Annual Review and Outlook

Today’s markets confirm that international trade remains sluggish, although the ratio does vary trade by trade. The third quarter of 2016 for imports from China is generally been the busiest period for this industry as retailers stock up on goods for the beginning of the school year and the winter holiday season. For exports, the fourth quarter is busy for end-of-year profits, and expectations may be moderate at best. The North Atlantic has little or no cargo moving. This has never happened before, showing a terrible economic signal. Cargo exports to West Africa have slowed because of government restraints on letting money out of the country. Let’s hope recent elections will bring a positive impact to change the economic waters. One out of every six jobs in the US is maritime related. The oceans are an important part of American life, as nearly 80 percent of US imports and export freight is transported through our seaports. How important is ocean transportation to our economy, a system that carries 95 percent of US foreign trade? Very important. Let’s hope for 2017 that the shipping industry is not sinking, and let’s keep focused going forward to an economic revision in 2017. With the new elections, hopefully sanctions with Russia will be eased by the second quarter. This will open a new corridor for global trade that was missing in 2016. This will definitely be a stimulus to international projects, adding to the economy and the shipping industry for 2017.

One of the most important changes we can expect to see in our industry in 2017 is further consolidation in the ocean freight market. With that comes some uncertainty, but we can expect to see a slight reprieve in increasing shipping rates providers have been experiencing since the collapse of Hanjin. While rates are not predicted to decrease substantially, stabilization should occur after Chinese New Year. However, providers can expect that once rates flatten, they will be higher than what we have experienced in the last year or more. Unfortunately, Hanjin’s situation may not be an isolated incident. Logistics providers should learn from the Hanjin experience and readjust their risk management systems. Taking corrective action prior to a crisis can ensure that a customer’s cargo is not stranded on a container at sea. Providers should pre-emptively move shipments to more stable carriers. In addition to rate increases, many importers have experienced delays and interruption of their supply chain as carriers experienced a capacity crunch. To manage delays, it’s essential that logistics providers work with their customers to ensure advanced booking of space by using the best forecasting tools for visibility and forward planning of weekly movements. Proper planning and forecasting is key to an uninterrupted supply chain. It will also be important for the supply chain industry to monitor the political developments worldwide in terms of changes in regulations and long-term potential shifts in the manufacturing industry, which could impact trade.

We expect to continue to see a challenging economic environment going into 2017. Economic cycles are occurring with greater volatility and unpredictable duration, which makes it harder to forecast accurately.

The ocean shipping industry in 2016 confronted two immovable forces that will continue to disrupt ocean logistics participants, driving shifts away from historically successful business models to those focused on scale, enhanced customer engagement, and accelerated technology innovation.

Having a new US administration may help bring back offshore drilling and create a need for services from the marine sector, as well as a possible infrastructure investment from the public sector.

In 2017, we can expect to hear a lot more about Industrial Internet of Things solutions such as autonomous shipping, completely networked warehouses, and global asset tracking.

Technology permeates every aspect of the railroad industry, and we must challenge ourselves to always think outside the box.

As trade flow through the Panama Canal increases, commensurate increases in security will need to follow to stop attempts to disrupt the global supply chain.

Investing up to $1 trillion in the nation’s infrastructure is central to the Trump administration’s goal of building a better economic future for America. Strategic investments in freight-related transportation assets are also among the top priorities for America’s ports. In mid-November, we sent President-elect Trump’s transition team the US port industry’s policy recommendations , which include land- and water-side transportation infrastructure investments, along with recommendations for port security and environmental enhancement programs. The AAPA’s policy document includes ways to relieve traffic bottlenecks and expand freight-handling capacity, modernize and fully maintain the nation’s federal navigation channels, provide tax fairness and equity, secure America’s ports and water-side borders, and help protect the environment and build resilience. With regard to improving the freight-handling capacity of the country’s roadways, railways and waterways, with particular emphasis on connections with US seaports, the AAPA recommends: Providing additional FAST Act investments and a sustainable freight trust fund to plan and build multimodal projects. Establishing a properly funded and staffed Office of Multimodal Freight Transportation within the US Department of Transportation’s Office of the Secretary. Supporting funding for a robust StrongPorts program under the Department of Transportation’s Maritime Administration to help ports plan for their 21st century infrastructure needs. Increasing investments for authorized marine highway projects to ensure transportation alternatives alongside congested landside transportation corridors. Increasing funding for transportation infrastructure grants to $1.25 billion per year. America’s seaport activity accounts for over a quarter of the national economy and supports more than 23 million US jobs. Local ports and their private-sector partners plan to invest nearly $155 billion into infrastructure over the next five years. Leveraging federal investments in seaport and freight-related programs will yield huge dividends in the form of economic growth, maintaining and creating jobs, enhancing America’s international competitiveness and sustaining a healthy environment.

We remain engaged in ongoing discussions about railway regulatory environments in Canada and the United States.

Supply chain discipline is steadily becoming an integral part of the global business model.

As we move into 2017, global trade management executives need to brace against disrupters that have the potential to send supply chains into a tailspin.

There is an important date looming that will have an impact on the world shipping fleet, and that is Sept. 8, 2017, when the IMO ballast water treatment convention comes into force.

Global trade and transportation are evolving at warp speed, and we must adapt or get swept out by this evolution.

Global liner shipping regulators and, in particular, the Federal Maritime Commission, should review their policies and adopt a more balanced approach in fostering a stable liner shipping industry while safeguarding the interests of shippers.

The past year brought about significant changes for intermodal transportation.

Throughout its history, the rail industry has embraced technological advancement as a means to drive our collective business forward and remain relevant in an ever-changing economy.

After a challenging year in 2015, US beef and pork exports rebounded in 2016 and enter 2017 on a positive trajectory.

The transition to a new administration in Washington will certainly bring change to the country and US rail industry. We’re optimistic their policies will promote economic growth and regulatory relief for the rail industry and broader economy.

A feeling of uncertainty pervades the shipping world with the rapid political shifts in the Western world with “isolation” as a strong undercurrent.

Change and innovation is where our future lies. New trade routes by land and sea, new ways of connecting the global supply chain will impact us all, and to those that adapt, the future belongs.

Uncertainty rings true as the word for 2017, which will be a bit unlike 2016.

Location strategy will become increasingly important to the performance of logistics real estate in 2017.

The overcapacity issues and slower-than-expected trade volumes exacerbated by the China slowdown have plagued the industry, and mounting losses led to necessary shifts.

2017 will offer some potential opportunities for meat proteins originating in the United States.

As retailers look toward 2017, one of the biggest questions is what a new President Trump will mean for retail’s priority issues.

2016 has been a watershed year.

Logistics is the main facilitator of international trade; for this reason, anything affecting trade affects logistics.

The global economy seems to be entering another era of uncertainty and is becoming more protectionist, to the dislike of the port industry.

Carriers and 3PLs breathed a sigh of relief the morning after election day. Finally, the period of uncertainty was over. While some are concerned that trade might be restricted, most carriers and 3PLs are looking forward to four, and perhaps eight, years, of fewer, less onerous regulations and a simplified tax code, perhaps including a reduced corporate tax rate.

Retailers are experiencing a period of profound change. How individual companies react will determine so much about their future.

Two major issues face US maritime education and training in 2017. First, the new administration must be made aware of the vital role the six state maritime academies play in ensuring the nation maintains a sufficient pool of licensed mariners. Second, maritime academies must assess current curricula and determine what programs should be added to meet the future needs of the maritime industry, based on the increasing pace of technological and regulatory changes.

A dramatic decline in piracy off the Horn of Africa and in the western Indian Ocean since 2014 has produced a collective sigh of relief among ship operators, government agencies, and others concerned.

Transportation and logistics organizations, successful in 2017 and beyond, will proactively transfer the capabilities of the departing generation to following generations.

There’s been a continued debate over transportation messaging and shipment visibility that will likely dominate supply chain conferences and board rooms in 2017.

Consolidation of container carriers and the realignment of ship alliances are commercial developments of significant magnitude, and point to a trio of critical priorities that industry and government must immediately address.

M&A proved to be a major theme in the freight forwarding business in 2016 and further consolidation is very likely in 2017.

Ocean container overcapacity is a major challenge we see impacting the freight forwarding industry in 2017 and beyond.

In my opinion, the single most important change in 2017 will be the reduction in capacity within the worldwide ocean carriage industry.

The barrier to entry to become a licensed NVO remains low, yet I expect we will see more consolidation during 2017.