Over the past two years, change has seen supply chains evolve rapidly, but evolution has been forced onto creaky infrastructure and old methodologies.
Covid has brutally exposed the soft underbelly of global supply chains and while shippers and carriers ran their business through an uneasy alliance, Covid will act as a major catalyst for rapid change in the industry.
If there’s one takeaway from the first full day of the Trans-Pacific Maritime Conference, which is taking place in Long Beach for the first time in two years, it’s that there will be no going back to the status quo. pre-pandemic quo.
This is a theme readily taken up by Geodis’ SVP Americas, Agustin Lopez, who declared The Loadstar drones were on the way, 5G would enable the development of self-driving trucks, new developments in the Internet of Things (IoT) and unmanned ships and digitization of supply chain data would come to market over the course of of the next decade.
“Rates will return to some kind of stability over the next couple of years,” Lopez said, but the industry “is looking at a very different scenario; all [cargo] will come quickly and there will be more reliability” in the system, he said.
Digitization will also result in increased visibility into supply chains, giving shippers the ability to move freight in a more sustainable way.
However, Mr. Lopez believes that under the new operational framework, small and medium shippers will have to use large freight forwarders to guarantee space on ships and small freight forwarders will only use electronic reservation systems, because “it will be the only choice they will have”, he explained.
Geodis’ vision of the near future is shared by at least one of the carriers, Maersk’s ocean and logistics CEO, Vincent Clerc, who, in conversation on stage at the TPM with the YCW‘s Peter Tirschwell, explained: “There have been many changes that have taken place [over the past two years] with the whole ecosystem facing changes.
Mr. Clerc pointed to the significant and persistent infrastructure problems in the United States and elsewhere that he said were caused by “the just-in-time way of thinking, which is outdated and needs updating.” ‘to be redone’.
According to Clerc, Maersk has risen to the new challenges and, acknowledging that mergers and acquisitions activity is the “public face” of change, he pointed out that much of the change the carrier is undergoing in its much-heralded strategy to be “the integrator of the seas” was internal.
“We made important decisions in 2020, with the aim of ending the paradigm where we only make money when our customers are in trouble,” Mr. Clerc said. “It is for this reason that we have decided to allocate more capacity to customers rather than relying on the spot market.”
He pointed out that the carrier could earn a lot more in the spot market at today’s prices, but also that “demand is elastic.” But with 75% of its capacity now committed to long-term contracts, the carrier should have a more stable income.
“You can’t predict the future by looking in the rearview mirror,” he said, but added that current rate levels were unsustainable.
With carriers, in this case represented by Maersk, looking to find stability in their revenues, and freight forwarders such as Geodis watching the evolution of the freight market, it is inevitable that regulations will have to change in order to keep pace with change. .
Sure enough, the United States Federal Maritime Commission (FMC), in the form of Chairman Daniel Maffei, said The Loadstar that the regulator was seeking more powers to regulate more effectively.
In a long overdue move, the FMC has been looking for ways to better enforce Detention and Demurrage (D&D) charges. According to FMC Commissioner Carl Bentzel, this will take the form of “cleaning up” the billing process so that carriers and terminals don’t charge shippers or truckers for goods they can’t collect.
Additionally, the FMC has sought to deepen cooperation with the Department of Justice which will provide the commission with more resources to investigate and develop cases – “the FMC will have the resources to prosecute rule breakers,” Mr. Maffei.
In addition, the White House has also considered the economic importance of supply chains and is addressing the issue of antitrust immunity, which many industry players believe artificially distorts the market.
Change is coming, and transformation has been supercharged by the pandemic. Whether the reform of the logistics industry is superficial or a deeper revolution in the world of goods movement remains to be seen.