Noticias

International Logistics remain complex for the US Market

11/03/2019

In 2018, the logistics industry in the United States experienced an unprecedented level of volatility, making the already-complex scenario of international shipping even more challenging.

One of the primary factors was an Electronic Logging Device (ELD) mandate by the U.S. government which become fully enforceable in 2018. This mandate requires that drivers record their driving hours electronically, rather than using the traditional paper logbook. Since paper logbooks were easier to falsify, it was fairly common for truckers to drive longer hours, allowing them to move more freight more quickly and, as a result, increase their income.

This new regulation, in addition to enhanced enforcement regarding cab and trailer maintenance, resulted in a decrease of both drivers and trucks last year, at a time when demand was already outpacing supply (truck fleet utilization was at 100% for much of 2018).

At the same time fuel prices increased. The result of these various factors was a “perfect storm” of volatility and price surges as less-than-truckload (LTL) and full truckload (FTL) providers had more freight to move than they could readily handle.

Meanwhile, ocean transport was equally challenging, due in large part to several mergers and acquisitions that directly affected transport from South America to North America, such as Maersk’s purchase of Hamburg Süd and CMA CGM’s takeover of APL. This created a notable impact on shipping schedules, as the newly merged organizations adjusted routes and timetables multiple times (often with little or no warning). Ocean ports also struggled with shortages of operational chassis and drivers, so there were also delays at ports.

The overall result for shippers/importers such as Daabon USA was a very challenging year in the world of logistics. It is expected that the outlook for the trucking industry in the U.S. in 2019 will stabilize somewhat as large companies increase the size of their fleets (orders for new trucks were noticeably higher last year) and make strong efforts to recruit additional drivers. However, demand continues to be high, and the upcoming implementation in 2020 of a consolidated database of drivers with drug or alcohol violations may continue to generate attrition in the current trucking workforce.

The ocean shipping industry, on the other hand, is looking toward 2019 with uncertainty. The potential for a slowdown in the global economy and trade wars could have a noticeable impact. Oil prices may continue to rise as well, though several risk factors could affect the 2019 markets. We also continue to see unusual volatility in ocean transit times as the newly consolidated corporations are still adjusting their routes on a regular basis, which presents planning challenges.

Overall, 2019 is expected to be another year of unusual complexity for logistics in the U.S. Daabon USA’s dedicated logistics team has responded to these challenges with daily monitoring of transit times for inbound shipments, close collaboration with the team at Daabon’s headquarters as well with as our domestic warehouses and our logistics partners to maintain clear communication channels throughout the supply chain, and proactive planning and communication with our customers to ensure that every effort is made to minimize the impact of these logistical challenges on their palm oil supply.

 

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