Logistics is an industry that doesn’t get attention until there’s a problem. Unfortunately, the pandemic has caused one problem after another, with non-stop delays and bottlenecks around the world.

As logistics professionals come out from underwater, they’re dealing with the fact that they cannot resume business as usual. Fortunately, these challenges present a new reality and opportunities in remote collaboration. This includes using technology to achieve greater visibility into their organizations, and developing end-to-end, collaborative business processes that involve all the players in the supply chain.

Remote Collaboration in Logistics

Remote collaboration is the use of technology to bring together people from different locations for a common purpose. It’s driven by advancements in cloud computing, real-time videoconferencing, and other forms of telecommunications that have made it easier to collaborate with people across distances. Leaders in logistics can benefit from remote collaboration because it allows them to tap into a wider range of industry experts and connect more easily to their end customers.

One of the biggest challenges in logistics is gaining a true sense of a facility or area that an employee can’t physically visit. This helps with planning and operations, but it’s also important from a security perspective because it allows leaders to understand what areas present risks for their workers and what areas might be hiding dangers. Advances in 360° technology, such as real-time 360° collaboration, allow leaders, customers, and experts to see any area from a remote location.

For example, during the heat of the pandemic, DB Schenker, a global logistics leader, leveraged 360° technology to conduct virtual warehouse tours. During these tours, DB Schenker brings potential customers on site to view their facility and explore their offerings without the time, cost, and environmental impact of physical travel, which in turn helps drive sustainability goals. They estimate saving millions in travel costs.

Below are 5 key benefits of remote collaboration for logistics leaders.

#1 Massive Cost-Saving Potential

Swapping site visits with virtual inspections/tours saves on average $2k per person, per visit. This money can be reinvested into other scalable projects. Remote collaboration is meant to augment an existing collaboration protocol. With the right tools at their disposal, logistics leaders can select which visits they can conduct remotely and how they can reallocate funds to other areas of business growth.

#2 Sustainable Solution

Business travel is a leading culprit in carbon emissions. For example, a relatively short return trip from London to Rome carries a carbon footprint of 234kg of CO2 per passenger.

Reducing reliance on travel allows businesses to reduce greenhouse gas emissions over time, thereby helping organizations meet carbon reduction targets without major disruptions to their business.

#3 Minimize In-Person Disruptions

With 360° remote collaboration, leaders and onsite personnel can get their time back. Instead of spending travel time and several hours on site, leaders can see what’s happening and discuss all the details in a single meeting.

Typical on-site visits disrupt routine workflows. For example, visits such as facility tours or audits may involve schedule changes for on-site personnel. This might only take a few hours out of the day but could significantly disrupt workflow. Leaders that use remote collaboration can reduce or eliminate these disruptions, allowing them to get work done.

For attendees, the average business trip involves 6.9 hours lost that could otherwise be spent productively and often involves a physical and mental drain on the travelers.

#4 Conduct More Frequent Visits

By avoiding logistical challenges with travel, leaders in the logistics space can reimagine how often they want their team or customers to be on site.

With remote tools at their disposal, they can increase the frequency of routine audits or bring customers/stakeholders on site more often for updates and decisions. Having more site visits virtually will only help on the efficiency side and improve quality control.

#5 Maintain Safety of Sites and Personnel

Remote collaboration also provides logistics leaders with another security benefit – personal safety – by allowing them to conduct more business from their homes or offices, away from any danger that might be present at a particular location. Having a remote protocol in effect helps leaders overcome travel challenges or COVID related shutdowns.

At the end of the day, logistics leaders should consider how remote collaboration tools can add value across the entire organization. Creating measurable goals, reallocating funds based on current needs, conducting more frequent visits for customers or employees, reducing in-person disruptions, and increasing access to decision makers are just some of the benefits that come from selecting remote collaboration tools built for site visits.

Technology is not a replacement for all physical interactions. In certain cases, logistics leaders might want their team or customers/stakeholders to visit their locations as opposed to meeting online. Having the option to have meetings with multiple people from different time zones in one space is already our future.

Source: www.inboundlogistics.com

Author: Devon Copley, Founder and CEO, Avatour

Image: www.pexels.com

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Global ports lost more than one-third of their expected capacity to ship containers in 2021, causing economic trouble for some smaller developing nations, among others, finds research commissioned by the Global Shippers Forum (GSF).

The study, which was conducted by MDS Transmodal, identifies the extent of capacity restriction in 2021 that resulted from scheduled port calls being skipped by shipping lines. It measured the number of container ship slots that were expected to be available at the port but never materialized because the lines skipped the port—often because vessels were already fully occupied by containers collected at ports called at earlier on the service.

Skipped ports have become part of how shipping lines are managing their heavily utilized fleets.

“Skipped port calls have multiple effects on shippers,” says James Hookham, director of the GSF. “They create local upward pressure on shipping rates, as shipping line agents ‘auction off’ available slots on the vessels that do call. Shippers also face unexpected surcharges for the handling and storage of delayed containers.

“More pernicious is the wider effect on national economies, especially those of developing nations that lose opportunity to deliver their exports, and hinder the recovery of their economy from the effects of lockdowns and COVID restrictions,” Hookham adds.

Source: www.inboundlogistics.com

Image: www.pexel.com

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These tips will help your company restart operating systems, processes, and strategies through the new normal.

As we enter year three of the COVID era, companies worldwide are grappling with an all-too-familiar array of supply chain challenges—supply uncertainties, capacity and labor shortages, long transit times, and sky-high transportation rates. Tough times call for fresh strategies. As companies seek to reboot their supply chains for better success in 2022, here are some tips on how to navigate the new normal.

1. Digitize to Manage Uncertainty. Before you develop a supply chain plan, you first need to establish certain parameters—for example, how much lead time a supplier requires to produce a product, and how much demand you expect. Unfortunately, right now, the figures that underlie supply chain plans are anything but solid.

“Supply chain organizations are faced with tremendous disruptions, just trying to respond to the variability that’s occurring,” says Mark Balte, executive vice president, supply chain innovation, at Atlanta-based supply chain solutions provider Logility.

To manage variability, collect as much data as you can about supply and demand and apply machine learning to develop a sophisticated picture of changing conditions over time.

Take demand sensing, for example. “If we put a plan in place four or six months ago, the demand pattern is going to change as we get closer to that demand date,” Balte says. The more data the company collects, the better it can predict actual demand.

“We can begin planning earlier, perhaps make a change,” Balte explains. Maybe a company expects a shipment at the Port of Los Angeles. “I was planning to move it to a distribution center in Colorado,” he says. “Now I may only want to move part of it to Colorado and some to Dallas.”

Opportunities abound to collect data that supports decisions, with new Internet of Things (IoT) devices coming on the market all the time. “But companies should begin the journey now, at least collecting data within their own enterprise, and then extending that outside the enterprise,” Balte says.

Data from publicly available sources, carriers, and IoT devices in company-owned or supplier factories can enhance the knowledge base, producing better forecasts.

2. Rate Sources for Risk. Data analytics can also help you develop more resilient sourcing strategies. For instance, Stanley Black & Decker, based in New Britain, Connecticut, analyzes risks its suppliers face due to COVID infections or various other challenges. Those risks point to potential supply chain disruptions.

“We’re able to quickly narrow down the list of higher-risk suppliers that we can evaluate much more carefully to see if their production rates have been hit,” says Guru Bandekar, chief supply chain officer for the company’s Global Tools and Storage business.

Stanley Black & Decker dual-sources or multi-sources components whenever possible. If supply from one vendor starts to look uncertain, the company can shift more order volume to a different supplier.

When dual- or multi-sourcing isn’t possible, Stanley Black & Decker maintains safety stock, setting the volume based on how long it would take to recover from a disruption. “If it will take us five weeks to re-source that part, because it takes time to get a new supplier up and running, then, to put it simplistically, we want to have five weeks of safety stock,” Bandekar says.

3. Move Your Manufacturing. Supply chain disruptions have dramatically driven up freight rates and lengthened transit times. A container shipment from Asia to the United States that would have cost less than $2,000 a few years ago cost as much as $20,000 in 2021, according to Bloomberg.com. And capacity shortages and port congestion have added weeks to the crossing.

“A shipment from Asia to the United States used to take four weeks by ocean,” says Mustafa Hossaini, business development manager at Westec Plastics Corporation, a contract manufacturer of plastic parts in Livermore, California. “Currently we see transit times of six to eight weeks.”

Since the start of the pandemic, Westec has experienced an uptick in inquiries from U.S. companies that might want to move their production from overseas to the United States.

While labor costs in the United States are relatively high, in some cases, domestic production cuts shipping costs so much that the math works out in favor of reshoring.

Hossaini cites a company whose drug delivery product uses plastic parts made in Europe. “They told us that on the last batch of products they received, the shipping costs were $8,000,” he says. “Our shipping rate to them would literally be $150, because they’re located a half hour away from us.”

Companies might also embrace domestic manufacturing to gain convenience and peace of mind, since they can easily visit a contract manufacturer to oversee quality issues and resolve problems, Hossaini says.

In addition, reshoring might eliminate language barriers. And many U.S. companies want to promote their products as “Made in America.”

Stanley Black & Decker strives to source components and assemble products as close as possible to the markets where they are sold. When local labor rates make this hard, the company controls costs through automation. Although the company has used this strategy since the advent of new tariffs in 2016, localization has grown even more important since the start of the pandemic, Bandekar says.

4. Get Flexible with Carriers. In an era of scarce capacity, shippers that strive to accommodate truckers’ needs have an easier time getting freight on the road. “We advise companies to be as flexible as possible with transit times, hours of operation, and trucks they would accept,” says Dave Menzel, president and chief operating officer at Echo Global Logistics, a third-party logistics (3PL) company based in Chicago.

Say a shipper wants a load picked up at 9 a.m., but the carrier can’t supply a truck until 1 p.m., Menzel says. If the shipper really wants that truck, it might adjust its schedule.

Shippers should also strive to get trucks loaded and unloaded quickly, to minimize downtime for truckers. “If a facility has a reputation for long lines and difficulty getting loaded or unloaded, then that facility is a lot less attractive, and trucks will choose different options,” Menzel says.

Fast loading and unloading are especially hard these days, when a tight labor market and COVID-related absences can leave shippers short-handed. Logistics managers should keep that in mind when they book appointments with truckers.

“They should be realistic about what they can load in a given day,” Menzel advises.

Shippers should also provide leeway when drivers arrive a bit later than planned. “Instead of telling them they need to get a new appointment, and the next available one is in two days, you might say, ‘If you miss your appointment by an hour, we will work you in,'” Menzel says

5. Collaborate. Good relationships with carriers and customers can also help shippers better deal with challenges such as uncertain transit times and shortages of crucial resources.

For instance, Stanley Black & Decker relies on strong partnerships with carriers and logistics providers to gain a steady flow of information about the progress of containers on the water.

“We can use that information to predict when we will get the product and then make commitments to our customers, to the best extent possible,” says Bandekar. “Customers want speed, but if they can’t have speed, they want predictability.”

The company also works with over-the-road providers to manage mutual challenges. “What can they do to get more chassis, or attract more chassis toward our supply needs?” Bandekar asks. “What can they do to attract more drivers?”

Stanley Black & Decker and its carriers hold many more conversations on such topics these days. “We are helping them prioritize, and they’re helping us understand the challenges so we can prioritize based on the changing dynamics,” he says.

Shippers may also overcome obstacles by sharing information with customers. “Don’t be afraid to discuss with customers the problems you’re facing, because they are going to face the same problems,” says Lewis Black, chief executive officer of Almonty Industries, a Toronto-based mining firm that is a major producer of tungsten.

Almonty serves customers in the electronics, medical device, aerospace and other industries. The company’s challenges these days include trouble procuring consumables such as drills, explosives and various grades of oil, as well as slow shipping, tight capacity, and high freight rates.

Sometimes, asking for a favor can help. “We ask our customers to send us a spare container if they have one,” Black says. Or, they might ask a customer that manufactures drill bits to send some half-finished drill bit or ones they are going to recycle. “Send them to us and we’ll use them,” he says.

6. Retain Your Talent. The Great Resignation has hit supply chain organizations hard. Companies, especially those involved in e-commerce, are trying to add front-line workers and new facilities to meet increased demand. “But at the same time, you have constant and accelerating workforce turnover,” says Dan Johnston, co-founder and chief operating executive of WorkStep in San Francisco.

WorkStep addresses the supply chain labor shortage with two technology platforms—Hire, a recruitment tool, and Retain, which employers use to gain insights to reduce employee turnover.

Companies have traditionally treated warehouse associates, drivers, and other supply chain workers as cogs in a machine, easy to replace, Johnston says. But in today’s tight employment market, that mindset has changed.

“If you can keep the talent you have, you have to compete less for this incredibly hard-to-find new talent,” he says. “And you can deliver more goods at a better pace to your end customers.”

WorkStep’s customers use Retain to collect feedback from employees periodically, asking their opinions on factors that affect job satisfaction. Using a mobile phone or similar device, the employee takes a minute or so to answer a survey. Retain aggregates and analyzes the results, spotlights areas of concern, and then, when the company makes corrections, tracks how those changes influence turnover.

Using Retain, a 3PL that runs 350 warehouses learned that managers in some of those buildings weren’t following correct orientation procedures for new employees. “You might see an average satisfaction with orientation of 90% across the organization, but in 10 buildings it was 50%,” Johnston says.

By correcting those and other problems Retain uncovered, the 3PL cut turnover among new hires by 36%.

7. Improvise. Beyond strategies to help navigate the current supply chain environment, companies might also benefit from tactical creativity.

Black recalls a time in the 2000s when Almonty Industries struggled with a shortage of rubber tires, which the mining company’s underground vehicles consume in large quantities. “What we came up with was very rudimentary, almost medieval,” he says. “We started making steel wheels with wooden tires.”

Almonty improvises in a similar way to beat today’s shortage of shipping containers. These are especially hard for Almonty’s European operations to get hold of, since the shipping lines focus so heavily today on their lucrative Asia-to-North America lanes.

“There are no containers around, but there are lots of old shipping containers in scrap yards,” Black says. Almonty retrieves those old containers, welds them back together and installs new, government-approved security latches.

“We have someone driving around who rings us up and says, ‘I saw an old shipping container in pieces in a scrap yard,'” Black says. “We send a truck down there, buy it, and bring it back.”

Unfortunately, once Almonty uses the recycled container to ship tungsten to the United States, someone there grabs it and the company never sees it again.

LONG-TERM SHIFT

While pandemic-related disruptions have prompted many changes, companies are not likely to revert to the old ways as the virus finally runs its course. “These capabilities we are building will be the way we operate in the new normal,” says Bandekar. “It’s a long-term shift.”

COVID has thrown a spotlight on issues that have always existed. But when normalcy comes back, other environmental issues, such as global warming and forest fires, will continue to disrupt the flow of goods.

Says Bandekar: “The way we manage our supply chains in the future will be much different from how we managed them in the past.”

Source: www.inboundlogistics.com

Image: www.pexels.com

The post 7 Strategies to Reboot Global Supply Chains appeared first on Cargo World Today.

Airlines have been ramping up their digital booking offerings over the last few years in response to market volatility.

A survey carried out by booking portal Freightos found that 46% of air cargo carriers now enable instant rate searches for quotes on their websites compared with 10% in 2019.

Meanwhile, 33% offer e-booking with instant confirmation compared to 25% in 2019.

But there is still room for development, with 21% offering instant allotment booking and 4% allowing payments to be made online.

Freightos said that the most widespread digital stride among air carriers was the leveraging of third-party platforms to extend their online reach.

The research shows that 46% of leading air carriers provide instant rate search through third-party platforms and 42% also enable e-booking through these channels.

Shipment tracking is also widely available, with 42%providing this as an option.

Freightos said the adoption of third-party platforms was higher in air than ocean, where just 18% offer e-booking on portals.

“In the fragmented air market – compared to the consolidated ocean market and the growing leverage the pandemic has shifted to ocean carriers – airlines are eager for the low-touch access to new customers, new segments and new geographies that platforms represent, even at the cost of making price and service comparisons easier,” Freightos said.

“And the volatility of air cargo during the last two years served as a catalyst for this trend.”

The overall shift to digital booking was accelerated by the pandemic, the company said.

“The rush on PPE early in the pandemic, just as passenger travel plummeted, was an extreme example of the volatility in the air cargo industry over the last two years.

“The fast pace of air transport only quickened as labour shortages and ever-shifting quarantine requirements led to frequent operational changes.

“This environment accelerated the ongoing search many carriers had already been engaged in for improved internal efficiency and faster ways to communicate and transact with customers.

“Like in ocean freight, the pandemic accelerated the pre-existing trend toward digital connectivity.

“While carriers made gains in their website offerings and API connections, the biggest shift was in leveraging third-party platforms to extend their reach.”

Johnny Rubio, chief commercial officer of Silk Way West, said that online booking portals allowed carriers to introduce e-booking without a massive amount of investment in resource and capital and also makes its services more visible to a wider customer base.

IAG Cargo head of distribution Peter Roberts added: “Not only have our e-bookings increased, but the average weight per e-booking has too, suggesting that customer trust is growing.

“In addition to improving both customer satisfaction and our reach, the data unlocked through e-booking enables better business intelligence and a data-driven strategy.”

Source: www.aircargonews.net

Image: www.pexels.com

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Looking at the market trends and possible challenges of 2022, industry experts have made various assumptions, but no one could have predicted that the industry would have to deal with something that Europe has not experienced for decades: active warfare.

For more than a month, the Ukrainian army has been resisting Russian occupation in a bloody battle. Although the people of Ukraine and Russia suffer most directly from the war, the rest of the world has also indirectly fallen victim to Putin’s decisions. I have already explained the impact the war in Ukraine has had on the freight sector as a whole, but I would now like to highlight the ongoing air transport sector. It is currently suffering not only from soaring fuel prices, but also from a lack of capacity, which is also having an irreversible effect on consumer wallets around the world.

Capacity is affected not only by ban but also by destruction

In early March, two weeks after Russia’s invasion of Ukraine, Northeast Asia-Europe’s transport capacity had fallen to 22% since the pre-war period. Now, almost a month later, it is even lower. The capacity of air carriers is most affected by the sanctions imposed on Russia. As a result, the delivery of goods to Europe is banned for the largest Russian cargo airline operator Volga-Dnepr, whose subsidiary AirBridgeCargo has more than 800 different cargo aircrafts. However, this is not the only aspect that affects the capacity of hauliers. Aircrafts destroyed as a result of war, which rubs salt into the wound of the industry, also play an important role. For example, in the battle against Hostomel Airport, the industry lost a historically unique specimen – the world’s largest cargo plane, the Mriya. Although the Ukrainian government has announced that every effort will be made to rebuild the plane, it will take time and at least $ 3 billion. It has also recently been confirmed that AN-26 and AN-74 aircrafts have been destroyed as a result of the Russian invasion.

To Asia around Russia

Due to the war, many air carriers have decided not to cross the airspace of Russia, Ukraine and also Belarus, citing the safety factor of employees as the main reason. This position has been publicly confirmed by industry giants such as UPS, DHL and FedEx, which own about 1,000 cargo planes. I believe that not only the issue of security, but also the image and political pressure of the company played a major role in making this decision. Now that most companies in various sectors are leaving Russian territory, thus clearly expressing their political position, the big logistics and freight companies must not lag behind either. It is clear to them, as to any other business expert, that the image of a company is easy to tarnish but hard to polish, and the smartest way to avoid becoming a black sheep right now is to turn your back on Russia.

Consumers become the victims

A series of all the above decisions and events will inevitably increase the costs for air cargo carriers, which will not only hurt market players but also consumers. There are already companies in the industry that are increasing the additional costs for international freight. One of them is FedEx, which took such a step in March. Although the company is one of the first to change its pricing policy as a result of events, it will certainly not be the last.

The most logical solution – more cargo planes

Once again, as in the Covid-19 outbreak, when the industry was struggling with a lack of capacity, the most effective solution is to transform passenger planes into freight transport. Such restructuring of airlines would significantly increase the capacity of air cargo carriers. Moreover, according to Insider, it is more profitable than buying new cargo planes. According to the media, such a move could save companies hundreds of millions of dollars. Airlines such as Qatar Airways and the Emirates Group, known to the general public as passenger airlines, took this step in early 2020. At the end of March, Alaska Airlines joined them, adapting five different passenger planes for cargo transportation.

Whatever the future decisions of air carriers, one thing is clear: only by working together in a crisis situation will it be possible to meet the needs of both the industry and the customer.

Author: Roland Peterson, logistics expert

Image: www.pexels.com

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The Baltic Exchange’s dry bulk sea freight index fell to its lowest level in over three weeks on Thursday, dragged by sliding panamax and supramax vessel rates, although the main index posted monthly and quarterly gains.

The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, dipped 11 points, or about 0.5%, to 2,358 points, its lowest since March 8.

The main index has gained about 6.4% this quarter and 15.6% in March, its second monthly gain this year.

The panamax index dipped 95 points, or 2.9%, to 3,141 points. The index added about 22.1% this quarter, after posting declines in the last two. For the month, it was up more than 20%.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, fell by $850 to $28,273.

Dalian iron ore rose boosting a quarterly gain that was the biggest since end-2020, while the Singapore benchmark hovered around the $160 mark, as traders anticipated additional policy support to shore up China’s economy.

The capesize index gained 114 points, or 6.9%, to 1,760, but posted its second straight quarterly decline at 23.9% and an 8.8% monthly decline.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, increased $938 at $14,593.

The supramax index dropped 67 points to 2,808 points and increased about 22.6% for the first quarter of the year.

Source: www.marinelink.com

Image: www.pixibay.com

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As shipping delays and supply chain issues pile up across the country, more businesses struggle to ship and receive products on time. When companies fail to meet important deadlines, the results can be costly, leading to the loss of valuable customers and vendors.

Fortunately, the use of expedited shipping services can help mitigate these risks. Experienced freight companies can identify the quickest and most cost-effective transportation methods while also helping to prevent financial loss caused by absent or late shipments.

Once you’ve established a working relationship with a reputable freight service, your account information, needs, and any special requests will be saved in their customer database. That means that the next time you contact them, you’ll spend less time explaining your situation, getting your inventory en route even faster.

WHY EXPEDITED SHIPPING SERVICES?

While expedited shipping options are typically more expensive than standard freight services, they offer numerous benefits.

Streamline the transportation process by sending freight directly to the consignee as soon as it’s picked up. That means your inventory won’t waste unscheduled time sitting in a storage facility or warehouse, reducing the risk of lost profits. Depending on the industry, just one hour of downtime (caused by lack of equipment or tools) can cost anywhere from $85,000 to $1 million.

Don’t pay for storage. More organizations utilize just-in-time inventory based on their production cycles. This means that supplies arrive only when needed, lowering overall costs. Maintaining the warehouses that store these items can be expensive since the facilities have to carry insurance, hire staff workers, and implement temperature control—leading to higher costs.

Utilizing expedited shipping services to order supplies when necessary eliminates the need for storage space, saving time and money without interrupting production.

Know your inventory is secure. Because your inventory remains on the same vehicle during the duration of its journey, there’s minimal handling, resulting in a much lower chance of damage or losses. Businesses also have the ability to track inventory in real time 24/7/365.

The ability to plan ahead. Planning months or years in advance can help businesses prepare for future demand, maintenance, upcoming supply chain shortages, and more.

Many organizations only utilize a single pallet per shipment when sending or receiving goods. However, they’ll save money in the long run if they order enough supplies to fill all the available space since they’re entitled to exclusive use of that vehicle.

By taking time to evaluate the total cost per shipment and establish a working relationship with a trusted expedited shipping provider, businesses can determine exactly what they’ll need over the next year, combining multiple orders into fewer shipments and reducing overall spending.

Save money over time. Expedited shipping offers security, helps you meet tight deadlines, reduces storage costs, and allows your business to plan ahead. Real-time tracking updates and less handling also ensure a damage- and loss-free delivery with no downtime.

While supply chain disruptions may continue for a while, expedited shipping services can reduce their impact.

Author: Dan Boaz, President and CEO, AirFreight.com

Source: www.inboundlogistics.com

Image: www.pexels.com

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Greenpeace activists have taken to the sea to protest against tankers carrying Russian fossil fuels to Europe.

Traveling in rigid hull inflatable boats (RHIB), kayaks and as swimmers, protesters from Denmark, Sweden, Norway, Finland, Netherlands and Germany on Sunday went in front of supertankers Waikiki and SFC Baltica in the Baltic Sea, displaying banners with “Oil Fuels War” as Greenpeace calls on Europe to reject and ban Russian fossil fuel imports to weaken the attack on Ukraine.

Mads Flarup Christensen, executive director of Greenpeace Nordic, said, “While people suffer in Ukraine and people in Russia take to the streets pleading for peace, Putin’s oil and gas is still arriving at European ports, contributing to his war chest. Supertankers crossing our seas with Russian oil and gas are still delivering fossils to Europe. If we want to stand for peace, we must stop this and urgently get off oil and gas.”

Waikiki, owned by Greek shipping company Cardiff Marine, is reportedly carrying 100,000 tonnes of crude oil from Russia to Rotterdam, and SFC Baltica, owned by Russia’s Sovcomflot, is transporting 85,000 tonnes of fuel oil from Russia to Antwerp.

© Will Rose / Greenpeace

A new tracking service launched by Greenpeace UK has identified at least 189 supertankers carrying oil and gas from Russia since the start of its invasion of Ukraine on February 24, with 88 of them headed to Europe. Despite some countries declaring a ban on the arrival of Russian vessels, Russian cargo is still arriving via ships registered to other countries.

Russia is the largest source of the European Union’s fossil fuel imports. Europe spends up to $285 million per day on Russian oil, which funds Putin’s war effort, according to the Transport & Environment (T&E) thinktank.

Last week in France, Greenpeace activists confronted Russian liquefied natural gas (LNG) carrier Boris Vilkitsky at sea, and earlier this month 20 activists from Greenpeace Germany painted ‘No Coal’ and ‘No War’ on the side of the bulk carrier Grant T loaded with 100,000 tons of Russian coal as it approached the port of Hamburg.

Dockers in France, the U.K. and the Netherlands have already refused to unload fossil tankers coming from Russia. And the Swedish Dockworkers Union decided on Thursday to block ships from Russia.

© Jean Nicholas Guillo / Greenpeace

Source: www.marinelinks.com

Image: www.pexels.com

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The war in Ukraine and the harsh sanctions against Russia have affected the market situation in many sectors, including logistics and freight. Since 24 February, when Russian tanks crossed the Ukrainian border, the global supply chain has seen a sharp rise in costs, freight transport has lacked capacity, and the industry as a whole has faced major challenges in addition to existing ones.

Whopping fuel prices

The war has affected the logistics and freight industry both directly and indirectly. One of them is the rise in fuel prices, which has been felt by every driver in recent weeks. Fuel prices have now reached unprecedented heights. In America, for example, this increase was last seen more than a decade ago. This inevitably affects the costs for carriers, which in turn raises the price of the service. For example, according to Freightos, global air freight rates from Asia and Europe have risen by about 80% since the end of February, reaching $ 11.86 per kilogram. Higher shipping costs are likely to affect not only carriers but also consumers. Market comparisons are already showing significant price increases for commodities such as aluminium, wheat and exotic fruits.

Longer routes

More than 2,500 flights from the United States used Russian airspace in January, according to aviation data company Cirium. However, at present, due to security, sanctions and political stance, many carriers no longer deliver goods to Russia and avoid including its territory in their route plans. Due to military threats, Ukraine and Moldova have also become countries with a curve in both land and air transport. This means that companies in the sector need to think about alternatives to travel around certain countries, thus extending flight times and inevitably increasing fuel consumption. Due to the difficulties caused, several airlines have cancelled flights to some Asian countries. Such a step has been taken, for example, by an industry giant such as Finnair, which has decided to cancel passenger and cargo flights to Seoul, Shanghai and Guangzhou, as well as Hong Kong indefinitely.

Lack of capacity and congestion

The state of war in Ukraine has also affected freight transport capacity, which had already fallen sharply during the pandemic due to growing demand for goods, and is now being further eroded. Why? One of the reasons is the aforementioned sanctions against Russia. As a result, Russian cargo planes have been suspended. One of the most significant losses is the banning of Russia’s largest cargo air operator, the Volga-Dnepr, in the West. The Volga-Dnepr operates a fleet of particularly large cargo ships with ramps that can accommodate unusual types of cargo, such as metro wagons, as well as large general cargo shipments. Its subsidiary AirBridgeCargo has 17 Boeing 747 jumbo jets and 777 other cargo aircraft that have been banned from operating in almost 30 countries since the sanctions were imposed. Such bans have had a significant impact on the capacity of cargo aircraft, which is also contributing to the rise in air freight rates.

Congestion at borders and ports

Sanctions against Russia are also not helping the already growing congestion at the border and in major ports. As a result, all shipments of goods entering and leaving the country are subject to special scrutiny at the border to ensure that all sanctions imposed on the country are complied with. This, in turn, indirectly affects an already disrupted supply chain, creating congestion and making it even slower than before.

The air and land transport sectors are not the only ones indirectly affected by the military conflict between Ukraine and Russia. Russia’s invasion of Ukraine is also damaging world shipping, which accounts for 80% of world trade. Many Russian ships are currently stranded in the world’s oceans and seas, unable to deliver and receive cargo because they are barred from calling at ports in the Americas, England, Canada and many European countries. In addition, the crew on board has to deal with the reluctance of foreign seafarers to help in the event of a shortage of petrol. In recent weeks, the media has repeatedly published videos showing footage of the Russian ship’s crew crying for help, which has been unsuccessful.

Security risk

The war in Ukraine has also increased the security risks for logistics and freight workers. Although most logistics companies have stopped delivering goods to Russia and Ukraine, including Maersk, CMA CGM and Hapag-Lloyd, some 140 merchant ships from other countries are currently trapped in Ukrainian ports, risking being left without food or drinking water. There have been several reports in the media about the shooting of ships and the death of crew members. For example, on March 3, an Estonian-owned cargo ship with a crew of six, including two representatives of Russia and four representatives of Ukraine, sank off the port of Odessa. Three other merchant ships were sunk in the Black Sea; one of these attacks killed a Bangladeshi crew member. Undoubtedly, the security risk in the shipping industry is now higher than ever, and events are pushing up insurance prices, urging carriers to impose a ‘war risk surcharge’ and puts people in the shipping industry in fear for their lives.

All the above factors lead to the same conclusion: no matter how much we want to send Russian freight and logistics companies to hell because of their political position, we must understand that their absence from the market makes it difficult for the entire industry to function effectively. So let us hope for an early end to the war and a faster recovery of the industry, which will benefit everyone.

Author: Roland Peterson, logistics expert

Image: www.pexels.com

The post Security risks and rising costs: the consequences of the Russia-Ukraine war on freight transport appeared first on Cargo World Today.

Waterway traffic is coming back. November 2021 saw 52.1 million tons moving on the U.S. inland waterway system, the highest monthly tonnage since October 2019, a few months before the onset of the COVID-19 pandemic, and the shutdowns and stoppages of early 2020. Flows estimated by the Bureau of Transportation Statistics (BTS), part of the U.S. Department of Transportation, based on data from the U.S. Army Corps of Engineers (USACE) show a 25% rise from June 2020. Data in a presentation by The Waterways Council Inc (WCI), also using USACE data, showed overall tonnage, in 2019, of 514.9 million short tons, with petroleum and products leading (with 150 million tons), followed by coal (95.6 million tons), aggregates (81 million tons) and grains (77 million tons).

During 2021, selected barge grain movements (moving through key locks, approximately half of overall tonnage shown above) were down slightly from the previous year, according to the U.S. Department of Agriculture’s December 30 Grain Trade Report. Michael Steenhoek, executive director of the Soy Transportation Coalition, in speaking with Marine News, stressed the linkages between the export markets and agricultural transportation on the rivers, noting that the U.S. exported 60.5 million total metric tons of soybeans in the marketing year ended August 31, 2021 adding that, overall, 35 million of the total went to China. He said the leading export region is the Mississippi/Gulf, accounting for 27 million tons in the 2020/2021 marketing year. He said that, normally, around 60% of U.S. soybean exports will come out of that region, with the overwhelming majority of that arriving via barge transportation.

Medium term trends on the waterway system were discussed within a detailed study on the waterways released by Vanderbilt University in September 2021. The authors noted, “The last 20 years validate that the underlying markets relevant to barge demand are stable and resilient, and the summary outlook for 2025 anticipates that tonnages will be slightly lower and ton-miles slightly higher than 2019.

The increase in ton-miles is in spite of a reduction of tons and is the result of a generally bullish outlook for the agricultural sector, which is expected to increase by nearly 15%. Most agricultural barge transports are also longhaul shipments of 1,000 miles or more. In short, the U.S. is expected to retain its position as one of the world’s largest grain exporters.” The USDA, in its 2021 “Agricultural Projections to 2030”, shows small, but steady growth in exports (which drives barge traffic into the Lower Mississippi region) for the major grains.

While agricultural moves are likely to grow, the opposite is true for coal. The Vanderbilt University researchers note that “…the energy sector sees the most significant projected change, reflecting a continuing decline in utility coal use, and the beginning of a gradual shift away from petroleum use across numerous economic sectors as decarbonization policies and practices are implemented, impacting overall refined petroleum demand.” Similar views can be seen at the level of individual ports. For example, in a Kentucky Economic Development Summit, held in Spring 2021, scenario-based forecasts for 11 individual riverports out to 2045 (prepared by IHS Markit) were presented. A number of ports saw grain replacing coal as the top commodity handled; in those ports handling coal, its moves fall substantially under the varied scenarios.

The forecast for the tank barge marketplace is upbeat. In a conference call accompanying the release of Kirby’s 2021 fourth quarter earnings, company CEO David Grzebinski told investors: “In inland marine, we expect a strong market in 2022 driven by continued economic growth, increased volumes and minimal new barge construction. This should contribute to further improvements in the spot market with our barge utilization ranging in the high-80% to low-90% range for the year.” He did caution that “the first quarter [would be] the lowest due to seasonality and the headwinds related to COVID with the positive pricing environment building throughout the year.” For comparison, during the Spring 2020 lockdowns, Kirby’s utilization had plunged toward the 60% level, with 2021 providing a recovery up toward 80% utilization.

Clark Todd, chairman and CEO of Blessey Marine Services, a New Orleans area based specialist in transporting liquid cargoes for petroleum and petrochemical companies as well as commodity trading houses, explained to Marine News, “We have continued to see a moderate increase in demand for inland tugboat and barge business to start the year. The equilibrium of supply and demand of our assets across the industry is tightening up as fewer new build tug boats and barges will be built in 2022. We are optimistic that the upcoming summer driving season will yield stronger demand as consumption of refined products increases. So, we look for 2022 to be a better year for everyone in the inland tugboat in barge business.”

In the investor call’s Q&A session, Kirby’s Grzebinski offered similar sentiments, saying, “Demand continues to grow. We still got some chemical plants coming on. And as you know, demand for liquid volumes typically goes up with GDP. We’re looking at a pretty good GDP number this year and probably next year…. [the supply picture] is even better. With barge pricing a new 30,000-barrel barge is probably $4.1 million to $4.2 million for a brand-new barge. That’s the highest we’ve ever seen. And a lot of that is steel price and some labor costs, but at those prices, we’re not seeing much newbuilds if any at all… and barge retirements are still going on because the equipment is getting older…So, when you put supply and demand together, this is about the best we’ve seen in a long, long time, and we think it’s a multiyear kind of upswing.”

Equity analyst Gregory Lewis, from brokerage BTIG, in a report released following Kirby’s call—where his recommendation was upgraded to “Buy” from “Neutral”—wrote, “After limping along for years, first around barge oversupply (2017-2019) and then from COVID (2020-2021), the inland barge market finally looks to be ready to inflect higher. Not surprisingly…the near- and medium-term setup looks good… And while the outlook for U.S. GDP remains constructive, which should buoy continued growth in both refined product and petrochemical volumes, on the back of what has been a challenging five-year period for barge owners the medium-term supply outlook is constructive (the inland barge fleet looks to have shrunk in 2021 and the lack of orders at yards points to negative fleet growth again in 2022).”

Going forward, new attention on infrastructure in Washington, D.C., against an ongoing backdrop of less carbon intensive transport generally—the subject of the Vanderbilt University study—may help waterborne cargo flows, with switching from less efficient modes and greater supply chain resiliency, encompassing matters such as Hurricane Ida, the I-40 Bridge and Colonial Pipeline disruptions now on the radar. The other big mover, aggregates (encompassing a variety of cargoes), is tied to construction, and waterborne flows could likely increase with spending on roads and other projects.

The WCI applauded the passage of the Infrastructure Bill, in late 2021, earmarking $2.2 billion for inland waterways projects. In mid-January, 2022, when the USACE identified specific projects to be funded, WCI president and  CEO, Tracy Zea said, “Today’s release of inland waterways infrastructure funds will not only advance the inland waterways construction portfolio but also create thousands of skilled jobs for America’s building trades, make American farmers more competitive, and promote energy security. WCI thanks its members and supporters on Capitol Hill, who helped to push this funding over the goal line.” Noteworthy projects funded included the Kentucky Lock (on the Tennessee River, near Paducah) the Montgomery Lock on the Ohio River (about 30 miles downstream from Pittsburgh), and Lock and Dam 25 on the Upper Mississippi River (mile 241, north of St. Louis), benefitting from the USACE’s Navigation & Ecosystem Sustainability Program (NESP).

Indicative of future shifts of traffic onto the rivers is progress being made on shifting containerized cargo from crowded supply chains onto ships built specially for transporting boxes down the Mississippi River. American Patriot Holdings (APH), a company formed by a trio of industry veterans involved currently involved in barging of liquid cargoes, announced that it would be seeking bids from U.S. yards for construction of four “hybrid”—liquefied natural gas (LNG) and conventional fuel—fueled container vessels, with options on four additional vessels. APH has been inking tie-ups with ports on the rivers, including terminals at Plaquemines Parish, La., Memphis, Tenn. (a distribution hub served currently by container on barge services linking it to New Orleans), and nearby to St. Louis, which local organizations have promoted as “The Ag Coast of America”. The vessel designs, ranging from 1,800 TEU for use on rivers with locks up to 2,400 TEU for use on the Mississippi River, will enable speeds faster than those of traditional tug/ barge tows. One group, the Mid-America Freight Coalition, wondered whether the plans represented a “Marine Freight Renaissance”.

Efforts to supercharge container transport on the Mississippi have been underway for several years, but they have taken on a sense of urgency with the ongoing supply chain chaos of 2021. The Soy Transportation Coalition’s Steenhoek offered a very positive view of APH’s plans, in remarks at Kentucky’s 2020 Riverports Summit. “There is a trend towards moving agricultural commodities via containers, including commodities like soybeans.” In moving beans to export markets, he noted that bulk transport would predominate, but container transits, backhauls for boxes that transported consumer goods up the rivers: “the slice of the pie chart that is labeled as containerized shipping will continue to grow….as shippers try to localize supply chains in a global market.”

Modal shifts from surface transport (road and rail) on to the rivers has also been a feature in the bulk cargo moves. The U.S. Maritime Administration’s America’s Marine Highway program’s late 2021 awards included a $1.4 million grant for the M-70 Barge Service linking Cincinnati with ports in Kentucky along the Ohio River, following up on $2.9 million awarded the previous year for related projects. Steel producer Nucor Corporation, the project sponsor, will increase its transport of steel products by barge, taking trucks off the roads. When the 2021 grants were announced (which also included funding for Seacor’s container-on-barge linkage from Memphis to the Lower Mississippi River), the Acting Maritime Administrator Lucinda Lessley described AMH as “an innovative program that encourages the use of America’s navigable waterways for the movement of freight and people as an alternative to land-based transportation.” Analysts and port executives participating in the Kentucky Riverports 2021 session (a follow-up to the 2020 event) emphasized the potential to divert multiple types of cargo moving in surface modes on to the Ohio River, and other waterways.

The year 2021 did not see any significant merger and acquisition activity, so that the well-known names continue to dominate. On the dry side, with a total fleet of more than 18,000 barges, Ingram’s fleet totaled around 3,900, American Commercial Lines (ACL) with more than 3,000 and American River Transportation (tied to agri-giant ADM) with approximately 1,800 barges. On the liquid side, with 4,000 total barges, Kirby dominated with more than 1,000 units, followed by Canal Barge, ACL and Florida Marine, each with more than 300 barges.

In summing up the sector’s overall picture for Marine News, Blessey’s Clark Todd said, “As the incoming chairman of the board of American Waterways Operators, I have a unique perspective of the entire inland tugboat and barge industry. In my role at AWO, I have the opportunity to have dialogues with the different sectors of the marine world. A few of the sectors have already started to see stronger demand and utilization. With rising crude oil prices, and an eagerness for folks to travel, we believe 2022 will be a very strong as a jumpstart to recovery in our industry.”

Source: www.marinelinks.com

Image: www.pexel.com

The post Recovery, Resilience and Demand Shifts to Drive Inland Waterway Cargo Flows appeared first on Cargo World Today.