When Etta James penned “At Last,” I bet she didn’t think it would be tied to the freeing of a 20,000 TEU ship. Yet, here we are. Finally, the Ever Given has been cleared to continue to its next port of call after an undisclosed settlement between the Suez Canal Authority and ship owners and insurers. Learn more about the Ever Given, DHL Express new investments, Trans-Pacific capacity, Biden Administration issuing executive orders and shipping challenges for perishable food importers in today’s Friday Five!
The ship that was stuck for six days in the Suez Canal, and remained impounded for over three months, sending ripples across global supply chains, has finally been released after an undisclosed agreement between Suez Canal Authority, ship owners and insurers.
Shoei Kisen, the vessel’s owner, will determine if the Ever Given can proceed to Rotterdam and other European destinations after it goes through inspections.
Unraveling the sea of messy shipping data and orchestrating all of the logistics processes generated by the 20,000 TEU vessel once it resumes course, will be a massive undertaking for LSPs for weeks to come.
DHL Express will be investing more than $360 million in North America for facilities and new air capacity. This new commitment will support the parcel growth required to keep up with the ever-growing e-commerce demand. The rise in orders increased shipments by 33% per day in the first quarter compared to the same period last year.
Mike Parra, Chief Executive of DHL Express Americas stated: “With an ever-increasing number of consumers shifting their shopping activities online, and the sharp rise in businesses selling their goods in the global marketplace, we need to continue the critical investments in our network infrastructure to meet the growing demands in international e-commerce and global trade.”
With the traditional peak shipping season approaching, freight forwarders, container lines, and consultants are preparing US retail importers from Asia that the worst is yet to come regarding vessel capacity.
A logistics director for a mid-size retailer, name and company not identified in the post, said his staff and forecasted a capacity shortfall for July, August, and September. This forecast was prior to the June closure of Yantian ports due to the COVID-19 outbreak which only put greater strain on capacity and late arrivals.
Booking and allocation challenges will continue as spot rates surge and containers get rolled creating a huge burden for 3PLs and other logistic providers. Finding capacity and forecasting demand in non-peak season is a labor-intensive and complicated manual process. When demand hits peak levels during traditional non-peak season, the labor hours needed to process unstructured data and inevitable changes from carriers can be a manual process for operators deeply impacting operational efficiency.
In brighter news for LSPs, some additional capacity will be provided by regional carriers in Asia that are new to the trans-Pacific lanes along with Maersk and Cosco/OOCL who are capitalizing on the capacity needs and increasing their weekly service to the West and East Coast.
Through an expected executive order this week, the Biden administration will be tasking regulators to confront the consolidation and anticompetitive pricing in ocean and rail shipping in the US.
The Federal Maritime Commission and the Surface Transportation Board will have to address lack of competition and aggressive pricing that are making it outrageously expensive for American companies to transport goods in the United States.
Rising transportation costs are adding insult to injury as perishable food shippers in the US are already getting hammered with changing ship schedules, labor shortages, tight reefer capacity and a shortage of wooden pallets.
As transportation labor rates increase, it has been increasingly difficult to find drayage drivers as employees are leaving for higher-paying jobs like Amazon or are choosing to exit the industry altogether due to the excessive wait times at ports which impacts their earnings.
Patricia Compres, owner and CEO of Advance Custom Brokers in Miami, Florida said she has “never seen it this bad.” Due to the wait times, some truckers are refusing to pick up containers from certain terminals and others are adding additional surcharges from problem terminals. Compres stated, “It’s really worrisome for produce shippers right now. We finished melon season and are heading into citrus season, and that means a different set of ocean carriers.”
In addition, to the above challenges for perishable food shippers, tight capacity and the need to become more sustainable is an increasing burden for the cold chain for LSPs. Logistic providers are relying on orchestrated logistics to ensure perishable goods can reach a growing global population with a minimum amount of spoilage while also reducing their carbon footprint.
“For logistics service providers, who neither control shippers’ demand for freight nor the types of vessels, fuels or shipping lanes carriers use, the challenge to meaningfully reduce emissions is that much harder,”
Nikolaus Sievers, VP of Customer Success at Slync.io, commented on the challenges for LSPs and cold chain in Food Logistics magazine. Read the full article, "How to Drive Greater Sustainability in Food Logistics" here.
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