Sheltered International Congratulates the NCBFAA on 125 Years

On March 22nd, the National Customs Brokers & Forwarders Association of America, celebrated its 125th anniversary. NCBFAA President Jan Fields says, “NCBFAA continues to represent a diverse membership, makes sense of incredibly complex issues, enhances our professionalism to attract top-notch talent, and strives to make our industry better.”

Even after 125 years, the NCBFAA is a stable and growing organization that continues to serve its members. NCBFAA Executive Vice President Megan Montgomery says, “While our mission has evolved, our determination to make our industry the very best that it can be has not changed. Our staff looks forward to serving you—our members—for many years to come!” Congratulations to the NCBFAA on achieving this impressive milestone! 

What is the NCBFAA?

The National Customs Brokers & Forwarders Association of America, or NCBFAA, is located in Washington, D.C. and represents over 1,000 member companies with around 110,000 employees involved in international trade. The NCBFAA was established in 1987 in New York, and since then has become a collection of the nation’s leading freight forwarders, customs brokers, ocean transportation intermediaries (OTIs), NVOCCs and air cargo agents, serving importers and exporters. The NCBFAA also watches over legislative and regulatory issues that could affect its members. 

Businesses like Sheltered International join the NCBFAA because of the many benefits the Association offers, including conference registration discounts, exhibitor discounts, saving money on contracts, and access to resources like the NCBFAA’s Monday Morning eBriefing.

A History of the NCBFAA

On March 22, 1897, the Customs Clerks Association of the Port of New York was formed, allowing customs brokers and clerks in the U.S. Customs Service of the Port of New York to be eligible for membership. This enabled customs brokers to share not only a physical space, but also ideas.

Then, on July 19, 1945, the bylaws of the New York Customs Brokers Association, Inc. were changed to include all licensed customs brokers throughout the U.S. On January 2, 1948, Customs Brokers and Forwarders Association of America, Inc., (CBFAA) was founded to succeed the previous New York Customs Brokers Association. The goal in doing this was to make forwarders eligible as regular members on a national basis, and as associate members on an international basis.

It wasn’t until June 6, 1962, that the Association changed its name to what we know it as today, National Customs Brokers & Forwarders Association of America, Inc. (NCBFAA). This change helped to give the Association a wider scope with broader region designations to bring appropriate representation. Membership also opened to international cargo agents in the United States (CNS/IATA) and non-vessel operating common carriers (NVOCCs). In 1997, the NCBFAA moved to Washington, D.C., where it remains today. 

How SiShips Gives You the Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

Covid Outbreaks in China, War in Russia

As the two year mark since the first coronavirus lockdowns approaches, life in the United States is close to resembling a pre-pandemic world—at least on the surface. While mask mandates are being lifted and the rate of new cases is the lowest since March 2020, the supply chain is still struggling under the pressure of inflation and gas prices at all-time highs. The Federal Reserve has indicated they intend to raise interest rates to curb inflation, but factors from international partners have massive complications.

The global economy is bracing for a two-front fight between Russia’s assault on the Ukraine and new lockdown measures in China. How much these events will affect cargo movement around the world is dependent on high-stakes diplomacy and the efficacy of medical care.

Photo courtesy of Lysander Yuen via Unsplash.

Inflation from Chinese Lockdowns

Currently, China is dealing with its largest outbreak of coronavirus cases since the initial explosion in Wuhan. Mainly driven by the Omicron variant, infections have increased from a few dozen per day to over 5,000 on Tuesday, March 15th. These numbers may seem small compared to other countries, but the speed at which rates are rising and China’s strict zero-Covid policy is causing alarm.

In response to the new cases, over 37 million people in China are under lockdown. All non-essential workers are required to stay home in certain cities. This is leading to a complete shuttering of factories that produce semiconductor chips, computers and more. It is unclear how long the lockdowns will last, but it will be one week, at least. SEKO Logistics, a shipping company based in Shenzhen, revealed in a press release they “have not yet been advised of any official restrictions to Yantian Port [in Shenzhen],” but “no cargo will be able to load in Yantian from next week and vessels most likely will omit the port.” 

With demand still high for all types of consumer goods, any delays lead to negative long term effects; as was evident last summer with the shutdown of the Meidong Terminal in Ningbo.

Inflation from Russian Sanctions

For many Americans, the most acute economic pain over the last month has been felt at the gas pump. The sharp rise in fuel prices stems from the powerful sanctions levied at Russia over their incursion into Ukraine. 

Photo courtesy of Emmaus Studio via Unsplash.

Although only a small percentage of American oil comes from Russia, the sanctions have had a far-reaching effect in a global market. The average price of crude has jumped, due to Europe looking for fuel sources other than Russia. This comes at a time when oil production was significantly down—barrels of oil traded at a negative price point during the worst of the coronavirus stay at home orders. It will take time for supply and demand to stabilize after several rocky years.

“Everything that you have touches a truck,” said Cherri Harris, the CEO of Swint Logistics Group. With prices of diesel fuel over $5 per gallon, a single truck can spend more than $500 per day solely on fuel. The price increase is eating into profits and that cost is eventually passed onto the consumer. 

Looking Ahead

This is an incredibly complex time for the global economy. Budgets and plans that have been in place for months have to shift at a moment’s notice. Even the Fed is reconsidering its timing to raise interest rates.

In China, the hope is an incredibly stringent lockdown will minimize the economic fallout for a new spike in cases. Optimistic predictions from the Chinese government give the impression they expect the lockdown to be lifted before the end of the month. 

On the other hand, sanctions on Russian oil will likely last until they withdraw from Ukraine. There is only one person who can call Russian troops home and they seem impervious to international pressure, at least for the moment. Meanwhile, oil companies look elsewhere to make up the difference from the lack of Russian oil. Chevron, for example, has made it clear they are willing to work with Venezuela instead of Russia, if the Biden Administration lifts sanctions on the South American nation. Republicans highly critical of Venezuela put Biden in a precarious place politically as he attempts to work down gas prices creating a stalemate for the foreseeable future.

How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

Russia Cut Out of Global Shipping

Russia sanctions rock the global economy following the unprecedented invasion of Ukraine in February. Now, as the dust begins to settle from Russia’s first salvo and ensuing sanctions from the rest of the world, the picture of how the global supply chain and shipping industry will be affected is becoming clearer.

In line with sanctions, Maersk, MSC and CMA CGM have suspended most deliveries to Russia, the world’s 11th largest economy. The refusal to deliver “non-essential” goods is in line with numerous other companies that have suspended sales in Russia such as Apple, Google, Ford and Harley-Davidson.

Photo courtesy of Obv Design via Unsplash.

Full Extent of Impact Remains to Be Seen

While foodstuffs and medical supplies are still being allowed into Russia, ports and customs are seeing significant delays due to the need to screen all shipments. Maersk, in particular, is advising shippers to be aware of the risks of transporting perishable goods and can make no promises of when they might be delivered. 

As we saw last year with the blockage in the Suez canal, seemingly isolated incidents can have large ripple effects across the globe. A supply chain that is already stretched thin is not helped by extended delivery times on the European and Asian continents. Not just limited to the sea, Maersk has canceled rail transport between Europe and Asia until further notice. 

Also being hit hard by sanctions is Russian ally-Belarus. The EU has banned over 70% of Belarusian exports for its supporting role in the Russian invasion of Ukraine. The major sectors that could see repercussions are wood, timber, steel, and iron, along with cement, rubber and fuels.

Difficulty Processing Payments from Russia

Photo courtesy of Jacob Meissner via Unsplash.

Perhaps the strongest sanction to hit Russia is the removal of seven major Russian banks from SWIFT. The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a secure financial messaging service based in Belgium that enables international companies to complete transactions with each other. While Russians will feel this more acutely in their daily lives than other citizens, it does affect the global economy and will not help with the current rate of inflation.

Banning any country from SWIFT effectively freezes all of their assets and makes it impossible for them to perform international business transactions. For example, Maersk, a Danish company, is currently unable to accept payments from any Russian company. No matter what happens as the conflict develops, there is literally no international business or shipping Russian operators can participate in until SWIFT lifts its ban. 

Some analysts speculate that aid might come from the East. In 2015, China established the Cross-Border Interbank Payment System (CIPS) in an effort to increase the power of the yuan and lessen the traditionally isolationist country’s reliance on western banks. Experts caution that this is unlikely, however, as only direct participants can use CIPS. Of the 76 direct participants, almost all are Chinese banks or closely-related overseas subsidiaries of those banks.

Complications for Humanitarian Aid

One of the strongest negotiation points where NATO, Ukraine and Russia have managed to agree in principle is the need for humanitarian corridors during the invasion. Though the U.S. has banned trade with the two Ukrainian regions recognized as independent by the Kremlin, the Treasury Department’s Office of Foreigh Assets Control has issued six licenses to ensure humanitarian efforts are not negatively impacted. Those licenses include a short-term wind down of trade activities, imports of food, medicine and medical devices, and continued operation of telecommunications, mail and Internet.

How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product. 

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

The Sun Rises in the East

As 2021 drew to a close, America faced a tough road ahead due to a historic rise in inflation and European growth slowed due to rising energy costs. The, as for now temporary, delay of the Nord 2 Pipeline has contributed to the high price of energy, as well. Russia’s incursions into Ukraine have made the outlook in Europe even foggier. As we examine the Chinese shipping outlook, it is clear economies from every continent are more intertwined than ever.

Following the Regional Comprehensive Economic Partnership (RCEP) entering into effect on January 1, 2022, the Asia-Pacific region looks to lead economic growth through the remainder of the year. This year’s Lunar New Year celebrations were slightly milder than usual with many Chinese citizens staying home due to pandemic restrictions. Now that the Lunar New Year festivities are winding down alongside the decrease in Omicron cases, Chinese enterprise is poised to explode. 

Renewed Hope for Sino-American Relations

Despite a diplomatic boycott of the Beijing-hosted Olympics, the economic relationship between China and the United States looks to improve in 2022. A leading reason for this rosy outlook is the power of the RCEP, as the world’s largest free trade agreement. In fact, US companies’ investments in 2021 increased 30.9% year-on-year and look to continue on the same trajectory. The global economy as a whole is projected to rebound this year, creating more investment opportunities for multinational corporations in America, China, and other countries.

Another benefit of the RCEP is creating elasticity in regional supply chains. One of the important provisions in the historic agreement is improving the division of labor among the 15 member states. Moving on from Covid-19, everyone is looking for ways to protect the supply chain and this agreement will be effective for years to come.

Impact of Covid-19

Compared to the early years of the Covid-19 pandemic, countries and corporations appear to be more in control of proper responses to outbreaks. The Omicron variant created a series of difficulties, but the spike combined with the Lunar New Year could have resulted in catastrophic backlogs at Chinese and American ports. While there are still delays and tightened capacity at ports around the world, a combination of ever-increasing access to vaccines and preparedness by private companies has mitigated worst-case scenarios. For example, Maersk is one of several companies to secure extra storage and transportation to ride out the Lunar New Year downtime.

Shipping Rates Remain High

2021 was a banner year for shipping companies and 2022 looks to be much the same. Q1 began with high costs as everyone prepped for the Lunar New Year holiday. As we enter Q2, stores needing to restock depleted inventories will keep those rates at the same price or push them even higher. Deutsche Bank is predicting Maersk and Hapag-Lloyd rates will be up 30% or higher compared to 2021—a previous record. 

Even less excitable forecasts have to contend with the potential outbreak of another Covid variant, continued labor negotiations and the possibility of a global military conflict, all of which would escalate shipping costs for every route.

How SiShips Gives You the Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

Auto Industry Losing Millions of Dollars Weekly

With new cases of the Omicron variant beginning to lessen, there were hopes by many life might slowly return back to a pre-pandemic state. February is a month that traditionally feels the brunt of a tightened supply chain due to Lunar New Year celebrations, but this year the strain on the supply chain is coming from border protests on the North American continent.

Three border crossings have been closed or affected by a group of Canadian truckers who are protesting Covid mitigation measures. Thousands of truckers have joined forces to fight a mandate that all Canadian truckers must be fully vaccinated or quarantine in their homes for two weeks after crossing the US-Canada border. The protests have been declared unlawful by police, but for the majority of the protests practically zero arrests have been made.

What Caused the Border Protests?

The so-called “Freedom Convoy” began in the western Canadian provinces with the goal of driving to the Canadian legislative capital, Ottawa, and remaining there until the mandate was lifted. Previously, truckers had been exempt from any form of vaccine mandate in an effort to keep the supply chain operational during the height of the pandemic. Since arriving in Ottawa, the truckers and other like-minded protesters have effectively shut down the city. There were rumors that similar protests might occur in Los Angeles, who hosted Super Bowl LVI on Sunday, February 13^th.

The protest has spread from the capital to border crossings in multiple Canadian provinces, crippling the trade of goods between the United States and Canada. The Ambassador Bridge, which carries over one quarter of all trade between the two countries has attracted the most attention from protesters and media, alike.

Who Is Most Affected?

For the moment, the people feeling the brunt force of the protests are autoworkers at factories in Michigan, Kentucky and Ontario, Canada. Due to a lack of materials, employees’ hours have been cut back. Economists estimate that workers in Michigan, alone, lost $51 million dollars during the week of February 7^th to February 13^th. Factories typically keep two weeks worth of supplies on hand, but if the bridges remain closed much longer, “then you’re looking at layoffs,” says Carla Bailo, the president of the Center for Automotive Research in Ann Arbor, Michigan. This loss of wages extends throughout the entire community, with people spending less money on food and entertainment while their hours are curtailed. It is a stark reminder of how precarious the global supply chain can be.

Additionally, the communities of Detroit and Windsor, Canada, where the Ambassador Bridge is located, are acutely feeling the pressure of the protests. The required police presence at the border protests, while leading to few arrests, has led to an increase in 911 response times for the rest of the cities. Additionally, in Ottawa, the epicenter of vaccine protests, the downtown area has been in a state of deadlock for several weeks. Businesses are closed simply because it is impossible to get to their doors due to the immense crowds.

The recent lack of steel and aluminum from Canada compounds upon the shortage of semi-conductors to drive up the value of both new and used vehicles. After announcing their earnings report for Q4 2021, Ford stocks fell 6%. However, Ford reported profits of over $10 billion dollars in 2021 and remains “bullish” on 2022.

When Will the Border Protests End?

On Sunday morning, February 13^th, following an injunction from a Canadian judge that entered in to effect on Friday evening, police began to arrest the truckers blockading the border crossings. While tow trucks removed vehicles, hundreds of pedestrian protesters remained. The road from Detroit into Windsor was partially re-opened, but it will take some time for auto plants on both sides of the border to rev back up to full production.

It is difficult to say when the borders will become fully operational, but goods are making their way, slowly, across the border. Prime Minister Trudeau, for the first time, invoked the Emergencies Act on Monday, February 14th, which gives the government more power to suspend citizens’ right to free movement and prevent financial support of the protests. However, the vaccine mandate was not repealed and after seeing the success of their initial protest it is likely there will be subsequent blockades in the coming days.

How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

Inflation Grows With Rising Freight Rates

Inflation continues to rise as the costs of transportation and warehousing goods for final demand has increased by more than 18% this November. Comparing this data to earlier years shows this is the largest annual increase since 2009. 

Covid-19 Contributes to Inflation Tensions  

Photo Courtesy of Daniel Schludi

Materials like iron ore, steel, and even finished products ready for market have to move as raw materials that are processed in global manufacturing. All companies have to factor in the cost of transporting goods, and this is typically a fraction of the finished product’s price. However, shipping containers and gasoline are more expensive, and truck drivers are in short supply, causing prices to surge for consumers and businesses alike.

The Covid-19 pandemic began the surge in transportation costs, and this could take years to bring back down. Many companies were already dealing with high raw material prices. Now with the new freight cost prices, some CEOs predict the inflation could continue into 2023. The Omicron variant causes even more tension in the liner industry because ports and shippers have to follow lockdown protocols in China. 

Higher Prices Could Slow Down Product Demand

The cost of transporting freight across oceans in November saw a 26% increase compared to last year’s prices. This is the biggest annual increase in data since 1988. Higher than usual freight costs are contributing to inflation issues that negatively impact consumers’ incomes and raise costs for companies. An increase in demand from earlier in the year caused freight cost increases, as producers and merchants struggled to find products. Even freight costs for trucks are up more than 16%, and shipments by air and rail have also seen large increases.

Photo Courtesy of Ellis Garvey

For years, a handful of large carriers have dominated key shipping routes, making room for fewer vessels to sail between ports. This leaves cargo owners paying an extreme price to find the space to transport their goods. Companies like Walmart and Home Depot decided to charter their own boats this year in order to ship their products. Some economists are unconcerned about extra costs, arguing that the economy will rebound and work itself out over time as higher prices slow down demand.

How SiShips Gives You the Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

The Past, Present and Future of the Customs Industry

Today on the blog, we had the chance to sit down with Michelle Rockwell, a Licensed Customs Broker and Operations Manager here at SiShips. Rockwell is a veritable fount of knowledge for all aspects of importing and exporting. Her career has spanned thirty years in the shipping industry. Rockwell has been a valued member of the SiShips team for the last seven years. Over the course of our conversation we touched on a variety of topics, including Rockwell’s unique experience as a Licensed Customs Broker, what she’s learned about freight forwarding in school and on the job, and the direction she sees the customs industry heading in the future. You can read our conversation below:

Hi Michelle, thank you for taking the time to chat with us. Let’s start at the beginning, how did you originally become a customs broker? 

Rockwell: On one of my yearly reviews my manager listed taking the broker exam as my goal for the year.  I had worked in all aspects of the industry during my career in international logistics and this was the next step in advancing in my career.

Was freight forwarding or international trade something you studied in school?   

Rockwell: No, I studied travel and tourism

What is an important lesson you learned early on in your career that you still think about today?  

Rockwell: The industry is a fast paced [one] with constant change that only the adaptable survive.

How to Work with Clients as a Custom Broker

What is your personal philosophy when dealing with clients? 

Rockwell: Always be transparent and honest with the customer.  The customer may not always like the truth, however they will respect you.

Do you treat them all the same, or does each receive individualized attention, depending on their wants and needs?  

Rockwell: Each customer requires individual attention depending on their working knowledge, experience, and expectations.

A Custom Broker’s View of Covid-19

Apologies that we have to bring it up yet again, but how has the Covid-19 pandemic affected the way you do business?  

Rockwell: We have had to extra care with our customers who are frustrated with the extra challenges they have faced during Covid.  Covid has caused delays throughout the entire supply chain from port congestion, labor shortages, and extremely inflated freight rate. 

What advice do you have for clients that are frustrated with the current global situation? 

Rockwell: Ship earlier than you normally would, check all port options for creative routings, and expect freight rates to be highly inflated and above all remember to be patient as we are all struggling [through] this together.

Are you able to forecast when the industry and the supply chain might return to normal—if “normal” is even a possibility anymore, especially in light of the new Omicron variant?  

Rockwell: At my best guess I would not expect to see any improvement before Chinese New Year 2023

Apart from Covid-19, what is the biggest change factor you have seen over your 30-year career in the customs industry and how do you anticipate the industry to change in the next five to ten years?  

Rockwell: Another big change I have seen is when we changed to ACE for the reporting to US Customs.  This change helped to make the industry a more paperless environment, however it took away the personal relationships you had with US Customs in your local ports. 

We’ll finish with a fun one: if you’re able to share with us, what is the most surprising or unique client you have worked with during your career as a licensed customs broker? 

Rockwell: An individual that imported a Mosaic piece of artwork to hang on their wall that weighed over 600 pounds.

How SiShips Gives You the Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

High Consumer Demand Prolongs U.S. Port Congestion

Already high consumer demand is growing, causing imports from Asia to continue congesting U.S. ports. Imports are forecast to remain elevated into February and push even higher in the second quarter of 2022.

2022 to Bring an Early Peak Season for Imports

U.S. ports have been struggling with congestion all year, and this is expected to continue into the new year. The annual Lunar New Year lull is typically a period of time that allows any backlogged cargo to be cleared up, but 2022’s “lull” is only expected to last for a matter of weeks in February. LA port chief Gene Seroka also believes 2022 will bring an earlier than usual peak season. This fall, retailers described record-breaking peak season volumes, and are now working to rush ship their products to the U.S. before factories in Asia close on February 1st for Lunar New Year celebrations.

Photo courtesy of Tran Huy.

For the past few months, big-box retailers have pushed back their restocks in order to focus on importing holiday merchandise. U.S. imports are expected to increase 4.6% in December, 9% in January, and 7.3% in February. By March and into April, these percentages are expected to drop. Retailers in the second quarter will only have a few months before the rush to restock begins again with back-to-school products.

Trans-Pacific vessel capacity will be tight into 2023, causing retailers to begin shipping their peak season merchandise earlier than usual in the late spring of 2022. Warnings of a second port congestion issue were released last week, but congestion issues will only truly be resolved if imports from Asia slow down considerably. Based on recent consumer demand trends, a slowdown is not likely any time soon.

Above Average Container Dwell Time Contributes to Congestion Issues

Photo courtesy of John Simmons.

Los Angeles and Long Beach ports have experienced the worst U.S. port congestion. These two ports handle 50% of all U.S. imports from Asia, and the amount of imports these ports receive continues to increase. Large numbers of empty containers left at terminals and long-dwelling import containers are contributing to congestion issues, as well as warehouse congestion. The average dwell time for these containers is above 10 days, which is more than double the normal dwell time of 4 days or less.

Despite the LA port shipping back 43% more empty containers to Asia than this time last year, empty containers remain an issue. Carriers are being asked to return their containers to Asia by sending sweeper ships, whose purpose is to take empties away in bulk.

How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

Increased Demand, Increased Profits

The global supply chain continues to be a mess. There are delays in ports around the globe and backlogs at every step of the way. Shipping costs are 20 times more per container than before the pandemic. However, expenses for shipping lines have remained relatively constant. This translates to one of the most profitable periods ever for a historically low-margin industry.

So, what are the world’s largest shipping companies doing with their newfound pandemic profits? A whole lot, it turns out. The industry leader, Maersk, is investing their war chest in every step of the supply chain. Other firms are diversifying their business by expanding into adjacent industries. The one thing they all have in common is an interest in shoring up their future before profits return to normal.

Investing Pandemic Profits in Shipping Lanes

The Evergreen Group is doubling the size of their fleet after dropping $2.6 billion on 20 new ultra-large containerships; even the globally bad press from the Suez Canal blockage was not enough to sink this Taiwanese-based conglomerate. The privately held Mediterranean Shipping Company is taking advantage of their boost in profits to make one of the largest secondhand cargo ship purchases ever. They hope their addition of 60 secondhand cargo ships to their fleet will be enough to overtake Maersk as the largest shipping company in the world.

Speaking of Maersk, the Danish company is opting for quality over quantity with their fleet and ordering eight carbon neutral vessels to be delivered by 2024. Part of the draw of green vessels for Maersk is the zero carbon ambitions of their clients, like Unilever, Amazon, and Proctor & Gamble. CMA CGM echoes this philosophy with their $627 million spend on ice-breaking cargo ships that can travel the more environmentally friendly routes of the Baltic Sea.

Expanding Airline Fleets

Major shippers are taking “by land, by sea, by air” to heart and pouring money from their pandemic profits into increasing their air delivery capacity. CMA CGM has announced intentions to expand their airbus fleet with a purchase of four A30F freighters at the recent Dubai Air Show. This represents a further commitment to air from the French shipper by tripling the previous size of their cargo airline.

As mentioned earlier, Maersk is sitting no part of the supply chain out and that includes airfreight. Combined with leases and other company acquisitions, they have essentially doubled the size of their airline fleet since this time last year. The two new Boeing 777s, which will serve as the crown jewels of the fleet, are expected to be delivered by 2024.

Diversifying the Shipping Industry

Part of many shipping companies’ plans for the future involve expanding their portfolios to keep profits on the rise, even when margins return to their typical pre-pandemic levels. Maersk is securing their future with the purchase of German-logistics expert and freight forwarder, Senator International. They are also capping off their shopping splurge with a $5 billion stock buyback.

Mediterranean Shipping Company has placed a large bet on their cruise division by ordering 12 new ships to be delivered from now until 2027. This purchase also includes the launch of a luxury cruise brand from MSC to set sail in 2023.

Finally, Hapag-Lloyd is taking a different approach from all of their competitors. Instead of investing in increasing their capacity, they are using their pandemic profits to purchase sea and rail terminals. If their belief that these port blockages are a one-time issue is correct, this is a wager that could pay huge dividends for Hapag-Lloyd.

How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

Supply Chain Crisis Forcing Re-Evaluation

In early November, the prevailing concern across the shipping and retail industries was would products arrive on shelves in time for the holidays. For the most part, it appears stores will have some goods for Black Friday, Small Business Saturday and Cyber Monday sales. It was an extremely close call, though, as there are still major backlogs in ports around the globe, including here in the United States.

This holiday scare is the latest in a series of post-pandemic aftershocks that are forcing companies to re-evaluate the way they order and stock inventories. Do you increase your back stock in order to prepare for another supply chain crisis? Or, do you shrink your inventory and rely on hyper-efficient supply chains to return to pre-pandemic speeds?

Re-Thinking the Supply Chain

The debate between “Just in time” (JIT) and “Just in case” (JIC) inventory levels has been in existence long before the onset of the Covid-19 pandemic. However, while supply chains were susceptible to vacillations in the global economy, there was never quite a shock to the system as far-reaching and long lasting as the one that kicked off in March 2020.

“Many clients previously had a dependable supply chain,” says Andrew Ciccarone, President of Sheltered International. “In the last few weeks we’ve seen boats in LA taking an extra month to dock. Now that inventory which should already be shipping for the holidays is still at sea, so we are helping them to rethink models for the post-Covid environment.”

Cost of Doing Business

For most companies, cost is the biggest factor, but relying completely on JIT inventory can leave a company susceptible to massive profit losses as we have seen over the last year. The decision is not an easy one.

For those focused on JIT inventory, it is important to consider extraneous factors that can potentially make JIT more expensive than JIC inventories. In October 2021, the annual inflation rate of the USD blew past projections to reach a two-decade high of 6.8%. This historic inflation rate, along with other considerations, led to the highest average gas prices since 2014. These increases in immediate costs for companies fully reliant on JIT inventory compound on already lost profits from an inability to provide goods to consumers. Companies who made decisions to stock JIC inventories may have had to spend more money upfront, but they have the potential to come out ahead in turbulent sectors like Q3 and Q4 of 2021.

Make A Strong Plan to Manage Inventories

Photo Courtesy of Mak.

The reality of our new situation is every company needs a plan. Fortunately, the Chinese New Year can serve as a real-world testing ground for a post-pandemic world. It may seem a little out there, but the effect the annual holiday has on Chinese exports (over a short period of time, granted) is not dissimilar to the effects of port and factory closures from the Covid-19 pandemic.

Instead of ordering goods a week or two in advance based on current demand, take the time to analyze sales patterns of previous years to forecast how much inventory you will need for any given time. Additionally, with proper planning, you can make sure to take advantage of the best shipping rates with strategic booking from a platform like SiShips.

It’s also important to remember to plan for after any disruptions. As we are seeing now, ports take a long time to reduce backlog once it begins to pile up and, at the beginning of the supply chain, factories take time in order to ramp up production to pre-existing levels.

If we have learned anything, it’s that there are no longer any guarantees in the shipping industry. But, with proper planning and reasoned foresight, you can still maximize your time and profits.

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.