Annual Review and Outlook

As corporations increasingly use their supply chain strategies to help gain a competitive advantage, we noticed a trend toward more in-depth site selection analysis.

When it comes to port selection, it might be said that cargo moves the carrier.

Supply chain risks, regulations and compliance requirements increase almost daily.

The ATA Carnet, a standard internationally recognized customs document that allows goods to move into foreign markets duty-free and tax-free, is one of the best-kept secrets in international trade.

[Editorial note: image removed/no longer available] Map"> "The merchandise was damaged in transit" is not welcome information. Recovering from the loss will depend upon how well you and your insurance broker have identified your supply chain risks, assessed those risks and put adequate coverage in place. Below are 10 questions that a knowledgeable cargo insurance broker partner should ask when developing a cargo insurance policy that is structured to protect your company’s unique supply chain risks and exposures.1. How are your import and export cargoes and/or distributed goods insured currently? This is a place to start to understand whether your assets are adequately protected against loss.2. Do you use a forwarder, logistics company or transportation carrier to help manage goods in the supply chain? If so, this impacts the insurance options and the understanding of your supply chain exposures.3. What are the goods and their approximate value in the supply chain on an annual basis? Knowing annual value helps to understand your insurance choices. There may be a point below which your own policy isn’t cost-effective.4. What is the geographic scope of the supply chain? Geography impacts the risk of loss and scope of coverage.5. How are the goods packed? Packing methods affect the risk of loss.6. What are your terms of sale and/or your purchase terms? This provides a good indication of where your ownership begins and ends.7. If you sell your goods on cost-and-freight terms, do you have insurance if title to the goods does not transfer to the buyer? While the buyer is responsible for insuring the goods, there are many reasons title may not transfer. Therefore, the goods remain in your ownership and at your risk.8. If you purchase goods on cost, insurance and freight terms, do you have contingency insurance that fully protects your interests as a buyer? While the seller is responsible for arranging the insurance, the buyer has no control on the price, coverage terms, insurance company stability or language of the policy.9. Do you have any of these exposures in your supply chain: storage/warehouse exposure, consolidation exposure, staging exposure, processing exposure, fulfillment exposure? Under a well-structured cargo insurance policy, your goods can be insured for all transit exposures, both internationally and domestically and by any conveyance mode. In fact, while the goods are in the supply chain or lifecycle they can be insured for broad coverage under a cargo insurance policy.10. If your goods are insured by you, under a policy in your name, what are the coverage terms? Are any supply chain exposures not covered? A knowledgeable cargo insurance broker can help you understand the coverage terms as well as identify risky “holes” in coverage. Leslie Levy August is secretary general of Trade Bridge International and a licensed property & casualty insurance broker in Barrington, Ill. She can be contacted at leslie@tradebridgeinternational.com . Steve Connor is president of Wyvern International Insurance Brokers and a licensed property & casualty insurance broker in Barrington, Ill. He can be reached at SConnor@WyvernInsurance.com .

Piracy and armed attacks against merchant shipping off the Somali coast have generated intense public and governmental attention.

While the exporting community is not a monolithic entity, many exporters of bulk or industrial commodities have similar characteristics.

Businesses everywhere are cutting costs and laying off employees.

An automated dispatch management system can provide the missing link for ocean carriers, 3PLs/forwarders and beneficial cargo owners who must reduce the cost of drayage.

2. Job Title VP of finance, director of supply chain, master of the universe. Oh, yeah! There’s nothing like getting more power and authority! This is one part of your negotiations that won’t cost your employer more money, but could mean a lot to you. But with authority and power comes responsibility, so expect to be working a few more hours — at least for the first few months to impress the boss!

In today’s uncertain times, one thing remains certain: There will always be changing global trade rules and technologies. The following are 10 of the top ways we believe companies can ensure they are being as efficient, safe and cost-conscious as possible in the short run while building a sound infrastructure for future needs. With the goals to reduce cost and risk in the supply chain, automation and working closely with partners are the two most practical areas of opportunity. Automation 1. Companies must validate more things. Effective trade screening is not just about denied parties but also denied goods and territories. With 80-plus denied trade lists already published, more items and checks need to be included in the validation process. Plus, more country-specific rules are being applied. For many companies, effective screening using manual processes is often not possible. What takes several minutes per item can be reduced to a few seconds using appropriate trade screening software. It assures that the products have been properly screened and provides a best effort record that the company did what was expected to ensure the safety and compliance of its products. Using such automation software also frees up supply chain personnel to do more revenue-producing work. 2. Importers and exporters have more direct accountability. With fees increasing and more policing occurring, importers and exporters are subject to massive penalties for noncompliance. Penalties can be substantial — in one recent case, a Singapore-based importer was subjected to a $25 million in fines. These fines, in effect, could put some smaller companies out of business, even if it was seemingly accidental noncompliance. In addition, personal civil penalties and jail time for individuals can be imposed for their participation (or lack thereof). Therefore, most companies cannot afford to be unaware of their trade compliance responsibility or of the specific activities conducted on their behalf by service providers and forwarders. The trading company must have knowledge and records of what has been done to their goods at all times. 3. Electronic submission is required. With Importer Security Filing — “10+2” — now in effect in the U.S., companies must be prepared to deliver Customs paperwork electronically. There is no paper filing option for this new regulation. Not just a means of expediting trade across borders, electronic filing is now a requirement for the efficient reporting and archiving of all trade transactions, including third-party ones. This extends to the company and its service providers. Even if companies are using third-party forwarders or other organizations to assist in trade paperwork, the importer must have and maintain documentation to defend any future potential compliance claims. Transmitting and warehousing paper is costly, time-consuming and environmentally unfriendly. The need to automate compliance processes is urgent. 4. Savings opportunities can be realized by having proactive plans. If your company imports or exports perishable products, you already appreciate the importance of knowing expedited clearance. With profit margins shrinking for all goods and with increased global competition, vendors of any type of product want their goods to be transported as efficiently as possible. To do this, a strategic and tactical plan for trade management helps to identify potential bottlenecks, issues and fees. Finding the best sourcing option can save companies significant time and money. For example, companies must consider various combinations of sourcing locations and destinations in relation to bilateral trade agreements. This should be done for all inputs and products to understand savings opportunities. 5. Enabling scalability so companies can expand their trade management capabilities gracefully. Every importer and exporter has some restrictions on how much global trade management technology and support they can afford. As such, it is a tremendous advantage to obtain a GTM solution that is scalable and can be augmented easily as the company’s needs change and as it can afford to expand its GTM processes. For example, buying specific products for trade screening or foreign-trade-zone support can help an immediate issue, but as more individual targeted solutions are acquired, the lack of integration between products causes users to deal with multiple systems having disparate data and non-uniform input and output. Having all of the trade information in a single platform is paramount, but allowing the system to add more features without requiring users to be retrained also is highly beneficial. Ideally, the GTM system should be able to expand gracefully with minimal disruption to the organization and the existing trade systems and processes. Involve partners and other third parties in trade planning 6. Build a virtual network of partners, vendors, agencies, etc. Clearly, global trade involves numerous entities from government agencies, to consultants, trading partners and software vendors. Coordinating these groups involves having a unified platform for information as well as an easy and accurate way to gather information. The Internet provides a ubiquitous way of connecting parties but does not in itself solve issues such as data formatting and automatic updating. The newer Internet-based GTM systems do these things so that they free users of concerns about data being managed and provide on-demand, secure access any time, from any Web browser. 7. SaaS-based systems are cheaper and easier to work with. Web-based systems don’t necessarily mean that they are cheaper or easier to manage. Web-based software-as-a-service (SaaS) systems, however, allow the GTM vendor to run and manage the system so users don’t have to worry about hardware or software maintenance. The vendor ensures that third-party data such as free-trade zones and Customs’ duty schedules are up to date. Company-specific data such as enterprise resource planning and accounting information also can be integrated for that company’s own view and use only. The GTM vendor worries about data backups and system availability. This frees up users to focus on their time and skills to improve the core business strengths such as manufacturing or marketing. 8. Supply chain security is critical. Supply chain security is a required piece of today’s post-9/11, post-Mattel, post-Salmonella world. Any product manufacturer and their subsequent distributors (even purely domestic ones) must know where the goods have been as well as whom and what has interacted with them. The safety of countries and its people are at risk. The liabilities of remaining ignorant of your supply chain are beyond any monetary fine. Every importer and exporter must have the knowledge and records about its products, where they were sourced and how they were transported. This is a requirement of government agencies, trading partners and, ultimately, the consumer. 9. Keeping the entire trade picture in view. To help gain supply chain security as well as a complete picture of the savings opportunities available when transporting goods across borders, entry visibility — a centralized global view of all the entry processing throughout your supply chain — is the latest buzz in global trade management. Once such a view is established, companies can centrally monitor their global import/export pictures for areas of possible compliance risk and for savings opportunities 10. Part of corporate social responsibility reporting. As more companies commit to and report on their corporate social responsibility, formal monitoring and measurement is being required for their global trade and supply chain practices. Companies want to ensure their goods are manufactured with appropriate testing and without the use of child labor or other unethical practices. Governments continue to increase their requirements for safety standards and compliance reporting. No company can afford the image impact or the cost of correction for a product recall or scandal. Therefore, supply chain visibility and accountability is becoming more important to the importers who in turn must defend their best efforts in ensuring safe and ethical trade. GTM systems can help to provide the data for such reporting. Managing global trade will continue to be laden with complexities and changes from all sides of the puzzle: governments, trading partners, service providers and related partners, nongovernmental interest groups and consumers. As such, importers and exporters are challenged to provide global trade processes that incorporate all the collaborating parties, changing laws, new and historical data and accomplished work from the virtual network. Utilizing automation and partners is more necessary than ever to streamline processes while ensuring the highest levels of safety and compliance.

Two decades of trade expansion has dimmed our memory of prior recessions. The last time the U.S. economy contracted at comparable rates was more than 25 years ago.

The price of maintaining and expanding America’s transportation infrastructure is high, but the price of failing to do so is even higher.

Against the backdrop of repeated general press stories about contaminated food and other invalid products being exported from China to the U.S.

Would you prefer to audit your own imports rather than have Customs perform the audit? If so, the “Importer Self-Assessment” (ISA) program may be right for you.

So your business is experiencing better-than-expected growth, and you’re ready to take the next step and expand globally?

It’s no secret: Forwarder executives have known for decades that millions of dollars have been slipping from their bottom lines, little by little, almost every time they do business with truckin

So why should investors (and others) keep the faith?

Shippers today are presented a vast array of choices when it comes to service providers. The lines between asset-based carriers, brokers, 3PLs, 4PLs and LLPs are becoming more blurred.

Over the past few years, we have seen attempts at automation in marine terminals with RFID, GPS and optical character reader technology with very few successes.

Looking to 2009 in the project logistics sector, the certainties we knew we faced last year have been radically transformed into unknowns.

What some had believed to be a temporary shift of trade volumes, from imports to exports, now appears to be a fact of life. Carriers and shippers must adapt. Consumers in China, India and other emerging economies are willing and able to spend more for food and fiber for U.S. agriculture products. While Asian consumers have demonstrated the ability to pay more for our exports, U.S. import consumption is flat, at best. Will this change the traditional trans-Pacific and trans-Atlantic “head-haul” calculus? Will exports from North America become again, as they were three decades ago, the “head-haul?” Will ocean carriers allocate the necessary capacity and equipment to service the long-term global demand for North American exports? There is virtually nothing produced by North America agriculture that cannot be sourced someplace else in the world. Our agriculture quality may be higher, and so might the production costs, but our ability to deliver dependably and affordably to the foreign customer will determine whether U.S. agriculture remains competitive. Thus, the ocean carriers’ decisions, either individually or collectively (where still permitted), will determine the extent of U.S. agriculture competitiveness. Over the coming months, or perhaps longer, we will have the opportunity to compare how ocean transport responds when subject to the antitrust laws-rules of competition. The European Union’s termination of the carriers’ exemption from EU competition laws now prevents the Atlantic carriers from jointly discussing and/or fixing freight rates and service terms. Meanwhile, these same ocean carriers will be allowed to continue, through their agreements, to engage in joint pricing activities in the Pacific. Will we see differences between the Atlantic and Pacific trades in rates, service or capacity? Time will soon tell.

A number of challenges remained foremost on the airfreight forwarder agenda throughout 2008 as the industry grappled with weakening economic demand, high fuel surcharges and the first year of implemen

The coming year’s biggest challenges for the port industry will be to manage the impact of a slowing global economy.

The most important change is the economy, and whether the new administration and Congress can build consumer confidence and get the credit markets moving again.

So the question goes: “What are the one or two important changes we can expect in 2009?” If I knew for certain, I surely would be in a great position to significantly increase my personal

In an ideal world, trade compliance programs would help ensure that importers and exporters continue to clear their goods securely, efficiently and legally.

America’s seaports and maritime industry need infrastructure investments now in all supporting modes water, surface (roads, bridges, tunnels) and rail to keep the U.S.

The “perfect storm” to which I referred in last year’s Annual Review and Outlook has, unfortunately, arrived with emphasis.

First, look for more unpredictability in the oil markets in 2009.

Without question, the highway reauthorization bill of 2009 is the single greatest challenge facing the trucking industry today.

One of the most important changes expected by the U.S. tugboat, towboat and barge industry for 2009 is the publication by the U.S.

In last year’s Annual Review and Outlook, The Journal of Commerce opened by writing that “times were turbulent in the global logistics arena.”

As 2009 dawns, the main question for everybody is how the world economy will develop under the impact of the global credit crunch and recession.

Financial and economic turmoil has cast dark clouds over the global trading landscape.

The continued weakening of the world’s economies and the global reaction of ocean carriers will be key issues for terminal operators in 2009. The government recently confirmed what we have all been feeling for months: The U.S. has been in a recession since December 2007. A downturn of this magnitude has not been seen for decades and is expected to last through 2009. When imports began to drop off early last year, increased exports provided the needed buffer and kept total volumes up. Now we see the dollar beginning to strengthen, and as a result, exports are falling. Shipping lines are under pressure to address these conditions in major markets. This is playing out in a variety of ways, including carrier consolidations, increased vessel-sharing agreements and reduction in services. How far these shifts in service will go, we do not know. It is clear that we have not hit bottom yet. As these changes by ocean carriers crystallize into new approaches to operations, terminal operators will have to respond in intelligent and cautious ways if the industry is to remain stable and efficient. Two years ago, the industry was desperate for some breathing room in the sprint toward new capacity, and now the industry is in a hiatus, albeit for reasons not predicted and certainly not preferred. While this is concerning, it is also an opportunity to focus on much-needed infrastructure improvements, to gain operations efficiencies, and for the industry to position itself for the economic rebound that will undoubtedly come.

No doubt, the current crisis gripping the financial markets, and the slowdown of global economic growth, will be the overriding issue facing the logistics industry this year.

I believe most individuals are surprised with how fast the global economies have declined, and it is not just a correction in markets.

From a policy perspective, the biggest development is the widespread recognition in Congress that rail transportation, both freight and passenger, is the greenest mode of surface transportation.

My forecast of the most important changes to hit the trucking community will continue to be capacity and productivity.