In the first part of this article, we discussed how some retailers and logistics companies are converging to solve the supply chain crisis. There seems to be a trend for retailers wanting control over their supply chain; however, what does this mean for ocean carriers and other logistics suppliers?
Trends and economics
Throughout history, changing landscapes and new demands have spearheaded economic transformation – such as geographical, technological, industrial, and social. Also, shifts in one industry filter down to related industries. While solutions to overcome challenges may start as a trend, many improve existing situations and eventually become the new norm.
A pertinent example is how hi-tech, including AI, has modernized the trade and import sector. Besides robotization uptake improving warehouse efficiency (Top 10 Innovations in 2021 Logistics Supply Chain). There is also much information regarding transport document digitization, such as Bills of Lading (BL) becoming the eBill of Lading (eBL).
Some changes are well received. However, others threaten small industry players, cause suspicion of job loss to AI, or eCommerce closing brick ‘n mortar stores.
Logistics, logistics
As per above, the current logistics ‘trend’ is primarily due to Covid-19 and its new variants, a significant industry disrupter. It explains why retailers – enduring price hikes and last-mile delivery delays impacting their bottom line, want to take matters into their own hands. Examples are JVs like Simon Property Group and Amazon, AEO and AirTerra, Whiplash and Free Fly Apparel, and other JVs.
Also, we have discussed (Did the Grinch Steal Xmas?) how Home Depot and Walmart are chartering ships for product retrieval. Walmart is creating a last-mile service to help other companies. Amazon increased its fleet of cargo planes.
It isn’t just retailers’ JVs, but last-mile suppliers are responding. An example is a strategic partnership between Tive and Blue Yonder. Tive is a real-time in-transit visibility provider, while Blue Yonder is a digital supply chain and omni-commerce fulfillment platform provider. Integrating data and insights from Blue Yonder’s transportation management solution will enable Tive to deliver on its promise of “90% reduced ‘where-is-my-order’ costs; a 90% reduction in claims for lost, damaged or delayed items; and an overall 10% savings on total freight spend to customers.” Again, the aim is to improve global supply chain efficiency.
Ocean Carriers Vs. Last Mile Fulfillment
Finally, we get to what one resource referred to as the “Impending Ocean Carrier War on Last-Mile Fulfillment.” An important example is the Danish shipping company Maersk.
Maersk has been the most extensive container shipping line and vessel operator in the world from 1996 until 2021 and is active in inland and ocean and freight transportation and associated services, including port operation and supply chain management.
In the current state of things, it is unusual for ocean liners, like Maersk, to find themselves in the same bracket and on a collision course with giant tech companies like Amazon and Alibaba. These companies are now providing digital infrastructures for selling merchandise. Moreover, Amazon’s goal to own last-mile delivery has transformed into a mega international global airline that far outpaces Maersk’s airline expansion.
So, while tech companies and carriers are closing some gaps between each other, they are doing so for different reasons. By improving relevancy, margins, and retention, carriers intend to be more than just infrastructure layers through a closer relationship with shippers. Otherwise, they must Commerce fulfillment companies and forwarders reaping the reward on goods they used to move – in other words, monetizing on and taking over their realm.
For shippers, this all means a plethora of possibilities. Mainly, an importer can use air cargo through a traditional freight forwarder, a digital one, an ocean liner, an online platform like Amazon, or their current supplier.
Both tech companies and carriers are on a track to win this territorial ‘war.’ We can’t predict if this is a passing trend or the new norm. Still, there is unease ahead for forwarders, tech platforms, and carriers, yet industry-transforming innovation!
Corona impact & supply chain material shortages
The Covid delta variant has added to the uncertainty. One of China’s busiest port terminals has closed for two weeks and operations at a third of Vietnam’s textile and garment factories have been put on hold.
Many importers blame Covid on turning supply chains face-down. There is a massive increase in shipping fees and extremely prolonged transit times. Amid virus outbreaks are logjams of cargo at every port and rail yards. The crew-change crisis in the shipping industry has been called a humanitarian crisis as mariners desperately await Covid vaccines after months of being denied leaving their ships and returning home. A Washington Post April article stated that the pandemic had “200,000 merchant sailors stuck at sea.”
Furthermore, the import industry is grappling with staffing shortages with the unparalleled demand for its services, a situation exacerbated when the famed container ship ran aground in the Suez Canal blocking a crucial waterway for nearly a week.
