Ocean Shipping’s Future: Response to Uncertainty and Volatility

What does the future of ocean shipping look like?

To gain insights into that question, we can look at how ocean shipping is responding to today’s uncertainty and volatility.

So what’s hindering ocean shipping today?

Global trade wars, Covid-19, the grounding of the Ever Given, and HMM’s cyberattack, to name a few. All have sewn uncertainty and volatility. And their lingering effects are still felt today.

In attempting to remedy these shortcomings, industry stakeholders must take a long-term view. Fixing today’s challenges won’t occur with the flip of a switch. On the contrary, they will take time because of their size, scale, and complexity.

Coming out of the pandemic has spurred companies to initiate or accelerate change. Hence, transforming business processes is getting a boost from Covid-19 lessons learned, new technologies, and government regulations.

The approach to rebuilding supply chains includes two elements. At the core of these, you will find the customer. That’s the first  element: starting with the customer at the center of your redesign. The second element consists of taking an enterprise perspective.

 

Ocean Transport’s Future Lays Bare Old Problems. The problems challenging ocean shipping today reflect an assorted mix of complex issues. Let’s look at the myriad issues plaguing ocean transport today.

  • Port congestion
  • Lack of capacity
  • Rising prices
  • Seamless flow of cargo
  • Risk management
  • Pollution
  • Competition

Did you notice anything unusual about this list of issues?

First, as you already know, they’re all complicated issues. Second, if you said, there’s nothing new here, you’re right!  Nothing on this list suggests something new has surfaced to challenge the industry. The only difference between pre-pandemic times and now is the sense of urgency. As a result, resolving these issues has greater focus and attention now.

Before the pandemic, industry stakeholders relegated these issues to the back office. The pandemic brought these issues to the public eye. Promoting public awareness of supply chain management was an unintended consequence.

Yet, in doing so, the pandemic has accelerated the resolution of some of these issues. In addition, it has revealed the intractable nature of others. This implies existing issues are getting worse. It also suggests these complicated issues need a long-term focus.

It further implies old methods of resolving these issues are ineffective. Moreover, it implies transformation of ocean shipping calls for “new thinking”.

This, the future of ocean shipping lies in a transformation that creates anticipatory, adaptive, agile, and resilient supply chains. That means delivering better, faster, and cheaper logistics services.

Let’s explore what some of those methods might be.

 

New Solutions to Old Problems.  In a nod to Steve Jobs and Apple, industry stakeholders must “Think Different!” Namely, in transforming ocean transport, new solutions require new thinking.

Those solutions will define the New Normal. And how those problems get solved is a critical element to success.

So, again, the problems aren’t new, but how they’re solved must be.

Heading the list of new methods in resolving issues is working in partnership and teams. It embraces the adoption of new business processes and new technologies.

It focuses on anticipation, adaptation, agility, and resilience.  Does this sound familiar? They’re the principles shaping the New Normal. Finally, it values innovation and recognizes the strategic role of supply chain management.

Here are three areas shaping the future of ocean transport.

  • Alliances and Partnerships. The complexity of ocean shipping will drive the formation of alliances and partnerships.

Why?

Well, the problems facing the future are too big to solve alone. Some say a big shipping line like Maersk may be able to buck this trend. If it does, it would likely be the exception.

Granted, ocean transport’s issues are not only huge, but they are also structural and intractable. That’s why they require an approach that depends on alliances and partnerships. Companies that combine into alliances and partnerships derive advantage from sharing collective resources.

Tomorrow’s solutions call for aggregating resources made possible by alliances and partnerships. Combined expertise and synergies from collaboration lead to trusting relationships. And that leads to strength and competitive advantage.

This sets the table for strategic planning.

  • Strategic or Long-term Planning. The days of tactical planning are over… when it comes to solving ocean shipping’s intractable problems. Instead, you must take a strategic or long-term view. The future calls for new thinking. It demands strategic thinking to provide strategic solutions.

Achieving effective and efficient results depends on a long-term view. Referring back to Apples’ slogan, we see “Thinking Different”  is more than a slogan. It sets Apple’s long-term, strategic direction. And that entails long-term commitment.

It also enables creative, innovative, sustainable and profitable solutions. It fosters customization over one-size-fits-all solutions.c

Furthermore, long-term planning aids comprehensive planning needed to address risk management. Tomorrow’s supply chain risk management programs must address anticipation, adaptation, agility, and resilience.

Due to strides made in technology and those in the works, realizing these goals are within reach.

  • Technology is opening new doors at a pace not seen before. Although technology development seems to be blindingly fast, it’s adoption is much slower. That’s because you must first identify practical value. Once that’s done, it’s important to look at the problem you’re solving.

In the old days, everyone developed a unique solution in piecemeal fashion. That worked for solving the immediate problem. But that approach often fell short, resulting in a sub-optimized solution.

To avoid a sub-optimized solution, you must focus any solution at the enterprise level. So before adopting Big Data, AI, real-time visibility, or IoT, you must take a strategic approach. That means addressing scalability, integration, and complexity.

That entails looking at your supply chain end-to-end. It also entails paying attention to second and third order effects. It will ensure you’re solving the problem at a strategic level.

 

Dealing with Volatility and Uncertainty

I’m sure you agree, uncertainty and volatility won’t disappear. Ocean shipping, in particular, and logistics, in general, will always entertain some risk. But the path to the future entails solving long-standing ocean shipping problems.

That path will look for new solutions to old problems. Given logistics’ new strategic role, new technologies and a greater sense of urgency, ocean shipping’s problems may seem less staggering. That may make them more manageable.

Old methods are no longer effective. Doing nothing will result in extinction as pacesetters adopt and adapt.

American Global Logistics can help you thrive in an uncertain and volatile market.

We can help you rebuild your supply chain for the future. We are future-focused on helping you develop your competitive advantage. We look forward to hearing from you.

Take a step in the right direction. Contact American Global Logistics before planning your next steps for ocean shipping’s New Normal.

 

AGL recognized as one of the “Georgia Fast 40”

AGL is proud to announce we have been named one of Georgia’s Fastest-Growing Companies in the ACG Fast 40’s Inaugural Division, Higher Middle Market! The Atlanta National Chapter of the Association for Corporate Growth (ACG), a global professional organization with the mission of Driving Middle Market Growth, honors the top 40 fastest growing Georgia based companies each year. 

“The companies being honored this year demonstrate the strength and significance of the middle market sector in Georgia,” said Melanie Brandt CEO of the Association for Corporate Growth’s South Region and ACG Atlanta President and CEO.

Applications required the submission of 3 years of verifiable revenue and employee growth records, interviews, and verification of said revenue and employee records by accounting firm, Cherry Bekeart LLP

““These companies represent more than 6,600 new jobs and nearly 2.4 billion dollars in revenue growth over the last three years,” said Michelle Galvani, chairperson of the Georgia Fast 40 Awards and Executive Managing Director with Wildmor Advisors. “In speaking with many of the CEO’s, the supportive business environment and accessibility of capital are contributors to growth. By far the biggest challenge is tightness of the labor market. We are proud to honor these companies and look forward to learning more insights online and at the celebration”

Every year ACG Atlanta hosts a celebratory event honoring those 40 companies selected. This year, the event will be held at the Atlanta History Center on June 24th, from 4:30 PM- 8:30 PM. 

We are honored to be recognized in the Georgia Fast 40, and look forward to attending the celebration!

 

 

 

Three Key Attributes of Resilient Supply Chains

Is your business prepared to survive a major supply chain disruption? If not, consider this. Two years after a major disruption, stock prices of unprepared businesses have lost up to forty percent of their value. (K. Hendricks & V. Singhal, See p.1.) That underscores the value of resilience in a concrete way.

With the unprecedented rise in supply chain disruptions, businesses must have resilient supply chains. Resilient enterprises can outmaneuver their competitors and gain sales, revenues, and market share. Therefore, it is important to build resilience into your supply chain. Doing so enhances your longevity and your competitiveness.

In reviewing the key attributes of resilient supply chains, we need a working definition. Essentially, resilience is the ability to avoid, contain, stabilize, and return and recover from a disruption.

In a 2005 Harvard Business Review article, Yossi Sheffi, identified three key attributes of resilient supply chains. Those attributes identified 16 years ago are still relevant today. The three attributes are: (1) Redundancy; (2) Flexibility; and Cultural change.

To understand resilience better, let’s dive into each one of these.

 

#1 Redundancy. According to Sheffi, the value of redundancy has limits, but it’s still a useful measure. It’s limited because it’s expensive and therefore not a long-term option. Redundancy implies carrying more safety stocks. It can also mean duplicating sources, processes, employees, or equipment. That duplication entails a larger investment that dilutes revenues and profits.

So, you should consider it as a temporary measure. That’s because it helps to diminish the effects of disruptive events. But the costs prevent redundancy from being a long-term solution. Namely, redundancy is a measure you can use to reduce the effects of a disruptive event. So, it’s an effective tactic but not an efficient one.

As a short-term remedy, you should include redundancy as one option to manage disruptive events.

 

#2 Flexibility.  Achieving flexibility is more effective and sustainable than redundancy. However, achieving it is more challenging. But flexibility offers a higher payoff than redundancy. Thus, building flexibility into your supply chain is a “must-do” event.

To begin with, flexibility can help you avoid and/or mitigate a supply chain disruption. It enables your business to respond to and rebound from a disruption – effectively and efficiently.

Sheffi identifies four way in which you can achieve flexibility:

  • Adopt standardized processes
  • Use concurrent instead of sequential processes
  • Plan to postpone
  • Align procurement strategy with supplier relationship

You can find a detailed description of each criterion here.

 

#3 Cultural Change.  The third key attribute that sets resilient businesses apart is culture. In his article, Sheffi lists four cultural traits successful firms exhibit.

Here they are in no particular order.

  • Continuous communication among informed employees
  • Distributed power, so empowered teams and individuals can take necessary actions
  • Passion for work
  • Conditioning for disruption

This list underscores the value of culture and people. It’s important to create a working environment conducive to accepting change. The combination of culture and people results in the ability to halt, sidestep, or prevent disruptive events.

 

Build a Resilient Supply Chain Today

It’s clear that Sheffi’s three key characteristics still remain relevant today. That’s notable because they’ve withstood the vagaries of time. More important, however, is that resilience has assumed a higher priority today in 2021 than in 2005.

Due to the increasing number and severity of disruptions, resilience is now a top concern.

Be aware, building a resilient supply chain is a long-term endeavor. The sooner you get started, the sooner you’ll harden your supply chain against the next disruption.

Are you satisfied with your supply chain’s ability to respond to and rebound from a future supply chain disruption?

If you want to build a resilient supply chain, contact American Global Logistics  today. We seek long-term partnerships with businesses focused on realizing strategic goals like achieving resilience.

Contact us to find out more about we can work together to neutralize disruptions to your supply chain.

 

The Unstoppable Rise of Shipping Prices in 2021

This year promises to segue from uncertain supply chain disruption into more predictable disruption. The unstoppable rise of shipping prices may cause that disruption. And it may dominate the news in 2021.

Last year Covid-19 dominated the disruption of supply chains– hands down. Although  a second strain has surfaced and threatens to disrupt supply chains, rising shipping prices may replace Covid-19 as a dominant disruptor.

The container capacity shortage, a front-burner issue now, promises to be dilemma for the  long-term. This post will look at how the industry got to this point. It will also examine what impacts you can expect, as this issue works its way to ultimate resolution. More important, it will explain what stakeholders are doing to mitigate the problem.

 

Global Shipping Rates Skyrocket Near Historic Highs

Container capacity shortage is a worldwide problem in the aftermath of Covid-19. Recall, Covid-19 resulted in massive declines in supply and demand, making forecasting all but impossible.

Blanket sailings reached record highs, cargo was rolled over, and shipping delays were the norm, not the exception.

As a result, today we have severe container shortages near record highs. And that negatively affects worldwide shipping rates. Since late 2020, rates have escalated almost fourfold from $1,400/TEU to over $4,000/TEU.

But that’s not the worst of it.

Carriers, primarily the big alliances have set these rates seemingly arbitrarily. They’ve broken existing contracts with much lower freight rates. And they’ve also added surcharges for various reasons, further causing shipping rates to spike.

It seems some of the Big Alliance, namely, 2M, THE Alliance, and The Ocean Alliance, are operating with a heavy hand. Shippers and forwarders are blaming them with taking advantage of the post-Covid environment.

Meanwhile, governments in the U.S., China, and Vietnam have stepped in to explore charges of anti-competitive behavior. At present, only the European Commission has refrained from entering the fray. But it appears the EC may soon join these other governments in digging into this mess.

In the U.S., shippers using the ports of New York, Los Angeles, and Long Beach are complaining about the severe lack of available container space. This issue is not restricted to the U.S – it’s a global problem.

Thailand, for example, is also suffering from the container capacity disconnect. According to The National Shipper’s Council in Thailand, compared to last year, Thailand has shortage of 1.5 million containers.

Thai authorities blame vessel delays, rollovers, and shipping cancellations. Moreover, Thai authorities estimate shipping will increase in 2021 by 3-5% after declining  about 7% in 2020. That will further exacerbate the capacity shortage.

That suggests shipping prices will get worse before they get better.

 

Fighting Rising Skyrocketing Prices with Partnerships and Regulation

Carriers have the upper hand at the moment and are forcing shippers and forwarders into the spot market. Of course, the spot market has much higher rates. Unless and until governments step in to regulate this huge disparity in supply and demand of containers, rates will continue to escalate.

This makes partnerships between shippers and 3PLs even more important. Fighting to resolve or avoid these adverse events demands a collective approach. Today’s situation gives truth to the adage: “There’s strength in numbers”.

The New Normal seems to be shaping up into a harsher, more competitive environment. More precisely, it’s showing signs of imbalance in the markets alone that may lead to greater government intervention.

As already mentioned, the U.S. is looking into claims by shippers and forwarders. On the table are not just formal inquiries, but also legal action, such as court injunctions against the shipping alliances.

We’ve just entered the New Year, so we can’t draw any conclusions yet. That said, regulatory action may be in the offing, if the market can’t redress these apparent inequities soon enough. That means, liners, shippers, forwarders, etc., must address this issue collectively and share costs as well as benefits. A one-sided solution won’t prevail in the long-term.

 

Operating Nimbly in the New Normal

Supply chain disruption is nothing new. Yet many businesses won’t weather the storm when disruption hits. It doesn’t seem to matter whether disruptive events are predictable or not.

Whether shipping prices will be the great challenge they appear to be at the moment remains a question. What’s important is how you manage the disruption caused by escalating shipping prices.

So what’s your plan for managing and/or mitigating expected or unexpected disruptions in 2021?

One way to manage and/or mitigate supply chain disruptions is through contingency planning. But a plan is only as good as the use you make of it. To make a contingency plan work you need people – partners to be more exact.

That’s where American Global Logistics  comes into the picture. We’re a 3PL that knows a thing or two about managing everything from speed bumps to major crises.

When you partner with us, you can rest assured we’ll provide you with industry competitive rates. We have the personnel, processes, and technologies to help you prevent, avoid, or mitigate surprises.

Contact us today, if you’re looking for a stable partner to help you navigate the choppy waters 2021 promises to bring.

 

Covid-19 Impacts to Infrastructure: What Needs To Be Done

Our roads, bridges, and ports are crumbling. And Covid-19 has accelerated our nation’s deteriorating infrastructure.

During the Great Depression, the U.S. government spent 4.2% of GDP on infrastructure. Today, the government only spends 2.5% of GDP on infrastructure.

That’s a huge disparity.

As an industry insider, you know, infrastructure is indispensable to logistics. Infrastructure influences economic growth as well as job creation. More than that, infrastructure affects the competitiveness of our nation and your business.

In emerging countries, logistics costs up to 25 percent of a product. In first-world countries that figure is much less at 6 – 8 percent. Regardless, both represent a sizeable cost.

Deteriorating infrastructure only adds to those costs.

Compounding this issue is the severe underfunding of State Departments of Transportation

(DOTs). They are in dire need of federal aid. Thus, Congress must address the nation’s aging infrastructure now. Doing nothing is not an option.

This post addresses Covid-19’s impact to roads, bridges, seaports, and airports. It also suggests recommendations to fix this threat to the economy and your business.

 

Fixing the Nation’s Deteriorating Roads

The nation’s roads are bad and getting worse. Many of them are dangerous, if not unusable. Some roads require scheduled maintenance but aren’t getting it. And new road construction is at a virtual standstill.

To fix these issues, states look to the Highway Trust Fund for aid. With that in mind, as of May 2020, revenues from the Highway Trust Fund have declined 49% from May 2019. You can attribute much of that decline to less traffic on the highways due to Covid-19.

At the same time, many state DOTs expect an average decrease in their revenues of 30% for the next 18-months. That only compounds the problem.

How bad is the problem?

According to the American Society of Civil Engineers (ASCE), 20% of highway roads are in poor condition. And without dedicated funding that percentage shows no signs of decreasing.

ASCE recommends a $50 billion investment in the next Covid-19 relief package. Also, ASCE recommends that Congress tackle this issue from a long-term perspective. That means providing a multi-year funding plan for the Highway Trust Fund.

The outlook isn’t promising. So, piecemeal investments are no better than band-aids.

As it happens, some of the same issues plague the nations bridges.

 

Fixing the Nation’s Deteriorating Bridges

This funding situation for bridges mirrors the funding issues for roads. For example, state DOTs expect a 30% decline in their revenues on top of reduced aid from the Highway Trust Fund.

For example, ASCE has identified 46,100 bridges in need of structural repair. This is quite a backlog, and it continues to grow. But the gas tax that funds bridge repair and maintenance has stood still.

That is, the federal gas tax remains stuck at 1993 levels. Moreover, due to reduced traffic and road usage, purchasing power has also declined. That makes for a risky and hazardous situation.

This is a long-term problem that needs immediate action. Without immediate attention, ASCE projects fixing these unsound bridges would take 50 years. That means we would not see completion until 2071 – and that’s if repairs started straightaway in 2021.

ASCE makes the same recommendation for repairing bridges as it does for roads. That is, Congress should provide $50 billion in the next Covid-19 package. But that’s only a short-term solution.

Instead, Congress should combat this dilemma by addressing the issue from a strategic perspective. Thus, Congress should provide a long-term solution for funding the Highway Trust Fund.

As you might expect, the situation for improving the nation’s ports isn’t much better.

 

Fixing the Nation’s Deteriorating Seaports

Seaports, like the U.S. roads and bridges, need an infusion of capital to continue operating. Since Covid-19 though, shipping volume has fallen sharply due to record breaking blank sailings.

That has hurt revenue collection, which funds port maintenance and improvement. Revenues have declined between 20 and 30%. Further aggravating this is the collapse of the tourism industry.

To appreciate the degree and severity of the problem, we need to understand the impact to the economy.

ASCE estimates that seaports contribute $4.6 trillion to the economy. That comes to about 26%  of GDP. Shipping at seaports provides about 23.1 million jobs. And it provides $321 billion in taxes to cities, states, and the federal government.

There’s no question the nation’s seaports have an outsize impact on the economy. Yet, investment for seaports is much lower than for repairing roads and bridges.

ASCE recommends Congress appropriate $1.5 billion for operations, maintenance, and new development. That’s for the near-term. For the long-term, ASCE recommends investing $4.5 billion to upgrade coastal navigation.

Finally, ASCE recommends investing $1.0 billion for the Port and Intermodal Improvement Program. That comes to total an investment of $7.0 billion or $43 billion less than for roads or bridges.

Next, let’s look at the conditions of the nation’s airports and what’s needed to upgrade them.

 

Fixing the Nation’s Deteriorating Airports

It’s no exaggeration to say that Covid-19 hammered airports. Both passenger and air cargo traffic declined significantly. Commercial travel dropped a stunning 95%. Air cargo did not drop as much. It fell 15%, which, when added to the commercial decline, proved devastating.

Those impacts adversely affected airport revenues resulting in a $23.3 billion loss. It’s no wonder then that revenue loss negatively affects modernization of terminals and technology. Thus, keeping pace with future demands is at risk.

ASCE recommends a $10 billion investment to modernize airports. ASCE also recommends Congress remove the cap on Passenger Facility Charges (PFCs). Airports rely on PFCs to upgrade their airports. Removing the cap will ease some of the pressure on funding.

Bear in mind these issues existed before Covid-19 struck. But, no doubt, Covid-19 accelerated and intensified these issues. As a result, they demand attention now, not later. And attention should focus on the long-term as well as the short-term.

 

Next-Generation Supply Chains Require Next-Generation Infrastructure

The nation’s infrastructure requires a remedy to keep the U.S. and its businesses competitive – nationally and internationally. That requires legislation that proposes both short- and long-term solutions.

Funding is a top priority. Yet, even more important is to approach funding from a comprehensive standpoint. The nation’s infrastructure problem calls for proactive risk management.

It’s safe to say, Covid-19 caught the government and most businesses by surprise. So any plan must address both immediate and future issues. That takes us to how next-generation supply chains will meet customer requirements.

The experience of 2020 tells us, Next-generation supply chains must be resilient and agile. They must be adept at managing or mitigating risk. A dilapidated infrastructure sabotages progress on those fronts. Thus, attacking infrastructure’s issues requires a strategic mindset.

Likewise, at American Global Logistics, we take strategic mindset when tackling our customers’ issues. Our approach is tailor-made for the challenges you face in the New Normal.

We believe in long-term partnerships because the issues facing our industry in a post-Covid-19 world demand a long-term view. We believe that reduces the uncertainty, volatility and complexity of the New Normal.

As 2021 approaches you have a choice to make. You can continue to prepare for the New Normal based on your existing plans.

Or you can contact us to discuss how you can prepare for tomorrow’s needs and challenges today.

 

Logistics Personnel: The New Key to Creating Future Value

The post-pandemic world has ushered in many changes. One prominent area of change relates to logistics personnel. If businesses take this change into account, they can grow and prosper.

Logistics personnel will differentiate businesses like never before. They will become a strategic asset that will add value in a meaningful way.

Personnel have always been important. But Covid-19 has magnified the value of employees in the logistics industry.

It’s important to understand the industry’s future personnel situation.

Proper personnel management can lead to competitive advantage. The opposite can lead to a company’s demise.

Let’s begin with reviewing the ways employees can generate value. Then, we’ll discuss the obstacles you’ll face and how to overcome them.

 

 

Logistics Personnel Create Value on the Frontlines

As you already know, the logistics industry is a customer-facing business. Logistics is a people business. Sure technology plays a major role in logistics today. But it’s people that make it all happen.

The supply chain process starts and ends with people.

During Covid-19, logistics employees found themselves on the frontlines. That’s when their contributions to the bottom line became visible. Indeed, their value to logistics became clearer to the global community.

With this recognition came a new sense of pride. Logistics employees became frontline ambassadors for their companies’ brands. More important, employees’ interaction with customers also heightened logistics’ personnel sense of value.

Logistics Personnel Create Value with Customized Solutions

As logistics employees served on the frontlines, they increased communication and collaboration with customers. They did so out of necessity.

Employees faced many challenges. They had to cope with wild swings in demand. They had to manage shortages in product availability. And they had to handle backlogs that resulted in longer delivery times. Dealing with these issues required closer customer engagement to identify solutions.

And given the unique circumstances caused by Covid-19, employees were useful in crafting customized solutions. Business as usual wasn’t possible under social distancing and other restrictions. As a result, employees tailored solutions to meet customers’ unique needs.

Thus, logistics personnel created value by striving to meet customers’ needs. And fervent focus on customers’ needs increased the opportunity for innovation.

 

Creating Value Through Innovation

Another way logistics employees created value was through creative solutions. Relying on standard business processes didn’t work during Covid-19. Thus, logistics personnel had to find new ways to do things. And they had to do so under duress.

Creating value through innovation is not new. But Covid-19 magnified it’s importance. This placed greater emphasis on teamwork. We saw integrated 3PL-customer teams develop innovative solutions through clearer and deeper insights.

And we found integrated teams can develop them more rapidly. “The coronavirus pandemic is accelerating innovations in supply chains, such as “contactless everything,” robotics in

warehouses, more cold storage warehouses, and autonomous vehicles for delivery.”(B.S. Jeffreys, Globe Street.com)

In brief, innovation will drive future success. Businesses that promote teamwork and work across organizational lines will thrive.

But to fully benefit from your efforts, you also must be aware of obstacles impeding value creation.

 

Obstacles to Creating Value and How to Overcome Them

Creating value during the pandemic was no easy task. Yet, many business rose to the challenge and delivered value. The level of effort, ingenuity, and urgency, however, must be sustainable.

With that said, it’s time to reveal the obstacles.

Industry studies suggest operations won’t revert to pre- pandemic operations. That means challenges will persist that affect logistics personnel. Those challenges will further intensify as competition for (qualified) employees heats up.

More to the point, employee acquisition, training, and retention will change dramatically.

The top concern among executives and employees today is employee safety. As companies reopen for business, they must do more than pay lip service.

They must provide masks, cleaning supplies, and Plexiglas to separate works spaces, etc. Businesses must put in place physical distancing, shift work, and remote work. And employers must install these measures in a balanced way. Remote work will likely continue because it offers flexibility and safety.

Companies that provide these basic safety protocols will attract new employees. These safety measure will also help retain employees.

Also as new career fields crop up, (e.g., data scientist), companies must focus hiring new employees. But hiring alone will be insufficient. To supplement new hires, companies must also cross-train.

Thus, training must adapt. For example, employees must be more flexible. They must embrace multi-tasking to make up for personnel shortages. Cross-training will become the norm. Both companies and employees must embrace this change.

Also, with many day care facilities closed, employees had to balance work with childcare at home. Until the CDC approves a vaccine, schools will rely on remote education, part- or full-time. This places an extra burden on logistics employees.

Yet, to remain competitive, businesses must continue to increase employee productivity.

Acquiring, training, and retaining employees will become a front-burner issue. Companies must

take the lead in this area to attract qualified employees. That’s especially important since the industry already suffers from personnel shortages.

Astute management of logistics personnel can help you set your course for the future.

 

How Do You Plan to Navigate the Road Ahead?

Covid-19 brought many changes supply chain management. One area that has changed and is changing is personnel. Understanding these changes can lead to competitive advantage and growth.

Failure to understand or underestimate them can hamper your success. It can stop your business growth in its tracks. Worst case, it can put you out of business.

If you’re unsure how you’ll manage acquisition, training, and retention of personnel, you’re not alone. Your best bet may be to seek a partner who’s prepared for the coming changes.

As a thriving 3PL, American Global Logistics is positioned for the future. We have a deep talent pool that knows how to create value. We take a customer-centered approach to creating customized and innovative solutions.

Contact us today to leverage our capabilities to gain competitive advantage.

 

Beyond the Pandemic: 6 Reasons You Should Hire a 3PL

In the post-pandemic world, companies competing without a 3PL partner are at risk.

To survive in the New Normal, your company must operate at peak performance.

Operating at peak performance requires a first-rate supply chain. That means your supply chain operations can’t afford breakdowns or even missteps. They could result in catastrophic failure and strategic loss to your competition.

Logistics and supply chain management have always been unpredictable, complex, and volatile.

But Covid-19 has intensified these three conditions.

Increased uncertainty, complexity and volatility typify the New Normal.

Thus, it’s critical to hire a 3PL to survive and thrive in the New Normal.

There are many reasons to outsource your logistics operations. So, we’ll home in on six crucial reasons you should consider outsourcing to a 3PL.

 

#1: Focus on your core competencies

In his iconic book, In Search of Excellence, Tom Peters popularized the strategy of focusing on your core competencies. Peters advised businesses to “stick to their knitting”. Not doing so could have dire consequences. You could risk getting sideswiped by your competitors.

Outsourcing will give you more time to strengthen your core competencies. The more time you spend on your core competencies, the more competitive you’ll be.

Hiring a 3PL allows you to become expert at what your business does best. As a result, you can focus your resources on what makes your business great. Running a business today is no easy task. And managing your own supply chain only adds to that complexity.

Honing your core competencies will give you a competitive advantage over your competitors. As you improve your competitive advantage, your top and bottom line will reflect that.

 

#2:  Optimize Your Supply Chain

Supply chain optimization has been all the rage for a while now. That’s because supply chain operations make up a substantial part of product development, delivery, and support.

Done right, optimizing supply chains offered a way to reduce costs, and cut them dramatically. As a result, many businesses set out to optimize their supply chains. They learned this was no easy task, yet persisted in the search for the Holy Grail, if you will.

Enter 3PLs. Today, many 3PLs specialize in optimizing supply chains. They, too, saw this is a way to add value by cutting costs. Over the years, much of that has been accomplished.

Many 3PLs still focus on cost-cutting. Yet, some 3PLs now focus on creating profit centers out of logistics.

Needless to say, your best bet is most likely to hire a 3PL, if you’re intent on optimizing your supply chain. If you want to reduce costs or monetize your supply chain, working with a 3PL offers you a smoother path.

 

#3: Leverage 3PL’s Experience and Expertise

We’re talking about complexity again. When it comes to logistics and supply chain management, expertise and experience matter.

Leading 3PLs have a talent pool most businesses will find difficult to replicate.  And why should they if logistics isn’t a core competency? In an era of increasing specialization, outsourcing the complex business of logistics makes sense.

Remember, 3PLs are expert at their core competency – logistics. Many 3PLs have built their expertise over time. And they also have the added advantage of experience.

When it comes to daily operations, cost control, automated payments, transportation, warehousing, import-export processing, and C-TAPT compliance, it’s tough to beat a 3PL. They’re  a treasure trove of expertise and experience that’s hard to replicate. And it’s likely costlier to grow that expertise and experience in-house.

 

#4:  Expand into new markets

According to a report by Statista, about 15% of businesses stated they are moving or plan to move out of China. With many companies leaving China, it’s critical to expand into other markets.

As your business emerges from the pandemic, revenue growth is likely a top concern. Growing revenues will depend, in part, on recapturing domestic demand. Another way to grow revenues is to capture demand in international markets.

But expanding into new markets, requires local expertise. Your business will need help in navigating laws, learning customs, and understanding cultures. That said, your business needs boots-on-the-ground to provide situational awareness.

Building that capability in multiple countries will require investments in time and money. However, leveraging existing capabilities resident within 3PL companies offers a viable alternative. That would shorten your time to penetrate new markets at reduced cost.

So, outsourcing to 3PLs for help in expanding into new markets is timely and cost effective. And that helps give you a competitive edge.

 

#5:  Reduce your risk exposure

Risk abounds in our industry. Supply chain management entails managing risk daily. We conduct business with perpetual risk. That’s an inescapable feature of our industry.

Some risks are predictable. Others are not. As a result, companies engage risk management in varying degrees.

A University of Tennessee white paper highlights three broad categories of risk. They include: (1) people, (2) the environment, and (3) supply chain performance. These include things such as labor strikes, health issues (Covid-19), hurricanes, tsunamis, supplier risk, theft, and cybersecurity.

Add to that economic uncertainty, product and materials shortages, and ship fires. Now you have your hands full as research suggests risk will increase. That makes risk management a front-burner issue.

Before he pandemic, many businesses didn’t give risk management its due. That will change. At most business, it already has. As pressures from risk increase, businesses will turn to 3PLs for help.

Reducing and mitigating risk requires a strategic approach. Covid-19 made that clear. Now, many companies are redoubling their efforts to tackle risk effectively and efficiently. You can bypass a steep learning curve as well as cost by hiring a reliable 3PL.

In fact, the study cited above lists risk management as a primary reason businesses use 3PLs. Reducing risk is no longer an ancillary function. It’s a strategic process that translates into competitive advantage when done right.

 

#6: Reduce your operating and investment costs

No discussion of business is complete without discussing cost. Also noted above, outsourcing to 3PLs grew because of their skill in slashing costs.

Cost management is still the top concern for shippers. Given their history, 3PLs are more than competent in cutting costs. For example, they excel in delivering all manner of logistics support cost-effectively. It’s tough to out-compete a 3PL that provides logistics services day-in and day-out.

And here’s another reason for partnering with 3PLs. They tend to adopt new technologies sooner than the businesses they support.

Also, by leveraging 3PL capabilities, your businesses can save on its technology investments. With that, 3PLs offer powerful capabilities to your businesses. They achieve that by delivering more effective and efficient operations.

Overall, 3PLs offer an enviable wealth of capabilities. Leveraged properly, 3PLs can deliver concrete competitive advantage that otherwise might seem elusive.

 

What you can expect when you hire a 3PL

Supply chain operations must continue to operate in unpredictable and volatile times. That was true pre-Covid-19. It’s even truer now.

You’re competing in an environment where only the fittest companies will survive.

As a quick summary, outsourcing to a 3PL partner can help you:

  • Allow you to focus on your core competencies
  • Optimize your supply chain
  • Leverage a 3PL’s talent pool
  • Expand into new markets
  • Reduce your risk exposure
  • Reduce your costs

Hiring a 3PL offers a powerful incentive to help you grow your top line and bottom line.

Why go it alone when you don’t have to?

Understandably, there are many 3PLs to choose from. How can you be sure you’re partnering with the right one?

You only need to look at a 3PL’s emphasis on customer service. At American Global Logistics we provide service that’s second to none. We make your mission our mission.

Contact us now to find out more about how we can help you. We’re ready to discuss your upcoming needs and challenges for today and tomorrow.

The Evolution of 3PLs: From Humble Beginnings to Critical Partners

3PLs started out as a good idea. They began as a convenience. Today they’re a necessity.

As the title of this post states, 3PLs had modest beginnings. They provided transactional services. As such, 3PLs provided limited services. That meant they also delivered limited value.

Yet 3PLs have become critical partners that deliver unmatched, value-added services.

You might wonder why 3PLs’ evolution has been so dramatic. You might also wonder why the future of outsourcing to 3PLs continues to grow.

The answer lies in managing uncertainty, volatility, and complexity.

Over the years, however, 3PL services have become more and more sophisticated. Globalization and advances in technology led to this dramatic evolution. Then customer expectations further fueled the need for outsourcing.

Expert supply chain management proved to be the antidote to uncertainty and volatility. It also proved effective in addressing customer’s increasing expectations.

To better understand 3PL’s growth, we need to look at look at 3PLs’ origins. Then we’ll look at how they evolved to become indispensable.

 

Deregulation Gives Rise to 3PL Industry

In 1980, the U.S. Department of Transportation passed the Motor Carrier Act (MCA). The MCA deregulated transportation resulting in a massive increase of motor carriers. For example in 1980, there was an estimated 20,000 trucking companies. By 2019, that figure had exploded to 1.2 million trucking companies.

Along with the explosion of new companies came an expansion of logistics services. Those services included warehousing and transportation enhanced by information technology. Many of these new motor carriers originated from warehousing companies. That’s how the 3PL industry was born.

So, it all began in the 1980s with the MCA. As deregulation took hold the industry grew even more, first in the U.S. and then globally.

 

Emerging Global Demand Spurs Growth of Supply Chain Services

In the 1990’s, the growth of logistics service providers skyrocketed. China and India spurred that growth as they opened up to international trade. Cheap labor and plentiful resources acted like a magnet. That attracted the attention and investment of many 3PLs, further spurring growth.

Moreover, as 3PL outsourcing  grew, that opened up opportunities for specialization. Thus niche markets developed as 3PLs specialized in serving single industries. A few examples are automobiles, construction, frozen foods, and furniture.

Specializing allowed 3PLs to compete based on expertise. It also facilitated both 3PL and U.S. business growth in international markets.

The achievements made in the 1990s served as a springboard for further growth in the 2000s.

 

New Technology Stimulates Even More Growth

We take it for granted today, but in the early 2000s, the Internet was coming online. As the internet’s and technologies’ capabilities grew, they also became more user friendly. As the speed and efficiency of computers, laptops, and mobile devices grew, 3PLs’ value grew.

Next, we saw demand for their services grow, as 3PLs became more effective and efficient. Use of these new tech tools demanded increased the need for expertise. And since 3PLs built that expertise, businesses outsourced supply chain management even more.

Logistics service providers now offered complex supply chain management services at reasonable costs. Replicating these capabilities would be cost prohibitive for most businesses. So this led to further growth of the 3PL industry.

 

New Roles Create Growth of Shipper – 3PL Partnerships and Value

As globalization and outsourcing increased, so did uncertainty, complexity, and volatility. Recall, one purpose of globalization was to bring the world closer together. Instead, due to trade wars, globalization became gnarled.

Also, recall the promise of technology/digitization was to simplify business. That included strategic planning, daily operations, and business intelligence. Instead, as technology solutions became more sophisticated, they became more complex.

Add to that the Covid-19 pandemic and the deregulation of transportation. Now we find ourselves in a much different world than we did 40 years ago. Over the decades as services expanded, so did outsourcing to 3PLs.

With the growth of outsourcing, we saw a transformation from the early days. In their infancy, 3PLs operated on a transactional basis. That is, they executed logistics tasks as a convenience for shippers. Shippers dictated tasks and standards, and 3PLs executed to those dictates.

But that changed – out of necessity.

Increased uncertainty, complexity and volatility demanded expertise only 3PLS could offer. Hence, shippers and other businesses formed deeper relationships – partnerships – with their 3PLs.

3PLs expanded their services beyond transactional tasks to conducting strategic business. This took place as shippers and 3PLs built a foundation of trust over time. As a result 3PL value-added services grew in scope and depth.

Included now we find 3PLs involved in all manner of logistics support – air, land and sea. Some examples are demand planning, end-to-end visibility, warehousing, packaging, integration, and business intelligence.

As you can see, 3PLs evolved from executing logistics tasks as a convenience. They now provide value-added services resulting in competitive advantage. Adding value to shippers top and bottom lines means having a deep relationship. Deep relationships foster partnerships that create extraordinary value through collaboration.

Shippers and 3PLs collaborate on strategic and operational matters. They work together to identify goals, set priorities and uncover hidden value. That’s where the 3PL logistics industry is headed. And it’s the perfect solution to navigating uncertain times.

 

How do You Plan to Navigate an Uncertain and Volatile Future?

Do you need help with managing your supply chain in today’s uncertain and volatile times?

Are looking to build a relationship with a reliable 3PL?

Perhaps you want to learn more about how a long-term relationship with a reliable 3PL can benefit you.

Whatever the case may be, why not contact American Global Logistics  today?

We’re no strangers to uncertainty and volatility. Despite the turmoil, we’ve succeeded by making our customers successful.

We’ve succeed because we always put the customer first.

That’s why we excel at meeting customer expectations.

If you think a close partnership with a 3PL could benefit you, then fill out this simple form.

We’ll contact you and look forward to answering your questions.

Big Data and Analytics: How to Increase Visibility, Velocity, Value… and Profits

Big data and analytics are necessary and important. Businesses that undertake big data and analytics initiatives have high expectations. Yet investments in many big data and analytics initiatives fall short. And many businesses fail to realize their expectations.

Does that sound familiar? If so, first understand you are not alone. Second, meeting your expectations is not as difficult as it may seem.

The secret lies in targeting your resources on what’s important. Doing that helps you avoid distractions and address what’s important. To maximize your investments, you should focus your big data efforts on three things. They are: (1) improving visibility, (2) increasing velocity, and (3) improving value.

Concentrating on these three areas focuses your limited resources on what’s driving supply chain management today. To do that you need to employ technologies and capture data relevant to these requirements. When you do that, you’ll be on your way to building an agile, resilient and sustainable supply chain.

Let’s examine how targeting each feature can help you build an agile, resilient, and sustainable supply chain.

 

Increasing Supply Chain Visibility

Today’s world of increasing uncertainty and constant volatility pressured supply chains like never before. We are experiencing that now. Witness the aftermath of Covid-19 and a hyperactive Atlantic storm season. We’ve seen fifteen storms this season, and hurricane season is not over.

Visibility helps to “see” what’s happening all along your supply chain. It allows you to foresee issues before they become problems. It enables you to sense and respond to disruptions. It also allows you to  keep costs low by providing information about your cargo, as it moves through each node of the supply chain. End-to-end visibility enables optimized decision making for performance and cost.

That results in a more effective and efficient supply chain. In other words, focusing big data and analytics focuses on improving customer service. Having real-time insight into moving cargo helps you make decisions on-demand. That, in turn, helps you meet customers’ expectations.

In fact, gaining visibility is now deemed critical. In a 2020 annual transportation study, respondents rated it the most important technology in 2020. That’s after not even being rated in 2018 and 2019. Furthermore, according to the same survey, visibility will remain the most important technology through 2023. (29th Annual Study of Transportation Trends).

Visibility is a must-have capability when operating in a more competitive and unforgiving ecosystem.

Now, let’s look at another must-have capability.

 

Increasing Supply Chain Velocity

The need for speed has always characterized the supply chain industry. That may be true. But

today it’s even more true. E-Commerce championed by Amazon and reinforced by the

pandemic, has made speed a competitive necessity.

Consumers in both the B2B and B2C world want their products sooner rather than later. Time is of the essence. It can make the difference between profit and loss. It can mean the difference between success and failure. It can make the difference between survival and extinction.

Focusing your big data and analytics program on achieving maximum velocity helps ensure you meet customer expectations. But meeting expectations isn’t simple. For example, you contend with multiple issues daily that prevent on-time delivery. And velocity can mitigate those issues.

When you focus data and analytics on visibility and velocity, you’ll enjoy a synergy that will make your business more competitive.

 

Increasing Supply Chain Value

Increasing supply chain value means providing tangible benefits that accrue to your customers. Achieving value may also seem elusive. But with a targeted data and analytics program, it’s achievable.

It with both tactical and strategic components. First, big data and analytics help contribute to value creation by focusing on performance as well as cost. That is, a sound program will offer you real-time data for managing in-transit cargo. Another example is the use of historical data to conduct “what-if” scenarios to determine the optimal outcome of a course of action.

Beyond that, more sophisticated capabilities, such as data mining, will reveal patterns in data that weren’t apparent. This takes data and analytics to a strategic level. You’ll see the Big Picture more clearly. That will enable you to build more sustainable solutions.

In short, big data an analytics will drive future supply chain development focused on creating value.

 

Building a Competitive Supply Chain for the Future

All in all, developing a big data and analytics program is critical to the success of your supply chain. Increasing competitiveness and volatility have made supply chains critical to business success.

So, when building a big data and analytics program, it’s critical to remain focused on what makes an impact. Today’s unpredictable and unstable world, calls for robust supply chains. In fact, only the most robust supply chains will thrive.

The wave of the future will demand supply chains that are agile, resilient and create value.

That’s a tall order.

Nonetheless, a targeted data and analytics program, can result in a resilient, cost-efficient, and durable supply chain. Future supply chains must: (1) improve resilience, (2) reduce cost, and

(3) improve sustainability.

If you’re unsure about how to meet your customers’ future needs and expectations, we’d love to talk to you.

Contact us at  American Global Logistics  to find out how you can maximize your resources, optimize your supply chain, and increase profits.

The Enduring Value of Relationship-based Partnerships

The 3PL business is all about SERVICE. And SERVICE is all about relationships.

Relationships are the key to providing excellent customer service.

At American Global Logistics, service is our watchword and our guiding principle. It guides everything we do in supporting our customers.

That includes providing industry competitive shipping rates. It permeates our culture. It also influences how we collaborate and communicate.

Those are the underpinnings of a powerful belief system that embraces relationships.

We value relationships because logistics is a business of relationships. Relationships help unlock potential hidden value. But building effective relationships isn’t easy unless you make it a priority.

Sometimes organizational structures impede beneficial relationships. Sometimes corporate culture impedes productive relationships. Sometimes technology’s to blame.

That’s why, we make relationships a priority.

We believe pursuing vested relationships leads to competitive advantage. Keep reading to learn more about why we believe in relationship-based partnerships.

Building Relationships through Teaming

We believe in teaming. It’s the bedrock of our mindset and our approach.

To build lasting relationships, we build teams within our organization and with our customers.

We provide a variety of individual functional services. But we don’t operate within functional silos. Rather, we team across functional services leveraging our company’s experience and expertise. In doing that we build relationships across the company. Everyone is a valued contributor.

But to maximize our effectiveness, we extend our teaming mindset to our customers. We work side-by-side with our customers to learn their needs, challenges and interests.

That sharpens our focus on meeting expectations. Moreover, it allows us to work in tandem with our customers in a collaborative manner. Plus, it promotes open and honest communications within and among teams.

As a result, our customers enjoy optimized, tailored, and innovative solutions.

Why We Focus on Building Deeper Relationships

Deep relationships generate many benefits. Here are immediate benefits you can expect as our customer.

  • Efficient Solutions: Our customer-centric approach ensures maximum utilization of resources to ensure we develop solutions without waste. In learning about your needs, challenges and interests, we home in on what matters to you most. Then we execute with a laser-like focus on your priorities.
  • Effective Solutions: Working in close collaboration with you helps us deliver effective solutions. We achieve that by teaming with you. That ensures we develop not only useful but also productive solutions. We can meet your specific needs by knowing what’s important to you.
  • Customized Solutions: A deeper relationship enables us to develop solutions that meet your needs. As we get to know you better, we gain special insights into your priorities. That helps unlock business insights that lead to actionable information. We then harness that information to customize solutions for you.
  • Innovative Solutions: We develop and deliver innovative solutions – both intentional and unforeseen. We do that by exploiting the science and art of innovation. We always take a deliberate approach to innovation. That intentional approach reflects the science of innovation. Yet, sometimes, despite our intentional approach, innovative solutions materialize on their own. That reflects the art of innovation.

But that’s not all.

These immediate benefits provide strategic benefits that make your business stronger and more competitive. They’re the result of our systematic approach to service.

Now let’s look at the strategic benefits relationship-based partnerships provide.

  • Agility: Making changes based on real-time information is more important today than ever. Our experience tells us relationship-based partnerships lead to agility. Agility improves your responsiveness in daily operations. In times of disruption, agility improves your supply chain’s resilience. Over time, your supply chain will transform itself into a responsive organization.
  • Sustainability: In today’s on-again-off-again world and unpredictable markets, sustainability is vital. Technology can be helpful, but it’s also disruptive, if you don’t keep up with change. Relationship-based partnerships guard against knee-jerk adoption of solutions. They ensure well-planned, results-oriented solutions.

One crucial lesson learned from the pandemic is the value of agility and sustainability. That is, companies must be able to respond in a proactive manner to crises when they arise. Also, they must also build sustainable businesses. Deeper relationships help build agility and sustainability.

American Global Logistics’ customer centric-approach embraces relationships. We believe it’s the key to unlocking hidden value. Our culture fosters relationships with you and with our employees. And we reinforce those relationships with constant collaboration and communication.

Most important, our approach is a durable one. By working in close partnership with you, you’ll withstand today’s frictions and tomorrow’s disruptions. Conquering the mundane to pandemics is easier when we tackle them together.

Contact American Global Logistics today to learn more about our relationship-based approach to providing unmatched service.