Welcome to 2022 – Get Ready for Changes

Posted on: January 24, 2022

Welcome to the new year. It’s gray and rainy here in Seattle just as it was last year. Some things don’t change! And, just like last year, the Pandemic is still with us and is expected to be so for some time to come. But, that is precisely what will drive substantial changes this year. Why?

First, and foremost, we will have to adjust to a “new” normal that includes COVID for at least the mid-term. That means the probability of more spikes in sickness, abnormally large numbers of people out sick from work, and continued caution.

Second, the US economy is expanding at the most rapid rate in over 40 years. We would expect household consumption to increase in good times even without the changes brought on by COVID.

We can expect consumer spending will not change radically from the current trend of more consumer non-durables and fewer services such as bars, restaurants, sports events, music events, and vacations. And that will translate into continued high cargo volumes.

Given these parameters, let’s look at why there would be a push for change. The enormous cargo volumes of 2020 were a surprise to everyone, not least the carriers and the terminals. Who would have thought business would do so well during such a historic bad time? But it did. Moreover, although back in January 2020 it was considered only “theoretically possible” that enormously high cargo volumes would continue, they did not only continue, they increased.

The management “C-Class”  CEOs, COOs, CFOs – will not be allowed by their owners, their boards or their investment banks, i.e. Wall Street, to be caught unawares again. They are being called on right now to develop strategies to change their business practices. Here is an example from Bloomberg News: Fearing the ax in 2022, CEOs sweat supply chain more than COVID.

In other words, CHANGE will be demanded by the C-Class to regain predictability in their business process. If they don’t succeed, they will be fired. Unpredictable supply chains will not be acceptable in 2022 and beyond.

We can already see change in the BCO / Carrier negotiations. Carriers are demanding longer term contracts and much, much higher rates and with more stipulations. The BCOs are agreeing, but with new terms for space guarantees. So, we can expect some movement away from heavy reliance on NVOCCs for space and back to direct carrier bills of lading for BCO cargo.

Furthermore, CEOs will demand concrete solutions; solutions that can be demonstrated and not just talked about. NVOCC and Forwarders that can show a customer technology that addresses the problem and demonstrate a concrete solution will win new business in 2022 and beyond.

The old approach of the salesperson who saying “you can have confidence in my company. We are doing our best” will not win new business in 2022 and beyond. Specific solutions will be more important than historical relationships and historical performance – not a reliable indicator these past two years – and override the fear of change.

Technology will drive a simple, logical solution path:

a) Shipment data must be captured at time of booking in a single system that can either feed the data to the carrier (e-Booking / SI) or manifest data with a Customs Agency. Only then can the data be of 1st tier accuracy.

b) Shippers will be required to upload all commercial documents (scanned copies) to that shipment file, and Customs Brokers will be asked / required to come onto the system and either feed the data into their Customs Entry System or Key Stroke it in. Either way, Customs Clearance data must be entered and submitted to the Customs Agency immediately after vessel sailing. That’s a BIG change!

c) Freight must be paid and shipment release arrangements made no later than 5 days before vessel arrival.

d) Containers will be approved to go into Peel Off Stacks in the terminal. The technology system will provide a list of approved, Customs Cleared and paid for/ released containers to the terminal 5 days before vessel arrival. These containers will go into the special Peel Off Stacks and not into the closed stacks where containers must be dug out when a trucker finally comes to get them and 10+ days of delay / demurrage are accrued.

e) Truckers will be dispatched to get “A Container” and not a specific container. The terminal will provide a special lane for those truckers (see Import Free-Flow Lanes at the Port of Los Angeles) so they will avoid long wait times. The terminal will load the next container from the Peel Off Stack onto the trucker’s chassis. The trucker / terminal will report the ID of the container they have been given back to the technology company at the Out Gate.

f) The Technology company will then look up the container number, identify the corresponding shipment, and let the trucker know where to deliver the container. At the same time, the warehouse and importer will be notified that the container is on the way.

Yes, this sounds futuristic. Yes, this sounds like it would work well on paper. In fact, this is what Walmart, Target, Home Depot, and several other top tier importers have already been doing in LAX / LGB for the past 6-7 years. But it won’t work for everyone if there is no way to create community volume. The technology company (yes, us) will be that natural community.

Yes, the BCO warehouses will push back. But the alternatives are no visibility, and 10+ day waits in terminals with no certainty when containers will be picked up PLUS the associated enormous Demurrage costs.

There are also very few other realistic options. CEO’s will demand predictability. They will weigh no delivery appointment predictability against the overall predictability of getting their cargo within 4 days of vessel arrival, and make sacrifices accordingly.

Here is my quote to live by for 2022:

“Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world are the ones who do.”

Excerpt From

Future Politics

Jamie Susskind

Logistic Global Trade Manager Software | Trade Tech

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