Annual Review and Outlook

The surge of US import traffic that has caused container ship delays at ports around the country and threatened empty store shelves at the holidays is frustrating every sector of the supply chain. These frustrations are compounded by skyrocketing ocean freight rates and increased costs in shoreside container operations and intermodal services. In addition, charges are being assessed by port authorities on importers and cargo owners. The situation is a real-time example of the need for alternatives to the old way of doing things. The cascading impact of this pandemic-driven logistics nightmare is an illustration of why today’s shippers need to have a high degree of agility, creativity, and a willingness to develop non-traditional approaches. This includes expanding networks to include new routes, new ports, new warehouses, and new vendors. Some problems cannot be immediately solved, such as finding an adequate number of truck drivers or chassis. The combination of frustration with ocean shipping and an openness to innovative solutions has led to more companies chartering their own ships and looking at working with some new, smaller ocean carriers into niche ports at origin and destination. While these new, smaller carriers may not have the economies of scale of the major lines and their larger vessels, they have space and can often offload more easily at less-crowded berthing areas and ports that cannot handle the larger ships. There are also small, hungry terminals across the world that have lost direct container calls due to the sheer size of modern goliaths and demand and stress that puts on shoreside operations. These terminals are now finding themselves as new frontline solution providers to add support to these niche carriers. As many of these niche carriers today have larger fleets of bulk vessels, they have existing infrastructure and people to add container services into their global networks.

The COVID-19 pandemic affected constituent groups within the logistics industry in different ways, with some impacts temporary and others becoming more permanent. First, it reinforced the fundamental role that trucking and logistics play in the US economy. These two segments were deemed essential early in the pandemic. Truckers and warehouse workers went back to work immediately and were instrumental in keeping essential goods flowing even as COVID-19 cases ravaged our communities. Other service-based businesses and retail establishments were also affected to various degrees. Some shut down completely and didn’t reopen, and many others are still recovering and struggling to hire employees, restock inventories, and rebuild their business as restrictions are lifted. And then there is the third group of literally millions of professionals now working from home, the majority of which likely will not return full-time to an office in the foreseeable future. All these events have fundamentally changed the world of logistics and how services are provided, resulting in a disconnect between past practices and new realities. As the pandemic eased, manufacturing volumes returned while e-commerce surged, putting that much more pressure on warehouse operators to staff up for soaring demand. Experienced warehouse workers, supported by COVID-19 relief funds, delayed returning to the workforce or chose other fields. Long-time truckers, already independent by nature, chose earlier retirement rather than dealing with mandates and restrictions that impacted their earnings and lifestyle. The normal ebb and flow of hiring was dramatically disrupted. Lastly, companies hurt by “just-in-time” inventory practices reversed course, ordering and holding much higher levels of inventory. That further exacerbated pressure on warehouse space, already stretched thin and now secured at even more of a premium — if shippers can find it. It’s a new world for logistics operators. Whether staffing, finding trucks, helping clients manage more inventory for longer periods, or pivoting to e-commerce fulfillment, all these realities present complicated challenges that will take time, planning, collaboration, and investment to solve.

For decades, international supply chains have been moving to a “just-in-time” model that reduced labor and inventory carrying costs. In hindsight, the industry now realizes that this way of operating relied too heavily on the smooth flow of goods, leaving no margin for error. The disruptions seen the last five years — from sudden changes in trade policies as with Brexit to labor shortages and unpredictable events like the Suez Canal blockage — offer a preview of what’s to come. The increased frequency and severity of extreme weather events like wildfires and hurricanes will also introduce more volatility to supply chains, interrupting production, affecting worker productivity, and raising costs. The COVID-19 pandemic has exposed the risks of this model like never before. Instead of only having minimal inventory on hand, businesses are now planning more resilient, “just-in-case” supply chains that can keep up with changing consumer demand in the face of disruption. The question is not whether inventory patterns will change but by how much. With higher inventory-to-sales ratios seen as key to the future supply chains, Prologis anticipates those larger inventories will require upwards of 800 million square feet of new logistics real estate. This demand should disproportionately benefit “gateway” facilities, distribution buildings that offer access to major sea and intermodal ports and multiple markets within a one-day drive. These facilities offer the greatest optionality for the direction of goods, though additional inventory will be spread across a broad range of locations. Barriers to new logistics development in gateway locations could push some growth into adjacent markets or increase demand for redevelopment or repositioning options. This scenario has already surfaced as companies aim to get control of inventory quickly. The average vacancy rate in the top global seaport-connected markets is less than 2 percent, about half that of other markets and down from a historical average of 4.7 percent. The shift to more resilient supply chains will be permanent. Businesses must balance cost and operational efficiency while making smart investments to minimize costly disruptions before they occur. Tomorrow’s supply chains will be defined by those who act quickly and decisively.

To determine what technology has the biggest payback potential for logistics in 2022, we should look at what didn’t work in 2020 and 2021. The COVID-19 pandemic became an easy scapegoat for all supply chain issues, especially as we exited 2020 and entered 2021, but the real culprit was a continued shift in buying patterns to more e-commerce and smaller shipments. In addition, there was a major disruption in ports and trucking due to a lack of drivers, and this has accelerated throughout 2021. In my opinion, the industry won’t see a return to normality until well into the third quarter of 2022. A recent survey showed that only 25 percent of respondents rated their level of supply chain visibility as “adequate or better.” Connectivity among systems driving visibility across the extended supply chain, using data analytics and dashboards, will allow early warning signs and constant updates of information. Operationally, within the four walls of warehouses, and distribution and fulfillment centers, there has been a shift from pallet/case fulfillment by third-party logistics providers (3PLs) to more e-fulfillment provided by third-party fulfillment providers (3PFs) and omnichannel operations. This has driven a need for additional labor for fulfillment operations, but people have not fully returned to the workforce, and this has forced companies to accelerate their strategies around automation of fulfillment processes via robotics, artificial intelligence, etc. Refitting a warehouse for e-fulfillment while continuing to operate is no easy matter, as it takes time to design and implement, and this work will probably continue into 2022. The pace of disruption has grown to a level the industry has never experienced, driving many organizations to make supply chain resiliency a critical part of their business continuity strategy. With new technologies and continuous design, organizations can reduce risk, improve resilience, and turn supply chain issues into a competitive advantage. To do so, they must look beyond traditional planning technologies, using AI-driven models to forecast future volumes and testing these scenarios, perhaps with a digital twin. In addition, firms must look at all processes that can be automated to remove labor requirements, both internally and externally. Front-end systems are becoming critical; the industry has gone way beyond simply taking an order, confirming an order, and sending an email to confirm a delivery date. Customers now expect real-time information on order fulfillment and delivery status. Future enhancements like available-to-promise (ATP) inventory information and offering alternative product selection in case of stock-outs enhance customer satisfaction and retention.

To put it mildly, the COVID-19 pandemic had an unprecedented effect on the supply chain industry. To put it less mildly, the container and capacity shortages and skyrocketing shipping prices of 2021 have been a fiasco. Part of the fault for this madness was the increase in demand and the booming e-commerce industry. But just as it boosted the chaos, COVID-19 was also the inspiration for new and exciting digital solutions. Though it has been somewhat of a late bloomer, the digital revolution in the supply chain industry is here to stay. From freight booking to the customs clearance process, warehousing, and last-mile delivery, the race for the ultimate digital solution is at full speed. Logistics technology companies from all over the world are focused on building solutions to simplify logistics workflows. The goal is simple: Take a daunting manual process and simplify it by making it digital. For the most part, companies focus on specific workflows such as ocean booking or last-mile delivery. The trick is finding the best way to bring it to the digital space, as these tailored solutions must be user-friendly and accessible. It’s no secret that each link in the supply chain is quite complicated to operate, let alone invent a digital solution that will work. For that reason, many players in the industry join forces to provide customers with end-to-end solutions that provide transparency and put them in the driver’s seat. Whether it’s an importer security filing (ISF), a customs entry summary, or international freight, simple is the name of the game!

The logistics industry is known for its highly complex processes and modi operandi. It is also known for being a digitalization laggard, even more so for the business-to-business (B2B) sector. Although some cautious initiatives had already been taken, it was not until COVID-19 emerged that things really began to get moving. The pandemic made many “physical” processes unworkable, so most companies had to put their creative caps on and think of other ways to keep the wheels turning. For business-to-consumer (B2C) logistics, the pandemic provided a great opportunity to further exploit the e-commerce flows that were already in place. For B2B logistics, this meant reaching down to the bottom drawer to retrieve that “need-to-digitalize” business case and laying it back on the table. Generally speaking, sales and post-sales processes in logistics are slow and cumbersome, regularly involving manual interventions that are prone to potentially painful errors, from purchase orders to dispatch, invoicing, and reconciliation. For example, over 20 percent of invoices in logistics carry incorrect data. With the rise of online platforms, this pain has been eased to an extent. Automation is one of the best things to happen to sales processes, but then there is the post-sales process; invoicing and getting paid are still among the main trigger points of the industry. Imagine the impact further digitalization and automation of the logistics sales process from order to settlement — no more manual invoices, no more chasing payments, no more waiving, no more reconciliation — could have on the entire supply chain worldwide.

Recruiting or retaining talent in the logistics industry is not a new issue prompted by the COVID-19 pandemic. Rather, it is a heightened issue we continue to face amid the waves of supply chain disruption. Compounding variables of port congestion, strong demand for imported goods, and low supply and inventory are magnified at every point. However, human capital — both labor and knowledge — remains our most cherished asset to keep our industry moving forward. From the ports to the executive suite, every level of personnel and service must be a top priority. Those who are faced with consistently replacing and retraining their workforce will continue to fall behind. Not only are there financial costs associated with retraining roles and missing the mark on customer service; there are opportunity costs associated with inexperienced staff. Qualified, dedicated third-party logistics providers (3PLs) with a track record of high employee retention and a commitment to putting their people first will thrive in this environment. Prioritizing our people will position the industry well for the future.

Even now, two years after the start of the COVID-19 pandemic, widespread delays persist in maritime transportation. Keeping up with exceptions while maintaining organizational goals is challenging for importers and exporters alike. During the vessel selection process, shippers often do “the best they can” to pick timely shipments. Yet time and time again, shipments are delayed, allocations go unused, and their carbon footprint is not under control. Many shippers think exceptions are completely out of their hands. And it is true that there isn’t much they can do if their carrier is late. But what if data intelligence could help shippers predict the future, avoid delays, and meet other organizational goals? Innovation is making that possible for shippers. It all starts with making data more accurate and more available to shippers during the vessel selection process. Accurate data is essential, and carrier data alone is not enough; carriers’ estimated time of arrival (ETA) data, for example, is often unreliable at the time of booking. With good data, shippers can select the best vessel based on their organizational goals and predefined criteria, including allocations, ETA reliability, and carbon dioxide (CO₂) emissions. In this way, allocation management is also completely simplified because shippers can search and book vessels based on which allocations need to be used. They can also select vessels that are most likely to be on time, taking into consideration the reliability of the carrier’s ETAs for the same line over the past three months. And finally, for the first time ever, shippers can search for vessels with the lowest CO₂ emission to reduce their carbon footprint and create a more sustainable brand. Today, technology — fueled by accurate data — is playing an important role in improving the vessel selection process, automating the booking process, and providing more control to shippers, so that they can meet their organizational goals, including reducing CO₂ emissions from vendors.

As the post-pandemic world continues to rebuild, the demand for warehouse workers is soaring. In the United States alone, more than 600,000 job openings are projected for the next decade. Warehouse clerks, material handlers, assemblers, forklift and machine operators, pickers, packers, and truck drivers are the backbone of this network and a mainstay of our global economy. These positions are part of a diverse, fast-growing industry that uses state-of-the-art technology and has numerous interesting opportunities for collaboration, innovation, and growth. Filling these roles will be critical to addressing the Great Supply Chain Disruption. But it’s also essential to recognize that industry roles across the board are evolving drastically after the deluge of recent market disruptions. The best practices that once kept things moving are giving way to all-new approaches, which in turn transform the way people work and teams function. To address these challenges, the Association for Supply Chain Management (ASCM) recently launched a new warehousing certificate program developed in partnership with Prologis, Inc., a global leader in logistics real estate. This program enables people to acquire the skills they need to launch promising warehousing careers and serves as a standard for core warehousing training and education. Learners develop foundational skills while gaining a comprehensive understanding of the logistics sector. Organizations everywhere are working hard to attract, recruit, and retain these modern-day supply chain heroes. There has truly never been a more exciting time to be a part of the field.

The COVID-19 pandemic and resulting e-commerce boom have driven -logistics companies to look again at their systems and operations. The rise in freight volume, coupled with the dramatic drop in passenger air travel, has disrupted supply chains and forced some air freight to move into containerized sea freight. This added volume and cost pressure on traditional bulk and containerized supply chains was further driven by an increase in goods-based consumption. The rapid rise in durable goods demand driven by government lockdowns has forced carriers to increase capacity. A recent example of this is the severe chip shortages due to a combination of increased demand and longer lag times in the supply chain. However, with additional sea and air freight capacity expected to come online, there will be a softening of the very tight international freight market. Everyone expects a gradual return to normality, but that new normal will be very different from the pre-pandemic world. Logistics providers will need to implement strategies that mitigate the risks of disruption and higher costs while ensuring their businesses are efficient, productive, and capable of operating under new hybrid office/work-from-home models. There is clear recognition among shippers that optimization and efficiency are critical to managing supply chains in the post-COVID-19 normal, evidenced in 2021 by increased usage of the CargoWise system; new customer sales; the lift in volumes per operator among WiseTech customers; and a drop in IT-related costs as major global CargoWise customers came onboard. The industry has also become aware of the costs, pain, and -difficult-to-control cyber risks of leaving legacy technology in place, particularly now that it has been forced out of closed office networks into an internet-connected, remote-working or hybrid environment. In this new world, logistics providers will be under increased pressure to deliver more streamlined services that are digital, accessible, and globally scalable, requiring true digitalization of their processes.

In a US trucking market facing a capacity crunch unlike anything seen in decades, with little relief expected in the near term, digital platforms that efficiently and reliably connect brokers and truckers and simplify the process of locating and securing available trucks will win the day. If a shipper cannot find a truck, the cost is irrelevant. Product that doesn’t move isn’t available to consumers in stores, leaving goods unsold and revenue unrealized. Consumers flush with cash from being home-bound during the COVID-19 pandemic are buying. And they are doing more of it online. That increases pressure across the supply chain, especially in the trucking industry, which faces a shortage of 80,000 drivers, according to the American Trucking Associations. As such, finding truckers and securing capacity is king. And the key to that objective is intuitive, mobile-based technology tools that reliably predict when and where trucks are available, not just today, but several days ahead. They use real-time location and status data drawn from truckers’ smartphones and ELDs. They combine intelligence from brokers on available freight, and then optimally — and quickly — match loads to available trucks. They eliminate wasted “where’s your truck” phone calls and stale data. And they help truckers take on only those loads which take one click on their smartphone to book, provide quality revenue and profit, and keep their downtime to a minimum. Digital freight-matching technologies are at the core of these tools. They are multi-client and multi-user, sharing common processes among many that automate manual work, save time and toil for trucker and broker, and provide unprecedented visibility into shipments out for delivery, as well as when and where that truck is available for the next load. The real payback from these technologies is connecting truckers, simplifying and automating processes, and providing a reliable, continuous, real-time window into capacity. Helping to keep truckers on the road by making it easier and more efficient to operate is one step toward overcoming the current capacity crunch.

After a tumultuous and challenging 2021, 2022 is shaping up to be another tough year for shippers as they contend with several issues that are likely to drive up their freight costs. Faced with escalating freight rates and deteriorating service levels that have slowed down the supply chain circulatory system, savvy shippers in 2022 will be focused on three key areas that will be crucial to supporting their supply chain activities. First, visibility will top the list of “must-have” tools that shippers will need to manage the flow of inventory into their organizations and orders being delivered to their customers. Shippers will need to know where their freight is so they can plan accordingly. Second, companies will be looking at “big data” and artificial intelligence (AI) capabilities that extend their view into their customers’ environment and improve their forecasting and planning capabilities. This data will also be used to gather data to support discussions that shippers will be having with their customers to explain adjustments in pricing based on an individual customer’s requirements and buying behaviors. Finally, look for shippers to move beyond key performance indicators (KPIs) and increasingly focus on key performance predictors (KPPs), issues that are likely to occur that could result in supply chain disruptions.

Since the start of the COVID-19 pandemic, what were once routine movements of freight have disintegrated into a never-ending series of redos and reworks. Shipments being handled by all supply chain providers had to be repeatedly touched by all organizations, doubling and tripling the workload while volume soared — a perfect storm. The surge in volume quickly absorbed any excess capacity that might have existed in the first half of 2020. From mid-year 2020 forward, physical, human, and digital resources were pushed into overload, and this trend continued throughout 2021. Any weaknesses were laid bare. Looking ahead to 2022, there is a growing consensus that the industry is in for more of the same. To meet the increasing need for timely and accurate information, additional investment in technology and staffing will be required. There is no single digital solution that operates in real time. Information on whether a vessel has sailed can be captured within minutes — if not seconds — but whether your cargo was loaded onboard or was rolled to a subsequent vessel requires additional time to confirm. In short, all organizations, importers, exporters, ocean carriers, non-vessel-operating carriers (NVOs), freight forwarders, truckers, railroads, and warehouse operators will need to find the right blend of technology and team member engagement to maximize the management and productivity of their piece of the global supply chain. For now, we see the human element and involvement as the crucial element in pulling together all the critical data customers need to make informed decisions.

Until recently, most logistics professionals were focused primarily on reducing shipping costs and minimizing inventory. However, the COVID-19 pandemic and resulting effects on the global container shipping market have now made it crystal clear to logistics professionals that their businesses depend on their supply chains, and that their priority needs to be building far more resilient supply chains. This requires proactive supply chain risk management. One of the many new tools shippers can use to effectively manage supply chain risk is the two-way committed freight contract, which allows both the shipper and carrier to effectively “hedge” against price fluctuations and service volatility. In the third and fourth quarters of 2021, there was a major increase in carriers and shippers signing two-way committed freight contracts that span three years in duration and beyond. While some may still argue against such contracts given that spot rates could one day soften to below the contract rate, the calculus has fundamentally changed for many logistics professionals. Now, it seems that most shippers place a greater value on securing the ocean link within their supply chains than on the potential cost savings of chasing the spot market. This new form of two-way committed contracts will soon become the norm. For example, Vincent Clerc, CEO of ocean and logistics at Maersk, said during The Journal of Commerce’s TPM21 conference in March that in five years, 100 percent of Maersk’s contracts would be two-way committed. Of course, shippers and carriers will always have the ability to abstain from contracting and ride the spot market roller coaster if that’s what they want to do. But for those that realize the importance of supply chain resilience, the two-way committed contract has become an essential tool for managing their supply chain risk.

The top takeaway from the rocky events of the last couple of years is that freight forwarders — and all businesses, really — need to make risk mitigation a priority. The industry does its best to make predictions, but the reality is that no one has a crystal ball. No one could have predicted the effects the COVID-19 pandemic would have on global supply chains, nor its many aftereffects. Businesses were forced to pivot at a moment’s notice, and in some cases, those that weren’t agile enough to adapt did not survive. For modern freight forwarders, agility and risk mitigation mean doing away with manual, siloed processes in favor of digitalization and centralization. There are opportunities to do this in many areas of the business, such as digitalizing the freight allocation management process to efficiently compare allocations with consolidated booking data. Forwarders should digitalize rates, prioritize gaining direct access to spot rates to compare best rate options, and ensure they have access to all schedules across modes to find the best routes and alternatives. And they should provide customers with online visibility using intuitive tools to monitor and track their shipments.

This past year proved as unpredictable as 2020. Supply chains were buffeted by unprecedented increases in demand, significant bottlenecks, and capacity constraints across virtually all transport modes. Adjusted for inflation, retail spending has increased 14 percent over the last two years in North America; that’s more than in the previous seven years combined, according to an October 2021 report from The New York Times. This sudden growth in demand and subsequent supply constraints exponentially increased variability in global supply chains. Traditional solutions like increased buffer stock, sourcing new suppliers, and increasing destination warehouse space in many cases were not available. Some shippers have chartered vessels to ensure their shelves are stocked, but the supply chain has many actors, and all those actors must work together, especially in time of disruption. The tenet “a supply chain is only as strong as its weakest link” has been on full display for all global businesses. However, 2021 also strengthened the digital transformation that started in 2020. One new solution offers hope for a task all importers and exporters work through: customs clearance. Visibility, transparency, and digitizing data hold promising potential within this space. The past year has prompted many customs authorities to explore digital documents, underpinned by blockchain, to improve the quality of risk assessments and mitigation. Clients have also realized the benefits thereof, such as earlier visibility into the clearance status of goods, sometimes up to six weeks earlier than with previous paper-based processes. Taking current variability as another impetus for change and adding the desire of customs authorities to embrace new ways of solving old problems means there is real potential for shared efficiency gains across the entire supply chain ecosystem. We look forward to that future in 2022. Collectively, we can make global trade easier, more efficient, and more secure for all!

In the engineering, procurement, and construction (EPC) world, the technology that has the biggest payback potential is the one that enables the logistics provider to give the internal customer — i.e., the construction company — with the ultimate answer to the question, “Where’s my stuff?” In EPC projects, the success or failure of a project revolves around the construction schedule. Even what might be considered a minor equipment item by value or size can have a major impact on a project’s timeline. Knowing where that item is and having a reliable forecast of when it will arrive may be just as important as planning for the arrival of a one-of-a-kind, long-lead-time, high-value equipment item. Project milestones and the rewards that go along with achieving them — or consequences for not doing so — are directly tied to the construction schedule. Managing a project schedule is a constant challenge that requires continuous material delivery status updates, from requisitioning to arrival at job site. A technology that provides a view of material status at the sub-line-item level throughout the supply chain is vital for construction work planning. That technology must be capable of routinely taking in and easily digesting data inputs from internal and external sources that track critical delivery milestones, providing instantaneous material status visibility for work planning. This will not be accomplished with a patchwork of Excel spreadsheets. The technology must be designed for the attributes of project equipment and materials that may ship in many levels of completion, by various modes of transportation, and via many legs from door to door. Ideally, it will also provide logistics professionals with tools to estimate and plan their work and forecast accurate arrival dates all along the way to the job site. This would be the ultimate treasure of integrated project logistics management systems, one that provides the visibility internal customers need and brings credibility to the logistics function. Hopefully, we’ll find that technology in 2022!

The logistics sector has been “whipsawed” during the COVID-19 pandemic. Labor shortages — at different times and in different geographic locations — have not only slowed the pace at which the overall speed of business moves, but in some cases, had an accordion-like effect of expanding and contracting the labor force and its productivity in different locations at the same time. This has drastically impacted our world’s commerce. Fewer adults are available in the workforce due to childcare issues, and loyalty to one’s employer is being challenged daily as companies that need workers bid up the cost of those available workers. Sickness causes workers to be out in 10-day blocks, due to exposure to an all-too-common virus. Our productivity as humans both increases and shrinks as COVID-19 cuts swaths across geographic areas and continents. This whipsaw effect has negatively impacted the ability to load and unload vessels at ports, as well as the availability of equipment like containers, chassis, and trucks where shippers needed them when they needed them. This, in turn, has crippled the ability to use existing infrastructure to help the wheels of commerce keep moving and get cargo to its ultimate destination. These fits and starts and resulting expansions and contractions are also now starting to cause shortages of commodities — the plastic used in many products, rare metals used in technology like computer chips, and raw materials used to make energy, like the coal needed in China for the power necessary to support a large manufacturing sector. These shortages then geometrically expand, causing other issues. Unfortunately, until more of the US and the world are vaccinated and the impact of the pandemic wanes, I believe 2022 will have more of the same type of issues. The US will achieve some sort of herd immunity, which will help lessen the issues, but domestic problems will be exacerbated by the impact of the pandemic on the rest of the world. We in the US also need to deal with our labor issues; higher wages, childcare assistance, and leisure time will all come to the forefront in 2022. I believe that the fate of the supply chain as we know it rests in the hands of those that choose not to follow the science and get vaccinated, prolonging our delay to return to business as normal.

At the end of any of other year, logistics professionals would normally be saying something like, “Well, 2021 has been yet another year of growth and innovative advancements in supply chain, and we are looking for greater advancements for 2022.” Instead, words like “unprecedented,” “historic,” and “uncertain” have been used to describe a year like no other, and more of the same is expected in the year ahead. In fact, there has been very little for any of us to draw on in terms of precedents. The challenges and constraints within our supply chains caused by the COVID-19 pandemic became apparent and newsworthy, all the way down to the consumer. Many organizations are still struggling to know where everything is, and consumer trust in the supply chain has been tested. There’s no doubt that the pandemic increased costs and disrupted efficiencies, but it also highlighted the value of end-to-end visibility, data, and analytics. These learnings need to be analyzed and shared, so that we all come out of this stronger and more resilient. First, resiliency and redundancy within our supply chains is critical. But resilience is most effective when paired with visibility. Shippers require the ability to see, feel, and touch their supply chains; they need visibility not only into suppliers, but into their suppliers’ suppliers. I see advancements in planning, sourcing, and logistics process and event management digitization rising right to the very top for 2022. Next, companies need critical information to be agile and make quick decisions. According to CSCMP’s 32nd annual State of Logistics Report, the homebound consumer in 2020 embraced -e-commerce and exacerbated shippers’ normal ability to meet consumer expectations and manage costs and quality. E-commerce growth then spurred demand for warehousing — but not for traditional SKUs — because in response to the pandemic, the consumer not only changed how they shopped, but what they purchased. This shift will continue incrementally in 2022. Finally, the supply chain must be flexible enough to absorb any shocks that come along, including natural disasters, humanitarian crises, tight labor markets, and unpredictable demand. The State of Logistics Report also describes supply chains as “continuing to reset from the pandemic with resilient logisticians adapting, planning, and shifting to meet current and future demands.” In 2022, it’s about capable and competent talent. Shippers and logistics providers are in a real fight to attract, retain, and develop supply chain talent. There’s no better way to describe it. Leaders need to embrace the fact that a winning strategy begins and ends with capable, competent people.

Across all nodes of the US supply chain, severe inventory shortages, equipment and capacity strains, and peak volumes have set the stage for a very challenging operating landscape. Continued robust and accelerated e-commerce demand will stretch the supply chain even further and calls for insightful planning. Despite COVID-19 volatility and a major spike in online purchases, e-commerce demand has now become both permanently present and permanently disruptive. E-commerce until very recently accounted for just a small fraction of overall US retail sales, but it now exceeds 20 percent of domestic sales, and that percentage continues to climb. In the next five years, US e-commerce sales alone will grow from $790 billion to $1.1 trillion. The corresponding warehouse space needed to house all that inventory will exceed 388 million square feet. Nimble companies must prepare to meet this heightened demand with agility and an innovative commitment. Inventory planning now takes center stage. Recently, stockpiles of safety stock were building, only to be depleted with a backlog at the ports and distribution networks. For traditional retailers and pure e-commerce operations, this means pulling that inventory forward to leverage urban fulfillment sites to meet delivery expectations. Planning for those new warehouses must begin now — years ahead of demand — due to delayed construction lead times and record low vacancy rates in all major markets. In addition, the traditional warehousing staffing model has come under increased scrutiny, requiring a greater focus on becoming an employer of choice, increasing the use of automation, and offering competitive compensation. Supply chain leaders expect the current inventory and shipping bottleneck to last well into 2023. E-commerce demand continues to be foundational, and foresight into new procurement and shipping strategies; new, well-located urban facilities; and contingency planning will be required to support continued growth.

Since the start of the COVID-19 pandemic, more shippers and third-party logistics providers (3PLs) haven been taking a close look at supply chain digitization. Why? Myriad new demands have surfaced, including a massive uptick in consumer spending and online ordering. These unending requests have exacerbated inefficiencies in domestic freight flows that have existed for decades. The result has been a nearly complete breakdown of the global supply chain. Forget striving for efficiency; now shippers just want to get the goods to their destination. The supply chain has substantial, fundamental problems that won’t simply disappear once goods start flowing again. We cannot go back to the status quo in 2022 and hope that things will get better, especially when it comes to one major issue that impacts all other nodes of the supply chain: US port congestion. Solving the current supply chain crisis and unprecedented port congestion requires a collective effort across all stakeholders. For example, small domestic truckers play a significant role in providing capacity and improving the flow of goods from the nation’s seaports and rail ramps. But shippers can’t always find and connect with drayage carriers that have chassis. In the current environment, containers on chassis are dropped off at distribution centers (DCs) and can sit there for days because the DC is out of space, effectively taking those chassis out of circulation. For shippers, using supply chain technology to find drayage carriers with chassis is essential to continuing to move goods out of US West Coast seaports. Focusing on a single stakeholder in the network will do little to ease congestion. But allowing all stakeholders to connect through innovative supply chain technology solutions and work together on a common digital platform will optimize and add fluidity to the entire network. We need to work together to improve the flow of freight around the world.

During the COVID-19 pandemic, the focus of the logistics sector has intensified around what you know, when you know it, and more importantly, whether you have the visibility and capability to quickly align your internal and external partners to pivot and make the best decision possible to solve the issue in real time. It is now a must to utilize new machine learning, artificial intelligence (AI), and predictive tools in conjunction with firsthand information provided by people on the ground in the origin countries, to proactively make decisions on how, when, and where to move, store, and distribute product to effectively compete and be among the winners. The best-in-class technology platforms need to allow stakeholders to collaborate in real time and enable importers to make smarter decisions sooner, changing from the traditional, reactive track-and-trace model to a proactively managed supply chain. As rates have continued to increase, some of the traditional third-party logistics provider (3PL) solutions have taken center stage and become a critical factor in the discussion. Solutions like distribution center (DC) bypass, terms of sale conversion managed by tightly coupled control towers, owned assets, and infrastructure are making it possible to quickly deploy old and new options to solve equipment and/or ocean carrier space issues. Control towers have typically focused on governance and oversight of individual business units; the future is extending visibility and potential resolution options across business units, process, and trading partners, thus enabling holistic approaches to meet customer expectations at a competitive cost. Value-added service offerings such as packaging optimization, previously a nice-to-have in the ocean world, quickly moved to the top of list of initiatives being considered. Improving the density of product loaded in a container or on an air freight pallet now delivers significant savings. Applying the best and brightest packaging engineers with in-country support, relentless focus on reducing damage, improving loadability, and not selling paper are a winning combination all around. In the end, the winning formula is centered around neutrality and having available options, choices with the capability to execute the best decision possible without disrupting product, documentation, and information flow.

The lingering impact of the COVID-19 pandemic and its effects on labor shortages are being felt across industries, and ours is no exception. We’ve all heard about the supply chain delays and the port delays, but this impact is being felt across almost every industry and organization. A recent article referred to this time not as the “Great Depression” or the “Great Recession,” but as the “Great Resignation.” Due to the labor shortages, salaries have increased dramatically in the past year, which has caused significant employee turnover. What can companies do to compete in this environment? One thing is to automate as much as possible in order to do more with less and have employees focus on the most valuable tasks. Robotic process automation (RPA) is a growing focus these days. Not only does it allow companies to do more with less, freeing up cash in order to increase salaries and be more competitive, but at the same time, it improves team morale because the team can now focus on more important things. It also improves accuracy, which in turn helps improve compliance. A second opportunity is to outsource certain roles that are not core to your organization. For example, if you are in the business of building widgets, you might not have an attractive career path for members of your trade compliance team, which could create turnover. By leveraging a managed services firm to focus on this area, an organization can reduce risk, improve compliance, and save money. Within the managed services firm there are career paths for these professionals. You also have a significantly larger core of expertise from which to draw, and chances are good that the increased depth of experience in the space will create efficiencies and save companies money while also making them more compliant.

Entering 2022, one question on shippers’ minds is “Where did integrity go, and will we get it back?” Integrity is a strong word and is used across the spectrum of human and machine behavior. In the global supply chain, the term is used to refer to schedule integrity and data integrity, but shippers also talk about vendors and carriers in terms of their level of integrity — i.e., the incorruptibility or soundness of their business practices. In 2021, the global supply chain lost integrity on all fronts. The factors that have created the chaos are well understood; the same risks existed before the COVID-19 pandemic, but the general state of overcapacity prevented disruptions from turning into genuine crises. Now, shippers and transportation providers alike are scrambling to move cargo on a day-to-day basis and find solutions that will work. The Wine and Spirits Shippers Association (WSSA) manages more than 25 service contracts with nearly every ocean carrier to and from virtually everywhere in the world. Beverage alcohol is a popular item, deemed essential in every country, putting the movement of wine and spirits on level with personal protective equipment (PPE), a fact we probably should not be proud of but one that certainly kept WSSA busy in the last 18 months. During this period, some carriers have performed flawlessly, honoring rates and allocations and apologizing for schedule disruptions and service failures. Many others, however, walked away from contractual agreements, following the money without remorse or apology for their complete breakdown of service. In the coming year, WSSA members are looking to bring integrity back into conversations with carriers, truckers, and terminals after learning the hard way that accountability goes out the window during a crisis. Going forward, shippers should look to tighten up contracts, including considering mutual commitments, and honor those carriers that have maintained their integrity.

The supply chain crisis of 2021 has affected all stakeholders involved in global commerce. Cargo owners large and small have been relentlessly focused on how to get shipments through the gridlock, into warehouses, and delivered to customers. Transportation providers have been ruthlessly focused on making up for lost time. Traditional media outlets have been given a primer on international logistics, and the inventory-to-sales ratio has become a household term. In 2022, supply chain resiliency will be at the top of the agenda of all corporate strategy sessions. What does resiliency mean, though? Firms might already spread manufacturing sourcing among multiple different geographic regions, procure ocean and air freight from multiple carriers and forwarders, deliberately utilize multiple different ports of entry, and act honestly and transparently with their international cargo suppliers. Over the past year, however, this kind of supply chain resiliency has achieved nothing but lost profits. So where does this leave shippers? Much talk has focused on language contained in ocean service contracts and whether it is “binding” or simply represents an agreement “in spirit.” But supply chain resiliency begins with business partners being real partners. Specifically, this dynamic is paramount between cargo owners and ocean container carriers. If contract language includes defined volume commitments at the weekly level and the corresponding penalties for each partner’s deficiencies, why shouldn’t that contract be binding and enforceable? Why does it take a shipper cash deposit to make a contract enforceable? Resiliency begins with partnerships. If these partnerships merely adhere to the “spirit” of the contract, then simple market dynamics surely will continue to disrupt the global economy. If ocean cargo is so commoditized that partnerships devolve into a circus market driven by a lack of logical consideration, real solutions will continue to be elusive.

It’s hard to underestimate the impact of the COVID-19 pandemic on the global cold chain, especially with the unprecedented scale and speed of the vaccine rollout and distribution, which has been a challenge for every cold chain. What’s more, this wasn’t the same cold chain we knew previously. Aside from the stress caused by the vast number of vaccines that needed to be distributed, plans had to be made for nontraditional delivery points, such as mobile clinics, which required precise temperature control and safeguards in multiple formats for transport and storage. Maintaining sustainable distribution has required innovative thinking, strategic partnership, and leveraging the best technologies available across end-to-end -temperature-controlled logistics. Efforts to maximize efficiency and mitigate risk in vaccine logistics across all temperature-controlled markets, including cold storage solutions, air, ocean, road, and last-mile distribution, and a shift to more flexible manufacturing strategies to more quickly respond to market fluctuations will provide valuable lessons for shippers and transportation providers in dealing with future challenges in 2022 and beyond. Going forward, sustainability can’t just be a buzzword, and directly addressing climate change will remain at the core of ThermoKing’s strategy. Commitments made to reduce emissions by 2030 are changing every major facet of the business — from operations to supply chains, employee and community development, and corporate governance. As part of our Gigaton Challenge, ThermoKing has set a goal of removing one gigaton — one billion metric tons — of carbon emissions from our customers’ footprint by 2030. This is the largest customer climate commitment made by any -business-to-business (B2B) company, and our math shows that this reduction could equate to 2 percent of annual global emissions, equal to the annual emissions of Italy, France, and the United Kingdom combined.

For the US Meat Export Federation’s (USMEF) member companies, the top supply chain challenges in 2022 are likely to remain transportation capacity and plant-level labor. Labor was already in short supply even before COVID-19, and the pandemic has made finding and retaining staff even more difficult. Port congestion is the most visible transportation challenge and the most difficult to overcome, but trucking issues — including a lack of available drivers, chassis, and containers — are also impacting exporters’ ability to deliver meat products to foreign markets. USMEF is pleased to see heightened efforts by maritime regulators, legislators, and the White House to address congestion at the ports, but progress will depend on many factors. It is essential that surging volumes of imported goods make their way into the market more quickly and efficiently, so that export cargo, including red meat destined for Asia and other key regions, can be shipped on a consistent schedule. Although US red meat exports are moving at a record pace in 2021, international customers are increasingly concerned about securing products in a timely manner, and the country’s reputation as a reliable supplier is at risk. Since the onset of the pandemic, e-commerce has certainly played a larger role in the growth of red meat exports. Prior to COVID-19, -customers in certain markets like South Korea were already well-versed in making online purchases of a wide range of food items. But with travel and commerce restrictions in place, online buying increased greatly in other Asian markets and gained remarkable traction for the first time in regions such as Central and South America. In fact, many distributors who had mainly marketed products to retail and foodservice purchasing managers began appealing directly to consumers. This is a trend we expect to continue to gain momentum in 2022 and beyond.

When traveling, I live by the motto “Expect the worst, but hope for the best.” This leaves little room for disappointment; expectations literally couldn’t get any lower. Over the past year, many shippers lived by the same motto and were still disappointed. Their hopes were met with dismal on-time performance, bookings with no equipment, chassis shortages, fragmented terminal appointment schemes, track-and-trace systems with missing or delayed updates, contract terms and conditions that were ignored, and wildly volatile buy-sell spreads. Ironically, the worse things got for shippers, the more money the carriers started raking in. It became evident that there were some players in the game that followed the motto of “Hope for the worst, expect the best,” and they might not want to see things improve as quickly as others. As this realization began to resonate with shippers around the world, the entire idea of an optimal global supply chain was placed under the microscope. With rates being so high, space being so tight, on-time performance being so poor, tariff volatility, and customer service quickly becoming an afterthought, some shippers are rethinking the benefits — or lack thereof — of offshoring manufacturing, thereby subjecting themselves to the inherent risks in today’s global supply chain. At the same time, many carriers, flush with cash, decided that now is the time to order a record number of ships, which will drastically increase available capacity in the next 18 to 24 months. That means there is a 10 percent increase in capacity on the horizon coupled with a potential 15 to 20 percent decrease in demand due to nearshoring. That’s the thing about that motto: It’s all in the eye of the beholder.

As the US retail sector comes off another record-setting year, ongoing supply chain disruptions will continue to affect the industry in 2022. Retailers have worked around the clock to meet increased consumer demand despite the challenges they have faced. And although uncertainty around the ongoing impact of COVID-19 lingers, especially among key trading partners, merchants will continue to focus on their supply chains to ensure resiliency for future disruptions. Throughout the pandemic, supply chain issues have been a priority for retailers. Many have made investments both internally and externally to meet the challenge. Critical to this effort has been a focus on communication within retailer organizations and with partners to ensure that all parties are in agreement on the best supply chain strategy. As we enter 2022, shippers must focus on ensuring that we are better prepared for the future and building out a truly 21st-century supply chain. Retailers will certainly focus their efforts on realigning their supply chains to meet future consumer needs and ensuring their partners can meet those needs. Working together with all stakeholders to address the continuing congestion issues plaguing major US ports will be critical to moving forward. The industry cannot go back to doing things the same as before. Instead, shippers must focus our attention on getting all key stakeholders together to develop creative solutions that will result in more efficient and resilient supply chains. Passing the Ocean Shipping Reform Act of 2021 would certainly help address some key issues that existed well before the pandemic. Better communication and information sharing among supply chain partners is also critical. More accurate information can help all parties to better plan, prepare for, and respond to any disruption. Creating a national freight data portal that allows supply chain partners to share key data, for example, would provide this visibility and allow better coordination among all stakeholders.

The upcoming year will be all about volume and capacity allocation. Success will be measured in how many containers a shipper can get at a predictable rate, even on the smallest lane, either directly from carriers or through a non-vessel-operating carrier (NVO). Asset-based ocean carriers will be aggressive in negotiating minimum quantity commitments (MQCs) in annual contracts, and cargo owners will need to keep lines honest when it comes to releasing space. For contracts to work, MQCs need to become a mutual commitment between the shipper and the carrier. If shipments begin a more normal seasonal cadence later into 2022, a seasonally adjusted allocation would be a welcome discussion. Alternatively, carriers could create tiered rate structures based on weekly volume. Wherever the discussion leads, the primary goal for shippers will be securing enough capacity in contract allocations to carry their volumes and, hopefully, better service to match the higher rates carriers will expect them to pay.

The vitality of American consumerism continues unabated as we enter 2022, and Americans continue to increase their consumption of goods at the expense of services spending. Against this backdrop, collective international supply chain infrastructure capacity — including ships, port terminals, railroads, drayage, chassis, warehouses, trucks, and drivers — has reached unprecedented industrial utilization levels. This surge of demand collided with a mostly capped short-term supply, snarling supply chains and resulting in bottlenecks and congestion across the US. Previous disruptive events, such as the 2014–15 West Coast longshore labor negotiations and Hanjin Shipping’s bankruptcy in 2016, are a reminder that it will take significant time and effort to bring the supply chain ecosystem back into balance. The last two years have reaffirmed the need for shippers to have a robust, data-driven procurement strategy backstopped by strong analytics. Building flexibility and optionality into the freight procurement process is of the utmost importance, as is securing strong partner relationships that can adapt to changing tactical conditions. While we cannot predict what the next challenge will be, we can be sure there will indeed be a next challenge to face. Carrier selection and annual contract renewals go well beyond simply contacting providers for rate quotes. Service degradation and price volatility have increased as the liner industry moves away from a long period of chronic overcapacity. To thrive in this environment, shippers require a sound, data-driven procurement strategy designed around strong partners and optionality. Stronger forecasting tools and processes will be needed to ensure that carrier partners are aligned to provide the required capacity and service levels. Shippers that successfully navigate the procurement process will be able to turn adverse market conditions and disruptions from a business inhibitor into a sustainable competitive advantage.

This year, the term “supply chain” has become a common household topic. Unfortunately, those working in supply chain would rather discuss other topics at home, as it has been a challenging two years with several supply chain disruptions impacting the global economy. Supply chains are receiving more attention because consumers are unable to locate items, and when they do, the costs have increased. FBD Partnership’s supply chain has continuously evolved to become more innovative and flexible to support the needs of our manufacturing line and our customers. Frequent communication with vendors has allowed us to identify material shortages before they become problematic. Costs and lead times for several commodities that were previously easy to source have increased exponentially. FBD Partnership’s logistics providers explored and utilized alternative options that were never considered before due to increased transit times, limited equipment availability, and costs. During 2021, we did our best to mitigate cost increases throughout our global logistics network by increasing container cube capacity and utilizing domestic sourcing to fill urgent demand. Moving forward FBD Partnership will continue to develop and diversify our supply chain with multiple qualified vendors from different regions while having continuous communication to understand impacts to our costs and lead times.

As many small and medium-sized shippers will attest, the most daunting challenge as the logistics industry moves forward is securing access to competitive and reliable international ocean transportation. This situation has certainly become more critical since the summer of 2020, but it was an existing trajectory for many years. Historically, if a small shipper was knowledgeable enough and sufficiently staffed, it negotiated ocean service and rates for itself, signing annual service contracts with one or more carrier partners and ensuring reliable access to capacity at predictable rates, rather than outsourcing that function to a forwarder. As the number of global container carriers dwindled and their individual market shares swelled as services were organized into the three main vessel-sharing alliances, there was less opportunity for shippers to negotiate. In fact, with such tremendous market share and enormous ships to fill, the carriers discovered that it was unattractive to manage a plethora of smaller shippers in any traditional way and eventually stopped offering service contracts with minimum commitments that a small or medium-sized business could meet. Instead, carriers used their largest and most dependable shipper volumes by lane as their baseload and then sold the remaining limited space — if any was left over — to the highest bidder. Whether through a non-vessel-operating carrier (NVO) or a sophisticated proprietary website that sets prices based on current availability as well as desirability — i.e., effort, weight, equipment needs at destination, etc. — of a particular cargo shipment, this activity has accelerated since June 2020. Given this, small and medium-size shippers must get “bigger” by securing space under the umbrella of a large NVO or shippers association, though both options are also becoming quite limited due to carrier constraints, and/or by revising supply chains to concentrate more volume into fewer lanes. But shippers only get so big in this manner, and we all want to protect the ability for our business to thrive. As such, all US businesses that count on reliable ocean transportation should support the Ocean Shipping Reform Act of 2021 (HR 4996). Among other things, the legislation seeks to ensure just and reasonable practices in the allocation of vessel space, helping the US Federal Maritime Commission to fulfill its mission to “ensure a competitive and reliable international ocean transportation supply system that supports the US economy.”

American Cotton Shippers Association (ACSA) members face the demanding task of efficiently executing exports and domestic shipments through unprecedented logistical challenges. Overall US production for the 2021–22 season is estimated at 18 million bales, and of those, 15.5 million bales are exports. Demand is strong, inventory is tight, and prices have increased rapidly. Harvest, ginning, warehousing, and shipping are underway, but execution has been poor. Significant vessel service delays, bunching, and a shortage of drivers to perform the critical “first-mile” export container loading are adding delays and costs to shippers and warehouse operators, compromising competitiveness, with no clear solution in sight. Timely executions to meet commitments and mitigate risks are only achieved by enhanced and aligned visibility between commercial partners. Every linked participant in the supply chain needs better-aligned visibility. Without transparent, automated technological advancement, we find ourselves leveraging more human resources to coordinate and resolve conflicting operational information in real time. These disruptions have created a new mandate for enhanced communication to review and address changing circumstances in real time. Logic and mutual partnerships between supply chain participants are required to execute. ACSA applauds Federal Maritime Commission (FMC) Chairman Daniel Maffei for his testimony to Congress calling for more data and information sharing. While disruptions are inevitable, immediate cultural changes to enhance visibility and transparency must occur to increase execution. But how do we move from concept to implemented action? The cotton export industry is primed for growth, and the logistics industry must solve the current supply chain challenges in preparation for volumes expected to exceed historical highs. Cotton traders value our partners and are objectively changing the way we procure cotton and execute delivery into domestic and global consumption markets. ACSA is hopeful that our strategic partners will also apply long-term perspective to commercial decisions during this difficult time.

In a way, we learned from the COVID-19 pandemic that both society and logistics operations could organize themselves in a completely different way. Meetings became virtual meetings, and in general, logistics processes continued. It also became clear during the last two years that supply chains are rather vulnerable and not sufficiently resilient to cope with rapid swings in demand. EU production of personal protective equipment such as face masks, for example, proved insufficient. The global air cargo supply chain was disrupted by the reduction of passenger flights, which significantly decreased available belly space for cargo, sending freight rates higher and making it difficult to secure capacity, especially for goods like medicine and pharmaceuticals. In the maritime industry, the disruption was even more severe. COVID-19 directly affected the availability of seafarers and complicated crew exchanges. At the same time, blank sailings increased and global service reliability dropped around 30 percent. Spot rates for small and medium-sized enterprises (SMEs) reached levels ten times higher than before the crisis. The crisis came at a time when the market was already in a difficult position, partly because of the specific rules on competition, such as the Block Exemption Regulation in Europe, that protect existing carriers and prevent the easy entry of new players. In addition to the disturbance of maritime markets, shippers also face shortages of parts and components. This can be attributed partly to logistics issues, but also to geopolitical tensions — between the US and China, for instance — and commercial decisions made by manufacturers to prioritize production of semiconductors for computers rather than for the automotive industry. For shippers in the EU, the top priorities for 2022 and beyond will be alleviation of the present supply chain challenges and the implementation of the European and global sustainability rules. Digitalization will be an important tool in achieving these goals. E-commerce is already booming, but we haven’t seen anything yet, and it is important that governments adjust to accommodate the increased flow of e-commerce. As a consequence of new EU customs and value-added tax (VAT) rules, the number of declarations has exploded, and with it the administrative burden on shippers and customs agencies. Further, it is important for the industry to rethink the system to make it more future-proof. This would mean a less cumbersome system and an up-to-standard system of private-public collaboration. Environmental measures are making it clear for shippers that all environmental costs are internalized. Systems should be harmonized, preferably at a global stage. At the same time, the system should avoid double-counting — for instance, for an emissions trading system (ETS), energy taxation, and excise duties.

More than 28 years ago, supply chain thought leaders re-imagined customs procedures in the United States, using novel approaches to create the US Customs Modernization Act of 1993 (MOD Act). The landmark legislation introduced two significant ideas: informed compliance and shared responsibility. Since then, the trade community has charted a challenging course to achieve the MOD Act’s ambitions. Border security resurfaced as a priority after the events of Sept. 11, 2001, which also reaffirmed the importance of shared responsibility in national security. US Customs and Border Protection (CBP) and the trade community agreed that “co-creation” would secure the supply chain and facilitate legitimate trade. Fast forward 15 years, and we saw new challenges at the border with the rise of e-commerce, illegitimate trade, and counterfeit goods. Today, importers and exporters face those prior risks along with new environmental, social, and corporate governance compliance rules. CBP earlier this year created a 21st Century Task Force to help shape policies that address current customs issues and to plot a path for the future. Many in trade, though, fear that CBP’s final product will push it away from the MOD Act’s tenets. Ultimately, it should be up to the trade, as it was 28 years ago, to proactively lay out the vision for customs and maintain the original intent of the MOD Act. In AAEI’s view, the next 30 years for customs should include the following adjustments: Reasonable care decision-making should be re-engineered and measured at the account level instead of transactional levels; Informed compliance should include transparent programs and reliable guidance that eliminate penalties; CBP should be managed by metrics, reporting actions identified as critical, such as time frames for cargo release; And CBP’s Automated Customs Environment (ACE) should be re-engineered to facilitate trade, not just police it. The MOD Act is still viewed as CBP’s most sweeping reform law. As the industry looks ahead, it must not lose sight of its original tenets: partnership and shared responsibility between CBP and the trade community and a balance between enforcement and trade facilitation.

In mid-November, President Biden signed into law the Infrastructure Investment and Jobs Act, the funding from which, combined with full annual appropriations for inland waterways lock and dam project construction, will provide more than $4 billion over the next five years for priority waterways construction and major rehabilitation projects. In addition, the bill allocated $4 billion for the operations and maintenance (O&M) account of the US Army Corps of Engineers, the agency that manages the inland waterways, to allow for dredging and other inland waterways O&M projects to compete for funding. Inland waterways transportation is critical to the nation’s supply chain and benefits American farmers, shippers, manufacturers, steel and energy producers, agribusinesses, construction firms, towboat operators, and US consumers. The country continues to face tougher global competition, and infrastructure is directly linked to winning on the world stage. The inland waterways that facilitate efficient transportation for US shippers of bulk commodities rely on locks and dams that were largely constructed in the 1930s during the New Deal. America needs a similar investment now to repair and modernize our foundational infrastructure that includes inland waterways’ locks and dams. The infrastructure bill is a chance to create and sustain jobs, continue to enhance our balance of trade in the agriculture sector, transport energy products that keep us moving, and upgrade our world-class waterways transportation system. Further, it’s an opportunity to remember that the fourth “R” — for rivers, along with roads, rails, and runways — remains right for America.

Looking back, 2021 will be remembered as the year of COVID-19-driven supply chain congestion, but it can also be seen as the year when US supply chains proved their resilience. There is no doubting the frustrations and business dislocations caused by COVID-19-related operational disruptions and the sustained surge in US consumer demand. But these dislocations have occurred at a time when the international ocean supply chain has successfully delivered not just the usual volumes but a 32 percent increase in the number of containers handled in North America, according to Drewry’s 3Q 2021 Container Forecaster report. Global container volumes in 2021 are projected to rise more than 8 percent from 2020, according to the maritime analyst. Despite all the problems, cargo is moving. The congestion seen today is different from prior bouts in that there is no one bottleneck slowing cargo flow. Instead, the whole supply chain is oversaturated, and there are multiple bottlenecks. That means every actor in the chain must make extraordinary efforts, including receivers at final destination, where cargo is piling up and pushing congestion back through the chain. For their part, the most important actions regulators can take today are to facilitate crew changes and to ensure that government processes that affect the import and export of cargo are efficient and fully staffed. Together with continued investment in logistics infrastructure, this will contribute to resilient global supply chains in the long term. What the government does not do is equally important. Supply chain congestion is not caused by a lack of regulation or government policies, and more regulation will not make the congestion go away. The US Federal Maritime Commission (FMC) has strong authority to address any violations, but having the government take control over service contracts and deciding how carriers should load ships — measures that have been proposed in Congress — can only cause harm.

An international consensus has emerged that supply chain resilience and sustainability, in which customs plays a key role, are crucial during crises to mitigate any subsequent negative effects. As we slowly start to emerge from the COVID-19 pandemic, economic recovery is at the top of countries’ national agendas. From the outset, it has been considered vital that legitimate consignments of important goods in the context of this health crisis, such as COVID-19 vaccines and other related situationally critical medicines, be cleared at borders as quickly and safely as possible. Against this backdrop, two approaches have contributed significantly to efficient cargo clearance by customs agencies around the world: coordinated border management and single-window systems. While coordinated border management is the concept by which border agencies join forces to combine, to the greatest extent possible, their requirements into a single streamlined approach, single-window is the most highly evolved form of this approach, essentially consisting of a “one-window, one-submission” facility to expedite border formalities. Under the COVID-19 Vaccines Global Access (COVAX) initiative, the WCO and other international organizations have developed a Joint Indicative List of Critical COVID-19 Vaccine Inputs, indicating product classification references based on the 2017 version of the WCO Harmonized System (HS). Once these references have been incorporated into WCO members’ single-window systems, it becomes much easier to monitor the cross-border movement and release of COVID-19 vaccines and shipments of related medical supplies. In response to the current global challenges faced, coordinated border management and single-window systems will be pivotal in facilitating the customs clearance not only of cargo containing COVID‑19-related goods, but also of cargo that will sustain the growth of international trade.

The supply chain challenges America faces demonstrate that a dynamic and active Federal Maritime Commission (FMC) is vital to ensuring competitiveness and reliability in the ocean freight system. Since the FMC issued its interpretive rule on detention and demurrage (D&D) in 2020, we have launched an investigation into pandemic--related D&D charges, container return policies, and export barriers; opened cases where unfair practices may have occurred; initiated an audit of the major carriers for compliance with the rule; and issued “best practices.” The commission is also considering supplementing the 2020 rule through additional rulemakings. In summer 2021, the agency launched an enforcement investigation into congestion surcharges and fees implemented or announced by eight ocean carriers. I will continue to push for action on any charge that is unjustified or a crafty way of hiding an increase in the freight rate. We also increased monitoring requirements for the ocean carrier alliances last year. And while ensuring the FMC’s status as a bipartisan, independent regulatory agency, we signed a Memorandum of Understanding with the Justice Department. We are committed to challenging any anticompetitive action that violates the law. Looking forward to 2022, we now have a congressionally authorized National Shipper Advisory Committee to provide direct input about ways to support US shippers. We are examining ways to incentivize better data and information flow in the hope of increasing capacity through digital infrastructure in addition to physical infrastructure. And we are enhancing the FMC’s Consumer Affairs and Dispute Resolution Services Office and Bureau of Enforcement, including creating a new export advocate position. I am under no illusion that the need for action in 2022 will be any less than it was in 2021. The FMC is ready to go.