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freight shipment

How Carrier-Shipper Relationships Can Stay Stable Through Unpredictability

February 1, 2022 by Levinson and Stefani Leave a Comment

“This is a very unique market and the first time in recent history where the market favors the carrier,” said director of enterprise execution for Emerge, Conner Doran. “In the past, shippers have over-projected on volume to create a buffer in order to protect themselves and their demand fluctuations. Typically, this results in the carrier not realizing 100% of the awarded volume.”

Doran’s comments come as the trucking industry faces unpredictable rate negotiations in the current market, especially as shipper and carrier relationships are easily becoming more strained than ever around logistical aspects.

“Now, we have seen the market flip in favor of the carrier side,” Doran continued. “Carriers are removing some of that capacity that was originally allocated towards that award to play in the spot market.”

Now, skyrocketing demand and rates have been an expected characteristic of the market itself since 2020, especially with surging e-commerce activity, shortages, and bottlenecks all playing a part in the strain.  Additionally, the abrupt and severe market changes at hand have led to unpredictable service capabilities, constantly-varying rates, delays, expensive spot transactions, and unsatisfied customers.

According to Doran, these major market inconsistencies are being worsened due to a lack of clarity or proper forecasting from a technological perspective, although other industry leaders expect the market to rebalance itself significantly by the middle of this year. This is probably due to the likelihood of companies beginning to finally recover from shortages brought about by the pandemic and as the transportation industry itself learns how to adequately adapt to the ever-changing habits of American consumers in a pandemic era.

Shippers are also beginning to avoid yearlong, less-than-ideal rates by aiming for quarterly or monthly bid cycles, which is likely to remain healthier for current carrier-shipper relationships as opposed to long-term rate negotiations. Still, such negotiations will continue to be strained over the next few months, with shippers not often wanting to accept the present-day, highly-inflated rates for the long term.

Senior full truckload analyst at Stanley Black & Decker noted that his company has indeed transitioned from yearly bids to monthly bids as it doesn’t see the need for yearly pricing commitments from carriers right now. During bid time, Jolles also noted that all parties should keep a close eye on all small details.

Still, carriers and shippers alike can act upon a variety of methods to keep relationships stable. According to Jolles, if both parties commit to solid service and transparency, and if carriers are sure to “ask questions, over-communicate, and meet performance requirements,” the relationship can remain strong and shippers can stay confident.

At their facilities, shippers should also make sure to prioritize improved driver experience, which should include avoiding high dwell times, allowing for shipper-of-choice behaviors, and working to improve overall operations. Wasting money and time through long dwell times can easily strain even the best of shipper and carrier relationships, noted manager of warehouse and transportation systems analytics at Hormel Foods, Tim Whitson.

Innovative technology should also be embraced by both carriers and shippers to keep relationships solid, as the new technologies making their way into the industry have been allowing for more transparent and smooth negotiations, accurate forecasting, and more reliable data aggregation so that all parties involved in a negotiation are seeing all aspects laid out thoroughly.

“Shippers talk about how they need to improve operations and dwell times at facilities,” explained Doran. “Utilizing technology such as the RFI feature and the Emerge Freight Procurement platform allows a shipper to ask these questions to their partners and consolidate all that information at the click of a mouse.”

Of course, communication is key, and this tech can boost partner communication in order to avoid mistakes and service issues that would hurt the relationship itself. If concerns and complaints can be relayed in real time, major issues can be prevented much more quickly and allow the shipping process to stay as efficient as possible.

Shipping Emissions Rise Again During Pandemic-Caused E-Commerce Boom

October 15, 2021 by Levinson and Stefani Leave a Comment

“Global trade is growing, and that means emissions will come up from transport,” said head of agricultural trading company Cargill Inc., Jan Dieleman. “Container fleet is speeding up, so emissions from that sector are going to be up, not down.”

Emissions in general are rising rapidly once again following the ever-increasing e-commerce orders brought about by the pandemic. With more people than ever heading online to buy their household items, clothing, and just about everything else, more and more fuel is burning with the heavy demand on container fleets.

Additionally, we’re in the midst of a natural gas shortage as these shipping emissions numbers meet new heights. Electricity production is turning toward further fuel oil and coal usage, even though the sector previously predicted emissions would be much lower this year than in 2020.

For Cargill, the company regularly brings in hundreds of vessels to meet the demand of the maritime industry, and while doing so, works to monitor fuel consumption and emissions numbers as accurately as possible. The shipping industry itself is a bigger source of carbon emissions than many realize–the American shipping industry releases more carbon than the United Kingdom and France combined.

The industry has pledged to cut this emissions in half by the year 2050, even while global trade continues to grow. 

According to Dieleman, COVID-19 has caused further employee shortages that is leading to port congestion and heavily delaying container loading and unloading processes. Some freight trade companies have begun shipping their loads in bulk products instead of in regular containers, he added, noting that freight shipping activity is “back to the heydays.”

Additionally, although commodity shipments (including shipments of coal) are expected to remain steady into 2022 and coal trade will likely boom when China lifts import restrictions during the winter, energy prices are skyrocketing, and emissions will likely not become as bad as they were at the worst around 2008. This is due to so many industries currently being focused on efficiency and fuel-saving technology–especially within the supply chains.

The International Maritime Organization aims to reduce emissions pollution as quickly as it can, but is still working out the process of doing so as the organization only has oversight regarding shipments at sea and not the entire emissions life cycle. Some potential solutions include a carbon dioxide tax as well as a research and development fund of $5 billion. IMO also announced its intention to restart discussions surrounding potential market-based measures in a formal capacity–a carbon market-adjacent initiative.

Industry experts are also looking to a possible increase in tanker recovery sooner than later as the pandemic’s effects lessen, a likely change from the current dry freight boom that continues on–especially as people once again begin spending money on experiences, outings, and travel once again. As of now, the shipping industry hasn’t been ordering sufficient numbers of ships, and still needs clear emissions standards in order for new investments to come in.

“If you are a ship owner and you want to add capacity, what are you going to buy?” Dieleman asked. “What technology are you going to buy? Who is going to finance you and under what [kinds] of conditions? So, we’ve seen very little ordering the dry bulk.”

He explained that right now, the outlook of the industry’s short-term future is clear.

“If you take a little bit of growth in global trade going forward and the number of ships coming to the water, you have a pretty constrictive picture.”

Because IMO works globally and must take into account all intentions and interests from countries across the globe, the potential new carbon market has seen little progress. The United States’ industry often looks to that of the European Union, which has recently announced its goal in including shipping within its Emissions Trading Scheme.

“To some extent, it would be great if it’s all regulated globally, but I think the issue you’re going to have is that it’s not going to go fast enough,” Dieleman added. “It’s going to be probably the lowest denominator. And why would you not let certain jurisdictions go more aggressive?”

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