For logistics managers with limited time at the helm, this chaotic market seems extraordinary. But let me assure you that this is just another “black swan,” a totally unexpected market event—and you will see many more before your retirement. Black swan events can affect just one mode such as a strike, or weather disaster, and then there’s an event like a pandemic that affects every corner of the global market. However, the news this month is about a turnaround in ocean rates. Ocean prices in competitive lanes are in a free fall. Contracted prices, seen as a hedge against further…
Now, It’s generally recognized that there’s a difference between freight audit and payment programs and freight settlement. The former being a form of match-pay, with the result being a processed freight bill for the accounts payable department; and the latter being an exchange of detailed transaction information, including transit tracking and delivery confirmation in exchange for a (rapid) payment of a contractual amount. The need for historic transaction detail in the analysis of service performance, customer demand, and network optimization is driving the need for freight settlement rather than classic freight bill processing. The design of a settlement agreement as…
过去两年的加速,匆忙,grabbing—let’s call it “ESG” in the supply chain industry—have taught us that we were not prepared for “black swan” events like pandemics, wars (trade and military), and rapid climate change. The initial impulse has been to simply diversify suppliers and routes. The problem appeared to be the over-reliance on a single-source company or country for products and services. Many industry analysts lamented our drive to be efficient in global sourcing that has resulted in a lack of a “Plan B.” And that can kill our sustainability as players in our markets. In…
For over 40 years, the United States has relied on market forces to “regulate” pricing and service in transportation. Rail, highway, water and air carriers were freed of “onerous regulation” under the popular idea that competition will result in better service at lower prices. Indeed, competition led to lower prices in the short term that, in some cases, bankrupted lesser competitors. The freedom gained also meant that consolidation was now not only allowed, but encouraged. The stronger competitors began to grow by absorbing rivals large and small, and over several decades there has emerged a market in all the deregulated…
The automation of e-commerce implies more than just exchanging payments and documents digitally. The operational ingredients for a fully automated delivery supply chain are appearing all around us. Not that long ago, we were telling young logistics candidates that their career-starter jobs in warehouses and transportation were secure from being shipped overseas. The proliferation of close-to-market distribution centers and retail store order picking, as well as the growth of third parties and web-based service providers, is increasing employment in the short run. However, several key functional areas are now in the target sites of software and hardware providers for full…
While there have been recent changes in temperature-controlled logistics, known as “cold chain,” there are many of the same players remaining in the sector, but with some new people skills, processes and technologies. The pandemic has super-charged the cold chain market with consumer demand for refrigerated and frozen foods. The local restaurant industry has seen a demand spike in heated foods, while nearly all supply chain managers overseeing temperature-controlled products have been reviewing back-up plans and alternate sources for critical items. This is especially true where foods, such as fresh and frozen seafood, have been affected by disruptions in highway…
After many years of hands-off regulation in ocean, rail and air cargo the U.S. agencies are getting wake-up calls from Congress and shippers. The Federal Maritime Commission (FMC), a part of the U.S. Department of Transportation, was handed orders by the federal government via the Ocean Shipping Reform Act of 2022 (OSRA-22) to staff up and start examining critical metrics in capacity sharing, demurrage fees and the recent rash of “blank” sailing schedules by major carriers. While shippers have been clamoring for rate reasonableness, these were a step too far for the post-rate regulation era we’ve been in since the…
Third-party logistics (3PL) providers have been widely reported as continuing to grow as companies seek to outsource the operations of shipping, warehousing, returns, and even packaging and fulfillment. The challenge for buyers of 3PL services has been selection, creating a mutually beneficial contract as well as governance during the contract term. As a former 3PL provider and several times a buyer of these services, it has become apparent to me that early mistakes in the process of outsourcing can result in unplanned costs and, worse yet, service failures that hurt both parties as well as their mutual customers. There are…
The frequent declarations by trucking companies that there are not enough drivers runs counter to the fact that there are many times more commercial driver’s licenses (CDLs) issued than there are jobs in the industry. The facts are that with unemployment below 4%, drivers are making personal choices to change employers and industries to find a safe, steady job that will enable them to provide a reasonably comfortable life for themselves and their families—assuming their family members are willing to put up with irregular appearances of their bread winner. As those are few and far between, turnover rates are exceeding…
The United States Postal Service (USPS) has had periodic changes to its structure and processes over 250 years. However, a new law, the Postal Service Reform Act of 2021 (PSRA) just passed by Congress and signed by the President, will enable this organization of 650,000+ employees to act more like its parcel freight competitors while maintaining the six-day mail service that consumers and businesses rely on today. That’s no small feat, as the USPS delivers to 159-million locations in the United States six days a week. While the PSRA 2021 focuses on the people side of the business, you have…
The movies of the “Oceans” series dealt with mega-millionaire casino owners who were able to force their will on smaller casino operators and on the gambling customers. In the movies, a group of independents band together to counter and “put in their place” the out-of-control operators. I went looking for those heroes in the ocean and airfreight markets today. The sky-high prices and the lack of reliability in service—particularly in international transport modes—are dominating the headlines. Shipper executives are now trying to determine if this is a permanent condition that would force them to invest in near-shore and domestic production…
For some years, data-hungry shippers have leaned on their carriers and third-party logistics (3PL) partners to provide more than just a correct invoice. “It’s about the data,” say many leading logistics managers. Freight transactions are unique in that they generate many fields of data useful for analysis, such as shipping location, date and time, actual destination, weights and volume patterns. Shippers use this information to help support sales and operations planning (S&OP) that forecasts production, purchasing and logistics operations. Further, accurate history means better requests for proposals (RFPs) from shippers for logistics providers. In 40 years in the industry, I’ve…