Annual Review and Outlook

COVID-19 is reshaping our world, changing consumer habits and customer expectations. In the second quarter of 2020, e-commerce purchases increased by 44.5 percent compared to the same time last year. Along with this, e-commerce giants like Amazon are offering faster delivery, real-time tracking, and reduced shipping costs. Now, customers want it all. When it comes to meeting new customer demands, supply chain professionals have three main options, with various performance in terms of costs, lead time, and CO2 emissions. Ship by sea and stock at destination. In this case, goods are shipped by sea in advance, to reduce shipping costs. Then when retailers receive an order, they are able to deliver it locally within one day. Ship by air direct from supplier stock at origin. This could appear to be the best logistics option, as goods are delivered within a few days, directly from suppliers. This is even better in a market where air carriers are looking for anything they can to fill their planes. However, this may not be the best solution in the long term. Not only does air freight cost nearly 10 times more than sea freight, it can also be destructive in terms of sustainability. Airplanes emit 10 to 20 times more CO2 per metric ton than cargo ships. CO2 impact will affect the scalability of this scheme. Ship by sea direct from supplier stock at origin. More affordable and better for the environment than air freight, LCL maritime transport can, however, take three to four weeks. LCL process efficiency and cost can be optimized to reach the full potential of this logistics scheme. This is what drives Buyco’s vision: providing the best sea freight management tool, enabling large shippers and e-commerce retailers to optimize costs and CO2 impact while ensuring same-day delivery if needed.

COVID-19 has brought about profound changes in consumer behavior. Not only are these new expectations going to become permanent, but they likely will intensify, even in a post-pandemic world. According to a September 2020 report by management consultancy Oliver Wyman, about one-third of grocery customers who began shopping online in response to the virus now plan to continue, even after the pandemic passes. The data also points to a rise in online penetration beyond grocery, including household goods and health and wellness. Over the past few months, fulfillment speeds have gone from two-day to one-day to by-the-hour. This new e-commerce landscape demands companies develop proficiencies that enhance the customer experience while protecting the bottom line through efficient, digitally integrated, omnichannel supply chains. Achieving these light-speed delivery times while preserving margins requires a combination of people, process, and technology. E-commerce demand is volatile demand, which means supply chains need visibility, transparency, and proactive information sharing. In order to build resilience by effectively monitoring upstream risk, strong partnerships must go beyond immediate suppliers out to tiers 2 and 3. Communication, coordination, and collaboration will be paramount. E-commerce demand also involves smaller order sizes, dispersed deliveries, and a large number of returns. In addition to accurate forecasting, supply chains must optimize inventory management, transportation, and last-mile processes. Optimally locating facilities will be essential, with many companies choosing to insource. Expanding the number of available fulfillment centers will also position businesses better to meet customer demand. Lastly, data analytics, the internet of things, robotics, machine learning, and related digital capabilities will be required. Embracing digital supply chain should be top priority for any company hoping to drive efficiency and maximize e-commerce opportunity going forward.

In a world of rapidly evolving and increasingly demanding customer expectations, traditional supply chain processes solutions cannot compete. We estimate that 80 percent of the data that companies need to run their supply chains lives outside their four walls within partner systems. To win in the digital age, companies must operate as agile business networks that create ecosystems of software, process, and partners providing visibility, automation, and insights from source to customer. Companies need to approach digital supply chain transformation end to end, holistically, from planning through execution, and not just within their own enterprises. This transformation must include their external partners; otherwise it’s like putting old spark plugs in a brand new car — it will run, but you will not get the performance you’ve paid for. A technology platform alone, however, isn’t enough to deliver the change in process or behavior necessary to achieve transformational change and breakthrough results. Success will be driven by the hands-on user community, and the winners will be those who are comfortable with transparency and collaboration and master the art of leveraging the “network effect.” In addition, the ability for the partner community to add new functionality, data, and business processes to the networked supply chain by extending and customizing the core platform will be essential in creating a network of mutual benefit. And lastly, internal and external silos must also be removed and replaced with transparency via “networked intelligence.” Operating in a network that connects all the supply chain partners, events, and devices capable of driving actionable insights, so that companies can respond decisively to disruptions, seize opportunities, and orchestrate and fulfill demand from anywhere in the supply chain, is the future.

Compared to historical incidents, container shipping seems remarkably resilient, with shipping lines now savvier at balancing supply and demand than before. This time they swayed it in their favor through very rough seas (fluctuating volumes), establishing a foundation where they can reap the benefits and rake up profits. Could this be a turning point? Will we ever see the low pre-COVID-19 rate levels again? This year we have also learned that supply chains are slow. Shutdowns in one place of the world impact the rest, with cascading effects that take a long time to repair or normalize. 2020 could mark the end of companies’ appetite for single-sourcing and the beginning of an increased focus on contingency plans and supply chain resilience. This may change, somewhat, the balance of global flows of volume to other regions than the Far East. With respect to getting the capacity they need at a reasonable price, shippers need to learn that there isn’t any such thing as a “reasonable or unreasonable price.” It’s all just market prices. Shippers need to adapt to the best sourcing strategy according to current and future market conditions. Whether it’s appropriate to drop the annual contracting process in favor of -shorter-term service agreements depends on far more than an appetite to change. It depends on which trades (front- or backhaul, north or south, etc.) budget requirements, employee resources, risk, predictability, and so on are involved. Ideally, shippers would maneuver between different contract durations at different points in time, depending on what is most favorable relative to current market conditions. Besides making headway on how liner shipping will become less of a burden on the environment, the container shipping industry is now challenged to find some sort of equilibrium of supply, demand, and equipment availability after a rocky 2020. The industry must be prepared to deal with a market state that doesn’t have “exploding” volumes. As we are on the cusp of getting a COVID-19 vaccine, consumption may get back to something of a normal state as we start again to spend on travel and other services. This could bring down the volume of durable and nondurable goods to be shipped. At the same time, the effects of unemployment caused by the lockdowns will start to be felt as governmental support packages will soon get pulled or dry up in many countries. This will also tighten the buying power of goods, further decreasing shipping volumes. Such abrupt and unpredictable changes in a fast-paced market, coupled with slow-moving shipping vessels, make planning in the container shipping industry extremely hard.

It’s been a journey full of wonders. Wonders brought by the pandemic COVID-19 have given liner shipping a tempestuous -roller-coaster ride in the year 2020. While we were still expecting the changes and impacts caused by the extended trade war and the enforced low-sulfur fuel oil regulations early in the year, coronavirus suddenly burst and spread wildly and globally. All preventive measures against COVID-19, such as city lockdowns and remote working, have interrupted production lines, decelerated trade activities, and hindered not only the supply chain but the global economy. With the market plunge in the first half, who, at the time of the pandemic’s outbreak, could expect that there would be such a surprising upturn in the second half which led to shortage of containers, tight vessel slots, lack of laborers, and even port congestion, and eventually an opportunity for lines to compensate for the losses in their first half? COVID-19 has widely changed our lifestyles and gradually transformed business models as well as operating strategy. Reportedly, the present heating demands may last to Q1 of 2021 at least, and the vaccines should be ready for launching when clinical trials are passed. It’s still too early to say that the pandemic will be completely eradicated. As long as COVID-19 is prolonged, its influence and interruption to the economy growth will endure. Surging freight rates are seemingly a windfall for liner shipping, but cost hikes will inevitably accompany them. The skyrocketing ships’ charter hires, tied with longer contract periods as well as sharply increased rental and newbuilding price for containers, along with other increasing operating costs, will no doubt be heavier burdens for lines, particularly when demands fade as time goes by.

Last year, I emphasized how maritime education and training needed to change, as well as the need for our students to become more flexible, in responding to a rapidly changing world. At that time, no one could have fathomed the changes maritime education and training would undergo in a matter of months due to COVID-19. Similar to colleges and universities across the country, maritime academies quickly transitioned to remote instruction using available (albeit previously underutilized) technologies. Instructors and students were required to adjust rapidly to a new normal. The pandemic served as a means of prompting us to develop innovative ways to deliver academic programs and provide student support services for incoming and current students. Many of the changes implemented will remain in a post-pandemic environment, as they provide increased participation and interaction. For example, it was necessary to cancel in-person career fairs and hold virtual information sessions with prospective employers. These virtual sessions, which have proven meaningful for companies and our students, engage more students, provide an abundance of information, and offer highly interactive discussions, and they will remain in place when we once again offer in-person career fairs. Despite readjusting, the supply chain for future mariners has been disrupted. Maritime academies are still struggling to provide the required in-person instruction and assessments. When the COVID-19 pandemic prevented our training ships from sailing on their regular cruises, our students were unable to complete their at-sea training requirements, delaying the completion of their programs and graduation by as much as ten months. While we have made adjustments to deliver our academic programs and support our students through the COVID-19 pandemic, the pandemic again illustrates the need I highlighted last year to modernize maritime education and training. Alternatives to the required face-to-face instruction and assessment, as well as at-sea training, need to be explored and developed. These alternatives should include virtual-reality and augmented-reality training, cloud-based simulation, and remote delivery of instruction and assessment.

During the last seven years, the Port of Virginia has matured into a world-class operation anchored by modern deep-water container and multi-use terminals that are supported by inland rail and barge operations. This growing port has the fastest cranes, employs twenty-first century technology, and will soon have the US East Coast’s deepest harbor. Every day, a skilled team of dedicated professionals makes these assets work in concert. In January 2021, this team and this port will welcome its next leader, Stephen A. Edwards, an industry veteran with a record of success. There will always be challenges to world trade like the pandemic, tariffs, etc. Working with our labor partners, we are well-positioned to meet those and other issues head-on, capitalize on our investments, and provide real value to our customers and a diverse group of cargo owners. Virginia has the assets to become the East Coast’s hub — leader — in the burgeoning offshore wind-energy industry. Our mid--Atlantic location, workforce, and multi-use terminals are the critical foundational components needed for success that make Virginia a logical place to home-port this industry. Cargo owners like Amazon, Target, Home Depot, and others are choosing Virginia for its port and its business-friendly practices. American farmers and businesses are emerging from the trade war and pandemic and seeking new export opportunities. As consumerism recovers, manufacturers around the world will want to ship their products through modern, reliable, and efficient ports. The Port of Virginia will be their gateway. This will be our agenda as we go forward: Build customer relationships by listening, collaborating, and reassuring them of their decision to move their cargo through the Port of Virginia. The best way to do that is to run the safest, most efficient, reliable, and cost-effective network of terminals on the East Coast.

Most of us, having lived through 2020, cannot wait until the year is recorded in history books and we can start 2021 with hopes of getting back to “normal” living and working conditions. 2020 provided us with the realization that we need to be prepared at all times for the unexpected. Previous to the start of the 2020 pandemic, Unique Logistics International as an organization had placed emphasis on having the capability to work remotely when needed and to operate in a paperless environment, which has surely helped us in sustaining through this -pandemic-driven environment. Despite the limitations placed on direct engagements with our clients, staying closely connected through frequent and updated communications on our services and state of their shipments will continue to be of great value in the coming year. Capacity availability in ocean freight space has been more than challenging in 2020, and the issue continues to be more with availability on a seasonal basis than with the overall number of vessels and containers deployed in the market. We will have enough capacity in 2021 to support forecast demand, which will be a nominal uptick from 2020, which is still forecast to be down from 2019. The issue with capacity in 2021 will be availability when demand is at peak, and whether both ocean carriers and shippers are prepared in advance of peaks with more accurate projections, which was unattainable in 2020. The annual contracting process will proceed as scheduled in 2021, again driven by major volume importers, but we do expect mid- to smaller size importers to opt for a mix of contracts for shorter-term price and space access for needed flexibility. As we expect 2021 to start — and likely last through the first half — in a continued period of uncertainty, the most important factor for all parties involved will be in working with commitment. As an ostensible excuse to operate in unpredictable conditions, commitment on service and cost was mostly missing in 2020, and we will need to return to delivering on committed requirements in 2021.

The coronavirus (COVID-19) pandemic brought widespread attention to the fact that seafarers are essential workers in supporting the global economy and prosperity. Maritime safety and global commerce have been threatened by the humanitarian issue of crew change restrictions. The resiliency of seafarers working under unprecedented circumstances due to COVID-19 has been remarkable. Because of COVID-19 crew change restrictions, more than 400,000 seafarers have worked well beyond their contracts, while an equal number of seafarers were unable to return to work. This number represents almost half the population of the world’s 1.8 million seafarers. Nevertheless, ships kept sailing and cargo kept moving. At the same time, the fragility of seafarers was made apparent by the pandemic. Seafarers, like all workers, bring their humanity with them into the workplace. Psychological vulnerabilities, chronic but manageable medical conditions, family stressors, and economic challenges remain just below the surface. With many seafarers working well beyond the MLC, 2006–mandated 12-month maximum, these human conditions were manifested in increased risk for fatigue and stress-related accidents, declining mental and emotional health, with an accompanying increase in suicidal thoughts and death by suicide, and general isolation due to restrictions prohibiting shore leave. The COVID pandemic reminds us that in order to ensure that seagoing careers remain an attractive option for skilled men and women, they need to know that their key needs will be met. These include the opportunity to be in ongoing regular communication with their families, help in monitoring their mental and physical health while on board ship, and, critically, access to shore leave when in port. For decades, these needs have been supported by and advocated for by organizations such as The Seamen’s Church Institute and other seafarer welfare organizations.

The pandemic impacted port operations and supply chains worldwide, requiring ports to be more flexible and adaptable than ever before. The ability to quickly move goods to market has never been more important. Maritime communities are working tirelessly to keep supply chains fluid, operating normally and efficiently amid great challenges. The pandemic showed the world the value of what we do, and it reinforced that we must do it well. While uncertainty and challenges remain, cargo has rebounded, at least short-term, to pre-pandemic levels, and growth is on the horizon. Ports should invest in growing and diversifying their cargo bases to provide some buffer amid economic fluctuations. It remains incredibly important for major ports to focus on long-term, relevant infrastructure, as large ships will continually be deployed to the US to maximize scale economies. Top container ports that wish to remain competitive must deepen their harbors and invest in big-ship capabilities. To that end, SC Ports is opening the Hugh K. Leatherman Terminal in March, continuing to invest in Wando Welch Terminal, and deepening Charleston Harbor to 52 feet — all of which will prepare us to handle four 14,000-TEU vessels simultaneously, as well as a 19,000-TEU vessel. We look forward to continually taking advantage of federal infrastructure programs to supplement our investments. Additionally, it is critical to focus on inland infrastructure, such as inland ports and truck capacity, to serve demanding supply chain needs. This is especially important for business segments seeing significant growth, such as mega-retailers and e-commerce brands, as they see online sales soar. The ever-increasing -e-commerce distribution will require more capacity, and ports need to be a player in assuring that exists. We continue to believe that the Southeast is the best place to be in the port business, and we see a bright future ahead.

As Canada’s largest port, the Port of Vancouver is Canada’s western gateway to the world, connecting Canadian businesses and consumers with 170 trading economies. Despite the challenges posed by the pandemic in 2020, Canadian businesses continue to rely on the port to keep goods moving. The Vancouver Fraser Port Authority remains focused on our strategy to grow existing terminal capacity to support future trade demand, build transportation infrastructure, and develop supply chain visibility tools to enhance optimization and planning. In 2020, progress was made on container terminal growth with the Centerm Expansion Project, which will expand the terminal footprint by 15 percent and increase terminal handling capacity by over 60 percent, from 900,000 20-foot container equivalent units (TEU) to 1.5 million TEU. Additionally, the proposed Roberts Bank Terminal 2 Project (RBT2), a 2.4-million-TEU container terminal, is a top priority as we progress through the final stages of the federal environmental assessment. The expansion at Centerm and the RBT2 project are intended to address projected TEU volume growth of three to four percent per year over the next 10 years. Along with industry and government partners, the port authority is also leading the development of $1.2 billion in road and rail gateway infrastructure projects regionally. Over the next five years, these projects will remove transportation bottlenecks, decrease traffic congestion, enhance safety, and allow greater fluidity and increased capacity throughout the entire gateway. Finally, the port authority has been leading the way in the implementation of new digital supply chain technologies with the West Coast Supply Chain Visibility Program. When the program is complete, the port authority and partners will be able to monitor supply chain performance across commodities, predict -terminal-specific arrival times, identify and address operational constraints, and improve forecasting and planning. Despite fluctuating economic conditions, we are confident in our ability to continue to weather the challenges ahead and facilitate Canada’s trade growth through our gateway.

Many lessons have been learned from the COVID-19 pandemic that are likely to have a continued impact on the maritime companies we work with. Our “essential business” partners have experienced record volumes and have continued to hire in an almost entirely remote world. While the US unemployment rate skyrocketed during the initial months of the crisis, much of the maritime industry maintained strong demand for experienced maritime professionals. A major ocean carrier consolidation was already well under way in 2020, creating notable reductions in force, but some of those long-time carrier professionals were highly sought-after and quickly recruited by direct competitors or other sectors. We have observed assertive, highly selective hiring at all levels with our client companies, from front-line terminal operations personnel to middle managers and C-suite executives, since the beginning of the pandemic. The competition for these positions is intense, but retirements, restructurings, and explosive container volumes since summer 2020 have created substantial demand for professionals with just the right experience, reputation, and willingness to relocate if needed. Specialists in technology, health and safety, and labor relations seem to be perpetually in strong demand, and those positions are difficult enough to fill that we must recruit from other industries. While some US ports have implemented hiring freezes, we are optimistic that recruitment will resume as natural attrition leaves critical positions unfilled. The lesson learned, from a recruitment standpoint, is that much, if not all, of the candidate interview process can be completed remotely, and we are likely to see that model continue for the foreseeable future. Travel limitations have resulted in candidates interviewing virtually (often multiple times), and sometimes even beginning their tenures having never set foot in the company offices. Cost savings on recruitment travel is certainly an upside, but we contend that limited traditional interpersonal interface is less than optimal. The lesson for executive leadership in this new remote world is that consistent (and preferably visual) virtual engagement with personnel is critical to cultivating and enhancing a sense of camaraderie and shared goals. Regularly planned, purposeful communication with one’s team and the broader organization can help nurture a sense of teamwork and organizational loyalty. We look forward to a return to engaging with our client companies and candidates in person in the coming year, but as we’ve all learned during the pandemic, Zoom is the next best thing to being there.

While most of us are happy 2020 is reaching a conclusion, despite all the difficulties, we certainly learned a great deal about our customers, vendors, partners, and ourselves. The transformation forced upon the shipping industry by the COVID‑19 pandemic required all stakeholders to be more agile, more transparent, more creative in arriving at solutions, and frankly, more compassionate. It’s abundantly clear that although our organization was able to seamlessly pivot from an office environment to a virtual operation — learning on the fly and improvising to overcome challenges and adapt to a very different model — at the core of it all, the driving factor to managing the unexpected was the quality of our people and the strength of relationships and partnerships across our business. The disruption to supply chains caused by the pandemic shined a bright light on business processes, disaster recovery plans, and technology, but the quality of people, leadership, and commitment is what carried the day. To say that everything has changed is indeed an understatement. The lessons learned this year will inform how we conduct our business in 2021 and for years to come. As we started the third quarter this year, we hit an inflection point, and trade volumes rebounded sharply as lockdowns in North America and Europe eased. Given the uncertainty brought about by the COVID-19 pandemic, the rapid recovery in demand surprised all of us and the global freight network with it. Ocean carriers who had worked to responsibly match vessel networks with trade demand early in the year had to quickly react to employ additional vessel sailings and capacity. Stocks of container equipment in Asia were quickly depleted, even as lessors and ocean carriers invested hundreds of millions of dollars in new boxes. However, the current demand surge has something in common with others in our recent history: It will not last. As was the case following the US West Coast port lockout in 2002, the 2008–09 financial crisis, and the bankruptcy of Hanjin Shipping in 2016, severe downturns in demand are often followed by a period of sharp and sometimes unexpected increases. That puts stress on the global network, leading to congestion, slower cargo flows, and, inevitably, frustration. The usual suspects cry foul and begin pointing fingers, but eventually those conditions begin to subside and more normalized trade patterns return. And yet, we seem doomed to repeat and debate the same issues and fight the same battles from previous periods of network stress. I certainly don’t have all the answers, but we seem to have missed an opportunity to draw upon lessons learned from prior experiences to chart a more constructive path forward. All stakeholders bear some responsibility here; however, it is the ocean carriers that bear the weight of keeping trade and the economy moving while trying to earn a return on their investments. For SeaCube, this year was a validation of our business strategy of focusing on cold-chain transportation and the refrigerated equipment market. While retail sales in traditional consumer items like apparel and electronics slowed because people were not shopping in stores, consumers still needed to eat. The refrigerated market sector continues to see steady, stable, and predictable growth and has proven to be very resilient in 2020. SeaCube’s commitment to stay in stock and in selection with refrigerated equipment gave our customers confidence in knowing that given all the uncertainty, we would be well positioned to support their requirements. SeaCube will continue to be a thought leader in the leasing industry by introducing technology to improve asset operation efficiency. SeaCube will also have a continuous focus on investing in assets that have tangible benefits linked to environmental sustainability. Linked to that differentiation, SeaCube will continue to offer flexible and innovative financing, leasing, and asset management programs that meet our customers’ short- and long-term financial goals. What’s the biggest issue facing the container shipping industry in 2021? To put it simply: more uncertainty. The global freight network has proven to be highly resilient, but there is always more to be done. To manage through difficult periods, all stakeholders will need to make investments, perhaps most importantly in collaboration and transparency. There will of course be further investments in infrastructure, and there may be useful new digital solutions, but in the end, it will come down to people, leadership, and commitment.

While 2020 was a year of uncertainty and supply chain disruption, we know that 2021 is going to bring its own set of challenges. Small and medium-sized ports may be well-positioned to address them. As a unique port situated inland on the Columbia River, the Port of Portland didn’t experience the magnitude of congestion issues that many ports saw in 2020. In fact, we added new container shipping service at the start of the year. SM Line now calls weekly at Terminal 6, with the container service experiencing strong productivity numbers. Over the summer, the terminal welcomed its largest vessel ever, and MSC containers were added to the rotation through a -vessel-sharing agreement with SM Line. This service has been instrumental in connecting regional shippers to critical international markets. With the flexibility our most versatile terminal provides, we believe there’s still room for us to grow. Terminal 6 remains -congestion-free for shippers of all kinds. Our ILWU Local 8 workers have been great partners who are committed to high productivity and our health and safety measures. With almost 200 acres of multi-use space and an intermodal yard, we keep containers and project cargo moving quickly and efficiently. Direct rail service includes a regular shuttle to the Puget Sound ports. As a leading auto port on the West Coast, we weathered the uncertainty of 2020 and began to settle back into normal operations by the fall. We also welcomed new auto partners: General Motors began importing vehicles, while Fiat Chrysler Automobiles began exporting vehicles through Portland in 2020. Last year threw a lot at us, and we’re grateful for our longshore workers and partners who kept things moving safely. With economists predicting further disruptions in 2021, niche ports like ours offer the flexibility to adapt to these changes.

The Port of Prince Rupert is on track for yet another record year in 2020, despite the COVID-19 pandemic that has disrupted the global economy. Navigating the COVID-19 crisis and its impact on the container business has been challenging, but the Prince Rupert Gateway has remained resilient during the pandemic due to the diligent response and coordinated effort of labor, each of our terminals including DP World Prince Rupert, Canadian National (CN), and all port partners, who remain committed to ensuring minimal disruption to the supply chains that anchor international trade and recognize their respective roles in ensuring essential supplies continue to be delivered. We continue to strengthen our commitment to sustainability and mitigating the environmental impacts of the Port of Prince Rupert. This year marks our 10th consecutive year participating in Green Marine, and our most recent verification recognizes that we continue to be a top port in North America in exceeding our regulatory environmental requirements. Initiatives like our Green Wave Program, which offers financial incentives to marine carriers, and the reintroduction of shore power at our gateway are only two examples of the many ways we support decarbonization and greenhouse gas emission reduction. We continue to work to inject value and innovation into supply chains, and a significant amount of work is being done to add both import and export logistics capacities and capabilities not only to support the growth and expansion at DP World’s Fairview Terminal, but to ensure we have innovative and value-added solutions for our customers. We continue to diversify our gateway and are working to advance projects like the Vopak Pacific Canada project, a bulk liquids tank storage and marine loading facility. Together these projects represent almost $2 billion in capital expansion over the next three years. The biggest challenge facing the shipping industry in 2021 is market uncertainty, and we continue to focus on the long-term market outlook rather than the short-term impacts of the COVID-19 crisis. The Port of Prince Rupert is working to ensure that our gateway has sufficient capacity for the next decade and beyond, via not only the expansion of Fairview Terminal to 2M TEUs but also further development and expansion of the Prince Rupert Gateway’s entire intermodal ecosystem.

In 2021, the uncertain and unpredictable state of global trade will continue to be a challenge. The US must regain its competitive footing: The strength of America’s economy — and its ultimate recovery — is reliant on our strength as a trading nation. Revitalizing US exports should be a focus. Tariffs and the global pandemic exacerbated existing vulnerabilities in the US supply chain and the nation’s freight infrastructure. Containers, chassis, and other equipment have not always been available when and where America’s leading exporters, namely agriculture and manufacturing, needed them. The US–China trade war and COVID-19 compounded these deficiencies, and American businesses and consumers nationwide paid dearly. We must help these sectors rebuild their overseas markets so they can rebound and grow. Doing so strengthens America’s overall competitiveness and resiliency, creates American jobs, and has a positive impact on people and industries around the globe. The results of the US election bode well for the US to recalibrate its approach to trade policy, and we should not miss the opportunity to couple trade policy with development of a cohesive national freight infrastructure plan that supports US competitiveness as well as climate change. As we do, we must look at goods movement planning and investment through the lens of US farmers, factories, and other producers of exported goods. Strong infrastructure also includes digitalization of the supply chain. Supply chain visibility and execution, supported by big data, is fundamental to the resiliency of critical supply chains, such as securing personal protective equipment and vaccine distribution. COVID-19 will remain a wild card, but we forge ahead with the lessons of 2020 under our belt into the dawn of a more coordinated strategy for tackling the virus.

The COVID-19 pandemic took a lot out of everyone this year, no matter what country you’re from or where you operate your business. However, the silver lining would be the resiliency we as an industry and as a collective global citizenry obtained. Port Freeport is more resilient, our tenants and port workers are more resilient, as is the entire world. We were able to come together to overcome local and international obstacles to keep commerce moving and push the economy along while still maintaining health and safety protocols. That resiliency will prove critical in 2021, and the new skills we’ve learned as a result of the pandemic can be honed and carried into the years beyond. Despite the pandemic, 2020 was all about growth for Port Freeport. Our past three years of marketing, construction, and major plant and carrier expansions have blossomed into dramatic growth. We have had more sailings this year than ever before, and our ro-ro cargo, along with LPG and LNG exports, has grown tremendously. Operations are running at full tilt, and the brisk activity in and around Port Freeport is evidence that global economies are recovering. We are expanding our Velasco Container Terminal with a new berth and backlands, have added new ro-ro marshaling facilities, and have started what will be our greatest improvement, the deepening and partial widening of the Freeport Harbor Channel. Our biggest challenge as an industry in 2021 will be the ever-present uncertainty and unpredictability of what may happen next. It will force us to deal with what is right in front of us each day, and we will have to be cognizant of the challenge that limited attention brings while ensuring our focus remains on sustainable future growth and development.

Port Everglades is focusing on organic growth — currently, into next year, and beyond. We are working with our customers to help them expand and grow their businesses before exploring full-scale opportunities outside. With more than $1.6 billion in planned Phase I capital investments underway, we feel secure in working with our partners to nurture their new business opportunities. We are developing a post--pandemic Economic Development Strategic Plan, based in part on customer feedback, to create an outline for growth that is realistic and sustainable. We will help our customers thrive and survive through unpredictable, changing and potentially impactful events. The plan will be nimble to give us the leeway to make rapid tactical decisions. Since joining Port Everglades at the end of June 2020, I have dedicated my time to speaking with our customers, the community and our internal and external workforce. Fortunately, our containerized cargo activity, which was down more than 30 percent in May 2020, has recovered to pre-pandemic levels. Infrastructure projects focused on sustainability have been accelerated during the pandemic. Most recently, our horizon has changed with the arrival of three Super Post-Panamax container gantry cranes. We are more than halfway through excavating 2.1 million cubic yards of land to build new cargo berths and lengthen a ship turnaround area from 900 feet to 2,400 feet. We have completed a Project Partnership Agreement (PPA) with the US Army Corps of Engineers to dredge our navigation channel from 42 feet to 48–50 feet and widen a hazardous choke-point. These efforts and other smaller improvements are based on our customers’ needs to improve efficient use of their facilities, which ultimately benefits the Port’s bottom line. I strongly believe in the prospects of our organic growth model: caring for existing customers first and the growth will follow. In addition, we will continue working on a long-term vision for existing growth though our new strategic plan.

COVID-19 dominated the headlines throughout 2020 as the virus devastated the national economy and dramatically changed the way we live. Despite the many challenges created by this unprecedented pandemic, the Port of Long Beach remained open and operating to keep cargo moving, deliver critical medical supplies to first responders, and assist with the country’s economic recovery. As the disease made its way to the United States, we saw a massive wave of economic uncertainty and decreased consumer spending as people across the country lost their jobs and followed stay-at-home orders. In fact, the industry, already experiencing uncertainty from the trade war’s impact, moved to radical uncertainty. The decline in demand for imports led to a rapid rise in canceled sailings at the San Pedro Bay ports complex. The ports of Long Beach and Los Angeles saw a combined 104 canceled sailings during the first half of 2020, up from 41 in the first half of 2019. At the Port of Long Beach, despite the trade war and health pandemic, we stayed the course and continued to build. We also created a designated COVID-19 website, donated nearly 300,000 forms of PPE, and established a COVID-19 testing site within the Harbor District. The Port also created a Business Recovery Task Force to mobilize supply chain partners, prepare for recovery and lay the groundwork for a rebound in cargo. That preparation helped as our fortunes changed in July, marking our best month ever with 753,081 TEUs. The “best month” record fell a second time in September, when the Port processed 795,580 TEUs. Yet another single-month record was achieved in October, with 806,603 TEUs. Going forward, our mission will be business recovery and market share growth. This was our focus prior to COVID-19, and it will continue to be our focus as we emerge from this pandemic.

The historic COVID-19 crisis put US West Coast ports in the spotlight nationally and around the globe in 2020. In early March, the eyes of the world were on the cruise ship Grand Princess, which waited for days for government approval to disembark in Oakland due an outbreak onboard. The Pacific Maritime Association (PMA) worked swiftly to ensure International Longshore and Warehouse Union (ILWU) members working the ship had complete PPE protection and collaborated with the union to rapidly develop safety protocols that would ensure terminals coast-wide could operate safely going forward. We salute West Coast longshore workers, who are recognized as essential workers by federal and state authorities, as well as our member companies, who have worked cooperatively throughout this challenging period to sustain our economy and ensure Americans continue receiving the vital goods and supplies on which we rely. COVID-19 has also triggered unprecedented extremes in container volumes. Activity at West Coast ports fell dramatically and blank sailings rose in the spring and summer, a period in which the Pay Guarantee Plan included in the coast-wide PMA–ILWU contract allowed longshore workers to continue drawing pay even when volumes declined. But as I write this in November, we are witnessing the other end of the spectrum: historic imports. Cargo that had been sitting idle in warehouses and terminals in Asia is now flooding the trade lanes in a spike expected to last through the Lunar New Year. The perfect storm unleashing this cargo surge is putting stress on all aspects of the supply chain leading up to the holiday period. But we cannot let this temporary spike mask the broader reality. In the long term, the West Coast’s share of discretionary cargo is steadily declining. In 2020, PMA commissioned several new research studies to quantify market share losses at West Coast ports and identify the core factors driving them. The studies found that materially higher terminal, environmental, and intermodal costs are all factors, exacerbated by the addition of significant new capacity at lower-cost port competitors elsewhere in North America. Veteran maritime economist John Martin took a closer look at the economic fallout from this alarming trend. He found that a market share loss of just 1 percent of discretionary cargo at the San Pedro Bay Port Complex translates to $15.6 billion in total negative economic impact to California, at least 6,800 lost jobs, and $700 million in lost wages, salaries, and personal consumption annually. These job losses would disproportionately impact off-dock workers, including the trucking industry, distribution centers, warehouses and transload facilities. Meanwhile, a pair of studies from consulting firm Mercator International also reached troubling conclusions. According to one of the Mercator studies, by 2022, the British Columbia ports of Vancouver and Prince Rupert will be prepared to handle at least 400,000 TEU of additional cargo annually, equivalent to roughly 15 percent of the intact intermodal cargo currently flowing through San Pedro Bay and the Puget Sound. This followed an earlier Mercator study finding that dwindling market share at the Ports of Los Angeles and Long Beach could pose a financial shortfall of well over $1 billion for the Alameda Corridor Transportation Authority in less than 20 years. In 2021, the PMA looks forward to continuing to work with fellow stakeholders throughout the supply chain and government leadership to tackle the urgent issue of West Coast market share losses. In addition, we expect terminal automation to continue advancing in Southern California and up-skill and re-skill training efforts for ILWU members to take hold. We also anticipate supporting the restart of the West Coast’s cruise industry, which had seen record gains before being sidelined by COVID-19. History and experience show us that West Coast ports are resilient and strong, with unique natural advantages unlike any other region in the world. Our entire industry stepped up when the COVID-19 crisis hit, and we have the capacity, the technology, the workforce, and the will to continue our national and global leadership in 2021 and for decades to come.

The late Bruce Seaton, former CEO of American President Lines, talked about the container industry being nothing more than a series of cargo “hand-offs” among supply chain stakeholders. Success and sustained profitability, Bruce noted, would be achieved by how efficient and cost-effective these “hand-offs” were. Efficient “hand-offs” have been topical at the Port of New York and New Jersey (PONYNJ) as all of us continue to navigate the COVID-19 pandemic. The global supply chain has remained extraordinarily resilient despite initial concerns of sustained volume downturns. The Port is experiencing record cargo volumes following a record 2019, which is a notable trend that is not unique to New York and New Jersey. At a time when “physical distancing” has become a national and global imperative, the need for “social connectivity” in the industry is increasing. “Separately but together” could be the dichotomy of the century. In the context of supply chain integration and managing seamless “hand-offs,” it has never been truer. There is no roadmap for managing a pandemic. We are all learning on the job. When we collectively overcome COVID-19, one set of critical actions will be cataloging best practices. Key supply chain stakeholders, ports included, need to be more interconnected to share real-time information about what is happening throughout the supply chain, particularly visibility where cargo “hand-offs” occur. At the PONYNJ, stakeholder engagements have been a mainstay since March. These include more frequent Council on Port Performance meetings and a new operations--focused forum consisting of the Port Authority, terminal operators, labor, equipment providers and depots, trucking partners, and railroads. An additional subgroup was formed to address waterfront PPE requirements and the development of our own supply lines for face masks, gloves, sanitizer, and more. What has been clear during the pandemic is that Bruce Seaton had it right. This really is about efficient “hand-offs.” The interconnectivity of these hand-offs across the supply chain has been further reinforced. Our collective resiliency, despite broader supply chain challenges, has been achieved together as an industry by not conflating physical distancing with social distancing and instead recognizing the greater need to be socially connected.

The COVID-19 pandemic has been a catalyst for a fundamental shift in consumer behavior that will have lasting implications for shippers and the entire supply chain. The challenges we face today are also an opportunity to rethink service delivery and consider new ways to add value for customers while diversifying our gateway portfolio. Spending more time at home, consumers have embraced -e-commerce for its convenience and safety. The Northwest Seaport Alliance is uniquely positioned to handle the surge in e-commerce business and the insatiable demand for -fulfillment/transload warehousing space. The Seattle–Tacoma gateway has an abundance of transload capacity and industrial land available near port property to support the current and future needs of e-commerce supply chains. We are re-examining the competitive landscape, taking into consideration this “new normal” to identify strategic opportunities for increasing service offerings and value for our customers. Through targeted rail incentives with a focus on some key inland destinations, we see an opportunity to grow our intermodal volumes. While we continue to invest and build on our existing big-ship handling capabilities, we have capacity, landside operations, and a commitment to delivering best-in-class service that make us uniquely qualified for handling smaller vessels and expedited ocean services. It goes without saying that 2020 was a volatile year for the industry. It’s tested the resiliency of supply chains that inherently depend on consistency and reliability. We remain focused on, yet adaptive to, market dynamics to cultivate strategic and innovative partnerships. The inland terminal in Minot, North Dakota, which launched a rail service between Seattle-Tacoma and the Midwest, adds another passage for Midwest-based exporters and supports US export growth. 2021 will likely be another challenging year, yet we remain optimistic for a more consistent flow of cargo and stronger year overall. Nevertheless, we have our work cut out for us as we continue to adjust to the changes in global trade; we need to continue to collaborate as we navigate this redefined landscape.

In 2020, during the unprecedented impact of COVID on our business environment, our industry has proven to be very resilient and adaptable. Our customers, vendor partners, and ONE staff around the world were challenged with a very uncertain and dynamic situation early in the year. After the initial slowing down of volumes as a result of a worldwide shutdown, the industry was quickly able to adjust capacity. In turn, when the demand quickly picked up, with the effort from all sectors, the industry was able to re-engage our network again, in order to accommodate the needs of our customers. Having experienced the turmoil of 2020, I believe a key issue for the industry in 2021 is to provide stability. However, this cannot be done alone. It starts with alignment, setting the expectations of all stakeholders involved in the logistics chain. What are the volume forecasts? Can the seasonal spikes be flattened? Can vessel capacity, containers, and terminal capacity be properly aligned? What are realistic service levels and true logistic budgets that are sustainable? Can all these moving parts of our industry be set in place in order to handle the volumes? These are the challenges that we face and must work with focus to resolve. In 2020, the industry proved that it can respond to large volume swings, but not without disruption and pain. With better forecasting and planning, we can make the industry better together as ONE.

If 2020 taught us anything, it is we need to be prepared for the unpredictable. On Friday, March 13, 2020, like many other industries and businesses across North Carolina, the United States and the world, North Carolina Ports made the critical decision to implement changes to ensure the safety of our employees. A portion of our workforce began to work remotely while front-line employees remained on-site to ensure critical cargo and needed supplies continued to flow. Despite the lack of a playbook for what the world was facing, contingency plans were reviewed and actions implemented. This year also taught us the importance of communication. We recognized quickly the need for seamless communication between our employees, suddenly working remotely, and our customers, facing their own unique challenges. It is imperative this high level of communication extend to key industry stakeholders, including leadership of the International Longshoremen’s Association, port users, service providers, and even competitors; the importance of sharing concerns, challenges, resources, and best practices cannot be overstated. Improving how we shared information and finding support from a diverse group of stakeholders are two highlights in an otherwise dark period. Looking ahead to 2021, the challenges and impacts from COVID-19 are unlikely to disappear soon. Implementing and enforcing the necessary safety precautions in order to protect employees and port users will continue to be a top priority. Truly understanding the supply chains of our customers and being willing to find unique and creative solutions for their challenges will remain a key driver in 2021 and beyond. Traditional supply chains are being impacted with disruptions due to cargo surges, service changes, equipment shortages, and resource constraints. At NC Ports, the investments completed over the last several years have allowed us to maintain the highest level of support for our customers, while offering a viable alternative for those looking for options. And most importantly, communication will remain key during these uncertain times. We must continue to communicate with our employees, our stakeholders, and our customers so their challenges and needs are understood.

On the longshore labor front, 2020 taught us lessons about handling extreme peaks and valleys in cargo volume and the need for flexibility. 2020 taught us how to develop safeguards for a workforce who were being asked to work side by side moving critical PPE and goods on and off vessels to feed the supply chain while the rest of society was being told to shelter in place and not interact with others. Early on, the Port of New York and New Jersey was ground zero for COVID-19 cases. There was no book on safeguarding the workforce or management from the potential devastating effects of the virus, managing the forecast exponential spread of the disease, and quarantining from contact with those who did have it. To develop these safeguards, the New York Shipping Association worked hand-in-hand with the International Longshoremen’s Association to establish guidelines on how to stop the spread of COVID-19 in the workplace. This included joint efforts to secure necessary PPE from around the world, and it included non-contact -temperature-checking for 3,000 workers up to three times per day. Longshoremen do not get paid sick days if they do not show up for work due to illness. As an incentive to continue to show up for work with the possibility of contracting the virus and cutting off their income stream, labor and management developed a fund to compensate workers who came down with the virus. What 2020 taught us that can be used in 2021 is that under the harshest and most unique circumstances, labor and management in New York and New Jersey can come together to solve our challenges.

History will judge the significance of 2020, but for now, the weight is hard to overstate. COVID-19 has forever changed the way work will be done. The acceptance of working from home has brought about a reliance on digital collaboration tools and tolerance of innumerable video conference calls. Hybrid work-from-home models will stay even after offices are free to operate as they did pre-pandemic, reshaping routines, communities, and company cultures. Business practices and processes have in most cases revealed stout resilience. Yet improvements are still needed to instill entrepreneurial mindsets and elevate thinking beyond the streamlining of workflows. This is a challenge well beyond shipping and logistics, but in a transaction and process-focused industry, it requires attention to develop. The US government is deliberating issues that will influence age-old industry definitions affecting payment regimes for freight, equipment, and assessorial charges as well as other legal and economic liabilities. 2021 is shaping up to be a pivotal year to smartly navigate regulatory change. The pandemic has left no place untouched, and in our global industry, supply chain operators have been heroic. As the coronavirus spread, supply chains to support first responders kicked into action, and supply chain professionals became silent heroes, setting aside differences to unite on common action. The strength and determination of people across the industry are a source of pride and hope for a better 2021. Our industry is defined by delivering results, and consequently it has the opportunity to lead in creating a post-partisan environment where shared goals outweigh differences and determination to solve problems is more tenacious than identifying blame. It is a unique position to act upon and opportunity to seize today.

The year 2020 will be remembered as one of the most disruptive in a long time. While adjusting to a global pandemic required the best of every business, perhaps the more unsettling crisis of 2020 was coming face to face with the truth that our country had moved so little in its evolution toward a more just society over the past half century. Demonstrations around the country following the tragic death of George Floyd brought centuries of suppressed anger and frustration to the surface for African Americans — and for non–African Americans, the realization that we are yet a long way from the ideal of our nation’s founders. Against this backdrop, Matson has been introspectively assessing its workplace environment, hiring, and promoting practices, and evaluating whether our business has been “part of the solution.” One of our conclusions is that we can and must do more. This has prompted us to take more proactive steps for the good of our business. After all, we believe that an organization relying on homogeneous views and perspectives is depriving itself of innovation, improvement, and competitiveness in countless ways. One of our first steps this year was to introduce training for all management employees designed to foster greater understanding of bias and how it works in the subconscious, shaping our own views of the world and the people with whom we interact. We have also supplemented our community giving program with cash grants targeting nonprofit organizations that are focused on combating racism, and we have undertaken a new scholarship program devoted to encouraging more African American students to pursue careers in shipping and logistics. It’s a start.

The Port of Boston may not look any different than it did a year ago — ships are still being serviced at Conley Container Terminal, and the dredging of Boston Harbor continues. But 2019 feels like a lifetime ago. Last November, we were celebrating the end of another record-breaking season at Flynn Cruiseport Boston and another solid fiscal year at Conley Terminal. This pandemic has taught us many important lessons. The most important are a reminder to be flexible and to not stray from the mission. Ports have always been flexible. Companies merge, trade routes evolve, technology advances, and ships get bigger. This time, the health and safety of our workforce was threatened, as well as our finances, and we had to react quickly. Our employees are our top priority, so the first step was to distance staff, adjust work schedules, distribute masks, and begin sanitizing equipment. In collaboration with our partners, we figured out how to work safely. As the industry has adapted to the pandemic, so has Conley. Furniture and textile importers have shifted business models to include PPE production. Traditional storefronts are now exploring e-commerce strategies in order to meet the demand for work and learn-from-home products. This past September was our busiest on record, reiterating demand through our congestion-free terminal. For years, we have been laser--focused on making the Port of Boston big ship–ready. Our mission is to position the Port so that New England companies can compete in the global marketplace, and our major improvement projects are advancing. Today, as the Boston Harbor Dredging Project nears completion, we are finishing a new berth and purchasing three new ship-to-shore cranes, among other improvements. We may not know what the new year will bring, but we will continue to adapt as needed.

When the supply chain breaks down, it disrupts business performance. In this past year of COVID-19-impacted business, those companies that adapted their supply chains quickly to manage through market uncertainty, order fluctuations, and new ways of working were rewarded with positive financial results and business growth. The supply chain lessons learned from the COVID-19 pandemic are clearly relevant to best practices in supply chain management in 2021: Agility: Structure your supply chain to adjust to the flow of goods and materials. This past year showed us there are many uncertainties to manage through on a daily and weekly basis. Your supply chain should have the agility to keep pace with changes in consumer demand and market fluctuations. Course corrections are inherent to supply chain management as conditions change, and you need to be able to control the controllables. Holistic ecosystems work more smoothly: Multiple handoffs in supply chains were a financial liability in 2020. Our experience is that it’s crucial to think end-to-end in the entire supply chain. It’s not enough to get more space on an ocean vessel without addressing landside infrastructure challenges like port congestion, labor shortages, and distribution center congestion — all of these segments need to be thought through end-to-end. Those companies that partner with true end-to-end providers attain better performance than isolated approaches with their inherent multiple handoffs, entailing extra coordination, cost, and risk. Omnichannel fulfillment will grow: The growth of e-commerce and its reach into store delivery, consumer home delivery, and distribution center restocking will continue to grow as we enter the “next normal.” Those warehousing and distribution providers that have strong omnichannel capabilities and warehouse management systems will continue to set the pace. Societal good: Our industry has played an important societal role in the COVID-19 pandemic by keeping supply chains operating this past year. In 2021, it is incumbent upon all of us to continue to create new and better solutions to constantly evolve supply chain performance. Vaccine logistics will be a high-profile opportunity to show our industry’s vital role.

In 2020, the EMS (electronics manufacturing services) sector stress-tested the importance of components to consumer visibility in the supply chain. When COVID-19 started to impact component manufacturers in Asia, supply of certain components started running low as plants were shut down. As a result, component prices increased, and air capacity being removed from the APAC trade lane then increased freight costs to record highs. To counter supply shortages, buyers started forward-stocking critical components, as well as asking vendors to store stock closer to manufacturers. Inventories in warehouses ballooned with the wrong components, and numerous companies fell short on critical components. Historical sales models did not account for a major pandemic, which left many supply chains wondering how much to build. A common discussion topic in many boardrooms has been how much to ship and to which channels. Given the impact of COVID-19 in 2020, it is clear that digitalization and higher quality data should be major initiatives for supply chains in 2021. Disruptions like COVID-19 allow companies to take a step back and reevaluate the component-to-consumer supply chain to identify previously unforeseen problems. Lessons learned can be summed up in three major categories: lack of data, lack of communication, and lack of resources. With the proper technology, solutions are available to overcome these supply chain challenges. Clients will be able to balance inventory between major channels, make smarter component purchasing decisions, keep product in stock, and — most importantly — not lose out on the sale.

2021 will continue to test supply chains, so we’re lining up new, innovative ways to help customers elevate their business performance in Canada. New transload facility in Vancouver: We will install more agile supply chain options and capacity to and from Vancouver for North American customers by reducing multi-modal handoffs. Supply chain leaders will be empowered with more responsiveness to the pace of business by giving them better control of order timing/fulfillment through inland routing flexibility, better velocity gained from one-day savings of rail versus truck, and cost savings through seamless transload operations into domestic 53' trailers. This lowers their year-on-year costs, while creating more sustainable supply chains with lower truck emissions. More rail capacity: The Canada market is heavily reliant on rail infrastructure. To strengthen supply chains in 2021, we’ve added two rail providers to expand our rail capacity and service depth. We’re the only carrier offering customers two significant Canadian rail operators (Canadian National and Canadian Pacific). More truck power: We’re exploring the market to find more truck power options for customers to serve their end-to-end solutions and meet future demands. More technology: We’re rolling out more digital solutions to digitalize supply chains and introduce innovative improvements that make supply chains run better and faster via Maersk.com, the Maersk app, and TradeLens.com. More societal good to fight the pandemic: This past year, we flew six air charters — Antonov 225s, the largest air cargo planes in the world — of PPE into Edmonton for the Alberta government to support its COVID-19 response efforts. In 2021, vaccine logistics and supporting pharma supply chains will be a vital role our special project logistics team will continue to play with their global expertise and assets in Canada. Our company is honored to serve the Canada market with the container logistics infrastructure essential to creating our country’s bright future.

During the early days of the pandemic, the marine cargo–-handling industry was faced with uncertainty about the methods of disease transmission, delayed and conflicting information from federal and local authorities regarding the essential status of the marine cargo handling industry, and shortages of necessary sanitizing supplies and personal protection equipment (PPE). While it was quickly ascertained that the ports must remain open and continue to handle cargo, doing that required enhanced stakeholder consultation and collaboration at a time when our industry’s traditional method of communication — face-to-face meetings — was no longer viable. Thus, the earliest lesson learned was that even though there is no virtual substitute for the rank-and-file labor that handles marine cargo, many ancillary functions attendant with cargo handling could be performed remotely. Concurrent with the effort to ensure that the workplace had appropriate PPE, equipment could be appropriately sanitized, and social distancing measures were adopted, back office functions had to be adapted to remote work. Since this was not as simple as just providing laptops or VPN access, a conscious effort had to be made to open new lines and methods of communication with employees, customers, and other port partners. Thereafter, the importance of the communication of timely and accurate information about cargo became even more significant. In an environment where few industry stakeholders have resources to spare, allowing them to work efficiently through enhanced cargo information portals like the Terminal Information Portal System (TIPS) deployed in the Port of New York and New Jersey was essential. We have seen how TIPS hastens terminal visits and transactions by providing a one-stop portal for general information regarding port-wide matters as well as terminal-specific announcements regarding special conditions or changed operating hours. TIPS also reduces unnecessary terminal visits. What we have learned since the pandemic is that port stakeholders want more cargo-related information through platforms like TIPS and that there is also a need to streamline and re-imagine cargo documentation flows. In 2021, when we are likely to see continued growth in cargo volumes, we are also likely to see enhancements to portals like TIPS to facilitate the movement of this cargo.

A number of events converged to create a maelstrom in the trans-Pacific trade in 2020. The uncertainty of the COVID-19 crisis, tight carrier vessel management, restructuring of societal norms to create a “stay-at-home” work environment, and the whipsaw-like effect of carrier blank sailings versus the introduction of extra loaders all contributed to an unprecedented perfect storm. The net result is a broken container supply chain that is unmanageable by any means. Importers find themselves managing an import flow that is both delayed and costly. Import budgets have gone through the roof as ocean freight rates, chassis per diems, and trucker waiting time charges have hit all-time highs. As if this is not bad enough, poor vessel service integrity and equipment shortages have delayed product delivery to customers as much as three to four weeks, with costs that are more than double the expected budget. While costs associated with these increases were implemented by all parties (carriers, terminals, trucking companies), they were initiated by the ocean carriers’ general rate increases (GRIs). Within four weeks of the contract conclusion, carriers took three GRIs and a peak season surcharge (PSS) on the spot rates. Eventually, the carriers prioritized spot rates over contract rates and began charging a premium to load a container on board. A premium? Isn’t the contract the guarantee? The blank sailings ensured the tight space to enforce the rates. When extra loaders were initiated to clean up the backlog, it created a mass movement of containers from Asia to the US, thereby creating container shortages in Asia. And a restructuring of consumer buying patterns under COVID-19 ensured a surge of import volumes through the remainder of the year. As we begin the 2021 contract season, there are many questions to be answered and much uncertainty. What is the sanctity of a contract? What is the baseline for new negotiations? At what cost can we consider a carrier to be reasonable as a service provider? Have the ocean carriers become too greedy?

Logistics is facing an era of unprecedented change, and resilience and agility are critical to unlock business growth. The coronavirus outbreak has reshaped the world, and the supply chain is disrupted due to traffic restrictions, lack of delivery capacity, and warehouse shortages. Digitalization takes hold and customer expectations evolve; as more consumers have begun online shopping in greater numbers and frequencies, new technologies are enabling greater efficiencies. Shipping lines have expanded their expedited services to capture rising demand for faster transit times from Asia. Strong consumer demand in mainland China for imported products has not only boosted general trade in goods, but also fueled the expansion of cross-border e-commerce retail imports on the mainland. China’s recovery from the COVID-19 pandemic is, in large part, driven by consumer activity across e-commerce platforms. Riding the wave of e-commerce and the awesome growth in South China, Yantian is exercising its agility to develop a collaborative supply chain. Yantian works closely with shipping lines to provide an extensive shipping service network, and new expedited cross-border -e-commerce express routes have been launched to deepen e-commerce reach. In addition, Yantian has also developed new clearance models and partnered with both upstream and downstream stakeholders to inject new impetus to the sector and to ensure fulfillment of orders in a timely and efficient manner. As shipping disruption continues and value chains have grown in length and complexity, Yantian proactively monitors the changes of the shipping market and industry, facilitating collaboration and coordination across the extended supply chain and ecosystem. Yantian will continue to serve as a sustainable partner — as a smart, green, world-class port by providing world-class container terminal services to combat challenges and capitalize growth opportunities. Agility will sustain growth in the ever-changing global supply chain.

This past year is one most of us will be happy to have in the rear-view mirror. One of the things that COVID-19 taught us in Halifax is the importance of strategic planning and communication. By the time the first wave of COVID-19 came crashing over Nova Scotia and North America in mid-March, we were already holding daily briefings with our senior team, terminal operators, and other strategic partners within the Port of Halifax, including marine service providers, Canadian National Rail officials, health officials, and our regulatory agency, Transport Canada. Doing so put everyone on the same page and allowed us to be able to adapt and respond quickly. As this was happening, our IT department was able to capitalize on upgrades to our digital infrastructure that provided our workforce with the digital capabilities to work from anywhere. From a customer perspective, the temporary closure of our administration building to protect against the spread of COVID-19 was seamless, and through the initial stages of the pandemic, we maintained schedule reliability while protecting the health and safety of our workforce. There was not one reported case of COVID-19 amongst our staff or terminal workers in Halifax. Consistent and reliable service through Halifax meant goods continued to flow, and though working with those same critical partners, we were able to fast-track emergency supplies and equipment through the Port of Halifax. Looking ahead, providing our core administrative team the ability to work remotely as required will help to ensure that critical goods keep moving through our international gateway, even during those situations that force an unexpected or unplanned change.

Future success for US ports depends on cargo fluidity — the ability to move massive container exchanges not only on and off vessels, but beyond terminal gates. Value for BCOs depends on overland and maritime logistics networks working in tandem to bring goods to market quickly and reliably. GPA will inject additional value into the supply chain in 2021 through a multifaceted expansion of capacity. By the summer of 2021, the Port of Savannah will commission the second set of new working tracks on its Mason Mega Rail Terminal, increasing its total from eight to 18 and doubling GPA’s rail lift capacity to 2 million TEU per year. This space for new business will open up the Port of Savannah as a viable new option for additional inland destinations. The US Army Corps of Engineers is expected to deliver a deeper Savannah Harbor by the end of the year. Now more than 75 percent complete, the project will allow larger vessels to take on heavier loads with fewer tidal restrictions. As with other deepening projects, this will mean faster service and improved cargo efficiency. Having seen success at its Appalachian Regional Port, GPA plans to begin earthwork in 2021 for a new inland port in Northeast Georgia. Besides the high-volume movement of cargo, such facilities provide quicker container returns for importers and better empty container availability for exporters. Through collaboration among GPA and local and state economic development authorities, Georgia has created new opportunities for 3PLs, frozen and chilled cargo storage, and general retail distribution, as well as export cargoes such as resins. In a market featuring 79 million square feet of industrial space, another 8.7 million are currently under construction. This new space will allow more companies to use Savannah as part of a “four corners” approach to serve the US.

The number one question we are asked by our customers as we look forward to 2021 is: How can we mitigate the outrageous increases in our ocean freight expenditures that were not forecast in 2020, and what did we get in return for the increases? Carriers implemented a range of new revenue streams including a “priority loading” charge, experienced a massive meltdown at the Los -Angeles–Long Beach gateway, and basically took the attitude of “the market is what it is.” The lack of planning and meeting the challenges that were created as a result of the surge in volume in the second half of the year has created tremendous frustration and supply chain meltdowns. We tell our customers daily: forecast, forecast, forecast; but even with more detailed forecast models, the carriers have failed the industry miserably. Looking forward to 2021, the industry is showing signs of continued volatility. The terminals in LA–LB must find solutions to improve service levels. Carriers are blaming shippers for the lack of equipment in key Asia ports, and that’s wrong because the shippers cannot get appointments to return empties, creating additional costs for detention and chassis shortages. These challenges are going to remain in place until the carriers address the terminal failures. Carriers are going to face tremendous push-back from shippers over the dramatic rate increases that have taken place in 2020. This is going to result in very contentious contract negotiations in 2021 that will result in some new boilerplate terms providing some level of service expectations by the carriers to justify the actions taken during the crisis created by a global pandemic. 2021 will bring continued volatility to the market.

During the COVID-19 crisis, ports across the country have sustained mounting losses. In Florida, where our ports support more than $117 billion in economic impact and 900,000 direct and indirect jobs — we continue to face many challenges in recovery. Whether moving over a hundred million tons of cargo annually or millions of US and international cruise passengers, Florida’s seaports generate and support a vast array of commerce and are the gateway for shipment of goods into and out of Florida. Communities from the Panhandle to the Florida Keys depend on port revenues, jobs, and taxes to support their economies. During the pandemic, we have continued to advocate for federal funding to assist the maritime industry, but in the meantime, the commitment of local communities, our cruise and cargo partners, and the state government has helped us navigate the crisis to the best of our abilities. We have worked day in and day out with partners at the local, state, and federal level to ensure our ports maintain a state of readiness and have the necessary infrastructure to move cargo across the state, the nation, and the globe. Recent studies have shown Florida’s ports remain resilient to disasters, from recurring hurricanes to disruptions to the global supply chain. We continue to grow and diversify — in goods and services, trade partners, and innovative technologies — to help us withstand and endure the myriad challenges we face. Although we know the COVID‑19 pandemic will continue to impact our port economies into the unforeseeable future, every single day, Florida’s ports continue to deliver critical goods to individuals, families, and businesses. Our ports are economic engines of our communities, and they will be instrumental in getting the state’s, and the nation’s, economy back on track.

In an increasingly competitive and transparent supply chain sector, our most innovative advances will more often come from our people than from technology or capital investment, and that will require unlocking the power of their diverse backgrounds, experiences, and points of view. To leverage this diversity, companies must foster inclusion. Hiring within underrepresented groups, such as women and minorities, helps sustain a workforce. Yet truly inclusive practices, where everyone is respected, valued, and has a voice, extend beyond identity groups. They allow a company to tap into the differences and unique abilities and experiences of employees, who are then empowered to build transformative solutions for customers and markets. Research shows companies that embrace the power of inclusion have a higher performing culture, achieve better outcomes, increase their market share, and provide higher levels of customer satisfaction. At Crowley, we know this pursuit is a journey. It is not perfect, and it takes time and dedication. However, we believe inclusion is a catalyst for positive disruptions that spark fresh ideas and services, taking what we have always done and realigning or recreating it to make supply chain solutions more effective. Traditionally, talent management has focused on bringing in diverse talent, then assimilating new team members into a culture. However, recruiting and retaining a diverse workforce without taking steps to foster an inclusive culture will create a diverse team, but one that may never realize its potential value. To increase inclusion, we work to improve communication by recognizing and overcoming bias and enhancing awareness. We open up discussions that ordinarily might have been smaller. And we drop the insistence on hierarchies and ownership of roles that inhibits contributions and ideas. When companies attain a higher level of inclusion, they make a positive impact on customers, careers, the lives of their people, and the industry as a whole.

The COVID-19 pandemic continues to signify how important health and safety issues are, not only for our employees, but also for our clients and subcontractors. The enormous impact of health and safety on operative working processes along the supply chain became evident in recent months. At deugro group, we review our quality, health, safety, environment, and security (QHSES) processes constantly, in line with the plan-do-check-act (PDCA) model, to ensure operational excellence for all deugro group companies and enterprises. Our QHSES department enables us to react within the shortest possible time with appropriate measures and resilient emergency planning to ensure the well-being of all parties involved. We will continue to promote, invest in, and expand this approach in the coming years. The COVID-19 pandemic further highlights the importance of close working relationships and collaboration with clients and partners. Adapting to new technologies, meeting customers virtually, and using tools like Microsoft Teams, Skype, Webex, etc., are paramount to effectively connecting and communicating. As part of deugro’s global digitalization strategy, we are investing heavily in deugro group’s IT landscape, which also includes interfaces with our clients and partners. This ranges from deugro’s new customized transport management system to OTTO, dteq’s custom-made cloud-based transport engineering software, which creates customized transport engineering solutions including operation, documentation, and technical project management, to the new e---procurement modules of deugro visiotrack, deugro’s own supply chain, transportation, and warehouse management software suite, and to SAI360, a centralized reporting tool on QHSES incidents and observations that provides greater transparency. Likewise, effective communication internally is equally important to ensure that all deugro group employees globally are kept up to date about relevant business topics, without delays. It enables the organization to act and adapt quickly when needed. Therefore, the deugro group introduced HELIX, a state-of-the-art intranet platform based on SharePoint and Valo, to all deugro group employees back in February 2020. The use of electronic communication will continue to shape the logistics industry for years to come as it drives efficiencies, thus enhancing performance while saving cost. In this regard, the deugro group already offers certified web trainings, such as the “Incoterms 2020 Made Easy — A Comprehensive E-Learning Course” training from 4D Supply Chain Consulting, certified by the Chartered Institute of Logistics & Transport (CILT), and technical training modules from dteq. All of this is an integral part of our overall digitalization strategy along the supply chain. To meet growing client requirements and provide the best possible tools and skills in an increasingly digital environment, the deugro group continues to invest in a future-oriented digitalization program, with state-of-the-art IT architecture delivering consistent, high-quality data covering all areas of the supply chain. External data communication with clients, subcontractors, and project stakeholders will continually be digitally optimized, allowing real-time data exchange and operational visibility to all project stakeholders. In this regard, the deugro group has already started to redesign its organizational structure, creating efficiencies and new teams. The benefits range from optimized document and transport management systems to deugro visiotrack, providing clients 24/7 global access to all cargo information and documentation, which is required for smooth work processes and ensuring visibility of real-time logistics data. The stability and resilience of our logistical processes and our IT network are of utmost importance to deugro, not only to guarantee operational excellence but also to be ready for the future, no matter the challenge. To achieve decarbonization and to reduce greenhouse gas emission, shipping lines are required to invest to meet future objectives and environmental regulations. That said, most shipping lines continue to endure weak market conditions combining low rates, an overcapacity of aging tonnage, and a highly competitive marketplace. Shipping lines must either invest in new technologies to protect the environment by replacing old propulsion systems or, alternatively, invest in fuel-economy-friendly vessels. A pivotal part of shipping lines’ preparation for a more -environment-friendly future rests with financial institutions and banks, as ultimately those institutions play a key role relative to providing the required financing. Some banks have burned their fingers in the past. Near-term future will tell how much appetite is left with the banks to provide financing to an ailing shipping industry. Perhaps most important is that both shipping lines and financial institutions need to adapt, align, and collaborate so that finance conditions and expectations on financial returns are realistic. deugro group’s financial stability has allowed dship Carriers, a deugro group company, to order a total of four F-500 multipurpose/heavy-lift vessels, according to our fleet expansion program, which was initiated back in 2018. The F-500 vessel type belongs to the new generation of economical multi-purpose vessels, specially developed to reduce fuel consumption and to increase stowage flexibility. However, the responsibility for reducing emissions does not lie solely with the shipping companies. Cargo owners, freight forwarders, and everyone else participating in the supply chain can make an important contribution.