Capacity has just about reached its limit on the global stage as shippers and importers continue to brave exorbitant rates and ever-increasing tightness.
Third-party logistics services provider GEODIS echoed one U.K.-based forwarder’s sentiment that the “perfect storm” troubling ocean freight waters following the unprecedented Suez Canal blockage has only worsened. Rates continue to approach unsustainable levels on Asia-Europe lanes, which is hurting the freight’s movers and end consumers.
The same scenario is unfolding on the Atlantic, where rates have shot off the charts. Just one look at SONAR’s Freightos Baltic Daily Index — an average of several lanes between Europe and the East Coast of North America — shows that rates have hit levels unseen in recent years.
Nura Kruciak, vice president of GEODIS’ Client Success Organization, shed some light on why trans-Atlantic rates have almost doubled in the past year, explaining that it’s been a multitude of factors.
The Suez Canal fiasco and, of course, the coronavirus pandemic have played a huge role. But Kruciak noted that American shippers have also suffered from container and chassis chaos at both East and West Coast ports. However, Kruciak argued that it isn’t a volume issue but a location issue when it comes to port congestion — assets are often in the wrong place at the wrong time. This, coupled with the reduction in scheduled sailings on certain trade lanes, has made constraints seem an almost permanent addition.
Industry rates are normally settled with customers in the early summer months, but Kruciak said it’s been especially difficult this year to lock down contracts as freight forwarders demand more and more rate adjustments.
“There’s a lot of saturation right now in the ocean market. There are situations where bookings are either being rolled or canceled, and some of our customers are becoming really concerned, so they’re moving to air,” Kruciak said. “Now we’re seeing a lot more volume running through air operations because of what’s happening in the ocean market. GEODIS is seeing a shift in how our clients are having to move their product and how the ocean carriers are pricing their services.”
It’s no longer wise to stick to your guns as volatility, both domestic and global, has shattered the status quo. In fact, the key to surviving in an adapt-or-die environment is to brace for the unexpected; no one can predict the future, but tomorrow’s freight leaders are those acting boldly today.
But acting with such confidence requires the right tools. GEODIS’ Intelligent Real-Time Information System (IRIS) is the eye-in-the-sky ocean and air shipments visibility platform. This global all-in-one tool provides online booking, pricing, invoicing, documentation, reporting, and track and trace of imports and exports — all in real time.
Kruciak described IRIS’ intuitive user dashboard’s versatility, providing customized snapshots of shipments, invoices and shipment statistics, and explained how its exception alerts keep stakeholders informed throughout the supply chain. In addition, stakeholders can stay in the know at all times with the IRIS mobile app, through which shipments can be booked and managed in just a few taps of the screen.
“IRIS is a very comprehensive tool, and we’re able to quickly add more skill sets to the tool if needed,” Kruciak said, describing the needs of one client that wanted to share GEODIS’ visibility with 610 of its customers so they could easily keep track of their shipment documents.
“I’m in the process of registering all 610 of their customers onto IRIS, and every time a shipment is going to one of their clients, they’re going to get an alert,” Kruciak continued. “By the time the shipment arrives, they’ll be ready for customs clearances. As global shippers, partnering with GEODIS has been a proactive move for them in the sense that their end customers are now getting visibility that they didn’t have before.”
Visibility needs have reached an all-time high for supply chains as consumers restlessly return to their pre-pandemic spending habits. It’s not just e-commerce that’s seeing heavy traffic; parking lots are once again filling up at shopping centers and restaurants, as well as sporting events and concerts.
“We’re now heading into peak season, and the U.S. economy is super hot at the moment. It’s a tough environment, and I’m unable to see the end of it,” said Maximiliano Bernaldo, GEODIS’ SVP of business development in the Americas. “I don’t anticipate things to change for the rest of the year. In fact, I think things will probably be similar in the first half of next year, maybe not as stressful, but keeping inventory replenished will continue to be the name of the game.”
Naturally no two companies are alike, especially regarding their visibility needs. This spurred GEODIS to develop a turnkey solution for companies to manage logistical and physical data and to oversee logistical and financial flows.
Control Tower allows users to manage purchase orders and oversee their fulfillment and invoices to improve service quality overall throughout the supply chain.
“GEODIS’ flexible nature makes our services boutique rather than cookie-cutter. We actually work with customers to find specific solutions for them,” Bernaldo said, describing GEODIS’ ability to build unique solutions as what sets it apart from other 3PLs. “We have the toys to deliver solutions within the supply chain, from contract logistics, transport management, fourth-party logistics service providers, control tower, and of course, air and ocean freight forwarding.”
As the global shipping community wades further into a digital environment, reliance upon visibility tools has reached new heights. But soon enough, the needs of the industry will stretch beyond end-to-end visibility.
Raziel Bravo, GEODIS’ vice president of strategic management, said it aims to be a leader in forward-looking data analytics, with the ability to maneuver customers around predictable disruptions by giving them alternatives.
”We’re venturing from descriptive to predictive analytics, and now we’re looking into prescriptive analytics,” Bravo said. “At GEODIS, we must take steps further to embrace emerging technologies because that’s the only way to service the needs of our customers further while remaining competitive in the market.
“We’re not just looking at customized solutions based on fast data; we’re providing customers with data analytics that’s forward-looking so we can help them overcome any disruption that might occur.”
Mile-high spot rates and container issues look to remain constant struggles for importers and global shippers through the end of the year, as freight enters a season peak in addition to the massive influx of Americans looking to return to their pre-COVID retail and food-service spending habits.
Bernaldo added that certainty is what customers are longing for most amid these conditions, especially around cost. But any sort of certainty is difficult to come by for those struggling to secure fixed capacity.
“GEODIS has the elements of a big company, but we’re still very boutique-oriented,” Bernaldo said. “We have the ability to really focus on the customer so as to keep them from getting lost in a big network, which is often the case for some of our bigger competitors.”
Bernaldo spoke of GEODIS’ unique ability to secure capacity for its customers. Amid the craziness of the past year, he said the 3PL has landed favorable contracts for its clients with steamship lines in both Asia and Europe, purchased new containers for clients in Vietnam and China, and even started chartering vessels in certain markets. He explained that GEODIS’ willingness to invest in its clients creatively is well worth the risk.