This is due to a number of lingering issues including the pandemic; huge increases in energy prices; large fluctuations in the supply and demand for transport capacities; delays in port trans-shipment; and bottlenecks in hinterland transport. Furthermore, numerous countries are experiencing double-digit inflation.

Russia’s war on Ukraine also has effects on the supply and flows of goods, while disruption of supply chains and the West’s dependence on imports continues to intensify the debate about relations with China. Above all, there’s also the environmental challenge and the question of how to reduce CO2 emissions and deal with the costs for doing so.

And in the midst of these unprecedented challenges, industrial and commercial companies are analyzing their supply chains and searching for optimization tactics and alternatives. One possibility is to go back to more warehousing with the aim of greater stability in the supply of goods of all kinds—which has often not been running smoothly as of late. Still, the economy has no short-term alternative to international production and trade.

As we move forward, it’s clear that global supply chains will continue to not only need exceptional risk management solutions, but also improved climate friendliness. According to experts of the German Freight Forwarding and Logistics Association (DSLV), one thing is certain: the trend is to take every bit of CO2 reduction into account and leverage climate potential step by step wherever sensible and effective.

“Through innovative technology and efficient and digital processes, we need fewer resources and can reduce emissions. Switching to low-emission modes of transport, motors, and fuels is the most important way to further climate protection in the transport sector and logistics,” say DSLV experts.

Freight rates remain high

Just-in-time deliveries, a strategy followed for a long time, can often no longer be reliably guaranteed in many places. High-volume consigners have the advantage of market power to exert pressure on shipowners, port terminals, and transport companies to meet just-in-time delivery schedules.

In addition to delays in deliveries worldwide, the huge increases in freight rates caused problems for shippers last year. For 2023, consigners hope that freight costs will gradually taper down toward pre-pandemic levels.

However, Rolf Habben Jansen, CEO of Hapag Lloyd, pointed out at an online press event that the significant increase in fuel prices will mean that shipping lines will have to reckon with freight rates around 20% to 30% higher than two to three years ago. He expects that shipowners will face difficulties in long-term planning in general and will need to rely more on quarterly adjustments in services and rates.

Major seaports, such as Rotterdam, Europe’s largest port, will respond to increasing costs with moderate price hikes of around 2.5% to 3%, according to Siemons Boudewijn, COO of Port of Rotterdam Authority. Other ports are also expected to implement price increases for 2023.

Gradual introduction of a CO2 levy in the EU

Maritime shipping accounts for around 3% of global CO2 emissions, according to a report published in October 2017 by the International Council on Clean Transportation (ICCT). Around 60,000 larger merchant ships, including around 6,000 container ships, operate on the world’s oceans.

In October 2022, the International Chamber of Shipping (ICS) announced its goal of achieving climate-neutral shipping by 2050. In 2018, the International Maritime Organization (IMO) had already set the target of reducing emissions by 2050 to a level at least 50% lower than in 2008. The EU is planning to reduce CO2 emissions and to put taxes on shipping even earlier.

Within the framework of its Emission Trading System (EU ETS), a CO2 tax for ships of 5,000 gross tonnage (GT) and above is to be introduced in the EU in three stages from 2024 to 2026. Some shipping companies, such as MSC, have already informed their customers about additional costs in the future. Container shipping companies have estimated the added costs at about $192 to $202 for a 40-foot standard container on the Northern Europe-U.S. East Coast route.

DSLV’s experts point out that it’s important that the introduction of a CO2 levy in the EU region must not lead to any competitive disadvantages. Equal competitive conditions in international shipping are crucial for global trade. In the opinion of shippers and shipowners, the IMO should implement global regulation in a timely manner.

In the meantime, the development of alternative fuels for shipping is still in its early stages. The production, distribution, and market ramp-up of sustainable alternative fuels, as well as the expansion of shore-side power supply in sea and inland ports, are important steps towards reducing greenhouse gas emissions on the way to climate-neutral shipping.

Green shipping

Shipping lines are increasingly employing modern ships with significantly improved environmental standards as well as new propulsion systems and more environmentally friendly fuels. There’s no doubt that investment in climate-friendly transport chains is on the rise.

Among the world’s largest carriers, companies such as Maersk already offer their customers special “green shipping offers.” EcoDelivery, for example, takes climate-neutral fuels into account. These are, for example, waste vegetable fats and oils from the food industry. The CO2 saved is certified for the shippers’ carbon accounting, while a total of 3% of Maersk’s total cargo volume was carried with climate-neutral fuels in third quarter of 2022.

The EcoDelivery surcharge for a 40-foot container in major trades, such as the Far East and trans-Pacific, was around $200 to $300 per box in 2022. If you convert that to, say, the 30,000 T-shirts or 6,000-8,000 pairs of shoes that can fit in such a box, at $0.007 per T-shirt, that’s not a huge added cost per unit of product.

The number of consigners interested in EcoDelivery is increasing steadily, according to the shipping company. According to Maersk, customers already using EcoDelivery include H&M, Electrolux, Lenovo, and the Danish fashion group Bestseller.

The shipping company recently ordered 19 container ships powered by climate-neutral green methanol. From June 2023 to 2025, one feeder ship and 18 large container ships with slot capacities of 16,000 TEU and 17,000 TEU will be put into service under the Maersk flag.

The carrier is also moving towards climate neutrality landside and is building or leasing very low-emission warehouses and using electric vehicles at its own terminals. To date, 300 e-trucks are already in use, mainly in the United States, and a further 140 e-trucks have been ordered.

Now, what does this have to do with your logistics operations?

It’s simple. Your drivers are the superheroes and your planners are their support team.

Think about it. Your drivers are out on the streets battling traffic, roadworks, and whether to meet your SLAs. But who ensures that they get there on time to pick up and drop off shipments? Who ensures that your drivers make as few empty trips as possible?

Their support team, of course – a team made up of your logistics planners and the best decision-support technology.

While your planners don’t help save the world from evil villains, they have to manage daily disruptions in the form of vehicle breakdowns, port congestions, brutal weather conditions, and driver shortages. But the question is, are your drivers getting the most out of their support team? Do your planners have what they need to generate not just good, but great plans? Not yet.

The best support team in logistics planning

To get not just good, but great plans, you need to equip your logistics planners with the best decision-support technology – intelligent planning and optimization software.

An intelligent planning and optimization software like Quintiq is designed to help your planners make better decisions, faster. It frees up your planners to focus on refining optimized plans by applying their years of experience in logistics planning.

Imagine this: A shipment is due to be delivered and a rush order comes in. But your planners know that the shipment due today can be pushed till a day later because the customer has a good relationship with your company.

The best decision-support technology would give your planners insight based on due dates, volume, and drivers available. When combined with their experience and soft knowledge, this would enable them to achieve the ultimate goal: Maximize operational benefits and increase profitability.

What’s possible when you empower your planners?

By empowering their planners with the Quintiq planning and optimization software, some of the world’s leading logistics providers, including P&O Ferrymasters and DHL, have experienced these significant improvements:

Increase in resource utilization by 12%
Delivery performance up by 25%
Costs reduced by 12%
You and I know that even the smallest percentage can mean millions in savings. Join the ranks of leading logistics providers by empowering your planners to do more for your bottom line and be the best support team for your drivers.

While nearshoring may be a great way to gain access to specialized resources, important things must be considered before embarking on such an endeavor. It is important to evaluate the potential complexity of working with a different culture and language and the cost of adapting existing processes and teams to the new environment. In this article, we will explore what exactly nearshoring is, the differences between nearshore and offshore, and how businesses can benefit from it.

What Is Nearshoring?

Offshoring your company’s tasks or operations to a nearby provider can be an advantageous business model, often referred to as nearshoring or regional outsourcing if the chosen destination is within the same region.

By nearshoring, businesses can cut labor and transportation costs while gaining access to a deep bench of talented professionals. Moreover, they can easily transcend any language barriers or cultural differences encountered with offshore outsourcing.

What Is Nearshore Outsourcing Main Function?

Nearshore outsourcing is the perfect solution for businesses looking to expand operations beyond their own locations and hire skilled workers while maintaining an exceptional standard of service. By partnering with a nearshore outsourcing company, companies can access qualified staff from countries situated nearby without compromising productivity or quality.

These Are the Benefits of Nearshoring

Nearshoring has several agile methodologies, making it an excellent option for businesses looking to outsource specific processes or job functions. These consist of the following:

• Lower costs in labor, transportation, and other expenses.
• A greater level of trust between the client and provider due to cultural similarities.
• Access to skilled personnel who are more familiar with the latest technology.
• Reduced risk of data loss due to compliance requirements.
• Improved communication and collaboration between teams.
• The ability to scale up or down quickly and easily.

When Did Outsourcing Begin?

The concept of outsourcing dates back to the 16th century when wealthy British landowners began sending clothing production overseas to India to save money on raw materials and labor costs.

Soon after these steps, other countries followed and began an outsourcing system of manufacturing jobs. Towards the end of the 20th century, large organizations sought to lower costs without compromising on product or service excellence–resulting in the widespread popularity of outsourcing among multinational firms.

The concept of outsourcing dates back to the 16th century when wealthy British landowners began sending clothing production overseas to India to save money on raw materials and labor costs.

Soon after these steps, other countries followed and began an outsourcing system of manufacturing jobs. Towards the end of the 20th century, large organizations sought to lower costs without compromising on product or service excellence–resulting in the widespread popularity of outsourcing among multinational firms.

However, researchers for the Economist Intelligence Unit (EIU) note in a recent report that logistics managers face a slew of additional complications that will require today’s freight forwarders to come up with new and innovative solutions.

According to EIU analysts, most multinationals are optimistic about future trade activity with the United States. Indeed, the United States accounts for 13% of global imports and 9% of global exports and will continue to remain a key market for companies in Europe and Asia. In fact, two-thirds of respondents in the EIU survey anticipate that their company’s trade with the United States will increase over the next five years, with over 43% expecting an increase of 10% or more. This means that freight forwarders will have yet even more pressure to perform in the future, add analysts.

“Companies face a number of issues in trading with the United States, but none of these are perceived to be insurmountable,” says Andrew Siciliano, practice leader for trade and customs at advisory firm KPMG, U.S. “Exchange-rate volatility presents the largest issue for companies, with 41% of respondents citing this as a concern.”

Siciliano also observes that close to one-third of EIU survey respondents cite transport costs and delays, trade-related infrastructure, and making payments as their top challenges. Other challenges cited by close to 30% of respondents are access to trade finance, unfair competition, communication challenges and cultural hurdles.

“However, many of these are challenges that companies experience in other markets as well,” adds Siciliano, “and the overarching consensus is that these challenges are not viewed as deal-breakers when it comes to trading with the U.S., given the sheer size of the market opportunities there.”

Embracing complexity

In the meantime, freight forwarders will be expected to help shippers identify and navigate premium trade lanes as well, says Cathy Morrow Roberson, president of research firm Logistics Trends and Insights.

“The main takeaway from recent studies and surveys is that forwarders must add much more value to their services by mapping out a sustainable distribution strategy even when the transport infrastructure is less than entirely reliable,” says Roberson.

New forwarders meeting challenge

Meanwhile, the supply-chain consultancy Armstrong & Associates estimates that global freight-forwarding market has grown at an average rate of about 12.3% a year since the 1990s. It amounted to about $238 billion in revenue in 2015, but that surge has slackened by almost 5% in recent years, coinciding with a slowdown in China’s economic expansion.

“Given this reality, the economies of scale still favor the mega forwarders,” says Evan Armstrong, the firm’s president. “They have the economies of scale to leverage ocean and air cargo rates that smaller players simply don’t have.”

But forwarding upstarts like San Francisco-based Flexport takes issue with this, noting that technological breakthroughs are rapidly changing the landscape. According to Ryan Petersen, the startup’s founder and chief executive, shippers have been paying too much for simple services that can done with a lean and responsive staff schooled in the nuances of digital commerce.

“Because no company is big enough to have all the assets required—trucks, container ships, cargo planes, trains, warehouses, and more, in every country on earth—freight forwarders have to use multiple asset owners on any given shipment,” he says. “That’s what we do.”

Andrew Lubin, who currently teaches a variety of logistics management and international business courses at Rosemont College, agrees, contending that small and nimble companies like Flexport “are the new wave” of the forwarding future.

“While the giant forwarders continue to buy and resell container space at a huge profit, new business models are competing by building global databases,” says Lubin. “By doing this, they reduce their overhead and save shippers money.”

Israel’s Freightos is another rising star, Lubin points out, noting that it too offers software that provides Customs clearance while booking ocean and air cargo seamlessly through the internet.

Dr. Zvi Schreiber, CEO of Freightos, maintains that the forwarding industry is moving on two parallel paths, with most major transport carriers continuing to work with the larger established players while striking up relationships with new companies like his. “This is a delicate ecosystem for the time being,” he says, “comprising companies of all sizes and influence.”

Adam Compain, founding CEO of the “predictive logistics” forwarder ClearMetal in San Francisco, says that deep math and cloud technology are transforming the industry. “In today’s world, a lot of forwarding inefficiencies can be addressed without costing the shipper any more money,” he says. “The big ocean and air carriers are moving toward digitization, too. There’s not much more room for bankruptcies or more alliances in the global marketplace.”

Old guard response

While scores of venture capital upstarts threaten the forwarding status quo, the giant freight intermediaries are beginning to work with them while investing in their own technology.

Kuehne + Nagel, for example, recently launched KN FreightNet, a digital product providing instant quotation, online booking as well as track and trace for air and sea shipments. In the scope of its venture platform, the mega forwarder engages with startups and explores new business opportunities broadening its digital offering and customer base.

“Using our core competence and scaling-up our digital mind set, especially in the area of data management and analytics, we develop products designed to bring additional value,” says Dr. Detlef Trefzger, CEO of Kuehne + Nagel Group. “We consider digitalization not as disruption, but as part of our ongoing business evolution.”

Building on its market intelligence, Kuehne + Nagel created “global Kuehne + Nagel indicators” providing estimates for key economic figures, such as trade balance and industrial production, based on the forwarder’s insights into markets and data of global trade flows.

This digital revolution has not been without its mishaps, however. DHL’s freight forwarding division has been struggling for the past two years to recover from a failed IT modernization program—the costly and infamous “New Forwarding Environment” initiative that led to a shakeup in the company’s management structure.

Tim Scharwath, the newly named DHL Global Forwarding CEO, hopes to reverse that fortune. “What is clearly needed here is a unified global technology platform that can help deliver online quotation and booking,” he says. “Everyone is moving in that direction, and logistics managers will come to expect it from all forwarders—regardless of size.”