Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Cargo is backing up on Chinese docks due to government efforts to curtail the spread of the deadly coronavirus by forcing workers to stay home, and that congestion is already causing a domino effect on supply chains in the U.S. as well, a food industry trade group warned today.
That change is needed because of the broadening impact of the coronavirus—now officially named COVID-19 by the World Health Organization—an infectious bug that likely originated in December in wild animal food markets in the central Chinese city of Wuhan. The disease has since sickened thousands and killed hundreds of people, moving the Chinese government to slow the spread of the virus by constricting travel, a policy that has also hobbled the flow of trade.
The growing backup of containers at China's ports is now causing ripple effects in the U.S. as well, the group says. "Within China, the supply chain has been compromised, starting at the China marine terminals extending all the way to the ultimate inland destination points. The supply chain disruption has crossed the Pacific and is evident at U.S. marine terminals, and inland," Peter Friedmann, executive director of the Agriculture Transportation Coalition, said in a release.
Consequently, U.S.-based agriculture and forest products exporters have been finding their cargo getting "stuck" at inland origin points, rail ramps, truck yards, refrigerated warehouses, and domestic marine terminals, the group said.
That impact occurs because China's production of both industrial products and of consumer goods—such as apparel, footwear, and electronics—has slowed due to factory shutdowns that originally began during annual Lunar New Year celebrations but that were extended by government-imposed quarantines and closures.
In turn, there is now "dramatically less" cargo and fewer containers flowing from China to the U.S., and therefore fewer sailings by ocean carriers that are cancelling departures to avoid losing money by operating partly empty ships. Thus, there is an emerging threat of a shortage of ocean carrier capacity to take U.S. exports to China on what would ordinarily be the "backhaul" of a roundtrip ocean voyage, the group said.
For example, those effects are being seen at the Port of Virginia, which reported today that the number of empty containers for export in January fell more than 27% to 13,882 TEUs as a result of the uncertainty being created by the coronavirus, an increase in blank sailings, an extension of the Chinese Lunar New Year closures, and quarantines in China.
And on the west coast, leaders at the Port of Oakland reported that containerized import volume had jumped 7.3 percent last month over January 2019, lifting hopes for recovery from a U.S.-China trade war. But at the same time, Port of Oakland Maritime Director John Driscoll said it was "possible" that concern over the fast-spreading coronavirus could dampen trade growth. "The uptick in January was encouraging but we're hearing from shipping lines that cargo volume could moderate over the next few months," Driscoll said in a release.
Refrigerated exports in danger of spoiling on overcrowded docks
One industry that may be particularly susceptible to the impact of container crowding on Chinese docks is U.S. food exports that require constant electricity to stay fresh inside their refrigerated containers. Specifically, shipments of protein products such as beef, pork, and poultry may arrive on Chinese shores but not be able to locate enough open electrical outlets for plugging in their refrigeration units, the Agriculture Transportation Coalition said.
The problem has arisen because marine terminals lack the capacity to store all the containers coming off of arriving ships, so terminal operators must maintain efficient throughput to quickly move containers through terminals, past inspections, and onto waiting trucks or trains. However, that domestic freight routing has recently been hindered due to China's initiatives to restrain the spread of the virus by restricting workers' commutes to the docks and truckers' routes from place to place, the group said.
"One of the first messages we sent to our protein exporters was to be aware of the lack of additional capacity at China's marine terminals for refrigerated containers. In short, the plugs (supplying electricity to the refrigeration units on the containers) were fully utilized, with no more available for additional temperature-controlled containers," Friedmann said.
In response, the group is urging exporters to confirm with their ocean carriers at the very outset—before loading containers onto trucks or rail destined for seaports—that containers will be able to transit to the ultimate customer in China once they arrive. "For instance, before removing protein from refrigerated warehouses, the U.S. exporter should get a commitment for their ocean carrier that there will be available reefer plugs at the destination port," Friedmann said.
Editor's note: This article was revised on Feb. 11 to add information from the World Health Organization.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.