LM Viewpoint: The mounting complexities of Global logistics

Last month, six leading logistics and freight transportation analysts joined me in our 2020 Rate Outlook webcast, the live version of our January cover story. I was in awe of the mental firepower we gathered at one time, and I was also not surprised that our panelists went about their individual
portions of the event with a heightened sense of caution.

“As we learned, uncertainty is certain in 2020,” contributing editor Brooks Bentz shared with me after the event. “Everyone’s crystal ball is significantly murkier than usual, as we’ve entered an unprecedented period of time.”

And in no place is that uncertainty more certain than in the global logistics arena. As we just witnessed, 2019 proved to be one of the most turbulent and unpredictable years on record in terms of international trade. Trade wars, economic sanctions, Brexit, the pending implementation of the United States-Mexico-Canada Agreement (USMCA) and other related agreements were daily headline news, putting international trade at the top of the agenda for global shippers.

With that in mind, the editorial staff of Logistics Management has focused much of this issue on helping global logistics operations better control what they can while moving freight through the world’s ever-puzzling borders. Starting on page 20, European correspondent Dagmar Trepins offers seven key areas that U.S.-based shippers will need to pay attention to as the global roller coaster ride continues in 2020.

“I’m sorry to report that the Brexit drama is still unfolding, while new trade disputes and customs threats seem to be popping up on a weekly basis,” says Trepins. “Advice from my contacts here in the EU to U.S. shippers is to strengthen your nerves, as there’s a confusing mixture of concern and hope in the region.”

Starting on page 26, contributing oil and fuel correspondent Derik Andreoli offers global shippers a comprehensive snapshot of what’s on the horizon in terms of ocean cargo capacity and rates. He explains the operational challenges that now face global carriers as they go about their deployment decisions for the year. With this, he warns shippers that any significant changes in sailings will send a ripple through global supply chain networks.

And, of course, the world needs to keep any eye on how the implementation of IMO 2020 is going to trickle through the budgets of nearly everyone involved in the global supply chain—something that represents the single biggest mystery that carriers, beneficial cargo owners (BCOs) and consumers have faced in decades.

“We’ve already started to see that the revamped fuel surcharge formulas have resulted in a wide range of fees being levied across carriers operating in the same trade lane, and the differences are not clearly tied to vessel size,” says Andreoli. “This, along with a lack of transparency, has left many BCOs with the impression that carriers are doing more than simply passing on the fuel costs.” Only time will tell how this plays out.

And while all of this creates mounting complexities, contributing editor Bridget McCrea reports that this is welcome news for providers of global trade management (GTM) software. On page 32, she dives into the state of the GTM software market and explains how the current global conditions are pushing adoption.

“It’s safe to say that nothing is easy about the 2020 global business environment, and it doesn’t look like there’s any real relief in sight,” says McCrea. “But the good news is that reports from ARC Advisory Group and Capgemini are indicating that the pressure is pushing more shippers toward automation—and that is never a bad thing.”