The wine shortage in 2021, caused by unseasonably cold weather in key wine-growing regions, has also had a serious impact given France is the second-largest wine producer in the world. The l’Association Nationale des Produits Alimentaires attributed current and future expected shortages to price rises throughout the supply chain.

Protect your existing supplies and production

At a time when food production is affected by issues such as the weather, protecting existing resources is essential. Many food manufacturers have had to recall products because of avoidable issues in the factory. Food manufacturing powerhouse Kraft Heinz made global headlines when it had to recall over 1.2 million containers of cottage cheese because they weren’t stored at the correct temperature.

Equipment maintenance is essential to prevent unnecessary product spoilage and recalls. Many manufacturers will operate on a reactive maintenance model, only maintaining machinery when it fails. Instead, switching to proactive maintenance and checking equipment regularly can help to identify issues before they become a problem. Predictive maintenance technologies are now more commonplace too and will monitor the health of systems automatically.

Food contamination is also an issue that can result in recalls and even affect the health of end consumers. It was reported in 2021 that foodborne illnesses increased between 2018 and 2019, with salmonella topping the list of pathogens. There are a range of processes that can threaten the hygiene of food – from handlers not washing their hands to unsanitary cabling. Many manufacturers use stainless steel goulottes métalliques because they’re easy to clean and decontaminate.

Diversify your suppliers

Access to, and costs of, the raw materials needed to make foodstuff is a key issue right now. it’s essential for manufacturers to diversify their suppliers in the wake of supply chain disruptions. If you rely on one or two suppliers for one key ingredient and they experience issues, you’ll feel this more acutely.

In the wake of COVID-19’s dramatic impact on small businesses, while global behemoths like Amazon increased their profits, we’ve seen a shift towards prioritising local businesses. To encourage this, the government introduced click and collect services for small businesses that didn’t have the resource to set up an ecommerce presence.

The same should go for businesses looking for new suppliers. Small businesses need support, and local suppliers can offer more security to your business because they’re more easily accessible. What’s more, with a renewed focus on sustainability in France in 2022, going local can boost a business’ green credentials.

Support the elimination of food waste

Consumer food waste is a real problem worldwide, but especially in France. Despite a number of legislations in place to prevent food waste, research by Statista has shown that bread is one of the food items French consumers waste the most often. The survey found that 16% of consumers were throwing bread away at least once a week. Given that flour is an ingredient that has soared in price, throwing away its end product is costly.

At a time of food shortages and soaring prices, the nation should be focusing on reducing food waste. France is a global leader in the reduction of business food waste, as well as helping consumers to recycle applicable soiled food. The government and businesses can build on this platform with educational campaigns on reducing the amount of food that is thrown away or recycled.

Food manufacturers can play their part too. Packaging should include information on how best to store the food, as well as tips on making it last longer – such as storing unused bread in the freezer, transferring dried food to airtight glass containers, and putting fresh herbs in water.

France’s supply chain issues are set to continue into 2022. While it’ll be difficult to completely prevent shortages and price fluctuations, there are a number of steps that food manufacturers can take to mitigate these issues and ensure they can continue to provide essential resources for businesses and consumers alike.

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Sources

https://www.statista.com/statistics/1143426/coronavirus-changes-to-supply-chain-retail-worldwide/

https://www.connexionfrance.com/French-news/Which-products-are-or-could-be-hit-by-stock-shortages-in-France

https://www.statista.com/statistics/1128445/most-frequently-wasted-food-in-france/

https://blog.winnowsolutions.com/4-ways-france-is-leading-the-food-waste-agenda

https://www.gardenersworld.com/plants/quick-ways-to-protect-plants-from-frost/

https://www.foodsafetynews.com/2021/04/france-sees-increase-in-foodborne-outbreaks/

https://www.nytimes.com/2020/11/03/business/france-shopkeepers-lockdown.html

https://www.thelocal.fr/20201102/click-and-collect-how-to-help-your-local-business-during-lockdown-in-france/

https://www.housebeautiful.com/uk/lifestyle/food-drink/a19417308/how-to-make-food-last-longer/

https://www.highspeedtraining.co.uk/hub/preventative-maintenance/

https://www.foodsystemsjournal.org/index.php/fsj/article/view/836/817

The post Managing Crisis Within the Food and Beverage Supply Chain appeared first on Global Trade Magazine.

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.

The post GLOBAL SHIPPING CRISIS: NO QUICK FIX appeared first on Global Trade Magazine.

CONSUMERS WANT THE GOODS

With a strong economy, declining unemployment rate (3.9% in December), and limited opportunity to spend their money on services (e.g., travel, events, restaurants) due to COVID restrictions, consumers are buying more durable and non-durable goods: think flat screen TVs for Netflix bingeing, furniture for the home office, and more kitchen appliances and groceries to cook at home instead of dining out.

Personal expenditures on goods remain high, increasing by 0.1% in December 2021, according to the latest U.S. Federal Reserve Economic Data (FRED) data. As Omicron spreads like wildfire across the country and service businesses grapple with staff shortages and new restrictions, consumer spending will continue to flow away from experience-based expenditures towards the purchase of tangible goods.

With consumers clamoring for products, retailers are still contending with availability issues, as reflected in the worrisome inventory-to-sales ratio of 1.07 (October 2021, latest update). According to FRED, this problematic ratio is tied with April 2021 as the lowest since the start of the pandemic—not good news for retailers facing aggressive consumer demand and empty shelves.

PORTS ARE STRUGGLING

The intense consumer demand for goods is one of the most significant drivers of high import volumes and the resulting global shipping challenges. While container import volumes declined in December compared to December 2020 and December 2019, volumes still broke records. According to U.S. import data, volumes increased 1% and 25%, respectively. In fact, year-over-year 2021 container import volumes were 18% higher than 2020 and 22% higher than 2019.

Source: Descartes Datamyne

The record import volumes, coupled with driver shortages and a U.S. workforce crippled by the Omicron wave, continue to wreak havoc at the ports. Despite lower import volumes in December, port delays worsened, according to analysis from Descartes Datamyne.

Delays reached staggering heights—Port of Los Angeles (15.1 days), Port of Long Beach (15.6 days), Port of New York/New Jersey (11.7 days)—and the number of ships waiting to dock and unload increased in tandem. As of January 7, 2021, there were 105 ships waiting to enter the Ports of Los Angeles and Long Beach, up from 96 at the start of December 2021.

Notably, in response to problematic port delays, importers and LSPs are accelerating their shift away from the large West Coast ports. In fact, the Port of New York/New Jersey processed the most containers in December.

Source: Descartes Datamyne

RELENTLESS PANDEMIC-DRIVEN CHALLENGES

The pandemic continues to leave uncertainty in its wake, dashing hopes for a fast recovery from the supply chain chaos. Importers, LSPs, and ports are contending with record numbers of the labor force away sick or self-isolating. This is greatly impacting the ability to get goods into the hands of consumers—from electronics to beef and everything in between.

In the U.S., manufacturers are bracing for the impact of renewed lockdowns underway in China. As the country attempts to keep the Omicron variant from taking hold, its zero-tolerance policy may trigger another round of shutdowns at Chinese factories and ports, leading to further supply chain disruptions and constraining the ability of supply chains to recover.

At least 20 million people (~1.5% of China’s population) are in lockdown and the Hong Kong airport has initiated a month-long suspension of transit flights from approximately 150 “high-risk” countries; Volkswagen and Toyota have temporarily suspended their operations in the port city of Tianjin due to lockdowns. This “Omicron effect” will continue to exacerbate pressure on an already-taxed global supply chain in the near term.

Even as countries recover from the latest coronavirus variant wave, they will be under enormous pressure to simultaneously catch up on previous trade flows while trying to meet new demand—creating a whiplash effect on global logistics, as monthly TEUs swing dramatically between high and low volumes moving through the supply chain.

LOOKING AHEAD: DÉJÀ VU

If consumer behavior in 2022 mirrors 2021, the demand for goods and the associated logistics services to get them to market will stay at elevated levels through 2022, extending the supply chain capacity crunch and forcing stakeholders to adapt to the new normal. What steps can manufacturers, retailers, and LSPs take to mitigate risk moving forward?

In the short-term, importers and LSPs should track the spread of COVID variants to understand their path and the impact on critical parts of the supply chain. Companies should focus on keeping and nurturing the supply chain resources they have, especially drivers, and prioritize shipping higher-velocity and higher-margin goods to maximize profitability in the face of shipping capacity constraints. In addition, by considering alternate ports, such as eastern or inland ports, companies can hedge their bets against upcoming ILWU contract negotiations.

Shippers should also explore the possibility of shifting the movement of goods to less congested transportation lanes, or using alternative lanes into the U.S. (e.g., entry via northern and southern borders), to improve supply chain velocity and reliability. While total transit time is an important metric, supply chain predictability is a valuable attribute in the face of pandemic-driven volatility.

Thinking long-term, companies should evaluate the location density of their suppliers and factories to mitigate reliance on over-taxed trade lanes. While density does create economies of scale, the pandemic and subsequent logistics capacity crisis has highlighted the downside and inherent risks of this approach.

RESILIENCY HELPS ANSWER THE CALL

With months of shipping backlogs, labor shortages, and increased consumer demand for goods taking their toll on importers, LSPs and ports alike, companies must implement strategies that build resilience into their supply chains. From shifting to more resilient inventory models (i.e., saying goodbye to just-in-time) to leveraging global trade intelligence solutions to determine the most expedient and cost-effective routes and modes of transport, organizations can take steps to evolve their operations to better manage shipping challenges, mitigate supply chain risks, and protect their business from costly disruptions.

The post GLOBAL SHIPPING WOES: THE SAGA CONTINUES appeared first on Global Trade Magazine.

People got used to the fact that they can order anything they want online, and it’ll be on their doorstep in a day or two. They got fond of convenience, so the demand kept growing. However, during the last two years, we’ve seen a shift in the logistics challenges facing the industry. The waits are longer than before, and we can’t expect that they’ll get shorter during the holiday season.

Luckily, things are going fine for now. People are getting their packages, but the real rush is yet to start. So, let’s see how customers can help the retailers, and then we’ll talk about how to prepare for shipping out.

How to Get Your Packages In Time

It’s only natural that you want to surprise your friends and family during the holiday season. If some of them live abroad, you might want to send them a package to unwrap on Christmas morning and share your love that way. However, you’re not the only one thinking this way.

As we’re getting closer to the end of the year, more and more people are sending parcels. Shipping companies are busy, and you need to account for that. Let’s go over a few things you want to keep in mind if you didn’t do your Christmas shopping just yet.

First off, expect delays. We know it sounds contrary to what we’re trying to achieve, but you want to stay realistic.

Secondly, plan ahead. Of course, if there’s a chance that there will be a jam near the end of the month, send or request your packages early. If you can, there’s nothing wrong with doing it right away. You’re better off if they arrive at their destination early than late.

Finally, be prepared to pay the premium. Planning so much in advance is often tricky, especially if you have a lot on your mind. Thus, if you see that you’re already behind, pay the premium to ensure your parcel will arrive when it should.

What Can Businesses Do?

Both retailers and eCommerce companies want to boost their sales, and the end of the year is the best time to do it. If you want to bring your sales up and keep your customers happy, you’ll want to learn how to avoid the 2021 holiday shipping delays. Here’s what you need to do.

Prepare Your Inventory and Packing Supplies

Go over your books and your inventory, and think once again about what is likely to sell a lot at this time. Predict the number of orders you’ll get and make sure you have enough stock to go around.

On top of that, you mustn’t forget about the packing supplies either. No matter how many orders you get, they won’t be of much use if you can’t send the items people want to buy. And according to Murphy’s law, you’ll run out of them in the worst possible moment.

Don’t let this happen to you, and get yourself a bit more packing supplies than you think you’ll need. These aren’t that expensive – so you can afford them, and even if you end up with some leftovers, you’ll use them later.

Set Up Delivery and Return Strategies

If you want to be carefree this holiday season, you must sort out and fine-tune your shipping system. Get in touch with a reliable company and see if you can get a deal. They’ll be more than busy for sure, but if you have a few big shipments to send out, you might even get some kind of discount.

You also want to sort out your return strategy. Some people won’t like what they get, and they’ll want to return it. If you want to improve your eCommerce business and retain customers, your job is to go out of your way and make that possible.

Why Do Holiday Shipping Delays Happen?

If you did everything we talked about, you did everything you could. It’s not like you can take each package and take it where it needs to go by yourself. You’ll have to rely on transport companies to do it for you, and they’re under a lot of stress at the moment. Here are some of the factors that you can’t influence and that can make your shipment run late.

Bad weather. The weather can be unpredictable in the winter, and the shipping company can’t do anything about it. A significant snowfall certainly can push delivery dates a bit further.

A high number of shipments. As we mentioned, more and more people are ordering things online, and the higher the number of shipments is, the higher chances for delays are.

Traffic jams. They’re unpredictable and happen in a split second. So, even if delivery companies know about the existing jams, they can’t predict where the next one will happen.

And that’s all you need to know about how to avoid the 2021 holiday shipping delays. Be honest with your customers, encourage them to order early, and do your shopping as soon as possible.

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Tobi Hook is an experienced transport specialist and a freelance writer. At the moment, he’s working with City Movers on improving their processes and spreading the word about their company. He loves to spend his free time reading sci-fi novels and building model rockets with his son. 

The post How to Avoid 2021 Holiday Shipping Delays appeared first on Global Trade Magazine.

USTR Comment Period is Open Until December 1

About one week remains to petition the United States Trade Representative (USTR) to reinstate 549 of these expired product exclusions, which would introduce retroactive refund potential for shippers. If the USTR rules to reinstate the refunds next month, shippers would be able to file for refunds as far back as October 15. In that two-month period alone, there is potential for millions of dollars in retroactive duty refunds, and that doesn’t include the future savings these exclusions could provide shippers who are likely not going to see supply chain congestion and shipping cost relief even as 2022 begins.

When considering whether to reinstate the exclusions, the USTR will focus primarily on factors such as changes in the global supply chain, domestic product availability and effort spent on domestic sourcing by importers, and whether there is adequate domestic capacity for producing the product in question in the U.S.

What This Means for Shippers

Not only does this targeted tariff exclusion process provide a financial opportunity for shippers now, but it also introduces the potential for additional exclusions to come to light in the future, according to recent statements by the USTR. However, many current trade measures are not expected to change soon. The office has acknowledged that trade reform between the U.S. and China is ongoing as the relationship evolves with the new administration.

Still, the potential for reinstated refunds next month presents an opportunity for shippers to better understand their financial position, discover what they may be able to reclaim, and determine what impact that may have on their shipping operations.

To help provide shippers with an information advantage, C.H. Robinson has developed an automated U.S. Tariff Search Tool. The tool streamlines what can otherwise be hours of tedious tariff data analysis. Shippers can input their organization’s HTS codes and receive information about their eligibility under the tariff exclusions as well as better understand their total landed cost analysis – including their costs to import, recovering duties previously paid, and reducing their duty exposure via trade agreements.

Shippers can submit comments to the USTR at this webpage: Home (ustr.gov) and get more information on the impact this could have on the trade community here: Recent Trade & Tariff Perspectives | C.H. Robinson (chrobinson.com).

The post C.H. Robinson: Millions at Stake for Shippers Awaiting Decision on China Tariff Refunds appeared first on Global Trade Magazine.

In the initial economic fallout in the first few months of the pandemic, freight volumes sank, and so did per-mile rates. There simply weren’t enough loads to go around for all of us who make a living moving freight, and the slowdown happened so fast, we were all left searching for answers.

At least I know here at Circle Logistics, we weren’t immune to that sudden freight vacuum.

But then as the recovery gained steam, freight volumes hit a warp speed, seemingly making up for lost time last spring and due to consumers spending money on hard goods rather than services or entertainment.

Behind that pendulum swing, logistics providers this year have faced a tall task in keeping up with the demands of their shippers. There’s been a dearth of transportation capacity, and 3PLs have often had to book loads at a loss to make sure we take care of our shippers.

Between freight volumes slamming the brakes in spring of 2020 and then mashing the throttle this year, I’m sure we as an industry will glean many lessons from the trials we’ve weathered.

But there’s a fundamental lesson staring us in the face right now: We have to pivot our industry away from transactional deals and work to create real, trusted relationships with each other.

This involves all of us — shippers, brokers, and carriers. We’re at a precipice in the logistics industry, and it’s incumbent upon all of us to heed the requirements of this new world. That starts with ditching the old ways and forging a path in which mutually beneficial relationships rule, and in which we utilize those relationships to help manage the current crisis and any future events that occur.

For freight brokers and 3PLs, first and foremost, this starts with shedding the label of a freight  industry “middleman.” That might have been true of yesteryear’s freight broker. You know the type — the guy at a desk working a big landline phone with four or five different lines connected into it. But it absolutely cannot be true of a modern logistics provider.

We need to be viewed as a valued, trusted source of market information and trucking capacity by our shipper customers. And we must be viewed as a business partner of our carriers — a sales team working to find loads that fit their lanes and rates, a dispatcher trying to get them backhauls, and someone who they’d turn to for a load over taking a chance on a random broker from a loadboard, even if it pays a little better.

By building these relationships on both sides, you can ward off the situation where shippers try to pit 3PLs and brokers against each other in negotiations. Or the situation where you try to squeeze a carrier for a few pennies a mile on a one-and-done load and then find you need their service a few weeks or months later for a different load.

Will every freight transaction be this way? Of course not. Logistics providers still have to turn to loadboards to find carriers, and carriers will still have to utilize some one-time deals to reposition or simply keep the wheels turning.

Also, shippers’ procurement managers will still mostly be working to find transportation services at the best cost for their company. They still have a boss to answer to, too.

But what I hope has become a stark realization during these turbulent times is that we’re all in this business together, for better or worse. Shippers need their freight hauled. Carriers need loads to move to keep their operations afloat and their bills paid. And freight brokers and 3PLs, more than ever, are the conduit to bridge those two parties’ needs.

In an 18-month span which has seen both ends of the spectrum — carriers unable find loads at sustainable rates and shippers unable to find capacity — the new calling for freight brokers has been laid bare: We must work to build the relationships that keep goods moving and keep the supply chain chugging. Anything less is a step in the wrong direction.

The post Logistics Providers Have a Higher Calling than Freight’s ‘Middleman’ appeared first on Global Trade Magazine.

“Global supply chain bottlenecks are feeding on one another, with shortages of components and surging prices of critical raw materials squeezing manufacturers around the world,” wrote reporters for the Wall Street Journal in an Oct. 8 story. 

I recommend to any executive seeking guidance that all aspects of their business ought to focus now on resilience. Engage your partners and stakeholders with transparency about the challenges; don’t try to shield them from reality. Leaders need to concentrate on business continuity and supply chain agility, whilst scenario planning throughout the value chain of inputs and flows. 

Even when it looks like conditions are approaching catastrophe, there is always something an organization can do. After the 2014 flooding in Somerset, Prince Charles visited the area to learn about relief efforts and remarked, “There’s nothing like a jolly good disaster to get people to start doing something.”

Now is a good time to remind managers that they need not wait for a jolly good disaster to create a plan of action. Rather, multiple “scenario plans” are crucial to providing guidance in the case of any disruption one can think of — and they must include mechanisms for coordinated communication and implementation across the value chain. Making sure these scenario plans result in opportunities for reserving capacity within manufacturing and transport divisions will allow your company to switch gears when needed. 

Any company that relies on a global supply chain is suffering to a degree right now. Obstacles have descended like a game of whack-a-mole; if capacity is secured, an issue like port congestion is ready to pop up and take its place as the bottleneck. That’s why I’ve been reminding my teams and customers that rather than keep strict, minute-by-minute tabs on external conditions, our time is better spent referring to (or developing, if none are found to be applicable) our scenario plans to discern what levers to pull, as well as the potential customer impacts. 

The best path toward actually implementing these chosen plans of action is consistent collaboration, transparency of information, and gaming with peer options/scenarios. It is also worthwhile considering that options are changing rapidly as providers, countries and infrastructures adapt — e.g. options you thought open today, may not exist tomorrow — so being present (understanding the landscape) is as important as planning scenarios in advance. 

The fundamental concept of trade, as outlined by Adam Smith in The Wealth of Nations (1776) is based on the concept of comparative advantages and division of labor offset against the cost of home manufacture and transport. If you ask modern-day economists, global trade conditions are a direct consequence; they echo the very same sentiments as Smith expressed in 1776. They produce daily figures such as PMI, GDP growth, wage inflation, etc., which do provide insight into trends that will directly impact the demand for global trade — outside of trade disputes, pandemics and government interventions, that is!

For more informed predictions, however, one must pair economists’ numbers with trade capacity data. We are trying to return to a normal state of demand and supply right now — with one challenge being that speed of recovery and capacity constraints are creating the real impacts, and this is only solved by normalization of demand, which is impacted by both inflation and opening of service sectors (or fundamental societal changes — don’t underestimate the potential for change from COP26); and/or increased capacity to service demand, which would require new vessels and terminal infrastructure that would be several years out from use.

The last two years have highlighted the fragility of global supply chains, as well as the interconnectedness of our world in general. We’re still feeling the effects of the initial COVID-related factory shutdowns in Wuhan, which immediately generated a global impact on supply chains. COVID has shown how shocks in long global supply chains can become impossible to repair, destroying businesses and wiping out hard-fought GDP growth. 

Among the most likely outcomes: companies will re-evaluate risk in sourcing internationally, consider more diverse sourcing strategies, and build segmented supply chains to manage risk. 

We must be mindful, however, that while the majority of the news over the last two years has been about COVID, major geopolitical changes have also been playing out: heightened tensions between the US and China, increased risk of conflict in the Asia Pacific region, and trade tensions between the UK / EU through Brexit. So when companies look at long-term strategy, these influences on trade policy may force more questions over resiliency, risk management, and diversity than the pandemic’s impact.

Also among the headlines is ongoing discourse about the US’s over-dependence on foreign supply, both in terms of resilience and sustainability agendas. 

In the short run, keep in mind that big problems very often don’t have simple solutions. We can manage the diversity of sourcing both nationally and internationally, remembering that even domestic supply chains are not 100% safe from natural disasters and environmental impacts. We can segment our supply, understand the sourcing of inbound products, and take steps to secure strategic inputs that the company depends on — all while utilizing a diversity strategy that blends domestic, near-sourced, and internationally sourced inputs from diverse supplier bases. 

Apart from the above actions, it’s good old effective planning, careful inventory adjustments, and sales management that remain the keys to supply chain resiliency, whether near- or far-sourced.

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Neil Wheeldon is Chief Strategy & Innovation Officer, BDP International. He is an experienced supply chain management practitioner having worked across numerous industries supporting customers in supply chain and digital transformation initiatives to drive growth. He can be reached at neil.wheeldon@bdpint.com.

The post The True Issues Facing Shippers and Importers in this Supply Chain Nightmare – and How We Face Them with Resilience appeared first on Global Trade Magazine.

1. Creativity Within Modes and Port Selection: Presently, more than 100 container ships await dock space at the Los Angeles and Long Beach ports¹, and the World Container Index price for 40 ft. containers stands at $9,669.47², 276% higher than a year ago. Shippers are not only struggling to secure capacity due to port inefficiencies but are paying premium prices even when they can secure containers. Once reserving container space, shippers then have to deal with long lead times. The door-to-door transit time for a container from China to Chicago is now 73 days versus 35 days in pre-pandemic times.

Minimizing the impact on your organization will require teams to think more creatively and collaboratively. For example, in the past, when Coca-Cola could not supply their production facilities due to limited vessel space, they refused to accept the current situation as their only option. Instead, their procurement and supply chain teams collaborated to leverage a nontraditional method of shipping. They decided to ship their manufacturing materials via bulk vessels typically used to ship dry cargo³. Coca-Cola safely shipped their products by securing the materials using plastic wrap and unloading at noncongested ports to avoid excessive demurrage fees being levied on shippers. Their priority was to keep the product lines running, and they accomplished it by actively seeking out alternatives.

Organizations need to think more broadly and explore the feasibility of using all available options, such as Coca-Cola did. Also, they must consider avoiding the West Coast ports whenever possible, as other ports, such as those on the East Coast, are currently less congested.

2. Seek Unconventional Partnerships: The boost in e-commerce sales and the growing driver shortage have negatively affected domestic trucking capacity. The result is like what we see in ocean shipping: premium prices and increased lead times. In pre-pandemic times, consumers took advantage of quick and reliable e-commerce delivery channels made popular by the likes of Amazon. Now, however, they are left hoping their products arrive within their expected delivery window, as shipping delays continue to become more common.

Understanding that customers have an insatiable appetite for fast and reliable delivery, Home Depot found a way to offer added convenience to its e-commerce business. Home Depot will become the first retail client in Walmart’s new delivery-as-a-service business called GoLocal. According to a Home Depot spokesperson, by leveraging Walmart’s existing delivery network, Home Depot will offer same-day and next-day delivery in select stores, with plans to expand by the end of the year.

In a market where capacity is hard to come by, Home Depot expanded its options by leveraging new partners who had capabilities that spanned beyond their own while offering convenience to the customer. As a result, they will reach more customers than before at lower costs to the consumer. Stephanie Smith, a senior vice president of supply chain for Home Depot, said, “This partnership brings us even closer to our goal of offering same-day or next-day deliveries to 90 percent of the U.S. population.”⁴ Seeking partnerships, even from those who may be competitors, is an excellent way to reduce the consumer’s expenses. Also, shippers should begin exploring alternatives in last-mile delivery to increase customer satisfaction, including added convenience and reduced shipping costs.

Difficulties in the supply chain are impacting shippers and consumers alike. On the one hand, consumers are experiencing inflation in certain products; on the other hand, shippers see their profits eroded. From either end, this situation is far from ideal. Labor shortages and capacity constraints are but two of several factors are contributing to higher costs. Organizations will have to wrestle with whether they will pass some of these costs on to consumers or allow them to affect margins. Either way, to overcome this dilemma, shippers must get creative to offset rising costs.

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Alex Hayes and Derrick Lopes are Senior Associates at GEP, a leading provider of procurement and supply chain solutions to Fortune 500 companies.

¹ https://apnews.com/article/business-california-los-angeles-long-beach-shipping-ffbbf935495b0bbea064bcbb1ce330cb

² https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry

³ https://www.businessinsider.com/coca-cola-uses-bulk-vessels-amid-shipping-crisis-2021-10

⁴ https://www.forbes.com/sites/walterloeb/2021/10/11/could-home-depots-partnership-with-walmart-lead-to-other-close-working-arrangements/?sh=25aebd867b88

The post Dear Shippers, It’s Time for Creativity appeared first on Global Trade Magazine.

Just this year, the Port of Los Angeles became the first port in the Western Hemisphere to process 10 million container units in a 12-month period. “Over the past 12 months, port terminals have worked an average of 15 container ships each day, up from a pre-pandemic average of 10 ships a day, representing a significant increase in productivity,” the Port of L.A. reports. With America’s busiest port breaking records for annual volume, it sets a new standard for the industry.

With a new record of goods being shipped, this introduces a magnitude of opportunities for error. Perhaps one of the most common is in the bill of lading (BOL) lifecycle. A BOL serves as a contract between an original equipment manufacturer (OEM), the shipper and the carrier–acting as a legal document to protect all parties involved.

From the time an item is developed overseas to the time it takes to reach an end consumer, that product and BOL have switched hands multiple times. There’s the OEM, the carriers, port staff, freighter’s crew, other port’s employees, the carrier again, a potential distributor, more carriers and then finally the retail store, where the end consumer can purchase the product. With products being mass shipped and divided at ports or distribution centers, this leaves room for error when it comes to BOL accuracy.

Because of this, an electronic bill of lading tool (eBOL) can help create a valid, blockchain-like record of a product’s journey–from origination to end consumer–resulting in less human error, faster turnaround times and reduced inflation costs.

What can go wrong with the BOL? 

According to a recent study, the top challenges in supply chain management were recorded to be visibility (28%), fluctuating consumer demand (19.7%) and inventory management (13.2%). Consider the effects of COVID-19 this past year, and these areas have since then largely increased. In fact, the global e-commerce market is expected to total $4.89 trillion this year, and keep growing over the next five years. 

With rising demand, the BOL is essential in the supply chain lifecycle to ensure accuracy and transparency throughout. This means facilitating collaboration, standardization, digitization and automation across all supply chain parts.

With the BOL serving as proof that the shipper has given permission to haul goods, the traditional paper copy leaves room for human error. For example, during a pickup or delivery, the driver is recording the product, quantity, whether it’s cold storage or not and the final destination of a shipment. Next, the clerk would sign the paperwork and the driver would be on their way. After that, the BOL paperwork would need to be faxed in, but consider the driver’s route. A driver might be gone for a week or two (even more) before the BOLs would be able to be turned in. And it doesn’t stop there–once the driver’s packet of BOLs makes it back to headquarters, the office then needs to process them manually and store the physical copy for years for auditing purposes.

The long turnaround time simply sets companies back. Additionally, if a driver recorded the wrong product name or number, this could result in a product having to be returned, costing companies time and money.

How can an eBOL platform help?

An eBOL is not a new concept within the supply chain, but due to the amount of moving parts and interoperability challenges, it hasn’t reached wide-scale adoption. However, due to the visibility, inventory and growing capacity as well as safety challenges, companies are starting to include eBOL and digital pickup and deliveries as part of their supply chain digital transformation initiatives. An eBOL tool creates streamlined workflows for all supply chain parties, resulting in more efficient shipments and greater transparency. 

As discussed, traditional paper BOLs leave room for human error and improper documentation in addition to lengthy turnaround times. By eliminating paperwork and manual processes, an eBOL can instantly capture key information and significantly cut down on dwell times. In fact, companies who have used an eBOL tool saw a significant decrease in driver dwell times–from 66 minutes on average down to 23 minutes.

Going beyond paperwork, an eBOL tool has the ability to boost collaboration by supporting just-in-time manufacturing and replenishment planning. This provides visibility that allows logistics partners to make faster decisions in case freight needs to be re-routed to different plants, distribution centers and stores to meet customer demands. Overall, the entire supply chain becomes more agile. 

Additionally, given the current environment of COVID-19 cases spiking and taking into consideration the delta variant, eBOL tools are effective in reducing health and safety risks for drivers and yard workers by minimizing paper and physical interactions. Now that information can be accurately tracked and shared through a contactless option, this makes the process self-service for drivers and eliminates the need for in-person check-ins. 

What effect does an eBOL tool have on the end consumer? 

It all starts with capacity. Driver shortage is not a new concept in the supply chain and logistics industry. Currently, the supply chain is stressed with a heavy demand and not enough capacity due to driver shortages, which can drive up shipping costs that translate to the end consumer. 

However, if drivers across the supply chain spend less dwell time at facilities, that time can be spent making an additional stop. One more delivery added to a driver’s route could help create more capacity and stabilize shipping prices that has the potential to trickle down savings to consumer products.

In addition to strengthening supply chains, companies across the country are trying to find ways to keep inflation from rising. Using an eBOL tool turns those in-person interactions at facilities into quick, digital processes, streamlining the delivery and pickup process. By getting drivers in and out of facilities faster, companies can improve capacity challenges by enabling drivers to add another stop to their days, which will hopefully reduce shipping costs and benefit consumers in the long run. 

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Brian Belcher is the COO and co-founder of Vector, a contactless pickup and delivery platform that ensures supply chain partners get the right load to the right place at the right time. Prior to Vector, Belcher led Customer Success at Addepar, a wealth management platform, which manages more than $2 trillion in client assets. Before joining Addepar, Belcher co-founded Computodos, a socially-minded supply chain solution that helps source, transport and distribute recycled computers to developing countries. He holds a bachelor’s degree in Business Administration from Santa Clara University. 

The post AVOIDING ERROR IN THE BILL OF LADING LIFECYCLE appeared first on Global Trade Magazine.

For many, it has felt like one big, never-ending peak season, and they’re all asking when will things get better and what can they do in the interim, especially as we head into pre-holiday shipping.

Unfortunately, disruptions and delays likely won’t be ending soon. But there are best practices that all shippers can follow to navigate the pre-holiday rush. Let’s start with an update on the current air and ocean market situation as we head into fall.

Ocean Shipping

Ocean demand continues to exceed global capacity, with no sign of slowing down. This is compounded by port congestion, largely unreliable and inflexible schedules, and pandemic-driven labor challenges at major ports. But these issues aren’t a product of the pandemic alone.

In 2015, there were roughly 17 global ocean carriers. After mergers and consolidations, only 9 remain in 2021. Those 9 have been further consolidated into three alliances that control over 80% of the global containerized market. As a result, there are limited options for getting space on vessels and lower flexibility across vessel schedules due to the number of ships in rotation and the lack of available containers.

Globally, schedule reliability in ocean shipping is at the lowest we’ve ever seen. Right now, the reliability that a vessel carrying goods will arrive on time is roughly 40%. At this time last year, it was over 80%. While ocean carriers are trying to stay on track to destinations by skipping ports or enabling blank sailings, improving the schedule systematically in time, their methods are negatively impacting customers trying to transport products out of high-traffic areas such as Asia in a timely manner.

Air Shipping

Lower levels of passenger air travel over the past year have created congestion at air cargo terminals worldwide.

Pandemic-induced travel restrictions reduced commercial air capacity dramatically. Instead of having weekly passenger flights that move cargo volume to a wider network of airports in smaller quantities, most freight is now consolidated at larger terminals in bigger quantities via freighters or charter flights.

Terminals are then receiving increasingly large waves of freight, pushing demand to an all-time high over this past summer while also having to navigate labor shortages. Today, some of the larger terminals such as Chicago are seeing up to two-week delays in the recovery of cargo.

In addition, changes in export screening standards in the U.S. are also creating backlogs and congestion at terminals that are exacerbated by a lack of warehouse capacities. Carriers have been tasked with picking up more screening activities than usual because some shippers may not be partnering with the right forwarder who can take care of the screening for them.

This increased screening is also at odds with expedited terminal timelines, which currently give carriers as little as 12 hours to move freight that traditionally would have had a 48-hour takeoff window. If problems are encountered during screening or transportation to the terminal that slow the timeline, congestion will follow.

What Now?

No one solution is going to bring an end to the challenges of today’s market. But there are a few proven best practices shippers can use to better navigate the current challenges:

Maintain a flexible approach and be open to different options

To stay on top of this market, global shippers must commit to maintaining a flexible approach toward moving their freight. Remaining open to new and different options, such as less-than-container-load (LCL) ocean shipping, different routings or air charters when needed, as well as on-the-spot troubleshooting, can significantly improve shipping outcomes.

For example, for one C.H. Robinson customer moving PPE (personal protective equipment), Thomas Scientific, air charters were a fast-shipping option that offered a great deal of flexibility for last-minute demand shifts during the pandemic. The team worked with airlines to charter passenger planes with the seats removed for cargo flights, which offered a creative alternative to crowded cargo flights and other shipping options.

Seek support from providers who can use information to your advantage

When needed, shippers should consider partnering with a logistics provider that can give data-driven market insights to drive smarter solutions for their business. Sometimes shippers aren’t aware of all their options and need quick help figuring out how to circumvent disruptions to keep current and future orders on track. We’ve seen these solutions play out with our global experts and technology platform, Navisphere, by providing shippers with the aggregated data and analysis they need to determine which ports or terminals to avoid and the right tactics to overcome unique challenges.

Closely collaborate and communicate with supply chain partners

In a market as challenging as this one, close collaboration and frequent communication with supply chain experts are critical. For example, we’ve seen shippers overcome a variety of new challenges this year because they allowed daily cross-functional meetings with our team and theirs. To develop robust solutions, both teams need to truly understand all aspects of shipping challenges and what a company is trying to achieve.

Final Thoughts

Shipping disruptions likely won’t be ending soon. It has taken the industry about a year to get to this point, so it’s safe to say that it may take just as long for things to revert to normal levels or to adjust to the higher demand. Shippers have had to become increasingly nimble and informed to create success throughout this past year, and they must commit to staying flexible and seeking alternative solutions to continue overcoming obstacles.

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The post 2021 Has Felt Like One Big Peak Season: A Global Shipping Market Update appeared first on Global Trade Magazine.