Why Strategic Partnerships Will Dominate the Future

Why Strategic Partnerships Will Dominate the Future

Strategic partnerships are essential to thriving in the new world of work. A lot has changed since the pandemic, and those changes are taking hold in the blink of an eye.

Supply chain transformation is not only ongoing; it’s happening rapidly. One critical element of today’s transforming supply chains is strategic partnerships.

To survive and thrive, businesses must develop new solutions because you can’t solve today’s problems with yesterday’s solutions.

The power of strategic partnerships

Strategic partnerships will set winners apart from losers. It’s that simple. That’s because it all boils down to the old adage: Two are better than one.”

As you look across your supply chain, you’ll find fifteen capabilities that work better with a strategic partnership than without one. Without further ado, let’s dive into those fifteen capabilities.

  1. Agility — Working with a partner will help you build an agile supply chain with sense and respond capabilities that can pivot on command. Supply chain management enables your business to respond proactively, not reactively, to unexpected events. Responding proactively saves time and money and helps to meet customer expectations.
  2. Capacity and pricing — A partner can leverage its expertise, experience, and network to help you get the capacity you need at the best price when you need it. A strategic partnership can help spread and therefore reduce costs equitably.

It can achieve that by optimizing your business processes. Optimized business processes can reduce costs from production to packaging to warehousing and transportation. A strategic partnership also improves supply chain performance that benefits your customers and your organization.

  1. Complexity The SCM landscape is becoming more complex with 24×7 operations, increased risk (Covid-19/pandemic, Ever Given, Colonial Pipeline, etc.), and technology. It’s a changing, globalized world that’s reorganizing its sourcing strategies.

Automating routine processes to mitigate labor shortages while meeting consumers’ expectations will drive automation and robotization of warehouses and e-Commerce functions. That will introduce another level of complexity into supply chains.

And that will require a more highly skilled labor force. Hence, your business will need to upskill, re-skill, and cross-train your workforce to overcome increased complexity. Engaging a strategic partner will ease this burden.

4. Compliance In today’s globalized world, change is the name of the game. A 3PL can help you maintain currency with the latest changes in regional, national and international shipping requirements.

A 3PL already has qualified regulatory and compliance analysts. So it makes sense to leverage existing capabilities of a partner rather than build those special skills in-house.

  1. Communication and Collaboration — Supply chains are all about communication and collaboration. Without them, supply chains just don’t work.

Seamless communications along your supply chain, from suppliers to your customers, foster collaboration. Working closely with a strategic partner will iron out the kinks you may have now in your communications channel.

Importantly, an adequately implemented effective communication and collaboration system will build trust, further providing for future performance efficiencies and cost savings. You can also expect innovation.

  1. Customer Responsiveness — Today, customer responsiveness has become the cornerstone of modern supply chains. Strategic planning has been turned on its head, putting the customer at the top and the business at the bottom.

That means the business exists to serve and support customers while generating profits has become secondary. Supply chain management and logistics services are key in addressing customer demand.

They achieve this by providing the right products/services in the right quantity/amount, condition, time, cost, and place to the right customer.

When your business can deliver on the 6 Rights, you will have achieved customer responsiveness. Keeping your customers happy by meeting their expectations will enhance your competitive advantage.

  1. Data Analytics — Businesses are turning to data-based decision-making in an increasingly complex and uncertain environment. Making decisions based on anecdotal evidence no longer passes muster. Today, decision-makers must make decisions informed by reliable, relevant, and real-time data for standard reporting and ad hoc analysis.

Historical data also play a role in achieving strategic insights into hidden patterns and trends regarding customers and business processes. Therefore, any successful organization must have a robust data analytics capability. Partnering with a 3PL that has a potent data analytics capability facilitates supply chain agility, resilience, and responsiveness.

8. Experience — There is no substitute for experience. Experience comes from prior history and involvement with managing supply chains. Those experiences are comprised of successful and unsuccessful activities. In fact, unsuccessful experiences often teach the best lessons.

By partnering with an experienced 3PL, you’ll avoid repeating mistakes based on your partner’s lessons. You’ll also avoid surprises that can ambush your operations.

9. Expertise — Expertise is an invaluable resource in the New Normal. Expertise is a prized asset because tomorrow’s problems are thornier than those of pre-pandemic times. They’re more complicated and more complex, and they engender greater risk.

Growing global competition, rapid adoption of technology, and rising customer expectations all demand expertise. Hence, partnering with a 3PL can give you the benefit of a firm that brings its supply expertise to bear on your problems.

10. Innovation — Generating new ideas is a key cornerstone for surviving and thriving in the future. Since no organization monopolizes new ideas, partnering with a 3PL to manage your supply chain makes sense.

Working in partnership, you’ll benefit from diverse ideas from different areas of expertise. Integrating those various ideas will lead to faster innovation and increased trust. It will become automatic, simplifying the resolution of your toughest challenges. When that happens, you’ll innovate consistently and often, helping you to sharpen your competitive edge.

11. Resilience —Your supply chain will be more resilient when you partner with a 3PL. Building resilience is a technical competency a competent 3PL can achieve in several ways. Three such ways are data analytics, SCRM, and visibility. See #7, #12, and #15 for an explanation of each one.

Partnering with a qualified 3PL that understands the value of building resilience in your supply chain will position your supply chain for success.

12. Supply Chain Risk Management (SCRM) — A 3PL partner can help you develop an SCRM plan that acts like armor, shielding your supply chain from disruptors. It’s an understatement to say that SCRM is critical to your success in the future.

You can’t address every contingency. Doing so would be cost-prohibitive. Therefore, you must analyze how you can best defend your supply chain, keeping it operational while mitigating disruptions and their related costs. You can do that by assessing the probability of expected and unexpected disruptions.

You can also build in a proactive component to your SCRM plan. This is where you can build agility, speed, and resilience into your supply chain. In doing that, you would be creating a more flexible organization—a responsive one that adjusts and adapts to changing conditions.

You can create your SCRM by yourself or make a plan with a strategic partner. Delegating SCRM to a professional 3PL does more than ease your workload. Having a professional 3PL create your SCRM plan ensures both supply chain vulnerabilities and opportunities are addressed.

13. Speed — Savvy consumers who have a fundamental understanding of the capabilities of new technologies make them relentless in their demand for speed. Thanks to the growth of e-commerce, consumers have increased their reliance on online shopping.

So, speed has become a paramount capability. Achieving speed works hand-in-hand with developing agility and resilience. Adaptive and responsive organizations ensure speedy delivery of products/services. Technology, discussed below, enables speedy operations that focus on meeting customers’ high expectations.

14. Technology — A partner can help you automate your supply chain to remove the burden of technology changes while optimizing your supply chain. But implementing technology solutions today is almost as important as selecting the technology you use.

Today’s solutions must present quick wins. They must apply directly to specific issues and concerns. And they must demonstrate an assured ROI.

  1. Visibility — Visibility or, more accurately, end-to-end visibility, is essential in the New

Normal. This capability gives your business a holistic view that permits you to curtail

issues before they become problems.

Combined with data analytics and a robust SCRM plan, visibility gives your business the edge you need to respond rather than react. And that will help your business stay ahead of the competition.

Strategic partnerships have mutual benefits.

In the New Normal, going it alone, at worst, will fail. At best, your business will struggle to survive in an environment of heightened competition, increased volatility, and greater uncertainty.

To combat these challenges, your business must become adept at operating in a dynamic marketplace. That entails dealing with risk, complexity, and chaos with steadiness.

If you’re looking for a reliable strategic partner to help you with your supply chain, you should look at American Global Logistics.

The future belongs to businesses that seek strategic partnerships.

You can contact us here to learn more about the benefits of forming a strategic partnership.

Ground Transport Trends: The Future of the Logistics Industry

Trucking Industry as Leading Indicator for Future Business Trends

Trucking industry trends show no relief in sight through 2022. The costs of shipping are at historical highs. Fuel, labor, and other transport costs have spiraled to highs not seen in decades.

What’s to blame?

The administration claims the Russo-Ukrainian war has caused inflation. However, the data show otherwise. Relevant data show that prices were on the rise well before the start of the war. Nonetheless, the war is a contributing factor.

Economic sanctions intended to pressure Russia are having a reverse effect, calling into question their viability. For example, Germany, the EU leader of the Green Movement, has resorted to burning coal to fill the gap created by sanctions against Russia.

The government shutdown of drilling on federal lands has had a chilling effect on oil production. Since the administration’s shutdown, the U.S. has shifted from being an energy exporter to an energy importer.

There’s more, but you get the gist. Inflation is global, and that puts pressure on consumers worldwide. Eventually, that may lead to a destruction of demand, but that’s not certain.

How much the Federal Reserve raises interest rates will determine whether inflation gets tamed, persists, or spins out of control. Currently, the Fed is walking a fine line between lowering inflation and avoiding recession.

Hence, you’re operating in an environment of increased risk and uncertainty.

All of the above affect businesses and consumers globally. As a shipper, a key concern is how these factors affect the trucking industry. In tracking the trucking industry, we’re tracking a leading economic indicator.

The value of tracking the health of the trucking industry

In zeroing in on the trucking industry, we’ll gain key insights into the health of the logistics industry. For example, in examining shipping prices, we’ll gain insights into the spot freight market. Other helpful indicators include the persistent driver shortage, container capacity, and technology innovations.

Tracking those and related indicators can provide a useful path in planning your supply chain for maximum efficiency. Understanding trucking industry forecasts can inform how you position your supply chain for success.

Shipping prices remain high through 2022

You’ll find yourself in a fiercer, more competitive environment as shipping costs rise.

Since transportation costs comprise 63 % of logistics costs, we’ll examine how spiraling costs shape industry trends.

In the first quarter of 2022, inflation hit shipping prices. As of May 2022, prices increased 21.3%, according to Logistics Management. One month later, in June, transaction prices increased by 34.4 %.

All trucking sectors increased by over 20 %, from local trucking to long-distance trucking to refrigerated trucking. Inflation left no sector unscathed.

Trucking companies increased their prices, reflecting existing market conditions.

  • As of May, the CPI was up a surprising 8.3 %.
  • Fuel prices also increased as the government halted drilling on federal lands.
  • Labor costs increased as trucking companies competed for a shrinking labor pool.
  • Economic sanctions against Russia expanded, which boomeranged and put upward pressure on prices in the EU and U.S.

Until some of these cost factors ease or get resolved, prices will remain high.

Persistent driver shortage easing

Data suggest that industry driver shortages are abating. Hiring is at an all-time high. Competition in the spot market has moderated. Contract rates are higher, but historically they lag price action in the post-market by about six months.

Citing Bureau of Labor Statistics (BLS) June Report, JOC.com reported that “… trucking

companies added a record 62,400 workers to their payrolls, compared with 31,400 in the same period last year and 37,800 employees added from April through June 2020, when trucking began to bounce back from severe job losses during the early days of the pandemic.

This surge in hiring suggests a growing economy, not a recessionary one.

Also, from September 2021 to March 2022, the price of shipping a container declined by over 20 percent on average. The main reason cited for this decline is the availability of trucks. That suggests container capacity is increasing.

Another indicator is the significant reduction in the time required to unload cargo ships at the Port of Los Angeles. According to a Harvard Business Review article, the number of cargo ships waiting to be off-loaded in May 2022 was 39 compared to 103 in January 2021 at the Port of Los Angeles. That’s a sizable drop of 62 %.

The same article mentions that driver salaries have risen. As trucking companies compete for a limited driver pool, companies have raised salaries, attracting more truck drivers. So, the factors mentioned above combined are easing the persistent driver shortage.

The trucking industry outlook and what it means

The outlook for trucking industry costs shows a continued trend of high prices for the rest of 2022. Industry forecasts project a staggering annual inflation rate of 25.7 % through the end of the year. After that, in 2023, economists forecast a more moderate inflation rate of 3.3 %.

Not to be unduly optimistic, the trucking industry will face some bumps along the way. The transition to the post-pandemic marketplace has begun and will not be without some risk and uncertainty.

The challenge is getting from where your business is now to where you want it to be.

At American Global Logistics, we work with our customers to find a smooth, even-paved road. We track trends in ground transportation to minimize or avoid disruption to your supply chain.

Call American Global Logistics today to find out how we can help you get ahead of the trends. We can help you leverage your supply chain as a competitive advantage when you stay ahead of the trends.

June 2022: Quarterly Economic Update

Mixed Economic Trend: Growth or Recession

The most current economic data suggested inflation was not transitory. Instead, the data showed rising inflation. It suggested a continuation of volatility and uncertainty. And recession now seems likely.

The Russo-Ukrainian war remains a significant bogeyman. However, the war is moving closer to an outcome depending on how you interpret events.

Whether that outcome is positive or negative for the world remains to be seen. Regardless, you can take steps to avoid the worst of these events.

KEY ECONOMIC INDICATORS

Economic indicators and data we’ll explore include:

Besides these indicators, tracking the Fed’s intent for raising, lowering, or maintaining interest rates is essential. That’s usually a guessing game until the Fed announces its decision.

Currently, the Fed is telegraphing an aggressive rate hike of 0.75 percent, according to the Cleveland Fed President Loretta Mester. Fighting inflation is the Fed’s main priority. But in fighting inflation, the Fed risks running the economy into a recession.

At the latest Congressional hearing, Fed Chairman Powell admitted a recession is possible. He further stated that achieving a “soft landing” would be “very challenging.” Against that backdrop, teetering between inflation and recession, let’s dive into the data.

General Macroeconomic Indicators

Inflation RateCurrent data as of May 2022 shows inflation at 8.6 percent. Inflation hasn’t been this high since 1981. Here’s how inflation affected various sectors of the economy.

Energy increased the most. It had the largest impact with a price increase of 34.6 percent. That measure includes gasoline, fuel oil, electricity, and natural gas prices.

Food costs were next with an increase of 10.1 percent. Food costs increased in the prices of meats, poultry, fish, and eggs.

Significant increases occurred in other sectors. Housing showed a rise in inflation at 5.5 percent. Household furnishings and operations increased by 8.9 percent. Used cars and trucks increased 16.1percent, and airline fares rose 37.8 percent.

Bucking the trend, new vehicle costs decreased to 12 percent from 13.2 percent.

Gross Domestic Product (GDP)—On June 29, 2022, the Bureau of Economic Analysis (BEA) reported that GDP contracted by 1.6 percent from the fourth quarter of 2021.

The decline reflected decreases in six categories. They were exports, federal government spending, private inventory investment, and state and local government spending.

Meanwhile, the economy saw increases in four other categories. Imports increased, which are subtracted from exports. Nonresidential fixed investment, personal consumption expenses (PCE), and residential fixed investment rose.

The Bureau of Labor Statistics (BLS) will release June’s GDP, the 2nd Quarter, on July 28, 2022.

Atlanta Fed uses a real-time tracking model called GDP Now model, which says the economy is in a recession. The BLS’ latest report revision shows second-quarter GDP falling 1 percent.

If that happens, it would be the second consecutive quarter of negative GDP growth. That would result in the second consecutive quarter of negative growth in real GDP. And that means we are in a recession.

Given the Atlanta Fed’s GD Now report, a recession seems likely. If the data holds up as projected, the only question now is how long and how deep a recession will be.

Consumer Price Index (CPI)As of May, the CPI was 8.6 percent. June’s data becomes available on July 13, 2022). May’s increase was 1.0 percent compared to an increase of 0.3 percent in March 2022. The causes for the increase are discussed in the GDP update above.

The Bureau of Labor Statistics (BLS) will release June’s data on July 13, 2022.

  •       Producer Price Index (PPI)May’s PPI data revealed a rise of 0.8 percent. On an annual basis, demand prices rose 10.8 percent for 12 months, ending in May 2022.

The Bureau of Labor Statistics (BLS) will release June’s data on July 14, 2022.

  •       UnemploymentMay’s unemployment data did not change, remaining at 3.6 percent. However, drilling into this metric shows some encouraging signs.

The Bureau of Labor Statistics (BLS) will release June’s data on July 8, 2022.

First, the number of long-term unemployed (27 weeks or more) dropped slightly to 1.4 million. While that is below February’s level by 235, 00, May showed a welcome decline.

Second, teleworking employees dropped to 7.4 percent from 7.7 percent in April 2022.

Third, the number of people unable to work because of the pandemic declined. That number dropped to 455,000 compared to 586,000 last month.

Overall, the various economic reports show mixed—not clear-cut— indicators.

Tracking macroeconomic data gives us a perspective of the economy as a whole. In assessing the logistics industry’s health, we need relevant industry indicators. Those indicators must drill down and measure industry-specific performance.

We find that with the Logistics Manager’s Index.

May 2022 Logistics Manager’s Index (LMI)

As a refresher, the LMI Index comprises eight unique metrics that reflect the health of the

logistics industry. To determine the industry’s health, the LMI measures eight key categories. Those elements include inventory costs and levels, prices for inventory, warehouse utilization and prices, and transportation capacity and utilization.

A rating above 50 percent indicates that the logistics industry is expanding. A reading below 50 percent suggests that the logistics industry is declining.

May’s rate dropped 2.6% from April’s index of 69.3%. That indicates continuing growth, but at a lower rate. The eight key categories representing logistics industry health are below.

Five metrics indicate growth occurring at an increasing rate compared to March’s performance data. The only exception is Transportation Utilization.

  •         Inventory Costs—increased to 88.1% up from 87.7% or a 0.4% increase.
  •         Warehousing Utilization—increased significantly to 45.9% from 40.8%.
  •         Warehousing prices—increased marginally by 1.7% to 87.5% from 85.8%.
  •         Transportation Capacity—increased markedly by 7.8% to 64.7% from 56.9%.
  •         Transportation Utilization—This metric remains unchanged at 64.3%.

These two metrics indicate a slowing growth rate.

  •         Inventory Levels—decreased 3.0% to 69.3% from 72.3%.
  •         Transportation Prices—decreased decidedly by 8.7% to 65.3%, down from 73.9%.

These metrics show a slowing rate of growth. Growth is still above historical averages and suggests slow growth, not no growth.

Only one key metric is contracting: Warehousing Capacity.

May’s LMI Index declined 2.5 percent from 69.7 to 67.1. This snapshot indicates gradually improving logistics conditions. It implies a state of slow growth, not no development.

The combined metrics suggest easing supply chain pressures on prices, capacity, and delivery time. Only warehousing capacity is diminishing.

These improvements are occurring against a backdrop of sustained volatility. That said, uncertainty seems to be waning as China recovers from its Covid lockdowns. The pace of manufacturing and shipping should increase.

China’s lockdown has benefited, as companies have used shipping slowdowns to work off bottlenecks at ports.

Also, as the war drags on, businesses adapt to economic sanctions against Russia. And businesses are still flush with inventory because of the surge coming out of the pandemic. The inventory data suggest businesses are slowly drawing down their stocks.

In sum, the snapshot of logistics industry health shows a decline in growth, but it is still growing.

To compete successfully, you can take several steps to keep your business running through any turmoil.

Mitigation strategies to keep your business running

The economic data continue to suggest a future of volatility and uncertainty. However, the severity of impacts and risks to global supply chains appear moderate.

Contain costs by maintaining cost consciousness without shortchanging customer service

To prosper in these times, your business must be cost-conscious, being mindful of eliminating wasteful spending. But not all spending is wasteful, as external events drive some costs affecting your supply chain.

To address externally-generated costs, you should have as many workable options as possible.

Identify and exploit unplanned opportunities

You should look for opportunities to increase your options to avoid supply chain uncertainty.

Adjust your inventory product mix

You can reduce supply chain friction by changing your product mix by matching supply to demand. That’s a temporary measure. But it might get your business through tough times.

Future-proof your supply chain through strategic planning

Here, you can make some headway. You can build resilience, speed, and risk mitigation into your supply chain. This proactive step can serve you well in the short- and long-term.

As the New Normal takes shape, it is clear that business as usual is over. Re-calibrating your strategy to address increased volatility and uncertainty can boost your competitive edge.

Future-proof your supply chain with agility

Besides resilience, speed, and risk mitigation, agility is another key driver of competitive supply chains. Static, set-piece processes will break under today’s pressures. Hence, the future belongs to nimble organizations.

Competing in a high-risk environment is possible. The best way to do that is to adapt your business processes. They must be adaptive at the strategic and tactical levels. You need new business processes to address new challenges because the old ones don’t work.

Legacy processes are ineffective in today’s marketplace. The alternative is to change, to adapt.

Next Steps: Positioning Your Business for the New Normal

The industry is not returning to business as usual. So, staying abreast of the latest economic trends is more critical than ever.

Today’s marketplace has more risks with greater severity than in pre-pandemic times. That’s especially true for economic risks, which can have long-lasting consequences.

Tracking key economic events and indicators can result in significant benefits.

At American Global Logistics, we track whatever affects your business. We track trends, including key economic indicators. We do that because that can make the difference between success and failure.

Tracking economic performance is only one aspect of identifying trouble before it occurs. We track critical data to identify trends. As a data-driven 3PL, we identify trends as a matter of routine.

The AGL Team looks for patterns to see what they tell us. We are proactive in avoiding supply chain disruptions. More importantly, we also identify opportunities that can arise from supply chain disruptions. That’s how we drive a competitive advantage for our partners.

Contact us today to find out how we can drive competitive advantage for your business.

AGL Recognized as Georgia’s Fastest Growing Company

Atlanta, GA. American Global Logistics has won ACG’s Fastest Growing Company in Georgia for 2022. Each year ACG Atlanta, the Atlanta Chapter of The Association for Corporate Growth® (ACG), a global professional organization focused on middle-market growth, mergers, acquisitions, and private investment honors the top 40 fastest-growing middle-market companies in Georgia. Out of the Top 40 honorees, AGL was named Georgia’s fastest-growing company over a three-year span. 

“This is a huge testament to all of our employees and all of the hard work they have all done these past few years,” said Chief Executive Officer Chad Rosenberg.

American Global Logistics delivers customized logistics solutions that empower businesses to solve their most significant supply chain challenges. Their proprietary cloud-based technology offers unprecedented visibility and control throughout the supply chain, while their end-to-end logistics solutions help provide a greater depth of service to global enterprises.

Recognized as one of Fortune Magazine’s “Top 50 Great Places to Work, along with Inc. 5000’s Best Places to Work and Fastest Growing Companies, AGL is grateful to have earned another accolade.

“In the single word that describes the culture and DNA of AGL is resilience,” said President Devon Wijesinghe. “From three years to go from effectively nothing to this year, tracking at $1 billion in revenue is pretty incredible.”

Founded in 2007, American Global Logistics (AGL) offers customized solutions to fit businesses’ unique requirements and goals, powered by agile, proprietary technology that adapts as their partners’ logistics needs do.

Ocean Shipping Rates: Reversing Excessive Prices and Relieving Congestion

Ocean Shipping’s Supply Chain Disruptions on the Economy and the Logistics Industry

In a whirlwind legislative effort, Congress passed a bill for the President’s signature in record time. The bill passed with record bi-partisan support, which the President signed within a week.

On the surface, this looks like a positive development. We can conclude that Washington works when it comes to important issues. Bi-partisanship still carries the day and is the way ahead in passing bills into laws.

However, as we dive deeper into the new law, the Ocean Shipping Reform Act of 2022 (OSRA-22). We’ll examine who’s impacted and whether it addresses inflation or supply chain disruptions.

To answer these questions, this post will:

  • Identify the key points of OSRA-22
  • Identify supporters and critics of OSRA-22
  • The near-term outlook for ocean shipping.

As you might infer, this law has far-reaching consequences that are not clear-cut.

Issues the OSRA of 2022 intends to remedy or address

The shipping of agriculture failed to ship because of container constraints.

  • Lack of cargo space because of prioritization favoring the return of containers to China for shipping higher-value goods.
  • Reverses the burden of proof of “demurrage and detent” on” from shippers to carriers.
  • That a “demurrage and detent” on” charges comply with federal regulations under the force of penalties.
  • Common carriers must report to the Federal Maritime Commission (FMC) the number of empty containers carriers are shipping.
  • Outlaw retaliation against shippers or threatening to refuse cargo.
  • Establish the FMC Office of Consumer Affairs and Dispute Resolution Services.
  • Improve chassis management by requiring the Bureau of Transportation Statistics.
  • Commission a study aimed at developing best practices of chassis management.
  • Authorizes the FMC to collect data in times of emergency, such as severe congestion.

These issues are wide-ranging. They run from improving performance to regulating prices. OSRA-22 addresses gaps in U.S. maritime law. It does so by regulating commerce.

“… eliminate unfair charges, prevent unreasonable denial of American exports, and improve the oversight and enforcement tools needed to crack down on unfair practices facing American consumers.”

Strong Popular Support for OSRA-22

OSRA-22 targets primarily foreign ocean carriers. The administration’s sights are Maersk, MSC, CMA CGM, Cosco, Evergreen, HMM, Hapag-Lloyd, ONE, and Yang Ming. These concentrate on trans-pacific trade that dominates the bulk of ocean shipping.

These carriers have come under fire because their rates have increased to 1000%. That suggests collusion in price-fixing that limits competition.

Supporters include farmers, truckers, logistics service providers, trade associations, retailers, and bankers. You can find a complete list of supporters here.

But not everyone agrees that OSRA-22 is the answer to inflation or congestion,

On May 31, 2022, the FMC itself issued a final report: Fact-Finding Investigation 29 Final Report that contradicBiden’sn’s charges of collusion. The Final Report concluded competition was not limited and was, in fact, vigorous. It further stated that Trans-Pacific trade was not concentrated and that “… Trans-Atlantic trade was only minimally concentrated.

In case you didn’t notice, FMC issued this Final Report only two weeks before the passing of OSRA-22. The ink was barely dry.

Also, the World Shipping Council (WSC) questioned the administration’s charges. In equally strident language, the WSC came out swinging.

The WSC state:

“We are appalled by the continued mischaracterization of the industry by U.S. government representatives and concerned about the disconnect between hard data and inflammatory rhetoric. The 22 (not nine) international carriers that serve the American people, industry, and government in the Asia – United States trade are part of the global supply chain that has built this country, importing and exporting food, medicine, electronics, chemicals, and everything else we depend on.”

In short, the WSC disagrees that OSRA-22 will remedy port congestion. It believes intermodal improvements are necessary along with investment in landside logistics infrastructure.

So amid the harsh language is an offer of conciliation. It indicates a deep understanding of the complexity of ocean shipping.

It recognizes that global stakeholders must find a holistic solution to address the root causes of this issue. Only then can the industry make enduring progress. Also, to accomplish that implies doing so cooperatively in partnership.

Will OSRA-22 remedy inflation and supply chain congestion? Or will it trigger retaliatory actions that further disrupt supply chains?

The Near-term Outlook for Ocean Shipping and Supply Chain Disruptions

Everyone hopes for a positive outcome. However, you must base your shipping decisions on reality rather than hope. The industry is moving toward fact-based decision makinIt’st’s also moving towards long-term partnerships to resolve long-standing issues. Cooperation, collaboration, and coordination epitomize the future of logistics operations.

These modernized ways of working reflect how to thrive in the New Normal.

Likewise, American Global Logistics already leverages these modernized ways of working.

Specifically, AGL operates on fac-based decision-making. We also adopt close relationships with our partners. And we seek long-term partnerships.

Contact us if you’re considering a long-term partnership with a 3PL in today’s world of uncertainty. We’re positioned to thrive in any economic or political climate.

Ocean Carriers Overcome Volatility and Continuing Risks

Ocean carriers continue to deal with uncertainty and volatility. Risks have not subsided; instead, they persist in the post-pandemic era.

External risks loom large with the typical risk that plague ocean carriers. In particular, political and economic threats have increased uncertainty and volatility.

Despite the significant risks and challenges, ocean carriers are succeeding against formidable odds.

This post will review the challenges facing ocean freight today. It will also delve into how ocean carriers overcome the odds stacked against them. With these insights, shippers can understand today’s circumstances better. And that should enable them to secure critical capacity and competitive pricing.

Persistent risks and challenges plaguing ocean carriers

You know the risks and challenges well.

Where should we start?

Let’s focus on the big-ticket items: external political and economic events. These are beyond your control.

Specifically, the war in Ukraine and inflation are the two overriding challenges. Both negatively impact ocean freight and global supply chains.

  • Seaports have been put off-limits because of economic sanctions and safety concerns.
  • For the same reasons as above, airspace is restricted.
  • Delays have resulted from freight bogged down in Russia and Ukraine.
  • Fuels, supplies, and materials are in short supply with no end in sight.
  • Prices for fuels, supplies, and materials have increased, aggravating inflation.

According to a GlobalData Annual Report, the war has disrupted 130 multinational companies doing business in Russia or Ukraine. The most exposed sectors include metals and mining, consumer packaged goods, industrial goods and machinery, and pharmaceuticals. Other affected sectors comprise automotive, oil and gas, technology and communications, and financial services.

That doesn’t leave many business sectors untouched by the war. Also, these disruptions have global effects, with the EU enduring the most of them.

How ocean carriers are overcoming today’s challenges

With all those disruptions occurring, import volumes have remained strong. That is reflected in the continued backlog of vessels anchored at major U.S. ports. Also, DC Velocity reports that infrastructure-related work is adding to these backlogs.

Despite these risks and challenges, carriers are operating more effectively and efficiently. For example, total vessel losses have declined 57% worldwide. In 2021, ocean carriers lost only 54 vessels. That’s a decline from 65 total losses in 2021.

To put that into perspective, the global fleet of vessels has increased from 80,000 ships 30 years ago to 130,000 today, or 62 percent. That makes the reduction in total losses more impressive.

At the moment, flexibility is key to mitigating disruptions.

Ocean carriers also add to capacity by using non-container vessels to carry containers. Although this adds to capacity and is likely a temporary measure, it heightens the risk of shipping improperly secured cargo.

Inclement weather could affect bulk carriers as they adjust, putting cargo at risk. That said, this is a temporary measure and not in wide use, yet it adds some relief.

Also, some ocean carriers are diverting vessels to avoid port congestion. JOC.com reports some carriers diverted cargo from Charleston to Savannah. In addition, many carriers diverted their ships from west coast ports to east port coasts. That has mitigated some of the congestion issues.

But carriers are not working alone to return to normal operations. They’re getting help from various ports authority and other governmental authorities.

Increasing port capacity and increasing operational hours are other measures taken to reduce the impact of supply chain disruptions.

Last year, the Port of Savannah could only handle about 80,000 containers. Its utilization rate at the Garden City Terminal was above 80 percent. Now, because of the Peak Capacity Project aimed at increasing port capacity. By summer’s end, handling capacity will increase to  100,000 containers.

Flexibility also comes in, providing truckers increased access to ports. Turning to the Port of Houston, container terminals will be open to truckers on Saturdays. This is also a temporary measure that will remain in effect through the end of 2022.

Safer operations, adaptability, and infrastructure improvements have been key. They have allowed carriers to continue operations through disruptions. Some mitigation steps taken are temporary, while others are longer lasting.

Regardless of the risks and challenges, ocean carriers are working to mitigate disruptions. And, despite difficult conditions, the improved loss rate shows a significant improvement. Keep in mind that reduction in losses comes with a 62 percent increase in operating vessels.

How to navigate today’s challenges and minimize your risks

Ocean freight remains an essential mode of transportation. As risks and challenges increase, shippers compete for limited capacity and battle rising prices.

That makes today’s markets extremely competitive. Understanding today’s challenges can aid you in adapting to overwhelming odds.

Working alone in today’s environment is tough and ineffective. Just as ocean carriers are not working alone to achieve more seamless flows, neither should you.

That’s why working with a partner who can mitigate risks and leverage opportunities makes sense. It’s about securing capacity when you need it at a competitive price.

At American Global Logistics, we track trends in ocean freight tirelessly. We do that to mitigate risks and leverage opportunities to benefit our customers.

When you partner with us, we’ll do the same for you.

Contact us to learn more about how we can hone your competitive advantage against the odds.

Transforming Future Supply Chains: Ocean shipping’s outsized impact on future supply chains

Non-stop loading and off-loading of stacked containers on ships 

Transforming Future Supply Chains: Ocean shipping’s outsized impact on future supply chains 

Ocean shipping represents a mammoth component of international shipping. According to OCED, 90% of international trade ships by ocean carriers. That’s huge.

That makes an analysis of ocean shipping worthwhile. It can provide meaningful insights into how global supply chains are coping. 

Often, analyses look at microcosms to shed light on more significant issues. In this case, we’ll flip the coin. So, this post will look at a macrocosm — ocean freight. It also provides insight into how ocean shipping is shaping the New Normal.

This should provide a reliable assessment of both the health and future of ocean shipping and the global supply chain industry.

Assessing ocean shipping’s outsized impacts on future supply chains

Knowing how ocean shipping shapes supply chains will help you adapt to the future.

To assess ocean shipping’s impacts on future supply chains, we’ll look at several key factors. To begin with, we’ll consider the current economic situation. Then we’ll look into capacity, performance, and pricing.

That should give us a snapshot of ocean freight’s current status and how it’s shaping the industry.

Ocean carrier economic and market backdrop

The economy is a mixed bag at mid-year. Clouding current and future is the uncertainty surrounding China’s re-opening (JOC.com). Inventory levels are high at both Walmart and Target (JOC.com). 

Walmart’s CEO stated inventory is 32 percent higher than its year-over-year (y-o-y) plan. Target’s CEO, meanwhile, reported its inventory is 34 percent higher than its y-o-y plan. Those bloated inventories suggest a pending slowdown in imports.

Consumer demand at present remains strong as employment and wages are improving. The Bureau of Labor Statistics (BLS) reported May’s employment at 3.6%, with an increase of 390,00 jobs. 

Other big retailers also reported bulging inventories. Kohl’s reported an excess inventory of 40 percent. Clothing retailer Abercrombie & Fitch reported an excess of 45 percent. And, cooler and drinkware maker, Yeti, reported excess inventory at an astounding 125 percent (JOC.com).

At the moment, the main question is will imports surge or not. Those suggesting a surge is in the offing point to strong demand coupled with pent-up demand. And as China opens up for full-blown trade, that surge may well occur.

Proponents suggesting a gradual inventory build-up believe well-stocked warehouses will tamp down demand and future purchase orders. 

A third group believes inbound traffic will ebb and flow between now and December 2022. For example, trade will increase with China’s re-opening and ease in mid-summer. Then as peak season arrives, imports should rise again only to decline by year’s end.

This mixed bag reinforces volatility and uncertainty through 2022. As a result, capacity and pricing will reflect.

Ocean carrier capacity improving

The present and future both appear promising for capacity availability. So, constrained capacity has eased. Improvement has resulted from blank sailings and normalization of port operations as bottlenecks get sorted out. According to Kurt McElroy, Executive Vice President at Apex Maritime, “Nothing is moving at a premium.”

The future appears promising, as infrastructure spending focuses on improving logistics flows, repairs, and upgrades at ports and distribution centers should improve effectiveness. And that should benefit capacity availability.

Also, Sea-Intelligence reports trends indicating rising levels of capacity. In its Maritime Analysis report, weekly capacity has risen to 650,000 or 21 percent. That data reflects the last two weeks of May 2022.  

While capacity constraints remain, they are improving, which will affect pricing favorably. That should benefit shippers and consumers alike.

Moderating ocean carrier pricing

As capacity constraints are relieved, pricing, too, should see relief. They should at least moderate from their recent highs. So, as logistics and supply chain operations improve, pricing pressure should ease.

According to Container Xchange, container prices have already declined 30 percent. That decline is because of the build-up of container inventories at U.S. depots. As empty containers accrue, carriers are shipping them to where the demand is. That increases availability, helping to drive prices down. 

This should extend from the near- to mid-term. Beyond that, capacity availability will decline, and pricing will increase.

Counteracting that, inflation is putting upward pressure on prices. For example, according to the BLS, pallet prices are now at record levels. Pallets range in price from $12-$13 in the mid-Atlantic and $18 – $20 in the West. 

As ocean carrier pricing moderates, that should provide relief for shippers and consumers. 

Now let’s turn to trends in ocean carrier performance and growth.

Ocean Carrier Performance and Growth

Overall, reliability performance was irregular, depending on the trade lanes and carriers measured. Performance in some trade lanes experienced better performance, whereas some experienced worse performance. As of April 2022, reliability seems to have peaked.  

Citing a Sea-intelligence maritime report, JOC.com reported global reliability at 30.4 percent for January 2022. That was a low. Then, in March, reliability came in at 35.8 percent, followed by 34.4 percent in April.

While global maritime reliability has stabilized at about 33 percent, ocean service is expanding. In particular, regional ocean carriers are expanding their services. One example of growth is Regional Container Lines (RCL)

RCL operates out of Thailand, servicing the ASEAN-Gulf region. That’s in addition to service to India. RCL touts its expansion as having “… one of the best transit times… for Asian trade out of the Middle East and India. Shippers are taking advantage of this RCL’s growth, as reflected by its outbound value. In April 2022, the export value reached a record $40 billion.

Ocean carrier performance and growth are varied. Performance and growth are adapting to conditions in real-time. As they do so, volatility and uncertainty continue, albeit at a more tolerable pace. That means ocean freight is coping and adapting carefully as it shapes the New Normal. 

How are you adapting to the dynamics of ocean shipping and the New Normal?

Ocean shipping overshadows all other modes of transportation. It dominates global trade by an overwhelming margin. And that outsized profile is shaping the New Normal. 

Current and future supply chain operations are becoming more responsive. They are becoming more agile and more resilient. And they’re becoming more efficient and customer-centered. 

The team at American Global Logistics understands the dynamics of ocean shipping. Many parts and pieces are affecting daily operations. 

We track daily operations and market conditions to anticipate trends. Anticipating trends in ocean shipping gives AGL and you a competitive advantage. 

Contact us to learn more about how we can help you stay ahead of the trends shaping the New Normal.

Air Cargo’s Future: The Changing Face and Utility of Air Cargo

The increasing importance of air cargo

Air Cargo’s Future: The Changing Face and Utility of Air Cargo

 Next-generation air cargo is taking shape here and now. Along with a transforming logistics industry, air cargo, too, is transforming.

Air cargo is adapting to the post-pandemic circumstances. Thus, it’s becoming more effective, improving reliability and flexibility. It’s also becoming more efficient, helping to moderate costs.

In short, air cargo is transforming into a higher value-added mode of transportation. Also, it is becoming a bigger component of a multi-modal strategy.

This transformation will result in more agile, speedy, and resilient logistics services. Both the face and utility of air cargo are changing. This trend will lead to improved performance, customer service, and pricing.

How the face of air cargo is changing

ECommerce is a driving force that extends beyond last-mile delivery. It entails speedy delivery, as consumers want their merchandise as soon as they can get it. The faster, the better.

Also, to meet consumers’ need for speed, many logistics service providers (LSPs) are expanding their services. Some air cargo companies are partnering with passenger airlines to increase capacity availability.

That expands capacity, enabling the capability to ship more goods at once. And shipping more goods at once improves the speed of delivery.

For example, CMA CGM and Air France-KLM have inked a 10-year strategic partnership. In doing so, they now operate as a single service. This partnership expands CMA-CGM’s capacity. And this partnership includes the capacity of Air France-KLM’s 160 passenger planes. (See JOC.)

Also, some ocean carriers, like Maersk, are developing integrated ocean and air services. Maersk reported this move would improve reliability by enabling more dedicated capacity. And that would lead to improved operational performance.

Taking further steps, Maersk acquired a German Freight forwarder­—Senator International. Maresk also expects this integration and expansion to enable greater flexibility and agility.

These industry changes will help ease capacity constraints and improve performance. It reflects a move towards forging end-to-end solutions. And this reflects the next stage of development in optimizing cargo flows.

That’s an important and practical attempt to ease structural supply chain bottlenecks.

Continued supply chain bottlenecks

Capacity constraints still plague the seamless flows of cargo. The nation’s coastal and inland ports have yet to recover from the pandemic’s impacts. As companies work to return to pre-pandemic port operations, the value of air cargo is rising..

On the surface, diversifying among different modes of transportation should help reduce congestion. But with the increased interest in air cargo, that mode is also becoming congested. Diversifying among various multi-modal carriers is helping to moderate congestion.

The Wall Street Journal reported the pivot to air cargo has jammed Chicago’s O’Hare airport. Compounding the shift to air cargo, labor shortages have further jammed airport operations. The shift to air logistics has also bumped O’Hare airport to the nation’s leading airport in terms of value.

Note, O’Hare is neither the largest airport with regard to volume (LA) nor the busiest (Anchorage). But with 6.6% of the nation’s trade passing through Chicago, its cargo is high-dollar value freight.

As the face of air cargo is changing, so is the reliance on its utility.

The expanding utility of air cargo

When assessing capacity, performance, and cost, air freight solutions are more attractive today.

As stated above, capacity remains constrained and affects air freight operations. That said, the utility air cargo offers some relief from capacity constraints. And that’s essential to seamless flows.

At present, the industry is dealing with extraordinary circumstances. So, shippers and carriers have increased their reliance on air cargo. But the congestion at O’Hare shows this is a double-edged sword. As the industry moves past Covid’s residual effects, reliance on air cargo should endure.

Speed gives air freight advantage over other modes of transportation. Speed has become a new, critical benchmark. It caters to customers’ expectations and the demands of eCommerce. That makes air cargo a competitive alternative.

And it improves performance by reducing cycle times. Finally, it facilitates seamless flows, as seen by Maersk’s drive to merge its air and ocean services.

Again, the increased reliance on air cargo operations helps moderate costs.

Before the pandemic, ocean shipping offered the most competitive pricing. However, now the pricing of ocean shipping is at record levels. The gap between air and ocean shipping has closed substantially. This makes air delivery a viable option when before, it wasn’t part of the discussion.

Of course, challenges exist for each mode of transportation. But air freight now looks like an attractive option. It offers agility, speed, and competitive pricing.

The utility of air cargo services is increasing because it offers value-added services. And it becomes even more potent when balanced with other modes.

The rise and value of multi-modal solutions

In logistics today, you cannot plan transportation and distribution planning in silos. Strategic planning now extends to and informs end-to-end logistics flows. That boosts multi-modal services, as they help optimize performance, service, and price.

Air cargo is transforming in response to a growing competitive environment. In transforming air cargo, you can meet the changing dynamics of consumer behavior.

Employing multi-modal solutions reflects a logical step. As businesses become more agile, resilient, and responsive, they will survive and profit. They will gain a competitive edge.

How to achieve seamless logistics flows

Achieving seamless logistics flows derives from adapting to today’s conditions. That means streamlining, integrating, and synchronizing those business processes. Then you need the technology to enable those changes.

But that’s not enough. You must also secure strategic relationships that add reliability and efficiency.

Strategic partnerships can help you meet heightened customer demands. In particular, strategic partnerships can improve performance and promote agility, speed, and resilience.

Having a global network also provides a myriad of locations you can service. These core capabilities will help position your company to thrive in the New Normal.

At American Global Logistics, we can help you get ahead of the changing face and utility of air cargo. We stay on top of trends — especially transformative ones.

That will lead to improved performance, customer service, and pricing.

We make that possible with our Global Network of carriers.

When you leverage our vast network, you’ll have the capacity you need when you need it at the price you want.

 

Contact AGL if you want to position your company to thrive in the New Normal.

The Growth of Multimodal Solutions and the Rise of Air Cargo

Shippers are turning to multimodal solutions more and more. Cost, congestion, and customer service are driving the need to diversify shipping modes. As a result, the use of air cargo shipping has seen a pivotal increase in usage.

One feature of the New Normal is the diversification of shipping with a reliance on air freight. The diversification and increased use of multimodal solutions help shippers navigate the New Normal’s higher risk environment.

Besides addressing cost, congestion, and customer service, multimodal solutions mitigate risk. That’s especially important for the future as risks increase in number and severity.

With all that said, the post will focus on the rise of multimodal solutions. In particular, we’ll analyze the changing dynamics of air cargo and what that means to you.

Why Shippers Are Pivoting to Air Cargo

The increased reliance on air cargo did not occur without reason. Actually, the increased reliance is because of several critical factors.

In today’s on-demand economy, it’s tougher to get the capacity, schedule, and pricing you need to satisfy your customers’ demands. Congestions, capacity shortages, and skyrocketing prices manifest the business environment.

To begin with, congestions at the nation’s seaports are breaking records. To relieve some of that congestion, air cargo has become an obvious alternative. According to Mads Ravn, Executive VP at DSV stated:“ We see more ocean to air conversions as a result of long delays and already longer transit times coming out of Asia to the North American East Coast. So, port congestion is a major factor in driving the shift to air cargo.

Next, consumers have shifted their buying patterns to online, which has led to the rise of eCommerce. Traditional retail, meanwhile, is on the decline, especially with younger consumers. This marks a trend in the making that’s also reshaping logistics.

As a result, manufacturing output is up to meet this demand. China also factors heavily in this mix. Besides eCommerce demand, manufacturing is replenishing inventory drawn down during the pandemic. Also, as China eases its Covid lockdowns, manufacturing will increase.

Finally, the return of passenger air travel increases air cargo capacity. It makes capacity available that declined with the pandemic-induced fall in air travel.  Statista reports air travel is currently at 3.43 billion. In 2021, the number of air passengers came to 2.27 billion, which was up from 1.8 billion in 2020.

By comparison, in 2019, the number of scheduled passengers was 4.54 billion. Today’s air passenger traffic is substantially lower – 50 percent lower  – than what it was in 2019. While not yet at pre-Covid levels, the data reflect an upward trend that is returning to normal. Of course, more available cargo capacity makes air freight a practicable option.

These factors help explain why air cargo is now a viable mode of shipping. But that’s not to say air cargo is a comprehensive remedy.

Air Cargo: Neither a Quick Fix nor a Perfect Solution

Although shippers are relying on air cargo more, air cargo has its limits.

First, air freight is more expensive than other transportation modes. But that gap has closed with the skyrocketing rise in ocean shipping rates. Also, air cargo is not viable for any type of cargo. It lends itself to high-value items in high demand and requires speedy delivery.

One timely example of the value of air cargo is the resupply of infant formula from Europe to the United States. This example shows how air freight’s advantages: speed, agility, and resilience. Namely, air freight can meet exceptional requirements with the speed and agility consumers demand.

IATA data show air cargo represents about 35% of all volume and $6 trillion of goods shipped. Also, the International Chamber of Shipping reported that the total value of global shipping topped $14 trillion in 2019.

In terms of volume, air cargo is not dominant, conceding that to seaborne trade. With a smaller footprint compared to seaborne cargo, air cargo’s growth and impact are more exposed to external factors.

Inflation, rising interest rates, and the ongoing war all affect the viability of air freight. On its own, air cargo cannot resolve your shipping challenges.

However, as one element of a multimodal solution, air cargo offers ample benefits. And taking a holistic multimodal approach offers more extensive benefits.

The Future of Air Cargo

Air cargo has its advantages and disadvantages. Still, the trend suggests that air cargo will continue to grow in the post-pandemic world.

Credit the omnipotent consumer. Consumers are now shifting their weight from buying goods to buying services. As governments remove their Covid restrictions, consumers are spending more of their disposable income on services. That will have ramifications for capacity, schedule, and pricing.

On the whole, those ramifications should be positive as capacity increases along with air passenger travel. More available capacity should support planned shipping schedules and moderate prices.

Air cargo’s value will likely rise and become an established trend. Its unique ability to meet rising customer expectations makes it a viable option. That’s especially true in the shift to an on-demand economy.

This reflects a structural change in the logistics industry. And it’s defining the New Normal.

But, by itself, air cargo is less beneficial if not considered as part of a holistic distribution strategy. In formulating your distribution strategy, you must focus on balancing the need to move freight quickly, efficiently, and effectively.

Optimize Your Multimodal Strategy by Working with an Air Logistics Partner

Multimodal logistics is on the rise, and so is air cargo. The future of logistics depends on agile, speedy, and resilient supply chains. That’s what the New Normal looks like.

Diversifying cargo among all modes of transportation enables improved customer service and support. And you can gain a competitive advantage by expanding your air freight solutions.

At American Global Logistics, we provide low-risk, cost-effective, tailored solutions. We exploit advantages in the market for you while delivering quick results. One way we do that is by diversifying your carrier options among all modes of transportation.

Contact us today if you want to leverage the benefits multimodal solutions offer. We can meet your needs for capacity, schedule, and pricing by leveraging our robust Global Network.

Emerging New Trend: Air Freight Facilitates Responsive Logistics

Takeaways

  • eCommerce promises to be an enduring trend propelling the growth of air freight.
  • Lingering effects of the pandemic, such as China lockdowns, will disrupt air freight.
  • Increasing geopolitical tensions will weigh more heavily on supply chains.
  • Supply chain disruptions will become a permanent part of the logistics landscape.
  • The advantages of air freight will offset future challenges as part of a multi-modal strategy.

ECommerce is hot. It’s the wave of the future, and it’s changing logistics. One major way it’s changing logistics is by emphasizing speed and customer service.

Stated otherwise, customers are demanding speedy delivery as they increase their online orders. To meet this increase in demand, shippers are pivoting to air freight.

Air freight offers several benefits to customers. We’ll delve into those benefits in this post and review the promise and limits of air freight.

On that note, let’s dive into this topic and how it’s reshaping logistics.

How air freight is reshaping logistics

Customer demand and focused technologies propel change

It all begins with customer demand. Since the pandemic, customer demand has skyrocketed. Also, importantly, that demand has shifted from in-store to online shopping. Those two changes combined are enormous. Both stoke air freight’s growth and promote the transformation of logistics.

That said, reliance on and expansion of air freight has limits. Adding to air freight’s challenges is pent-up demand from the pandemic. But that will run its course. However, eCommerce promises to be an emerging trend that will endure and likely grow. Carrying eCommerce into the future besides demand is the expansion of focused technologies.

IT companies are developing new technologies to achieve specific outcomes. That’s driven by customer demand as well as cost. Customers seek technology solutions that are easy to implement and provide tailored solutions quickly.

They also want to invest in affordable solutions, as costs remain a key concern. That means today’s technology solutions must deliver actual results that add to the bottom line. To maintain a competitive edge, your business must be sustainable.

Technologies that create seamless data flows will spur air cargo’s growth and transform logistics. Also, technologies that provide E2E visibility, refine performance analytics, improve inventory management, and enhance customer self-service lay the foundation for continued eCommerce growth.

Speed and rapid change facilitate agile and resilient distribution strategies

Still talking about customers, new fulfillment strategies must account for evolving customer expectations. That calls for speed in response to rapid change. Yet according to Aviation Business News, 60 percent of B2B companies are still working to implement a multi-modal strategy that maximizes air freight.

Air freight offers a potent building block in a multi-modal strategy. It meets consumers’ need for speed. And it can help your company adapt to rapid change more easily. In maximizing air freight, you can relieve capacity constraints while improving performance.

That’s not to say, air freight has no challenges. It does. In the long run, the advantages arguably outweigh the short-term disconnects and disruptions. The main point is that expanding reliance on air freight facilitates responsive logistics.

In an Aviation Business News article, Nabil Malouli, DHLs global product lead stated: “… in the next 3-5 years over 50% of businesses will be making some type of change to their distribution strategy”.

In short, the growth of air freight contributes to the “survival of the fittest”. If you merge air cargo into a multi-modal solution, you can build an agile and resilient distribution strategy.

The X-Factor: Geopolitical issues

Increasingly, geo-politics is becoming a key consideration in decision-making. The current geo-political crises of hot war and cold war are having an outsized effect on supply chains.

As logistics undergoes transformation, so, too, is the geopolitical landscape. A division between East and West is in the making. According to the International Aviation Transport Association (IATA), although Ukraine and Russia comprise under ten percent of international air transport, the war has far greater impacts.

Disruptions to supply chains include the rerouting of air traffic, as airports are inaccessible in Ukraine and Russia because airspace has been closed. Airports, too, have been closed. That decreases agility and degrades seamless logistics flows. That, in turn, decreases the safety of all planes flying near Russian airspace.

Another disruption stems from oil price instability. The longer fuel prices remain volatile, the greater the impact on the air freight industry. At $67 per barrel, IATA estimated the airline industry would lose $11.6 billion. Brent crude just rose to $114.42 per barrel on May 16, 2022, increasing 64.40% from one year ago. That further results in disruption to the industry.

At $67 per barrel, fuel represents 20% of costs. With the price of Brent crude at $114.42 per barrel, the percentage of overall costs would increase substantially.

And don’t forget China’s zero-tolerance policy on the pandemic. That, too, is a formidable geo-political trend creating supply chain disruptions.

Of course, the war will eventually end, and so will China’s lockdowns. But as long as they persist, the geopolitical landscape will affect aviation adversely. It’s the X-Factor every shipper and carrier must consider.

Positioning your business with responsive air freight logistics solutions

As mentioned above, the reliance on air freight logistics is increasing. It’s doing so out of necessity (survival) but also for profit. And by itself, air freight is a powerful tool. But as a building block of a larger multi-modal strategy, it is even more compelling.

Its popularity grew because of Covid-19 lockdowns. It created an eCommerce trend that shows no signs of weakening. Rather, eCommerce is a trend distinguishing the future of logistics.

At its heart, eCommerce is all about customer focus. Satisfying customer expectations is now at an elevated level compared to pre-pandemic times. And forget about today’s increased supply chain challenges. Today, customers demand speed, quality, and competitive pricing.

They want it all. Expectations have never been higher.

To meet customers’ expectations, shippers have made air freight a greater part of their delivery strategies. It supports the diversification and optimization of resources. This helps to increase still limited capacity and meet customers’ expectations.

At American Global Logistics, you’ll find a partner who can get the capacity you need. We also help you realize the promise of air freight solutions. We won’t disappoint.

Contact us to learn more about our transportation solutions. We’ll explain how we can leverage air freight for your competitive advantage.