News digest. 14 Nov
The new era will be all about technology revolutionizing logistics and transportation markets that are already welcoming fruitful collaborations among research institutions and major players.
Technocrats can definitely cheer “hurray!” as companies start switching their focus toward technical development that is absolutely essential if one wants to build resilient supply chains that would correspond to the challenges of the market in the present as well as in the future. Maersk is striving to be the leader in every initiative and teaming up with MIT Center to accelerate its abilities and renovate its strategies based on collaborative research and mutual commitments. This partnership follows Maersk’s recent Maersk long-term strategic work with wind turbine manufacturer Vestas for all containerized transport. Meanwhile, educational institutions tap into the big game in the Netherlands under the leadership of the Port of Rotterdam. They are going to access the ports’ capabilities and current market trends from the scientific point of view and provide solutions that could help improve general management and leadership. The design of the future training program for employees is also included; it aims to tackle the problem of underqualified labor.
At the same time, the debates and reflections on the consolidating of the industry continue. There are emerging players who actually start seeing it as an opportunity for diversification of their strategy rather than a monopoly threat. They also believe that their “neutral” status on the market will be more appealing to the customers in contrast with rigorous giants that are driven, according to these commentators, only by their greed. Besides, the cultural divide between the groups is just too great and allows everyone to find their niche and continue to grow. This is a controversial premise because it is impossible to doubt that some big players’ expansion strategy has limited the ability of some freight forwarders to access capacity on its ship on the main trade lines. In addition, such giants start taking over e-commerce in the light of a targeted acquisition strategy. This is a major shift in contractual relations that is highly difficult to break through if you are a small company. Will it be a good cop vs bad cop kind of competition? The customers will have to decide. It is challenging to fully concentrate on the long-run strategies when right here, right now, cargo is still not being delivered on time – schedule reliability remains one the sorest pain points. Even the attempts to omit the troublesome ports cause no improvement as everyone misses the deadlines. If congestion at the Ports of LA and Long Beach seemed insane, it is now breaking all records as, according to the reports, ships are literally queuing up 150 miles from shore. In the desperate need of space, the Port of Savannah has to use a small airport in Georgia as a temporary overflow yard. Never have the new marine transportation system ever been needed as it is now. Moreover, this chaos is sliding down towards intra-Asia trade lanes. There are large amounts of cargo stuck at transhipment hubs in the south-east, and many carriers keep blanking their sailings that, in turn, keeps pushing spot rates further down.
In addition to the challenging situation at sea, the congestion of some European airports is contributed to the rising competition between forwarders. As a response, Flexport has launched a weekly air charter service from Hong Kong to Paris-CDG Airport. However, any new steps are difficult to implement in the EU due to the recent new customs regulations in Germany. Any cargo sent to Frankfurt, for example, will take more time to clear, thus the delays are inevitable.
To deal with the growing demand, railway companies are trying to provide new services as well. The recent one takes place from Helsinki to Zhengzhou provided by Nurminen Logistics. The choice of Helsinki is a fair one as it is a hub for both – rail and port connections. Besides, there is hardly any congestion, so in the rush of the holiday season, the line will be a savior. Will the anticipated Rail Baltica be as efficient? Unfortunately, the long-awaited project will not meet its deadline by 2026 because of the classic issue – rising construction costs. COVID-19 is not the only one to blame. The miscommunication among the involved parties postponed the signing of the agreements that could boost the development. Spain could do better with its railway innovation as well, experts say. Despite sufficient infrastructure, the country simply is not using its potential. The problem originates from such issues as the fact that there is no level playing field between road and rail transport regarding the pricing offers and the external costs paid, and the government has been falsely prioritizing passenger freight over transportation. Perhaps, more strategic partnerships could boost the improvement. For instance, the restoration of trade via rail between China and North Korea is enormously changing the situation in a positive direction.
It is clear as daylight that the industry needs a technological push, and it is arriving. As companies start teaming up with the research institutions, this quintessence of efforts will eventually bring the needed technology. Sustainable development serves as proof. After continuous studies, Logistics UK has introduced a route map to decarbonize the sector.
