Mike Short, President of Global Forwarding at CH Robinson, provided Jeff Berman, Editor of the Logistics Management Group News, with an in-depth look at the many issues facing shippers, including labor shortages, inflation and mode selection, among others. Their conversation follows below.
Logistics Management (LM): How do you view the current labor/worker shortage and its impact on supply chain and logistics processes and operations?
Mike Short: The current labor shortage is an ongoing challenge for the shipping industry. We have seen unpredictable shifts in labor availability due to quarantines and COVID-19 outbreaks, which are directly at odds with the increased demand the industry has seen over the past two years.
The pressure of e-commerce on logistics, combined with low labor participation, are conditions that are expected to persist long after port congestion subsides. The growth of e-commerce requires more inventory in more places than before and, therefore, more trucks, trailers, drivers and warehouse space than before. Each of these things is still in short supply.
ML: Given all the challenges in the container shipping industry, how can things like implementing new modes, trade lanes, or inland transportation strategies along the supply chain help mitigate the impact of continued ocean congestion?
Short: A January 2022 CH Robinson customer research study found that a significant number of shippers are using new strategies to help manage supply chain disruptions. Specifically, 52% have changed their supply chain strategies in the past year by taking advantage of new modes, ports or trade lanes that they plan to continue using in 2022.
As shippers continue to manage disruptions, it will be critical to consider different modes, trade lanes or inland transportation strategies. For example, while it may not be possible to move 100% of cargo by air, air cargo is still the fastest way to replenish inventory. Therefore, prioritizing specific cargo can help keep cargo flowing.
Additionally, shipping less than container loads (LCL) is a strategy to consider. Generally, space for LCL shipments is easier to come by, especially in a capacity constrained market, as only container space is needed rather than an entire empty container. Shippers are seeing significant cost savings from expedited LCL services compared to today’s air freight environment.
Keep in mind that LCL shipments will not circumvent congestion at ports, so inland strategies should be considered. Currently, many ocean carriers are looking to carry more IPI (intermodal point inland) freight rather than focusing on port-to-port. CH Robinson has been able to help increase inland cargo flow for customers by sending more 53ft containers so that cargo on the smaller 40ft ocean containers can be efficiently consolidated into larger ones and loaded onto trucks or trains to be taken to domestic destinations more quickly. Overall, this increased our container capacity by 25% in Southern California.
As you can see, looking at just one part of the supply chain or mode can only get one shipper so far. It is important to consider all areas to keep the cargo moving.
LM: Do you think at some point there will be a legitimate push to bring supply/manufacturing operations closer to North America in a myriad of vertical markets? It appears that there are significant benefits that could be achieved through this approach?
In short: time will tell, but clearly changing supply chains is easier said than done. There may be issues with the necessary talent, the necessary raw materials and, in some cases, the infrastructure to transport goods to compete with current supply chains that have taken decades to build.
LM: Working with your large list of shipping customers, how is CHR using data and technology to make smarter supply chain decisions? How can new technology tools help provide the operational visibility needed to make adjustments in the future?
In short: Although today’s market presents many unique situations, historical data can always help us find solutions. Finding common trends and themes in cyclical data can give shippers an informational advantage to make smarter decisions for their supply chains.
Additionally, the right technology tools can give shippers the visibility and predictability they need to adapt. For example, with continued port congestion and delays, CH Robinson enhanced ship routing and tracking functionality within our transportation management system, Navisphere, to increase the efficiency and accuracy of port ETAs. and automatically send updates if changes are discovered. This is important because shipping is only part of the equation. Having real-time visibility into changes gives our team and clients a chance to react and adjust other tactics along the way.
LM: What are some of the key aspects of the latest changes in international trade policies that can impact a company’s landed costs, such as import costs, opportunities for duty collection and reduced exposure to rights?
In Short: With pending U.S. legislation, we have seen the possibility that many Section 301 tariff exclusions may be reinstated in 2022. These exclusions were designed to provide financial relief on certain products imported from China into the United States. United. At the end of 2020, the majority of these product tariff exclusions expired, increasing tariffs for shippers.
Although there has been no decision on reinstating these exclusions, the United States Trade Representative (USTR) is currently deliberating on a petition and comments provided by shippers endorsing their reinstatement.
If reinstated, these exclusions could not only mean future financial relief, but also have the potential for retroactive refunds as early as October 15, 2021, totaling millions of dollars for shippers nationwide. To help shippers better understand the impact this could have on their business, CH Robinson has created an online tariff search tool they can use to uncover potential duty refunds if exclusions are reinstated and help importers better understand their total landed costs.
In general, since each country’s trade policies are unique and subject to change, it is important that shippers have regular meetings with their trade advisor to overcome the complexity of their total landed costs, including understanding their shipping costs. importation, identify opportunities for duty recovery and reduce duty exposure through trade agreements.
LM: With inflation at its highest level in 40 years, what impact is this having on your shippers’ logistics sourcing efforts and what is CHR doing to help them?
In short: inflation certainly presents additional challenges for shippers. In Logistics management According to a recent readership survey, 97% of respondents said inflation has driven up their supply chain and logistics costs. One area that has been heavily impacted by recent inflation is contract rates – higher shipping costs and higher freight costs have also inevitably driven up freight prices, putting a strain on shippers across the trends. At CH Robinson, we are helping our customers manage the current situation in the most cost-effective way possible.
About the Author
Jeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics management, Modern material handlingand Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine where he covers all aspects of the supply chain, logistics, freight forwarding and material handling industries on a daily basis. Contact Jeff Berman