis struck, Apple, Dell, and large technology companies immediately swung into action, operating 24/7 procurement and supply chain war rooms. Unlike the automakers, they had learned from the last semiconductor crisis in 2017 and left nothing to chance. To fix their current situation, the leaders of automakers (and other companies impacted by the crisis) should take a series of urgent Big Tech-inspired steps:
- Establish their own bill of materials for semiconductors
- Make a non-cancelable and non-returnable commitment to suppliers for an 18-month to 24-month time horizon
- Ensure their suppliers earmark specific components for their sole use
- Collaborate with suppliers to track and trace every order
And, ever so importantly, ensure that parts that are produced, are delivered effectively and efficiently to where they are needed. That requires a global, fully integrated supply chain that can operate over all modes of transport, so your supply chain is flexible to the present economic and political trends.
And what goes for automakers also goes for many industrial companies because they too rely on semiconductors in their products. As the U.S. government noted in its “Briefing Room” blog, the paucity of semiconductors has not only been affecting the automotive industry, it has also been “dragging down the U.S. economy” and “could cut nearly a percentage point from GDP growth.”
Pay Your Suppliers on Time
Malcolm Harrison, the CEO of the Chartered Institute of Procurement and Supply has come out and said it. Too many large businesses are holding back on paying suppliers, forcing some out of business.
Harrison says, “Too many big companies have imposed unfair payment terms on suppliers who are grateful for the business, or they have taken many months to pay, which can result in bankruptcy for their smaller suppliers.”
Writing in a supply chain supplement that appeared in the UK’s Times of London newspaper, Harrison went on to say that strong relationships with suppliers has never counted for more.
He continued: “After the shock and turmoil of the past two years what has changed is a greater focus on resilience in supply, and not just cost savings.
“A built-in contingency that can flex quickly to handle fluctuations in demand, including switching to local supply or building up additional stock, has now become the strategy for many organizations.
“Developing the right resilient approach will depend on individual business objectives. For some, it can mean a clear onshoring or offshoring strategy, and not relying on only one supplier or one market for an essential component.”
And of course, as suppliers change, or become more fluid based on supply, your supply chain becomes ever more complex. That’ when you need to call in the professionals.
Are the Familiar COVID-19 Logistics Complications Just the Beginning?
We all know that the supply chain is a delicate and forces such as COVID-19 can cause mass disruption. But what if COVID-19 was just the short term, dress-rehearsal for more disruption? That’s the premise of the information and analysis in the Yale Environment 360 article by Austin Becker, a maritime infrastructure resilience scholar at the University of Rhode Island.
In Becker’s words, COVID-19 is “a temporary problem,” but climate change is “long-term dire. Climate change is a slow-moving crisis that is going to last a very, very long time, and it’s going to require some fundamental changes. Every coastal community, every coastal transportation network is going to face some risks from this, and we’re not going to have nearly enough resources to make all the investments that are required.”
The article suggested that climate change will further strain and could even break the supply chain. Rising sea level poses the biggest threat, as it will disrupt the existing coastal supply chain infrastructure. And there is more, there are likely to be more supply chain disruptions due to extreme weather events. We’re already seeing hurricanes, floods and wildfires that more intense, severe or long-lasting than they were a generation ago.
Which leads us nicely to…
DB Schenker Plans to Operate a Zero-Emission Autonomous Coastal Container Feeder
We just revealed plans to operate an innovative zero-emission coastal container feeder in Norway. The fully electric vessel has a unique design, making it the first of its kind in the world.
Along with our strategic partners, we have taken the first steps in an ambitious joint project to replace the traditional feeder vessels utilized along the stretch of the Norwegian coastline around Ikornnes and Ålesund. The new autonomous and electric, short-sea container feeder leverages Naval Dynamics’ NDS AutoBarge 250 concept that was developed in partnership with KONGSBERG and Massterly.
The vessel will operate between Ekornes’ own port, Ikornnes, and the port of Ålesund, which serves the main ocean freight ports in Europe. The ship will complete the 43-km (23-NM) journey within three hours, at a speed of 7.7 knots. The vessel will be 50 meters long and will be able to carry 300 deadweight tons of cargo. It is designed from the keel up for autonomous and zero-emission operation. It will run without a crew but will be monitored and controlled by staff at Massterly’s Remote Operation Center (ROC), whose team members include certified navigators and naval engineers.
The planned two-way data communication solution between the vessel and the ROC is destined to be another game-changer in the ocean freight sector.
The benefits here will be numerous, and include zero emissions, faster and more efficient transport, and reduced traffic on roads. As they lead the way to climate neutrality, the parties’ common interest is to unveil this pioneering vessel in Norway and then take the next crucial steps forward by obtaining approval from the Norwegian Maritime Authority, and possibly governmental incentives for the sustainability and technology aspects.
Exciting times when technology can truly advance us closer to environmental goals.
Q1 Updates | Week 17
Reshoring and Nearshoring: A Practical Approach
I’ve written a couple of times about the trend we’re seeing in manufacturing for reshoring and nearshoring, so I thought it was time to make that a little real. Here is a snapshot on the strategies some of our clients are using to achieve this.
1 – Map your offshore supply chain
Identify all tier 1 and critical tier 2 and tier 3 offshore suppliers. While this mapping should have already been done, it is still not too late to start. It probably needs at least an update. This insight provides a good visual clue as to the actual locations of your suppliers, allowing you to be one step ahead when delays could be forthcoming.
2 – Reestablish relationships with previous suppliers of offshored products
Who have you worked with previously, and would you consider working with them in the future? In fact, those suppliers may have already been in touch, sensing a sales opportunity given the supply chain turmoil.
3 – Identify new sources of supply
The pandemic and related economic fallout has changed the supplier landscape. Your previous sources may have changed their business model or even closed their doors. Part of a reshoring and homeshoring strategy is to find new sources of supply.
4 – Commit to a new, long term supply strategy
Reshoring and nearshoring is about making a new strategy. It takes effort in time, energy, and money. By learning from the past 2+ years, you can build a stronger supply chain. Build in standard operating procedures and quality success factors into these relationships.
Supply Chain Technology Trends We’re Going to See This Year
Technology is a cornerstone of our industry. Here are three trends I expect to be remain critical as we continue in 2022:
1 – Shift to more automation in the warehouse and hub space
Companies will be leveraging technology like telematics that can give them real-time data to address ongoing labor shortage issues as well as automate key processes. One process is inventory management and tracking the flow of goods in and out of facilities. This has a cascading effect on driver wait time and can minimize human errors and streamline the accounting of goods being transported from site A to site B.
2 – The need for better quality data (not just more of it)
We will all be looking for actionable information that can exchanged and used to collaborate with all partners across the supply chain—shippers, transportation & logistics providers, 3PL, etc.—to help make more informed decisions.
With longer cargo wait time on docks, capacity issues on multiple modes of transportation, and the increasing costs associated with each mode, we need want better data—as opposed to more data—on their shipment of goods. Data such as utilization data or stationary time of cargo, captured from telematics devices, edge computing solutions and third-parties (such as ocean and flight data) can provide contextual and actionable insights when integrated into management solutions.
3 – Cold chain monitoring will continue to be critical
Have you seen our latest cold storage facility in Indiana? This is cutting edge. In the past year, the logistics behind COVID-19 vaccine shipping have driven new innovations in cold chain monitoring solutions designed to ensure the quality and integrity of vaccine shipments. We can expect to see new improvements in cold chain technology, including devices with better battery life, sensors delivering real-time data on light, temperature, humidity and shock to monitor perishables like food, pharmaceuticals and biomaterials with greater environmental granularity to ensure compliance with regulations.
I continue to write about technology in logistics, because this is the critical factor for so many of our clients.
Q1 Updates | Week 16
China – COVID – Your Supply Chain
Concern is growing that the spread of COVID cases and city lockdowns in China will have massive downstream effects for global supply chains globally that could dwarf previous disruptions since the start of the pandemic.
Last May, the huge Yantian container terminal at the Port of Shenzhen throttled down to 30% of normal productivity for a month to stamp out a handful of positive cases there.
The difference this time is that an entire metropolis — and highly interconnected global trade center — is essentially shut down. Not since the initial 2020 COVID-19 outbreak in Wuhan have lockdowns been this extensive in China.
Spanish financial services firm BBVA predicts Chinese authorities will stick to the “zero-COVID” strategy and lockdowns until at least June. Other China observers say it could take even longer to meet China’s infection standard.
Most warehouses and plants are closed, nine out of 10 trucks are sidelined, the port and airport have limited function, shipping units are stranded in the wrong places, and freight is piling up.
The downstream effects for global supply chains are massive. If I had one piece of advice for clients today – irrespective of whether their supply chain is physically in China — it’s the ability to forward plan. Speak to us today for more information.
What Do We Want from Supply Chains?
As we move to a post-pandemic supply chain, it’s time to start asking some serious supply chain questions. In the past 2-years, logistics professionals have been focused on crisis management, some of which get to the core of what supply chains are even about.
What do we want from supply chains, and what do we want most?
Should companies focus on delivering same day or on being more environmentally friendly?
Should a chain be more resilient and able to withstand disasters, or should it be efficient above all else? Should it be shorter? Closer to home? More flexible? Can it be all those things at once?
Key to these questions is the subject of visibility. Survey responses in the Business Continuity Institute’s 2019 Supply Chain Resilience Report indicate that 57% of global companies surveyed likely lacked complete visibility into their supply chain – this is before the pandemic – and another 20% were unsure if they had it.
But let’s get real, not all companies have a strong incentive to be more transparent. Each individual link in a chain has different goals and makes decisions in its own best interests. This is a major obstacle to sharing data within the supply chain.
As I have already noted, Blockchain can be used to improve transparency by streamlining transactions. And once good data are available and accessible, they also can be shared selectively.
Bottom line – we have the technology. We have the need. Now let’s ask the serious questions.
Q1 Updates | Week 15
Who’s Driving the Trucking Industry’s Supply for Drivers?
The trucking industry needs an additional 80,000 commercial truck drivers to meet consumer demand. What are we doing about it?
The need for a strong, stable, and safe trucking workforce is not in contention. The facts are, however, that truck drivers are retiring at a faster pace than new members are entering the workforce, further widening the gap between need and availability.
The White House went into overdrive at an April 4 event to showcase the administration’s progress in easing the truck driver shortage and unclogging supply chains. It was a photo shoot.
The Biden administration is urging employers to use the Department of Labor’s Registered Apprenticeship Program for truck drivers to attract a next generation trucking work force. That’s a great start.
But we need more. And we need it now.
What do you think should be done to push progress on driver shortage?
US <> China Route Update
The two-phase lockdown in Shanghai that was meant to end April 5 is being extended indefinitely as the latest Covid outbreak is not contained and a massive testing campaign continues.
Although Shanghai’s air and ocean ports remain open, labor shortages are slowing operations. In addition, the availability of goods has dropped significantly as manufacturing and warehouses are closed. Trucking is increasingly unavailable because of quarantine rules and travel restrictions.
With limited goods available to ship, air cargo demand out of Shanghai is decreasing quickly.
Congestion is growing at Shanghai’s ports and at nearby alternatives like Ningbo. And though the outbreak in Yantian last May sent rates climbing just days after the shutdown began, transpacific ocean rates have remained stable, so far.
We’re predicting a volatile availability in the short term, so speak to one of our professionals if you are planning shipments on this route .
Q1 Updates | Week 14
Lifting of US/UK Tariffs
The United States, this past week, reached a deal with the United Kingdom to partially lift tariffs on steel and aluminum exports from the UK beginning June 1. The deal eases duties imposed in 2018 by former President Donald Trump. Trump imposed 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports as part of a strategy to prioritize domestic production and address an overcapacity of steel in China.
The deal also requires UK-based steel producers owned by companies in China to undergo a financial audit to evaluate whether there are any market distorting practices that “would materially contribute to non-market excess capacity of steel,” according to a statement. Aluminum shipments are subject to novel “smelt and cast” provisions, and producers must prove that products contain no aluminum from China, Russia, or Belarus.
More Tariffs – Tit for Tat
The 2018 tariffs on US goods like whiskey, peanut butter, and jeans were a retaliatory response to the Trump administration’s taxes on steel and aluminum from the EU, which at the time included the UK.
Once the US lifted its tariffs (see above), the British government said it would end the 25 percent tariff that had been imposed on these goods. The deal goes into effect on June 1, 2022, establishing the return of duty-free trade in spirits across the Atlantic.
The news provides additional relief for US producers who say that the 2018 tariffs caused a “significant slump” for exports in 2019 and 2020. EU tariffs impacting whiskey were lifted in January 2022, and in March 2021, an agreement between the EU and US lifted tariffs for US wine, along with certain other domestic spirits.
Q1 Updates | Week 13
Cybersecurity and Your Shipments
As if we needed reminding, data is ever critical for the smooth operations of our supply chains. Last week I highlighted that The Administration is focused on digital infrastructure to connect the supply chain with the launch of Freight Logistics Optimization Works (FLOW) – see the details below.
There have been recent ransomware attacks on the U.S. supply chain which are undermining national security (according to a U.S. Customs and Border Protection intelligence bulletin last week). Hackers and ransomware groups are targeting American logistics and shipping companies, the bulletin states, and the ongoing attacks threaten to cripple the already strained supply chain, limiting customs enforcement capabilities and undermining national security.
Ransomware persists to be the most common and destructive form of cyber-attacks, allowing malicious entities to threaten data leaks on illicit markets, and expose information on critical infrastructure.
There are proactively two strategies that should be considered as a shipper. Firstly, cybersecurity is a measure that must be taken at all levels of the supply chain, so ensure you have a corporate technology plan in place. Secondly, prepare for delays that are outside of your control and plan your supply chain accordingly.
Russia’s War on Ukraine: Air Cargo Update
Russia’s invasion of Ukraine has added another obstacle for air cargo-reliant supply chains already challenged by climbing rates and limited capacity.
Rerouted cargo flights and climbing fuel costs have resulted in higher surcharges for shippers and further flight cancellations as some services between Europe and Asia became economically unviable for carriers.
Some air cargo carriers are still traveling freely through Russian airspace. Airplanes for China Southern and Air China were doing so last week. But at least 11 of the world’s top 25 cargo airlines, according to the International Air Transport Association’s (IATA) 2020 rankings, and smaller operators have made some sort of adjustment due to the war.
What does that mean? As a shipper you need to have a logistics partner that can service your needs with multiple carriers and modes of transport.
Q1 Updates | Week 12
Stop Complaining – Start Strategizing
There is a lot of talk put behind complaining how badly the supply chain has been affected by COVID, the Russian/Ukraine conflict, labor shortages, blocked canals, lack of containers etc. etc.
Maybe it’s time to learn from these ‘unprecedented’ times. Maybe the supply chain is distorted and it’s not returning to how it was.
For decades, some of the best manufacturing were driven by lean manufacturing – or JIT (just in time production). Keep your inventory as low as possible and get everything you require delivered as you need it. This reduces costs and that’s a great thing. Except for then it isn’t.
When supply chains are not predictable; when there are a multiple of factors outside of regular control, lean manufacturing falls apart. If that one chip set that is needed to manufacture a car is delayed, it doesn’t matter that the other 2,000+ chips hit the manufacturing plant on time.
Sometimes, extra inventory on hand is quite helpful. So that’s one thing that supply chain professionals must think about: Do the inherent efficiencies of having just-in-time justify the issues when a lot goes wrong?
Administration Announces New Initiative to Improve Supply Chain Data Flow
The White House is focused on addressing supply chain vulnerabilities and congestion, working to speed up the movement of goods, and lower costs.
As I have covered previously, the Bipartisan Infrastructure Law (BIL) is now making a generational investment in our ports, highways, and other parts of our physical infrastructure, which will help speed up the movement of goods and lower costs.
Next, The Administration is focused on digital infrastructure to connect the supply chain with the launch of Freight Logistics Optimization Works (FLOW), an information sharing initiative to pilot key freight information exchange between parts of the goods movement supply chain.
FLOW includes eighteen initial participants that represent diverse perspectives across the supply chain, including private businesses, warehousing, and logistics companies, ports, and more. The aim is to develop a proof-of-concept information exchange to ease supply chain congestion, speed up the movement of goods, and ultimately cut costs.
Q1 Updates | Week 11
You probably heard the news about Meta. Mark Zuckerberg announced that Facebook would be changing its name. Of course, this is more than a change in name, this is a strong message as to the direction of technology – and that’s something for us all to take interest in.
How does the Metaverse change the logistics industry?
Maybe the first thing to clarify is what the Metaverse is. Simply put, it’s the technologies that make up a virtual world that continues to exist when you’re not part of it. There are two major technologies to be aware of – and distinguish. There is virtual reality (VR) where you are fully emersed and augmented reality (AR) when a technology is superimposed on the real world in your view. Both VR & AR are accessible through PCs, game consoles, phones and of course headsets.
The reality of virtual reality is that it’s already in our industry. Here at DB Schenker, we have been trialing, developing and using augmented reality for over 4-years through a joint Innovation Lab with Cisco.
How will the Metaverse change our industry? The answer is of course unknown, but we what I see is a world of opportunity where we can increase efficiencies, reduce costs, and give better service and visibility to our customers. And that’s exciting.
Blockchain in the Supply Chain
While we’re focusing on technology – let’s demystify blockchain and how that is changing our industry. The Blockchain was invented alongside cryptocurrencies for powering and tracking that technology. Transactions are organized in blocks and chained to each other through cryptography — hence the name “blockchain.”
In supply chain management, blockchain offers full traceability of goods as well as authentication measures. As a result, supply chains can better monitor quality or products as well as data.
The most important characteristic of blockchains is their decentralized nature. The ledger is distributed to thousands, sometimes millions of different computers around the world. This decentralization means that there is no single entity that governs the blockchain. As such, transactions are made peer-to-peer, without the need for a third party to allow them or provide escrow.
Again, this is not new to DB Schenker, we have had various partnerships and success stories in the development of blockchain over the past few years. More importantly, what does that bring our customers?
1 – Decentralized Structure – because all the assets are created following a consensus algorithm, this gives the ability to the users to transact directly with each other and retain full ownership of their assets.
2 – Improved Security and Privacy – because the ledger is distributed to thousands of different participants, hackers are unable to exploit a single point of failure. Additionally, while entirely transparent, the distributed ledger is also pseudonymous. This means that transactions aren’t linked to the user’s identity, providing additional privacy.
3 – Reduced Costs – especially when compared with traditional financial transactions via banks. This makes them incredibly versatile for international money transfers, as their borderless nature doesn’t incur any additional conversion fees.
4 – Visibility and Traceability – because the blockchain ledger is entirely transparent and free for anyone to review. A single transaction can be traced back to its origin, and users can investigate its source. This is incredibly useful in situations where tracking is essential, such as the logistics industry.
I’m sure we’re going to be greater application and use in our industry as blockchain becomes more understood .
Q1 Updates | Week 10
The Ukrainian Crisis and Logistics
The Ukraine crisis has created logistics and supply chain changes that are being felt globally. As with any crisis, information is often scarce to start with and of course there may be incorrect information being disseminated. Given the fluidity, uncertainty, and unrest this situation has created, things are anything but predictable, but here’s what we can say is happening.
- The price of oil and gas is rapidly increasing – shippers and carriers are implementing contingency plans.
- Port operations in Ukraine have ceased, which in turn could disrupt vital shipping routes that carry much of the world’s wheat and other agricultural products
- Several global logistics and freight transportation services providers have halted service into and out of both Russia and Ukraine.
- Airspace restrictions are adding logistical complexity and cost for the air cargo sector.
- There is a reduction in air cargo capacity – particularly with heavyweight and outsize cargo that don’t fit well in regular cargo jets. Ukraine-based Antonov Airlines is continuing some operations with five AN-124 super-jumbo jets, but two of the aircraft plus a smaller freighter were not able to escape before hostilities erupted. And the company’s behemoth AN-225, which was undergoing repairs, was reportedly destroyed.
- With many industries previously relying on Russian parts/products for their own manufacturing, these are now being sourced from alternative countries, and that changing dynamic will alter logistics routes and assets.
We continue to have a large team analyzing the many factors of this crisis so we can provide contingencies for our customers.
Q1 Updates | Week 9
U.S. Department of Transportation report examines efforts to alleviate nation’s supply chain woes
A report released last week, entitled “Supply Chain Assessment of the Transportation and Industrial Base: Freight and Logistics,” presents steps and approaches, which can be taken by the federal government, Congress, states, and private companies to augment supply chains, both presently and in the future.
In the report, DOT made it clear that the nation’s economic strength and quality of life are dependent on the safe and efficient movement of goods both throughout its borders, as well as beyond. And it added that, for supply chains to perform well, they need to be successful in three key areas: transportation, production, and sourcing.
While the report’s findings do not as serve as an immediate solution to the supply chain problems encountered by many today, there are various components of the report’s findings and recommendations that have strong value.
I believe that this is an excellent outline for the next decade, and beyond. If these objectives can be met, then the supply chain that we operate as part of will be in a very strong position.
A thought about sustainability
Finding a way to deliver goods in a sustainable way to mitigate climate change is one of the major challenges that also is creating new opportunities for logistics companies and the companies we support.
As pioneers of innovative logistics solutions, we at DB Schenker are committed to becoming the leading green logistics provider. We are convinced that our success is about more than just our performance — it’s about our social, environmental, and economic impact.
Our goal is to reduce specific CO2 emissions by 30 percent by 2020 and CO2e emissions by 50 percent by 2030 compared to 2006. Currently, we offer Eco Solutions for every mode of transportation, allowing customers to reduce or compensate for CO2 emissions along the entire supply chain.
But there is more to do. The sustainable movement of goods requires a variety of approaches, from more accurate forecasting to re-shoring production and vertical integration. The solutions range from improvements in infrastructure to deployment of clean delivery vehicles with low or zero emissions.
First, we have the desire – and that starts with education. Then we can build the strategies, and finally we can implement sustainability solutions.
Thanks for reading.
Q1 Updates | Week 8
Another Solution for the Ongoing Freight Backups at Ports
Last week I wrote about the ongoing freight backups at maritime ports and how they are disrupting global supply chains. In relation to that I highlighted how some logistics professionals are evaluating a balance between ocean and air freight (see below for more details).
The state of California moved last week to alleviate the same problem by announcing a deal to lease space at six state-owned sites with enough capacity to store 20,000 shipping containers and clear valuable space at ocean-side docks.
State leaders identified these six sites from the California Department of General Services for one year, with an option for a second year. They include three armories (in Lancaster, Palmdale, and Stockton), two fairground sites (San Joaquin County and Antelope Valley Fairgrounds), and a former prison site (Deuel Vocational Institute in Tracy).
We will continue to monitor this situation and bring you more good news as it happens.
At the beginning of the year, I mentioned five important logistics trends to watch. The fifth (scroll all the way to the bottom of this page) is autonomous vehicles.
Autonomous vehicles continue to evolve with improved technology making autonomous supply chains closer to reality. Last week I read with interest that a new company was founded (Parallel System), a firm specializing in autonomous battery-powered electric rail vehicles for shipping and freight.
Small autonomous vehicles will hold up cargo, like shipping containers, and allow it to be transported on railway tracks just like larger trains do. Since they’re individually powered, the railcars can be joined together to create a larger fleet or split off to multiple destinations with the cargo in hand. It also means that they’re more flexible, as the “platoons” won’t need to meet a certain amount of cargo before they can start moving. According to reports, the vehicles can carry up to 128,000 pounds, which is double what a semi-truck can carry, and each can travel individually for up to 500 miles.
Keep watching this space.
Q1 Updates | Week 7
Moving from Ocean to Air
As more and more ships continue to queue up outside of major ports, some logistics professionals are moving their cargo from ocean to air. This is being noted by some of the world’s biggest ocean shipping lines who are meeting that need by buying cargo planes.
Logistics clients are willing to pay extra to get around supply-chain snarls at sea resulting from the Covid-19 pandemic. This includes innovative ways to alleviate the current supply chain backlogs that are slowing shipments by utilizing air freight.
I look at this slightly differently. It’s never as simple to choose between air and ocean. Obviously, there is a time/cost payoff. But with ever more sophisticated data available, intermodal solutions can be considered. This allows a shipper to get the timeliness of air freight and the cost-effectiveness of ocean freight — intermodal is a logistics product that combines the best of both.
There are several advantages; a reduced freight costs in comparison with a standard airfreight shipment, a reduced transit time in comparison with a standard ocean freight shipment, it provides a cost-effective freight option for delayed ocean shipments, and it provides an option for tight capacity or expensive airfreight markets and lanes
By combining air cargo and ocean freight solutions, you can find the right balance between cost and time – adding flexibility to your supply chain. You can find out more here.
Update to Canada-U.S. Cross Boarder Trucking
Two weeks ago, I wrote that the U.S. closed its borders to unvaccinated and partially vaccinated Canadian and Mexican truck drivers. That lead to – as I am sure you have seen in the mass media – protests.
The trucker blockade at the U.S.-Canada border ended over the weekend. Commercial traffic resumed late Sunday along the Ambassador Bridge after the week-long standoff. A larger protest against vaccine mandates for lorry drivers has been going on for two weeks in Ottawa, where hundreds of tractor-trailers blocked downtown streets.
The disruptions added costs to already elevated charges for freight between the U.S. and its largest trading partner. We will have to wait and see if the Canadian unrest sparks similar moves by like-minded transport workers in the U.S. and elsewhere.
Watch this space for updates.
Q1 Updates | Week 6
What’s Going On In China?
I thought the opening ceremony of the Winter Olympics were spectacular. They showcased the determination and hope of athletes from around the world. As anticipated, they also thrust the political discussion of China to an international forum.
Companies, and countries, are taking a deeper look into their trading partner relationships for potential forced labor violations. The US has enacted new labor laws that could cause supply chain snarls. The Uyghur Forced Labor Prevention Act adds a presumption under the US Tariff Act that goods sourced from or produced in Xinjiang—home to many of China’s Uyghur and other Muslim minority populations—are made with forced labor.
To import products from the region, companies will have to document that they aren’t sourced from forced labor. Beginning June 21, importers will have to present strong documentation to the US Customs and Border Protection, showing that no part of their products contain components sourced or manufactured in Xinjiang or by Uyghurs.
Automating Warehouses – Update
As you’ll know, I pointed to five important trends to both watch, and act upon, in 2022. One of which is automating warehouses. The latest data is now available.
2021 saw more robots join the US workforce than any other year, and it looks like 2022 will bring about more of the same. Companies across North America laid out more than $2 billion for almost 40,000 robots in 2021 to help them contend with record demand and a pandemic-fueled labor shortage.
I’ve been a believer of this for some time. By blending robotics, automation, and artificial intelligence into the warehousing environment, we’re finding new ways to offset long-standing challenges such as the shrinking labor market and the demands of high-velocity e-commerce business models. You can see some of the advancements we’re making here.
Q1 Updates | Week 5
Do You Ship Canada-U.S. Cross Boarder?
The US has closed its borders in the past week to unvaccinated and partially vaccinated Canadian and Mexican truck drivers.
“These updated travel requirements reflect the Biden-Harris Administration’s commitment to protecting public health, while safely facilitating the cross-border trade and travel that is critical to our economy,” Secretary Alejandro Mayorkas said in a statement.
The impact will be felt most keenly at the Canada border, where around 160,000 truckers cross the border each year. If you have shipments crossing the border now or in the near future, contact your DB Schenker representative to find the best solutions for your need.
Good News for Ocean Freight
The Port of Long Beach is one of a few U.S. container ports that will benefit from the U.S. government’s pledge to invest $14bn in infrastructure projects, to strengthen the nation’s supply chain and its bid for sustainability.
“Long Beach is home to the second-busiest container port in the nation,” said Port of Long Beach Executive Director Mario Cordero. “Improving the ability of ships to navigate channels here will have economic benefits for the entire country. Locally, creating navigational efficiencies will move ships through the harbor faster, reducing air pollution. There will be a good return for this investment, and we thank our federal partners for this allocation to assist with our comprehensive harbor-deepening program.”
Among other features, the recommended plan includes deepening the Approach Channel from 76 feet to 80 feet, constructing an approach channel to Pier J South to a depth of 55 feet, deepening portions of the West Basin from 50 feet to 55 feet, and performing structural improvements to breakwaters at Pier J to allow for depths of 55 feet.
I’m excited to see this development work at The Port of Long Beach as it has great benefits for so many of our customers.
Q1 Updates | Week 4
Ocean News – How High Will It Go?
It’s not exactly news, but shippers are struggling as ocean rates continue to soar. The spot rate for a 40-foot container to the U.S. from Asia – according to some sources – hit the highest it has ever been in 2021. While it’s certainly not that high right now, many in the industry remember prices way lower.
We are now bracing for another round of supply chain disruptions as China imposes sweeping lockdowns in an attempt to keep the Omicron variant contained. Needless to say, a prolonged shutdown could certainly have major ramifications on global supply chains. So far, the effects of the lockdowns on Chinese factory production and deliveries have been limited. Four of China’s largest port cities (Shanghai, Dalian, Tianjin, and Shenzhen) recently imposed narrowly targeted lockdowns to try to control small outbreaks of the omicron variant.
While, as of this writing, these cities had not locked down their docks, logistics professionals should prepare now.
Q1 Updates | Week 3
Leading Maritime Cities of the World
In the last few of days, the Leading Maritime Cities of the World were ranked by Menon Economics and DNV. Ranked by five factors including law, technology, and ports, the top five cities (starting with the top ranked) are Singapore, Rotterdam, London, Shanghai & Tokyo.
Experts see Singapore, Oslo, Shanghai, and Copenhagen as best prepared for digital transformation (something I’m certainly watching), while Oslo tops the list for sustainable technologies and solutions for the oceans, followed by Singapore and Copenhagen.
What’s interesting to me is one city that doesn’t appear in the top five. Hong Kong has slipped out of the top five to the seventh overall position.
In related news, Hong Kong is planning to create a new transport bureau to enhance its status as an international maritime and logistics hub.
Hong Kong’s maritime policies are currently controlled by the Transport and Housing Bureau (THB), which many believe leaves the logistics industry overshadowed by the city’s acute need for housing.
Under the new proposals, the bureau will be split in two, creating the separate Transport and Logistics Bureau, a move welcomed by many of us in the industry. Of course, don’t expect too much over the next few weeks, as the Chinese New Year is almost upon us.
Q1 Updates | Week 2
Every year, it’s fun to see what the latest tech has to offer and of course that gets showcased at CES in Las Vegas every January.
In the area of transport, John Deere’s showcased their self-driving tractor. Deere showed off a tractor accessorized with stereo cameras on its front and back to allow it to operate autonomously. Deere has a somewhat simpler problem to solve than trucking logistics: agricultural vehicles move more slowly and won’t get honked at if they must pause in a field to get their bearings. But Deere will initially support only no-person-onboard plowing, not the more complex toil of seeding or harvesting.
That doesn’t mean there are not some great advancements in the logistics industry. If you missed it previously – check out what DB Schenker is doing in the area of trucking platooning.
Crisis – What Crisis?
Churchill is credited with saying “Never let a good crisis go to waste” in the mid-1940s as the world approached the end of WW ll. Logistics Management published a great article in the past few days: Supply Chain Disruption: A crisis yes, but an opportunity too.
As Logistics Management correctly point out, 2022 is likely to be challenging. But there is one deciding factor that will separate the successful from the frustrated, when it comes those planning their logistics. That’s going to be visibility, which in turn allows business planning. That requires a strong digital foundation.
If you have not signed up for eSchenker, then you should check it out. eSchenker is our most advanced logistic solution yet. It incorporates all eServices into one portal, giving you maximum support at every stage of your supply chain. From tracking and scheduling to booking and reporting, eSchenker has your logistics covered. You can find out more here.
Q1 Updates | Week 1
With the national recovery in full swing, e-commerce sales growing and consumer spending all remaining steady through 2021, demand for all areas of logistics is extremely high right now.
Concurrently, labor shortages, a lack of equipment and persistent supply chain shortages are impacting the smooth flow of commerce. These and other factors drove up freight rates and created capacity crunches that flowed right into 2022.
The transportation trends in 2021 were formed mostly by the necessity to deliver more products in less time, often with closed borders. Moreover, innovation technologies will guide the changes in logistics in the upcoming year.
From my point of view, I see five important trends to both watch, and act upon, in 2022.
Blockchain is one of the most exciting tech trends now. It is a distributed, encrypted database model that has the potential to solve many problems around online trust and security. While many know blockchain is important for crypto, we’re seeing a need for different blockchains for specialized industries. I believe we’re going to see it going into more traditional avenues of logistics.
Big data analytics
All the logistics statistics are essential for planning future deliveries and understanding what goods are needed for the market. I predict we’ll see the availability big data waterfall down from the largest organizations to professionals planning logistics at the business level.
AI already impacted the transportation sector in the last decade. Using AI helps improve the operation’s functionality, finding problems before they occur, and identifying opportunities. New transport technology in implementing AI was influential in the pandemic, as many people in management positions started to work remotely. I’m excited to see the next developments in 2022.
Transportation industry trends in 2021 were mostly focusing on the automatization of the manual workforce. Many logistic companies see the potential in automating and using robots for efficient warehouses. The goal of such a decision is to make routine work cheaper and more comfortable for the business. There’s a real need for more in 2022, so we’ll keep a close eye on this.
Trends in transportation also affect the use of autonomous vehicles for delivery. A few years ago, this trend was unreal for almost every manufacturer. Only a few giant companies were investing in autonomous transportation of goods (DB Schenker being one of them). Self-driving trucks can relieve drivers’ work in the future and be efficient in operating on busy roads to predict and analyze traffic. Watch this space.
Bookmark and come back weekly to find out how the logistics industry is trending in the weeks and months ahead.