This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
2020 looms as another pivotal year of change for those engaged in international trade. Shippers and carriers alike face the reality of market uncertainty and the need to prepare their firms to agilely respond to internal and external changes, many of which are outside of their control.
The vast impacts of the political and multinational trade policies on firms cannot be underestimated in 2020. Our ongoing trade dispute with China, the delay in passage of the USMCA, and Brexit all form a stark reminder of the impacts on supply and demand caused by agents outside our firms’ control. In an election year and at a time of such political uncertainty, parties must be ready to adjust plans, forecasts, and supply chains to quickly adapt and react to these impacts.
We must also prepare for the inevitable effects on ocean shipping due to the implementation of IMO 2020. All parties risk the possibility of opportunism for profiteering motivation to commercialize new fuel surcharges as a means to increase revenue unless transparent surcharge formulas are introduced. We should also prepare for supply-side impacts to charter tonnage due to the ongoing installation of scrubbers in the container fleet. Failing cost transparency, shippers must prepare to switch to using third-party indexed formulas, which are more aligned to actual industry costs.
Finally, all should affirm that the winds of change have finally shifted on the introduction of technology to our industry. The time to work together to introduce meaningful productivity-enhancing technology across the supply chain is upon us, and all parties should have a voice and a view in the shaping of what a truly digital supply chain could and should look like.
2020 will prove an exciting time for all of us who are lucky enough to be involved in this dynamic industry.