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Home » C.H. Robinson shares ocean logistics themes top-of-mind for shippers as contract season stretches on
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C.H. Robinson shares ocean logistics themes top-of-mind for shippers as contract season stretches on

May 23, 2023
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C.H. Robinson, a global logistics company and leading NVOCC across major trade lanes, reveals some of the themes influencing ocean market discussions as shippers work through an elongated ocean contract season, which typically wraps in April, and a rapidly-approaching retail peak season, which typically starts in August.

Background: In a recent global survey, C.H. Robinson shippers identified ‘having enough transportation capacity before the market tightens again’ as one of the top three risks to their supply chain this year. And, when asked what’s critical to their success, nearly half said ‘optimizing my supply chain while the market is softer.’

“Even in a soft market, it’s important for global shippers to build agility into their supply chain to mitigate challenges in an increasingly complex global landscape,” shared Matthew Burgess, Vice President of Ocean at C.H. Robinson. “After experiencing 2+ years of elevated transportation costs, many customers are turning to ocean shipping as a means of savings. While utilizing ocean where you can is wise, understanding short and long-term implications of some evolving ocean market factors is key to support smart decision-making during contract season. We see that reflected in shippers putting extra time and care into their planning.”

Drawing insights from conversations with some of world’s leading global shippers, C.H. Robinson shares key considerations, top-of-mind for shippers, as they navigate an elongated ocean contract season, softer market and options for building stronger supply chains long term:

Blank sailings & increased transit times: Low demand across most global trade lanes is leading to continued blank sailings, particularly on the trans-Pacific. As shippers expect consumer demand to remain low, steamship lines may decide to park vessels and/or increase blank sailings. This can add weeks to transit times, creating a domino effect of disruption down the supply chain unless you have a partner who can help you pivot quickly.

Despite ample capacity across trade lanes, nine new vessels are being introduced on the EU-Asia trade lane. However, the new vessels don’t automatically add more capacity due to slow steaming. Slow steaming, which adds approximately 6 days to the transit time, helps improve service reliability, but shippers will need to consider the longer time in transit when planning.

Port strategy shifts: Shippers shifted freight to the U.S. east coast spurred by pandemic-related backlogs and labor negotiations on the west coast. As negotiations continue, most shippers have not shifted back. In fact the Panama Canal which is used in Asia–U.S. east coast trade saw a record number of ships pass through the canal in 2022 according to Statistica. Now, as shippers predict negotiations are nearing an end, they’re looking to understand what a gradual shift back, or partial shift back, to the U.S. west coast looks like once an agreement is signed. Depending on how this plays out, shippers may find themselves needing to shift ports quickly to maximize efficiencies and lessen the risk for disruption.

Keeping LCL as a key shipping strategy post-pandemic: Less-than-container load (LCL) played a key role in keeping goods moving in the height of congestion during the pandemic and continued to emerge as a go-to ocean strategy post-pandemic by helping shippers move smaller amounts of inventory as they faced overflowing warehouses and pressure to reduce costs. In C.H. Robinson’s 2023 shipper survey, almost two-thirds said they plan to utilize or grow their LCL shipments in 2023 and over half are looking to shipment consolidation to drive freight efficiency.

Supply chain diversification: Companies are diversifying their suppliers, examining their manufacturing footprint and exploring reshoring, nearshoring and friend-shoring to be more resilient. As an example, one C.H. Robinson customer grew so quickly during the pandemic that they had to grab production lines wherever they were available. As a result, no one facility could make all their SKUs, so they had to ship from many production centers to many distribution centers and then group the product in all those places for further shipping. Now, they’re shifting to rationalize their manufacturing and place their production lines where it’s optimal for their transportation.

Optimization across modes: Shippers made a lot of compromises in the name of expediency during the pandemic, when getting product mattered more than cost. Now that’s flipped and shippers are looking to cut costs and optimize shipments across modes. “Choosing the ocean ports closest to their main distribution centers or consolidating their freight at origin to bring it all into one port at the best rate are some ways we’re helping shippers cut costs. Additionally, we’re helping them more strategically choose rail or truck to bring their freight inland, depending on which is most cost-effective at the moment,” said Burgess.

https://www.chrobinson.com/en-us/
Submit your logistics, material handling, or supply chain related company news in Supply Chain Quarterly's's Industry Press Room section or New Products section
Logistics Ocean Third-Party Logistics
KEYWORDS C.H. Robinson
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