Mike Short, president of Global Forwarding at C.H. Robinson, shares an update on the current global shipping market and insights into how shippers can prepare for this historical peak season.
For global freight shippers, managing disruption comes with the job. But the challenges of the last year have truly been out of the ordinary. Supply chain disruptions that consist of port and terminal congestion, shipping delays due to high cargo volumes, lack of labor due to Covid-19 and limited space have caused a myriad of challenges for shippers.
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 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.
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 recovery of cargo.
In addition, changes in export screening standards in the U.S. are also creating backlogs and congestion at terminals that’s exacerbated by 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.
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.
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.
Mike Short was named president of global freight forwarding in May 2015. Short started in the global forwarding industry in 1997 and joined C.H. Robinson through the acquisition of Phoenix International in 2012. Prior to being named President, Mike served as Vice President, Global Forwarding – North America. Prior to joining C.H. Robinson, Short held a number of roles at Phoenix International, including Regional Manager, Sales Manager, and General Manager of the St. Louis office. He graduated from the University of Missouri in 1993 with a Bachelor of Arts in Business.