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.
As much as U.S. west coast container ports are struggling with imports, congestion is even worse in China and could lead to further product shortages and delays for both businesses and consumers in a “global whiplash effect,” according to an analysis by supply chain visibility provider project44.
The data shows that container imports are already clogged off California, with the ports of Los Angeles and Long Beach setting a record in September of 73 cargo ships lying at anchor, awaiting their turn to unload freight.
That backlog is already making it difficult for businesses to deal with the annual holiday sales surge and global post-Covid recovery. But the challenge is even greater when they factor in freight flows in Asia. As of October 7, there were some 386 ships either anchored or moored off the busy Chinese ports of Shanghai and Ningbo, of which 228 were cargo ships and 45 were container vessels, Chicago-based project44 said.
Those traffic jams affect supply and demand halfway around the world because the freight passing through Chinese ports accounts for 40% of global container trade; Shanghai is the world’s busiest container port and Ningbo is just behind in third place.
According to project44, basic reasons for the berthing delays include lingering backlogs from the Covid-19 closure of Ningbo port, the impact of Typhoon Chanthu, and the current Golden Week between October 1 to 7. But shippers are especially concerned because Chinese ports are not making significant headway in dealing with the excess cargo, the firm said.
Those delays can be measured by container rollover rates, which are defined as the percentage of containers that miss their scheduled sailings. Project44 data show that those rates have stayed high, with September numbers reaching 36% at Ningbo, 41% at Hong Kong, and 37% at Shanghai.
Looking into the future, the report found that freight could soon slow down even more, triggering a potential “global whiplash effect,” according to project44’s VP of Supply Chain Insights, Josh Brazil. He pointed to a power-shortage crisis caused by a national electricity ration imposed by Beijing. Facing mandatory power limits and shortages of coal reserves, manufacturers may be forced to scale back just as demand heats up.
“We can expect these growing backlogs across Chinese manufacturers and ports to exacerbate imbalances at U.S. and European ports,” Brazil said in a release. “As it becomes increasingly hard to get inventory from factory floors to end-consumers, competition for shipping capacity will heat up. At this point, pretty much everybody is feeling the pain. The challenge is less about achieving full inventory -- that ship has sailed -- and more about adapting to, and planning for, future disruption.”
In fact, retailers are already seeing three consequences of these forces: lower availability, less speed, and higher costs, according to comments from Simon Geale, executive vice president at Proxima, a supply chain and procurement consulting firm. But although those impacts are hitting the whole market, they have different impacts on various vendors.
“Because of problems with capacity, there are historic highs in container prices and lows in service levels,” Geale said. “You see some companies like Peloton that have been using planes to fly in equipment. They are a low volume, high margin, premium product and because the product is more expensive, they can absorb the cost and take that hit. It is the opposite when you look at retailers with high volume and low margin such as kids’ toys, textiles, or low-end electronics. Most of these are coming out of congested ports and cannot afford that optionality to switch transportation methods.”
Despite a wide awareness of those problems, solutions may be long in coming, he said. “We are pushing more and more into a system that isn’t working. Many are focusing on when things will get better and the answer is no time soon. Supply chain issues in terms of logistics may clear up by next year and raw materials problems in chips could push some of those supply chains into 2023,” Geale said.
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.