Annual Review and Outlook

Compliant and expedited movement of goods is vitally important to the trade community, and efficient inbound cargo clearance is paramount to the US economy. Delays at the border can threaten business operations through cascading impacts on manufacturing operations, distribution centers, logistics providers, carriers, and vendors, impacting US jobs. US Customs and Border Protection’s (CBP) current process for the release of goods linked to the forced labor import prohibition (Section 307 of the Tariff Act of 1930, as amended) is opaque for US companies, inhibits an effective process to determine risk of forced labor in the import supply chain, and fails to leverage businesses’ resources to deter offending behavior. We support the prevention, identification, and eradication of forced labor globally. Many companies, including USCIB members, are committed to ensuring that forced labor and other violations of labor rights are not present in their supply chains. Enforcement needs to be effective and efficient. USCIB has presented to policymakers a multi-step proposal, which includes providing companies information about allegations earlier in the investigation process, providing companies 60 days to respond with information critical to the investigation, and instituting a time-limited process. The proposal seeks to improve CBP’s enforcement process and enhance compliance consistent with the requirements of Section 307, provide increased transparency, and encourage greater collaboration with the trade community. This process would also expedite shipment clearance and promote cooperation with the trade community to eradicate forced labor and provide transparency to an otherwise “black box” of enforcement. Involving outside stakeholders earlier in the process would enable CBP to proactively address forced labor at its source, prevent the importation of offending goods, streamline document reviews by companies and CBP, more efficiently use CBP resources, and allow companies to take necessary steps that could prevent goods from being detained at the port.

What started as corporate America’s temporary response to pandemic-related restrictions and precautions has taken on a life of its own. Remote work options are now offered in various iterations and are certainly here to stay. Many high-profile firms, especially tech-related mega-firms, have proudly proclaimed, “We are now fully remote option,” while other companies are touting hybrid remote schedules with two or three days at home. That means firms and candidates from smaller demographic areas are now on a level playing field, and regional salary disparities will likely level off. It’s also an excellent job market for global trade professionals, who can now market their skills and experience to firms in other states. They are offered competitive compensation packages and, in some instances, enjoying 20 to 30 percent bumps in salary for remote opportunities hundreds of miles from home. The current remote working phenomenon is occurring on the heels of the “don’t-ask-don’t-tell-your-compensation” legislation in place for the past two years. This translates to tremendous leverage for smart job seekers. Remote hybrid business models are working very well for firms with multiple locations around the country within two to three hours’ commute by car. Relocations to headquarter offices will still occur, but at a fraction of the frequency just two years ago. Caveat emptor: Companies should make sure the remote option is built into the employment agreement and look favorably on regional candidates that are a car ride away, rather than a plane ride, for meetings and possible overnights. And be ready for collateral damage. The full-time hourly front-line employees, who until recently were feted as America’s “hero” essential workers, will be left out of this new golden labor model. For truck drivers, warehouse staff, port workers, final-mile delivery labor, and assembly teams, among others on an endless list of supply chain functions, working remotely simply doesn’t work. Since there’ll be no remote perks to entice them, union contracts, salaries, and benefits will increase, and four-day work weeks will become the norm. Expect inflation to follow.

In year two of the COVID-19 pandemic, the economic fallout of the rinse-and-repeat cycle of global shutdowns and subsequent reopenings amid vaccine rollouts and the emergence of the Delta and Omicron variants has reverberated throughout the entire global supply chain, with US importers squeezed between every link in the chain. If foreign suppliers are still able to manufacture goods for export, the challenge remains actually moving that merchandise from foreign ports to the US in the face of shocking freight cost increases and unprecedented port congestion that few shippers can absorb. Those companies that are somehow managing the international transportation challenge must then contend with the container pileups at US ports of entry and continued trucking and labor shortages challenging inland movement. The devastation to US companies from the overwhelming cost increases of just the transportation aspect of international trade is being compounded by the continuation, for the most part, of the Trump administration’s Section 301 tariffs on Chinese-made goods, higher duties on steel and aluminum sourced from most foreign countries (though recent reprieves were granted to EU countries), and the proliferation of trade enforcement escalations — e.g., “forced labor” detentions, surprise allegations by domestic producers of “evasion” of antidumping and countervailing duty orders, more intensive document requests, more frequent allegations of intellectual property violations, more rigorous enforcement of regulations from other government agencies like the Food and Drug Administration (FDA), Consumer Product Safety Commission (CPSC), Department of Agriculture, etc. Importers that are the most diligent in their customs compliance processes and procedures are merely having to deal with the inconvenience of these interruptions to the facilitation of their shipments. Those that are careless, negligent, or worse, however, are likely to face more serious consequences, such as cargo seizures and possibly civil or even criminal penalties. Various bills have already been either introduced or are being drafted in Congress that are either specifically directed at trade with China or more generally designed to further increase enforcement by US Customs and Border Protection. While the US Trade Representative is considering reinstating previous exclusions from the 25 percent tariffs on 549 products imported from China, there is no indication that such relief is being considered for the many thousands of other products still bearing these increased costs. And while the Biden administration has announced that part of the recently enacted bipartisan infrastructure bill will be used to fund major improvements to ports of entry to relieve supply chain blockages, the effects of such initiatives will not be felt for some time. Strap yourselves in for another year of choppy waters for international traders.

The coming year will see more of the same with regard to supply chain congestion, and as a result, many companies already suffering from COVID-related business setbacks will continue to strive to survive. The pressure on small and medium-sized companies to compete in a global shipping environment has led to more than its share of intense negative consequences. While over 85 percent of companies in the United States are deemed to be small or -medium-sized, this latest congestion has led to the consolidation of volume by larger companies, at the expense of those not big enough to be able to withstand the short-term drain on resources. Shipments suffer delays all along the supply chain, whether at ports, terminals, rail, warehouses, or in transit on ships, trucks, and trains. Those delays, compounded by increased expenses and the inability to cope in this business environment, have hit small and medium companies exceptionally hard and may have long-lasting effects. All companies are feeling the pain of the past two years, but none more so than smaller importers, exporters, truckers, warehousers, and freight forwarders, which must suffer under intense pressure to compete. The aftermath of this economic debacle may lead to more government involvement — and perhaps new regulations — to protect these companies against unfair competition. However, by then it may be too late for many of those same companies.

To confront the latest tsunami of logistics challenges, non-vessel-operating carriers (NVOs), freight forwarders, and customs brokers need US maritime regulators and government policymakers to exercise a special kind of informed leadership and vision. Since the first Shipping Act in 1916, maritime regulation has sought to protect the shipper while encouraging carrier competition. It’s been well over 20 years since Congress passed the last major reform of the landmark legislation. Since then, the world of ocean shipping has changed dramatically, from a system of rates set by tariffs to a market-driven rate system. Major legislation to reform the Shipping Act of 1984 has passed the House of Representatives with the good objective of addressing current abuses, such as the assessment of detention and demurrage when they do not fulfill their stated purpose to incentivize the movement of cargo. This would add to the legal underpinning of the US Federal Maritime Commission’s masterful guidance on unreasonable practices based on the “incentive principle.” Maritime regulators and legislation should also embrace the principles of transparency in ocean shipping charges and accountability in aligning performance with the services promised. The 1984 Shipping Act still requires asset-based carriers and non-vessel-operating carriers (NVOs) to maintain publicly available automated tariffs. But industry experts say a small fraction of base ocean transportation is moving under tariff rates. An elaborate system of surcharges now exists and adds to the uncertainty of the final cost of the ocean freight movement. It would seem that the tariff system has outlived its usefulness and become a weapon used against the shipper. Certainly, it undermines transparency. Any ocean shipping reform legislation should amend this requirement. It should also align costs more closely with responsibility. Additional costs related to service failures should be borne by the party creating those failures. Changes to regulations or law should not be driven by an overreaction to current market conditions, but instead should promote a framework that will create a competitive, efficient, and economical system that carries US exporters and importers into the future.

The safe and efficient movement of people and goods has been a critical concern since the earliest days of humankind. Over the years, we have evolved a global network of supply chain logistics that has become so efficient that most people aren’t even aware that the systems exist, let alone how they work. With the conditions that have emerged due to the COVID‑19 global pandemic, the system became stressed, and the public faced both delays and shortages. It soon became obvious that multi--billion-dollar technology investments and enhanced digital information systems weren’t the answer to restoring the network. The truth is that the global transportation network, like most businesses, is actually a “people business” that depends on interpersonal relationships built on trust, knowledge, and cooperation. There are lots of different people that make up our international maritime industry: seafarers, longshore workers, bankers, agents, terminal, tug and barge operators, naval architects, drayage drivers, railroaders, brokers, and many more. We are spread all over the world and have disparate languages, customs, and laws, so how does it all work together? Over the years, members of our industry have joined together to create forums where they can gather to share ideas, make deals, and learn who their colleagues, competitors, and customers are. We learn who to trust, who to listen to, and how to work together. As Maritime Association of the Port of NY/NJ celebrates its 148th year, we acknowledge that our success is based on our ability to bring the diverse members of our industry together to facilitate cooperation and enhanced productivity. We are proud to bring people together to share knowledge and solve problems.

This past year was one of unimaginable disruption in the global supply chain; at a given time, more than 60 ships with over 450,000 containers were floating outside the port of Los Angeles for weeks awaiting docking and unloading. Although the COVID-19 pandemic has been a major disrupter, it wasn’t the only one. Our failure to learn and adapt fast enough to external changes is the real culprit. International trade is an elaborate system, and to function properly, all parties must learn and adapt to deal with disruptions to ensure predictable delivery of goods. Looking ahead, 2022 will be another year of system adjustments in the supply chain if we are to resume relative predictability and adapt to the various external changes that resulted in this incredible backlog. Consumers in the US will continue to consume and order even more products online. Traders must adjust, as smaller orders shipping directly to consumers will continue the exponential growth of the last several years. Consumers enjoy the ease and convenience of ordering online, and this too is a significant change in the supply chain system. COVID-19 will continue to rage, causing unexpected delays all around the world, and carriers, terminals, chassis providers, warehouses, labor, forwarders, brokers, governments, and all the involved parties in the chain must meet these and other challenges in a coordinated fashion. To do so, we must learn to share our thinking — and suspend our assumptions about the “cause” of the latest disruption — so that together, we can find a systemic approach, as each participant in the supply chain has a stake in the long-term outcome. Defending opinions and assumptions about how to unclog the mess will not help and could continue the spiral of “fixes that fail,” as one party or another implements a fix that fails to solve the system’s underlying problems. All the parties must find a new kind of communication among themselves, a shared dialogue to force a new future that gets the system humming again. No one group, party, or even external event caused the backlogs at our ports, and understanding this and working together to craft new ways of sharing thoughts and ideas will be the only way to bring about positive change. There is much at risk if we cannot engage in peaceful trade, and the need to untangle the mess at our ports is urgent.

Shippers and freight forwarders continue to face a crisis in the global container shipping market, with record high shipping rates, record low service reliability, and a chronic shortage of ships and containers to meet a surge in demand. Much of this is connected to the effects of the COVID-19 pandemic, which has resulted in the closure of ports and terminals as well as shortages of key labor, such as port workers and truck drivers for inland delivery of containers. These factors are creating immense pressure on international supply chains, with importers and exporters struggling to find shipping space for containers, especially on services from East Asia to North America and Europe. At the same time, demurrage and detention (D&D) charges have mounted over the past year. There is more and more distress in the freight forwarding industry due to a lack of cooperation and transparency, particularly around shipping lines reducing free-time periods for the pickup and return of containers and charging unreasonable D&D fees. At times of ongoing disruption, carriers fail to provide forwarders with a reliable advanced notification of the vessel arrival, communicated by the shipping line or terminal operator well before the actual arrival of the vessel. While D&D charges are an important tool for shipping lines to ensure the efficient use of their containers, shippers should not be subject to such charges if the pickup or return of a container is delayed due to factors beyond their control. It is unacceptable and unreasonable to charge unilaterally imposed damages such as demurrage and detention when the carrier itself is the cause of the delay, whether due to a change of vessel arrival time or changes in yard opening times. In these cases, the opinion prevails that shipping lines may try to abuse D&D charges to increase income as well as profits, or at least give the appearance of doing so. In the US, excessive D&D charges have attracted the attention of regulators since early 2017, and the US Federal Maritime Commission (FMC) has clearly taken a position to protect the interest of US shippers and cargo interests. The landmark guidance provided in FMC’s final rule Docket No. 19-05, Interpretive Rule on Demurrage and Detention Under the Shipping Act (Final Rule), which was developed as a result of an extensive fact-finding investigation and industry consultation, brought together a non-exclusive list of factors that may be considered when assessing the reasonableness of D&D practices. In Europe, a similar approach is missing. CLECAT continues to call on policymakers and shipping lines to ensure that their demurrage and detention charges are proportionate and fair to ensure a level playing field for shippers and the fluidity of international trade.

The severe ongoing disruptions in the maritime supply chain have turned proper logistics management and planning into Mission Impossible. Though exacerbated by the COVID-19 pandemic, the underlying causes are not new. Rather, they demonstrate the existing vulnerabilities of the supply chain. Here, regulators have an important opportunity to act in the interests of ensuring more resilient global supply chains and, in turn, the ability for economies to strengthen and flourish. Crucial to addressing these issues, and to ensuring the future fluidity and resilience of the maritime supply chain, is ensuring fair competition and a level playing field for all supply chain actors. FIATA welcomes the comprehensive efforts taken by US maritime regulators to delve into the various issues and supports the Ocean Shipping Reform Act of 2021, which would strengthen US regulatory enforcement in this area and provide an excellent example for other economies around the world. An important initiative of the current US administration is its work investigating the effects of carrier consolidation on other essential industry sectors, such as freight forwarders. This should include a review of carrier alliances, consortia, and vessel-sharing agreements, as well as the increasing trend toward vertical integration of ocean carriers to include end-to-end freight movement within their services in direct competition with other logistics sectors, despite benefiting from special anti-trust immunities. While business models inevitably evolve, it is important that competition remains fair. In the context of rapidly rising freight rates, maritime regulators should also exercise greater scrutiny over practices that perpetuate a wide spread in prices and treatment between large shippers and smaller shippers, which usually access the market via freight forwarders. Following the US Federal Maritime Commission’s (FMC) work to produce its Final Rule on Demurrage and Detention, FIATA produced a toolkit to help its members leverage the ruling as a best practice in other economies around the world. The next step should be to ensure the Final Rule really has teeth, using strict enforcement to mitigate what has become an increasingly complex bottleneck in the global supply chain. With the right regulatory responses, resolving the inefficiencies of the maritime supply chain may no longer be Mission Impossible. Fair competition and a level playing field, as well as developing smoother interfaces between the different supply chain actors, is crucial to this effort.

Looking into the new year, the big question on the minds of all US importers and exporters must be when the disrupted supply chain will return to a semblance of normality. Will a solution be found relatively quickly, or will it be a long wait for infrastructure improvements? An examination of the near-gridlock situation at the Los Angeles–Long Beach gateway indicates that the real problem is not inadequate berths or cranes but an inability to move inbound containers out of the marine terminals quickly enough. The industry, therefore, must find a solution for the inadequate warehousing and trucking capacity before pouring billions of dollars into improving infrastructure at the ports. It’s football season, and I see an improvisation brought into the game in the 1980s that could serve as an analogy for a solution to the world’s transportation woes: the spread offense. For shippers routing cargo through the West Coast, this would mean a greater use of the Northwest Alliance Seaport Alliance (Seattle and Tacoma) and Oakland, as well as the development of the Port of Portland in Northern Oregon. To the south, San Diego could provide additional capacity, if sufficient space could be found to expand the port’s existing container yard. The spread of the points of entry would invariably lead to the creation of more distribution centers and the conversion of a segment of long-haul trucking with local and port drayage. Similarly on the East Coast, the ports of Boston; Philadelphia; Baltimore; Wilmington, North Carolina; Jacksonville, Florida; and Miami need to be better served to eliminate dependence on the big four — New York and New Jersey, Savannah, Charleston, and Norfolk — with a similar spread in warehousing and trucking. In Europe, short-sea shipping is at the forefront of the EU’s transportation policy, accounting for close to 40 percent of all freight moved within the continent, but the antiquated Jones Act stands in the way of developing a similar coastal shipping network in the US. It’s time for industry leaders to step up and not be bashful about upsetting the old boys’ network by advocating for changes to the Jones Act; allowing coastal feedering of laden containers by foreign-built ships could change the entire transportation and distribution landscape in the US. The US Federal Maritime Commission (FMC) and Department of Transportation also need to engage the ocean carriers in structuring vessel deployment to meet demand, in exchange for continuing the regulatory approval granted for the operation of carrier alliances. Coach Jack Neumeier’s spread offense changed football forever, and the same concept could change freight transportation as well!

Delays at the ports of Los Angeles and Long Beach are not new concerns, especially around the end of the year. In 2021, however, with major infrastructure legislation moving through Washington, DC, and workforce shortages across the economy, they gained new urgency and visibility. Global supply chain disruptions highlight the lack of redundancy throughout the system and its failure to supply additional capacity when and where it was needed. This is due in part because the United States neglected to make timely investments in hard infrastructure — i.e., ports, terminals, rail and road links, and distribution and processing centers. The country has also neglected its so-called soft infrastructure. Across each link of the supply chain, stakeholders failed to have enough trained, skilled workers in place and available, to match hours of operations to demand and regulatory regimes that permit a cargo pipeline to flow efficiently. President Biden’s National Infrastructure Advisory Council’s recent Workforce and Talent Management Study Report is extremely important for our nation’s competitiveness. “People are essential to our critical infrastructure, but the United States has not given worker readiness the same attention it devotes to protecting critical infrastructure from physical and cyber threats,” the report rightly notes. “The consequences of failure are no less severe.” These challenges pose real risks to our national security. The Biden administration’s agreement with the Southern California ports, labor leaders, and the business community to move to 24/7 operations will certainly help to alleviate some port congestion. What’s more, the capital investments nested in the myriad legislation and spending bills will also help. But unless we make sure we have the strategic human capital infrastructure necessary to ensure a skilled workforce for critical supply chain infrastructure, we have only provided a temporary band-aid, rather than fixing the long-term systemic problem.

Our global supply chain’s complexity and its weak points have been brought to light during the COVID-19 pandemic. All parties engaged in the supply chain share a responsibility for collaborating with the goal of creating short-term fixes and long-term solutions to help alleviate the congestion backlog. The US federal government must be a major player in ensuring successful collaboration; it is critical that the government both invest in and craft policies to facilitate greater efficiencies in the nation’s infrastructure. The enactment of the bipartisan Infrastructure Investment and Jobs Act, which was signed by President Joe Biden on Nov. 15, 2021, is a good start when it comes to port funding. The bill includes over $5 billion exclusively for port programs and an additional $27 billion potentially available to ports via competitive grant programs, and it represents a significant down payment on modernizing and upgrading port and intermodal infrastructure. AAPA also urges longer-term investments in ports. A significant infusion of federal funding will unlock private financing, and these investments are urgently needed to continuously build out modernized and resilient freight connectivity between modes as well as increased capacity to handle larger ships and the new energy solutions that will fuel them. An underinvestment in dredging has left many federal navigation channels as the constraining link preventing efficient ship and freight movement through ports. AAPA recommends an increased fulfillment of Army Corps of Engineers Coastal Navigation projects to increase this necessary capacity. The Maritime Transportation System Emergency Relief Act (MTSERA) was passed in 2020 to provide relief to ports and other maritime supply chain participants from extreme weather events, such as hurricanes, and other natural disasters. Congress has not yet appropriated funding for the program, despite opportunities to do so, most recently during Hurricane Ida in August 2021, and AAPA ardently urges legislators to do so.

The COVID-19 pandemic has forever changed the air cargo industry. With over 60 percent of all belly freight capacity still grounded, we all have a very long way to go! Forwarders, previously fanatical about traditional gateways, are now moving to a point-to-point strategy and using charter or leased aircraft to support specific lanes where they control density and volumes. Several global ocean carriers — most notably, Maersk and CMA CGM — are developing logistics services platforms to be “all things to all shippers,” and they are including air cargo services to avoid giving up control of any cargo types or cargo--related services for their customers. Overwhelmed with global supply chain challenges, the automotive industry continues to embrace an entire “powertrain transition” by partially and slowly modifying their internal combustion engine systems as they shift toward new electric vehicle (EV) platforms. Performing both transitions while dealing with the loss of lift capacity in belly cargo has the automotive world in chaos right now. Amid this complete lack of predictability, another tsunami of air cargo volumes is emerging from international “de minimis” cargo. Amazon has created two East Coast gateways — Newark, New Jersey, and Lakeland, Florida — that, combined with the company’s Cincinnati hub, will receive high volumes of low-cost European goods purchased by US consumers on Amazon’s marketplace. This is the first automated, high-volume Section 321 initiative. Amazon currently serves eight EU countries and can position goods into US homes within 48 hours of purchase. Alibaba and logistics partner Cainiao predict over 1 billion packages per day will be distributed through their network. Cainiao has announced global gateways in five cities. However, they have not yet indicated airport selections in the US. It is clear that traditional cargo gateways cannot handle additional volumes at their congested ramps and facilities, most of which are three to four days delayed in offloading and delivery. Thus, alternative gateway airports will likely be Alibaba’s preference. We predict that the air cargo industry will not reach a state of normalcy for five to six years, maybe longer. The changes witnessed in logistics and air cargo today will pale in contrast to the challenges we will face over the next five years.

Thanks to the rollout of COVID-19 vaccines, the global economy is slowly beginning to emerge from one of the worst global pandemics in history. However, the disruption to supply chains will probably last for at least the following year in its wake. Our nation’s major ocean gateway ports and airports have continued to see unprecedented freight processing and recovery delays. During this time, Airforwarders Association members answered the call to help during the pandemic by providing complex logistical support. Air freight forwarders and their subcontracted vendors managed over 150,000 chartered air freight flights carrying essential goods. As lockdowns have lifted, consumer demand has skyrocketed. However, supply chains disrupted during the height of the pandemic are still facing significant challenges while struggling to bounce back. Unfortunately, there is chaos for manufacturers and goods distributors who cannot produce and supply as much as before the pandemic due to labor and goods shortages. A significant challenge we continue to face in the United States is the shortage of available truck drivers to transport cargo between major ports of entry. Recent studies indicate a deficit of 80,000 drivers, which will grow to 120,000 by 2030. Possible creative solutions may include allowing 18-year-old military-trained drivers to operate tractor-trailers and encouraging more women to enter the truck driving industry. As we enter 2022, in addition to facing the ongoing supply chain challenge, the Airforwarders Association is focusing on many other vital issues. For example, we have a new committee focusing on environmental sustainability. In addition, we hope that the US Congress passes significant infrastructure legislation to provide urgently needed funding for our nation’s ports, airports, and road system. In addition, the improper shipment of lithium batteries is a threat to our industry and world commerce. We will, therefore, be concentrating more of our efforts to solve this critical issue.

COVID-19 has resulted in unprecedented disruption to the mechanics of most economies, placing a major strain on the world’s supply chains, including essential linkages relating to food and medicines. The current state of supply chain logistics has exacerbated this strain, creating unnecessary delays caused by the manual and paper-based processes still used in some vital links in the chain. Take, for example, the bill of lading (B/L). In the container journeys, B/Ls are still often being printed on paper and passed from hand to hand as the container passes from vehicle to vehicle, from land to sea, and from country to country. As a result of the pandemic, cargo is getting stuck in ports waiting for paperwork that is delayed due to flight disruptions, people not being in the office to print B/Ls, or banks not being able to process the documentation in time. Having the electronic bill of lading (eBL) as the dominant format for B/Ls would reduce such delays. This is just one of many examples of how digitalization can help future-proof the container shipping industry, improving efficiency, agility, innovation, and customer service. But to digitalize the supply chain from end to end, IT solutions must be interoperable at every link in the chain. This requires widespread adoption of digital standards such as those DCSA and its members and collaborators are working to develop. In banking, telecommunications, and e-commerce, a standardized approach to digitalization has produced a better customer experience and increased efficiency and innovation for some time. Container shipping can enjoy the same benefits that have enabled these industries to weather the COVID-19 storm without impacting the customer experience. Change will take time, so the industry must start collaborating now on the adoption of standards that will help future-proof the industry, such as those published by DCSA.

While it is exciting to imagine how drones and driverless vehicles will shape the future, more accessible technology will have significant impacts in the near term. For instance, operational transparency between partners has huge ROI potential. One new offering, based on LTL carriers’ APIs, converts carriers’ empty line haul needs with automated pricing spot incentives to keep networks balanced. This enables more dynamic pricing opportunities that deliver ROI to shippers and carriers, not just through pure technology but by enabling the relationship to evolve between shippers and carriers. Replacing annual contract negotiations with monthly feedback loops empowers carriers to offer cost incentives where they want the freight and even use behavioral data to convert the “shipper of choice” concept into data-driven shared cost efficiencies. Another trend to look forward to is the renaissance of RFID. The most exciting part is obviously not the tech itself, but the promise of how an astute supply chain manager and new technology providers can convert the new data components for a significant ROI. The tags have become very affordable; when coupled with overhead readers, new visibility tools, and machine learning algorithms, RFIDs can create tremendous visibility and operational efficiencies not only in the warehouses for shippers, but also terminals and cross docking facilities for LTL carriers. Real-time data can be used to effect efficient picking (assuming you are not ready to invest in robots) and eliminates manual scanning. The visibility can extend through the carriers’ network to deliver enhanced tracking for LTL shipments that are currently unavailable today. This is an exciting time to be in supply chain, full of lightning-fast changes, so API interoperability is a must on all new tech investments.

The year 2020 has been perhaps the most disruptive and challenging in decades for the freight brokerage industry. The COVID-19 pandemic initially threw the market into disarray. Broker employees shifted to working from home. Shippers closed their doors. Loads disappeared, then came surging back. Truckers struggled, and reliable capacity became harder to find. Margins came under pressure. At the same time, the industry found itself in the middle of a disruptive technology evolution unlike anything experienced in the past. Millions of dollars poured into venture-backed startups as well as existing transportation management system (TMS) providers. New digital freight platforms intent on disintermediating the traditional freight broker and connecting shippers directly with capacity proliferated. What were once clearly defined roles — and the required technologies to support those roles — became increasingly blurred. Technology will only continue to accelerate, providing new opportunities for brokers to do more with less, deliver services faster and more efficiently, and build better relationships with those independent truckers and small fleets that provide 90 percent of truckload capacity. The market is at an inflection point, and that presents a huge opportunity for brokers. Never has it been more important for today’s freight brokers to have a well-crafted, realistic technology strategy. Standing pat or slow-walking technology decisions is not an option, at least for those brokerages that want to survive and prosper. Don’t get lapped by technology. Improving and upgrading technology is not a “one and done” proposition. It’s a core strategic imperative, the answer to reducing the costs of covering loads, improving margins, engaging employees, and maintaining a loyal and consistent base of carrier capacity. It’s also a journey where picking the right technology partner to join you is critical and, more than anything else, provides the reliable, effective, and enabling digital resources and expertise that will support your continuous journey to growth, profitability, and satisfied customers.

We close 2020 with validation of many core ideals and some newfound insights to take with us into next year. Despite the march toward commoditization, relationships still matter. When half the air cargo capacity evaporated as passenger flights ceased, relationships with airlines and brokers were critical to success. Knowing those players locally gained us access and space when our customers needed it most. Chaos at every port and gateway was often overcome by the relationships on the ground. Relationships with our customers became more important than ever. They were stressed, working from home too; the typical approval process was more cumbersome at the exact moment when decisions needed to be timely. Only insight and trust allowed risky commitments to deliver, and that only comes with keen rapport and understanding. The crises also demanded we see the world the way it was in the grip of the pandemic, not the way it had been in the “good old days.” How can you move hundreds of millions of units of PPE when half the capacity is eliminated overnight? You innovate, leverage those relationships, and find a new way. Success is never sweeter. Our survival and ultimate success were built on recent investments in cloud-based systems worldwide. Data passed from origin to destination in real time, while at times our offices in Asia and the US were closed. Our teams worked from home and didn’t miss a beat. Work from home eliminated commutes and the risks of social spread and gave us more flexibility to communicate across 12 time zones for clarity, and it likely continues to give us options in the future. Finally, the law of supply and demand is highlighted during a pandemic. Contracts will fall when supply is disrupted. Credit terms will tighten, and cash is king. We observe, evaluate, and write the new battle plan: Stay flexible, be creative, remain calm. We do this again tomorrow.

While -e-commerce traffic certainly took a big step forward in 2020, most of that shift is likely to remain, even as businesses reopen and people go back to shopping in stores again. In talking to UPS, FedEx, and others, we’re hearing that e-commerce growth was essentially fast-forwarded about three years due to the odd chain of events we saw in 2020. And when you’re talking about e-commerce, you’re talking about high expectations from customers for delivery speed. This means more air freight, especially if goods are produced far away. It also means more LTL shipments for replenishment of inventories at the warehouse, as sellers need to make sure inventory is always in stock and can’t wait anymore for, say, one truckload per week to restock everything. While many companies were dealing with inventories that were too low the last few months, going forward, we believe the trend should be to have a little more cushion. This will be facilitated by the trend of companies locating product in smaller warehouses closer to consumers, which will require inventory to be spread out more than in the old model of fewer, bigger warehouses.

The growth of e-commerce will keep forwarders on their toes as shippers continue to optimize their efforts to provide a service on par with Amazon’s. Automation is one of the highest-impact technologies that can be adopted — allowing forwarders to drive growth across their customer base and help bring new business on board. When data entry from documents is automated, data becomes accessible in real-time, removing delays and capacity constraints in processing. We also often see this capability unlocking visibility on process improvements that can further remove downstream issues and improve customer service. As shippers continue to demand more real-time visibility, it will become a “must-have” piece of infrastructure in every forwarding organization. Finally, automation can be used to reduce the cost of servicing, enabling a better margin on each shipment — particularly interesting given that the continued online movement points toward a future with a more fragmented customer base.

Today’s transportation management platforms continue to be enhanced, allowing for superior automation, optimization, speed, and transparency across networks. The transparency drives collaboration among shippers, carrier communities, and all stakeholders within the transportation ecosystem, along with increasing network agility, visibility, and predictability. Supply chain professionals will take advantage of multi-shipper collaborations, planned and dynamic continuous moves, LTL pools, and other strategic partnerships to improve capacity and cost management. Advancements in AI and machine learning on these platforms now offer predictive and prescriptive logistics execution support. From intelligent inventory demand forecasting to production scheduling, more and more logistics execution will be automated, saving time and increasing efficiencies within the supply chain. Additionally, the latest innovations in near real-time data processing are powered by IoT devices, APIs and, potentially, blockchain shared ledgers. Going well beyond geolocation visibility, logistics plans can be immediately adjusted based on the superior accuracy and timeliness of the data. The intelligent and automated supply chain analytics will improve procurement performance, minimize risks, identify root causes, and accelerate forecasting. With automated data processing and predictive analytics, workstreams will become more aligned across supply chain and transportation departments, as well as among logistics partners.

“What differentiates you from your competition?” I think every sales professional has been asked this question at least once during their tenure in the logistics industry. In the early ’90s, we often answered this question by saying that we are a communication company first and a logistics provider second. We explained that our focus was putting significant effort into the art of communicating effectively with our clients. Of course, our groundbreaking technology was the foundation upon which we built pathways for effective communication lines between our organization and our clients. Fast forward almost thirty years, and the word “communication” has taken on such a broader meaning. In 2020, the typical digital consumer is an entity (individual or company), who has incredible volumes of information available to them, faster than we ever would have imagined back in the day, when cellular telephones were still a luxury. Today, the internet, social media, and many incredibly innovative software options are available to the digital consumer. In the world of logistics, our ability to communicate has become all about real-time data, real-time visibility, and proactive analytics. Being a great communication company that moves boxes is not about just picking up the phone anymore, although we still hold this method of sharing information critical. Digital consumers expect notifications pushed to their laptops or smartphones, in advance of typical milestone updates. Extending our proprietary operating systems to smartphone devices through the development of various applications allows us to give our drivers a tool beyond just capturing hard copy signatures from our clients. We can use the functionality built within these smartphones to alert consignees when drivers are within a predetermined distance from their location. We can capture GPS coordinates at time of delivery. We can capture images important to the location condition at time of delivery. We can scan barcodes throughout the transit lifetime of a package or shipment, including at time of delivery — all in real time, and in a paperless environment. Are we still a communication company that moves boxes? Absolutely! And because of the fast-paced demands of the digital consumer, we are better at it than ever before!

[Editorial note: image removed/no longer available] The pandemic accelerated the adoption of e-commerce by several years. Customers will need to invest in supply chain capabilities that address same- and next-day service requirements well beyond 2021. The share shift from brick-and-mortar to online has and will continue to create an incremental 140 million to 185 million square feet (MSF) of demand for logistics real estate, with an emphasis on high-quality locations near end consumers. The pandemic has also laid bare the trade-offs supply chains have made in tuning for efficiency, in turn highlighting the need for more resilience in supply chains, thereby increasing inventory levels. Prologis research estimates that this could increase inventories by 5 to 10 percent or more, generating 285 to 570 MSF of additional demand over the next two to three years. Trade tensions and pandemic-related supply chain disruptions have spurred the need for diversified production and sourcing operations, causing some companies to explore nearshoring. If implemented, these changes are costly and complex, and thus are likely to be a longer-term trend. Logistics users invest in automation primarily to improve labor productivity and throughput. Automation adoption is fairly low, at about 20 percent of logistics facilities today, and more companies are turning to flexible modular and mobile automation technologies to address these requirements. These tools can boost return on investment, especially in high-cost labor areas near end consumers, the ideal locations for fast e-commerce delivery times and where logistics real estate is in short supply.

[Editorial note: image removed/no longer available] As the coronavirus con-tinues its surge throughout the nation, it’s a reminder that managing in this environment — and keeping our employees safe — remains the No. 1 challenge and focus. COVID-19 brings into sharp focus the value of agility, speed, and flexibility. Logistics is a blocking-and--tackling business that requires onsite physical work of people — driving forklifts, moving goods around warehouses, picking and packing orders, and preparing goods for shipping. Implementing effective safety protocols and keeping employee health at the forefront remain our primary responsibility. Longer-term, the pandemic is creating all sorts of questions around what makes for a successful logistics solution today and who is best suited to run it. It is a phenomenon being driven by a remarkable surge in e-commerce volumes, which in just the past eight months have reached levels experts once predicted would take years to attain. The other imperative is speed to market. Every customer wants their logistics solution implemented as fast as possible. The old process of doing a six-month RFP followed by another six-month implementation phase is no longer tenable. As an example, for one manufacturing client, we recently completed a new warehouse launch providing critical just-in-time line-side support — from RFP receipt to configuration, staffing, technology rollout, and full operation — in 30 days. Being a small regional 3PL, we were nimble and decisive in ways that larger 3PLs cannot. And that’s what more and more clients want in this new environment: nimble, agile, flexible 3PLs who can react fast and deploy high-value solutions in a fraction of time typical of traditional approaches. The old saying that “all important politics are local” applies very well to logistics. As local businesses — and even local operations of national businesses — cope with the ongoing realities of the pandemic, their logistics providers must demonstrate agility, flexibility, and speed to market. It’s not a convenience; it’s the key to enduring value and survival.

2020 has provided a pull-forward acceleration of existing digital trends affecting consumer behavior, organizations selling products, and logistics providers serving the overall market. The expectation for order visibility in the direct-to-consumer market continues to drive the import/export market to enhance technology, allowing for true visibility and flexibility to make shipping and inventory decisions possible in real time. Data needs to contain predictive analytics, real-time movement status, and post-shipment analysis tying back to the original predictions. Offering customers those tools is why we continue to invest heavily in technology. We believe that the best future ROI will come from developing many technologies that are fully integrated. While offering digital options to customers is important, what goes on behind the scenes is what differentiates logistics organizations as providers of lasting value. Much of it hinges on the ability to integrate multiple business divisions, technologies, and geographies in a way that offers the customer a seamless experience. Some processes are best automated using “bots,” while others still require the capability and knowledge provided by team members within the market. We believe that deeply understanding the limit where technology gives way to experience is vital to helping customers serve their markets and deliver superior financial results. Real value is created in multi-faceted client consultations that go beyond the data, helping them make the right decisions and opening doors on the ground when a screen says they are shut. Logistics remains a hands-on business, even if those hands are on a keyboard. The constant forces pushing supply chain forecasts off track will not vanish due to expanded digital utilization. Constant collaboration will be one key to longer-term success. Earning the trust and respect of your customer must be achieved with or without contracts. Performance and value should be the drivers every day.

The pendulum of market power seems to have swung firmly in the carriers’ favor. The market disruptions triggered by COVID-19, followed by all-time high spot rates, clearly illustrate how carriers have become increasingly disciplined in their capacity management. As a result of the tightly controlled capacity and high spot rates, most shippers had difficulties booking their cargo on their service contracts. Many were required either to pay significant increases or to suffer extensive delays. As we look toward 2021, no one knows how the freight market will play out. However, we do see shippers preparing to follow different paths when negotiating their 2021 service contracts. For instance, some shippers seem to be taking the same approach as they have in the past, by pressing for lower freight rates where possible and merely insisting that their carriers honor the service level agreements as outlined in the contract boilerplates. However, innovative shippers are taking a new approach. They have realized their legacy boilerplates are not effective alone. They are collaborating with their carriers to agree on new performance terms that align expectations and incentives. For instance, in return for fixed rates and allocations from their carriers, the shippers are committing to specific volumes on key lanes. This improves on-time, in full (OTIF) numbers and avoids unbudgeted freight spend for the shippers, while enabling the carriers to better optimize their networks and equipment flows. Over the past year, those shippers who established clear performance terms with their carriers, using NYSHEX to monitor performance and manage exceptions, achieved over 99 percent contract compliance. As we begin 2021, I’m excited to continue our work with the innovative shippers and carriers who are collaborating to solve the contracting challenges of the past in ways in that will benefit both carriers and shippers.

COVID-19 has all but delivered the coup de grâce to the traditional storefront model of commerce. Even after quarantine and lockdown restrictions are lifted, we can expect to see continued growth for -e-commerce. Now, especially, shippers and retailers are struggling to maintain an influx of new inventory to replace diminished stock. Rolling straight from a pandemic scenario into the holiday rush season will constrict available capacity to a choke point. With new surges of pandemic cases around the world, vendors will also have to contend with maintaining their day-to-day stock, in addition to their seasonal offerings, further complicating capacity constraints. Already we are seeing container shipments being turned down because there is no available space. We expect this trend to continue well after the holiday season, likely indefinitely, as more and more retailers are turning to e-commerce models to meet their customers needs. Shippers will need to step up their game and incorporate high visibility solutions into their supply chains immediately if they want to survive. Given the e-commerce boom and the likelihood that it will continue to grow exponentially as time progresses, supply chain visibility will remain a strong growth sector in the years to come. Retailers and e-tailers alike will face numerous challenges due to large returns in inventory management, just-in-time manufacturing, and a need for heightened operational efficiencies. Even if applied solely to detention and demurrage charges, two of the greatest operational cost pain points for shippers, visibility technology offers a substantial return on investment. In addition to indirect cost savings opportunities created through higher levels of visibility, there is also a gain in operational efficiency for supply chain operations. With the two combined, we will continue to see a rise in demand for supply chain visibility technologies.

Similar to the standardization the shipping container brought in the mid-20th century, modern technology is allowing for large segments of the supply chain to be standardized and digitized. This digital transformation is driving cost efficiencies and promoting transparency throughout the supply chain. In the short term, technologies that simplify this transformational process, including process automation tools and IoT data capture, will be immensely beneficial. In the longer term, as the market shifts more of its transaction volume online, digital platforms should look to invest in integrity tools and enhanced trading capabilities. These types of technology investments will promote trust among market participants, ultimately allowing for broader platform adoption and revenue opportunities.

No doubt many US-based engineering, procurement, and construction businesses (EPCs) have had to trim in-house logistics staff as an outcome of -pandemic-induced revenue reductions. 2020 has been a difficult year for EPCs, predominantly those serving the oil and gas (O&G) sector, wherein numerous projects have been delayed or canceled. O&G owners new and old have suffered substantial reductions in capex spend for new or additional production capacity as demand tumbled. However, EPCs were already adjusting to a new O&G market norm prior to 2020. Project opportunities started to diminish as oil prices began falling in mid-2018. There were many fewer projects to be bid and a much longer award cycle that consequently produced a declining need for logistics support services. For those EPCs serving multiple industry sectors, such as wind energy and mining, where business levels remained steady in 2020, some O&G related cuts may have been mitigated. Has the downturn in projects, and ostensibly a move towards leaner EPC logistics teams, become an incentive for project freight forwarders (FF) to turn away from their capital projects business, or has it triggered an appetite for diversification and specialization, including taking on additional tasks typically managed by EPCs? I believe the latter is the case. While there have been a few apparent organizational structure tweaks and related personnel moves across the industry, none of the FF majors appears ready to exit the projects sector. Conversely, discussions with several FFs reveal an expansion of services — some by providing resources for pre-award project support, some by investing in innovation and technology tools, some by focusing on process improvement and efficiency programs, some by investing in physical assets such as warehouse and laydown space, specialized trailers, or railcars, and some even integrating into carriage and consulting services. All seem to possess a keen understanding that the project forwarding business requires the resources, commitment, and patience to endure the cyclical peaks and valleys inherent to the sector. All also expressed confidence the projects sector will make a strong post-pandemic return.

Against the backdrop of the previous years’ online consumer behavior, which was already accelerating before COVID-19, e-commerce will continue to grow in 2021. However, 2020 has been a clear example of how quickly we as 3PLs were able to adapt our customers’ global supply chains despite the difficult market conditions in the course of the pandemic. What we have seen and what we expect is that customers will be considering diversification and de-risking of sourcing activities — including rethinking distribution centers and logistics hubs. Beyond that, at the current pace of change, only proper planning and enablement of responsive supply chains will ensure the resilience needed to stay ahead of the curve. This includes optimal synergies between strategic acceleration and deceleration levers and the respective enablers of the supply chain — regardless of changes in demand or disruptions. This process drives the increasing expectations of enabling technology. We are working with customers who are servicing end-consumers, and their demand for transparency and visibility is also high — not only in terms of digitizing the physical supply chain, order details, and predictive AI, but also in terms of the sustainability of their supply chain. An essential element in winning the trust of customers, in addition to cost, time and velocity, reliability, and flexibility, is a more environmentally friendly physical transport, facilitated by a new level of decision-making technology that enables responsible choices, such as full visibility of a supply chain’s CO2 emissions and all available greener transport alternatives.

Logistics procurement is set for rapid change, with the advent of sourcing bots to automate negotiations for higher-frequency mini-tenders and spot bids. AI-enabled software agents that autopilot sophisticated sourcing optimization systems are already in place for some of the world’s largest shippers. The first bots were in the ocean and air categories, and now FTL and LTL sourcing bots are set to be launched in early 2021. The heightened ability for some shippers to go to market faster and respond to exogenous events that cause disruptions means that a competitive advantage will be bestowed on early adopters. Furthermore, companies that leverage intelligent automation for logistics procurement are storing structured data that is tagged. This is critical for AI, and these businesses have a strong foundation to apply machine learning in their supply networks to interrogate them continually and identify where and when changes are required.

Fulfilling a brand’s promise to customers in 2021 and beyond will demand more efficient and transparent logistics orchestration across carriers, 3PLs, forwarders, multiple modes, and geographies. Both freight capacity and freight costs will remain volatile for some time in varying modes and geographies due to pandemic effects and responses. Rapid innovation and experimentation continue in final-mile/last-mile operations as businesses seek to serve customers profitably when e-commerce displaces traditional distribution networks. Logistics organizations are asked to adapt continually, improving their ability to sense friction anywhere along the supply chain and swiftly respond with course corrections. To increase options for the last mile, global transportation teams responsible for the first mile have a new imperative beyond cost reduction: Prioritize product movement around the world to prevent lost sales, protect market share, and seize sales growth opportunities. Businesses must protect their end customers’ experience, beginning with how they manage orders at origin and throughout product journeys that cross oceans and borders. The pressure to contain and reverse freight spend increases will return when markets and global economies settle into more stable patterns, but it will be tempered with awareness of the value of cost optimization in support of business success, instead of siloed cost reduction. Infor Nexus sees businesses with complex global supply chains investing strongly in digital technologies and services to support international logistics execution, tracking, planning, collaboration, and freight spend management. Over-reliance on manual processes and spreadsheets was exposed as a critical weakness in worldwide supply chains during 2020. We’ve observed growing market interest in 4PL services. Shippers find multi-enterprise business network technology platforms can power their evolving 4PL strategies with increased benefits and maximum flexibility as they balance logistics outsourcing with direct control. Network platforms streamline connectivity and process workflows in global supply chain ecosystems, assuring end-to-end visibility of critical participant activities.

The pandemic challenged us all in terms of how to operate our businesses and how much human contact and interaction could occur safely. It would be strange to talk about trends in 2021 without mentioning developments in digitization — how fast it is moving and how it accelerated due to the lockdowns and limits to physical document touches. The question will now move to how great a role digitization will play in further decision-making as increasing numbers of activities for front-facing functions become automated. It is not a binary discussion, but a balanced and progressive approach to understand the interaction of sales and marketing, customer support, and a digitized journey we are all becoming accustomed to. As digitization expands well beyond the automation of back office functions and interacts and influences the front office, we will have the ability to determine whether digitization is conducive to sales, increased customer satisfaction, and easier dispute resolution, the key fundamentals that are the “front of the firm.” The importance of a resilient and supremely agile supply chain has been highlighted by our recent experiences. Flexibility to respond to shocks, uncertainty, and demand changes is likely to become even more relevant, especially when considering the speed digitization brings to these areas. Cost pressure will not disappear, but leveraging all the data available to make smarter, quicker decisions will be required for efficiency. Those required data need to be gathered and made available not just within companies but across companies and governmental authorities involved in the supply chain. Removing inefficient and redundant processes is also where increased value can be realized by every party in the supply chain. With blockchain-created trust, incremental value can be created across the entire supply chain ecosystem, because companies no longer have to gather data from each silo, wait for that essential information, hope the information is accurate, and then perform their manual tasks. Removing manual tasks, freeing up time to find new ways of working, and enabling colleagues to have better information earlier in the process adds value to the business, increasing the collective size of “the prize” and the opportunities ahead. These will become achievable goals within the global supply chain, spurred by digitization.

E-commerce growth is constantly increasing, and it got an even greater boost during 2020 and the COVID-19 pandemic. While holding our breath in the hope for a fast and efficient COVID-19 vaccine that will finally allow us to return to life as we know it, we believe that the -e-commerce revolution is here to stay, and the pandemic merely accelerated it. With the ongoing seclusion, more customers and companies are turning to digital solutions. People around the world gradually became accustomed to the electronic marketplace, which allows them a greater range and varieties of commodities and services while enabling them to keep safe. We cannot yet begin to comprehend the full effect of the pandemic nor grasp the resulting psychological changes in customer behavior, but we can only assume that some behaviors will echo, and people will still be looking to digital means for solutions. eezyimport allows its users to work on their own in what was previously handled as “in--person” procedures. While our solution was created before COVID-19, we believe our users will adapt to the DIY solution and will not go back. From a business perspective, companies all over the world and throughout the supply chain adapted to the point where most of their work can be done remotely using technology. This kind of commerce management allows businesses to cut their expenses and reach more potential customers. Once companies get accustomed to digital business management, they are likely to preserve it, even after the pandemic is long gone. As for 2021, ending the pandemic will take time, and the e-commerce industry will grow further, perhaps even reaching new heights as the revolution spreads to new fields and new customers, forcing companies to invest in digital solutions and explore new technologies.

Tourists, in recent pre-COVID-19 years, made up about 15 percent of the Hawaiian islands’ population on any given day. Tourism has been almost non-existent in Hawaii for months, and in September Hawaii had the highest unemployment of any state in the nation at 15.1 percent. A large portion of the unemployed worked in hospitality. Nobody expects tourism to rebound near 2019 levels for months or perhaps years, so tourism will continue to negatively impact the Hawaiian economy. With that said, Matson, the largest container carrier to Hawaii, reported a less than 1 percent decline in freight volume in the third quarter. Islanders are buying goods instead of traveling, and the federal government put stimulus money into the economy earlier this year. We don’t know if people will continue to spend nor if the government’s future help will be as impactful going forward. At the end of the day, any real growth in Hawaii will be tied to tourism increases. In Guam, tourists are mostly from Japan and South Korea, where COVID-19 hasn’t been as widespread as in the US If tourists return “faster,” the Guam economy will benefit and we could see a return to “normal” freight volume. The military continues to gradually build infrastructure to house a larger number of marines, and that could also have a positive impact on cargo volume. Freight forwarders will continue to be very helpful in navigating the ocean shipping industry to Hawaii/Guam. We understand the different rules that may apply to shipping to a US territory like Guam, instead of a state like Hawaii. A forwarder also has knowledge of the various carriers’ tariffs, which will help obtain the least expensive cost available. And the forwarder understands the geography and required documentation — which is important given there are numerous islands in Hawaii and a small mistake can cause major delays and added costs.

We have known for some time that the supply chain is fragile. The pressure for extremely lean last-mile efficiency created a system that did not have the flexibility to bend with changes in the marketplace. The challenges brought on by the pandemic and the corresponding recovery shone a light on this fragility. These last few months made it clear that the supply chain needs to evolve into a stronger, more agile and adaptable system that can respond quickly to challenges and implement solutions, utilizing machine learning (AI) to analyze data when conventional programing has its limits. Also, LPWAN/5G technology with live-tracking positioning will be a key factor that Dachser will focus on. Technology for environmental protection will be more and more important, as well, and is in the center of our developments. Technology that provides transparency and enhanced communication among all supply chain stakeholders has been a key driver of our business for decades. We at Dachser believe strongly in the value of technology as it relates to enhanced efficiency and cost-effectiveness, but during this crisis, these benefits have been magnified beyond our expectations. For some customers, utilizing this solution-driven technology made the difference between staying in business and closing their doors. I believe that blockchain technology will drive many new innovations and apps that will especially support transparency and create the entry to new business models in the near future. Looking at the supply chain as a whole, capacity issues must be addressed, and technology will play a critical role in ensuring we do not relive the last few months. Capacity crunches of warehouse space, shortages of truckers, chassis and container dislocations, and a general lack of communication and collaboration throughout the supply chain created confusion and congestion at the ports and brought the supply chain to a halt. As an industry, although we may be competitors, we need to move collectively in the direction of technologies that provide transparency, inventory and warehouse management, AI-driven forecasting, equipment and fleet management, and enhanced communication among all parties, which must become the norm.

E-commerce will certainly continue to grow for B2C in 2021. The combination of convenience, broad offering, and enhanced efficiency favors the buyer but inevitably leads to cost-per-unit and cash flow benefits for the seller. However, we also believe that in the next five years e-commerce will experience a further boost throughout the entire supply chain. I’m talking B2B now: Many players have already understood that they can perfectly well offer online services providing they have a professional online presence, they have adjusted their offering to suit the new channels, and they have a solution for B2B customers to pay efficiently and, preferably, immediately. It (almost) goes without saying that this will require actors in the supply chain to take an assertive step forward toward innovating their services, broadening their horizons, and embracing the opportunities that will trigger new revenue streams. Just like retailers, these actors will need to find a good balance between online and offline, to avoid platform-only players whizzing past their asset-based businesses, leaving them way behind in the game. Today, in Europe, we see the first trends arising; B2B e-commerce is proving to be a great opportunity for the sector to generate new revenue streams and gain on back-office efficiency, while — in most cases — operational processes are not affected. Our advice? Give your innovation team enough room to be focused and lay their cards on B2B e-commerce opportunities, because there is plenty to be reaped. Speaking of which, a must for e-commerce success, the monetization of these innovations — or, in other words, how B2B customers are going to pay for these innovative services — is the simple part: cinvio takes care of immediate payments from wallet to wallet, digitally, allowing our customers to simply focus on, well, those e-commerce opportunities that will engender new revenues.

I strongly believe e-commerce will continue to grow and have a lasting impact beyond 2020. In addition to the general trend shift from offline to online shopping we saw in the last decade, repeated lockdowns and store closures due to COVID-19 will accelerate this development further. In an effort to increase supply chain resilience, we expect logistics flows as well as warehousing strategies to become more regionalized. In terms of the actual modes of transportation, ocean freight as well as road or rail freight will become prevalent, as capacities for air freight will continue to be scarce. Moreover, the new VAT regulations for Europe as of July 2021 will have a significant effect on the way e-commerce shipments are moved, particularly those of low value. Instead of being shipped after-sale from Asia Pacific, a rising number of products will likely be stored and fulfilled destination-based in Europe. In terms of serving digital consumers, we would have to make a differentiation between B2C and B2B. For the end consumer, there has been a strong development to increase ease-of-use and accessibility of the first and last mile. Automated packing/collection stations, shipment live tracking, and alternative drop-off points are only a few of the wide array of innovations. Due to the continuing rise of e-commerce, we are sure to see further transformational developments for the end consumer going forward. For the B2B segment, finding ways to enhance the digital interaction with the customer is key. Beyond the actual movement of goods, logistics providers are expected to support retailers in offering a seamless on- and offline experience to their customers. Over the past years, a plethora of third party vendors (3PVs) has emerged to support business customers every step of the way in becoming online retailers. For us as logistics providers, in turn, we need to ensure that customers can use our services with a click of a button, which could range from getting quotes on an ocean freight shipment or synchronizing inventory across different warehouses to booking a pick-up request for ready-packed parcels. Seamless collaboration and integration with the aforementioned 3PVs is therefore of utmost importance.

During a tumultuous pandemic, surrounded by global uncertainty, the industrial real estate sector showed great resilience and momentum in 2020. The seismic disruptions of COVID-19 and supply chain uncertainty brought greater attention and more capital into the business of manufacturing and shipping goods to an increasingly demanding end consumer. E-commerce is the primary demand driver for industrial real estate. Because people are buying more online and expect immediate fulfillment, distribution centers are opening throughout the country to get products to consumers quicker while lowering transportation costs. In the second quarter, e-commerce soared a record 44.4 percent. According to the US Census Bureau, more than $1 of every $5 spent came from online orders from April through June. We project this to accelerate in the coming months, pointing to online sales increasing by 40 percent during the holiday season, double 2019’s levels. While the sourcing of products is not tied to e-commerce directly, procurement is diversifying to ensure the flow of goods into the US is not disrupted. Inventory strategies have transformed from just-in time to healthier safety stock buffering. A “China-plus-one” strategy will be the supply source strategy of choice, coupling a dominant China with a secondary sourcing option either in Asia or onshored to North America (Mexico or the United States). This will continue to balance out import flows across the United States through multiple gateways. Finally, inventory control will be a primary demand driver for industrial real estate in 2021. Many retailers will look to the suppliers, whether it be wholesalers or outsourced 3PLs, to carry this inventory, and these two occupier types will be the most active in 2021. In short, the sector looks to stay agile and experience healthy expansion in 2021 and beyond.

The global pandemic has proved that end-to-end supply chain visibility, coupled with the ability to both react to and predict disruptions, is no longer an option but a necessity. Supply chain digitization has been a growing trend these past few years; in 2020, it became a top-of-mind priority. In 2021 and beyond, digitizing and automating supply chains by utilizing AI and machine learning will be necessary to meet growing customer expectations tied to e-commerce activity. Consumers have grown accustomed to shopping for nearly everything online during the pandemic, and they will not completely reverse course when coronavirus restrictions ease. Visibility technologies bring a nominal return on investment in this new reality; shippers need truly innovative technology tools that provide exception-motivated actions to keep cargo moving efficiently, on time and at a cost savings. A pliant, adaptable supply chain strategy starts with decision-making systems that either fully automate processes or present shippers with options to quickly take advantage of opportunities and solve issues. These solutions ensure shipments are routed efficiently to meet constantly changing demand. Data collected in real time will allow shippers to excel amid the unknowable challenges of the next few years. As has been said throughout the pandemic, supply chain uncertainty is the new normal. Stakeholders will benefit from supply chain technology that allows them to quickly react to growing adversity. Shippers need digitally empowered operating platforms that leverage data to efficiently make informed decisions. To accomplish this, it is critical to collaborate with an innovative, neutral third party that can create solutions that properly transform manual processes. When looking for these providers, it’s important to note that companies promising transformative solutions are not created equal. Shippers and 3PLs should survey the market, making sure they find the right blend of supply chain execution solutions to fit their unique needs.