Chairman’s Message

The first months of 2022 have seen a couple of curveballs thrown our way. The transport and logistics sector has teetered under economic, industrial, and geopolitical pressures.

An Inclement Season

We have seen the rise in fuel prices that have impacted all modes of transportation. The pandemic-induced restrictions in oil production would require time to shake off and scale to capacity. The present Ukraine war has further imperilled the global commodity markets. International sanctions on Russia, one of the largest oil exporters have deepened the situation. All this is in addition to the foregoing supply chain challenges and labor shortages.

The sector witnessed soaring inflation and a weaker dollar. Crude oil prices have reached record levels in the US, and the current volatility exposes the uncertainty in the global energy landscape. There has been a weakening in connectivity between North Asia, including Japan and South Korea, to North America. This has led to more short sea services to China and trans-shipment to trans-Pacific services.

Meanwhile, the closure of the Ukraine – Russia air space would translate to longer lead times, and the impact of this crisis would only be realized in the months to come. Further, China reeling under strict quarantine measures would create further production and transportation disruption. We can expect higher cost pressures, especially between Asia and Europe.

However, consumer demand has seen an uptick in recent months, and this trend will continue. While demand increases, ports have seen increased vessel bunching, berthing delays, and reduced-yard capacity. Carriers are using blank sailings to reduce congestion.

Keys for Success Amidst Rough Times

Again, e-Commerce has been growing, amplifying demand, especially in the US. Experts call on us to focus on localizing the supply chain networks. Success would depend on agile supply chain systems and better forecasting for inventory and delivery. Technology would be a key driver towards achieving this. Companies are increasingly moving to last-mile solutions and crowdsourced delivery agents.

Amidst the human tragedy in Ukraine that is disheartening, the crisis has compelled the shifting of traditional trade routes. For instance, UAE’s food retailers have opted for alternate sourcing from destinations like India, Pakistan, and Australia.

Changes and uncertain times always bring to us not just risks but a platter of opportunities.

At CSS, I believe three actions would become our competitive advantage in these uncertain times. Firstly, we must maintain a strong relationship with key customers. Having our feet on the ground, eyes, and ears on the markets, and our hands quick to act. Thus, we proactively shape the future. Secondly, we must foster an organizational drive towards digital fitness. We must be able to innovate, focusing on cost efficiency and asset productivity. Thereby, we drive our strategic goals into our daily and weekly targets.

Finally, the critical factor in driving the above would be our culture. Building a culture of agility and flexibility would be crucial to achieving the first two paradigms. The Culture Conduit by Steph Honami is a practical take on what helps make human connections work at the office and in everyday life. Our culture drives the core of all our interactions. This often dictates how we conduct our business and personal life. Let us build a culture that makes it easier for people to work together across regions and boundaries.

At CSS, I am confident in our team that is moulded to face tomorrow. The future is challenging which makes it interesting, and with the right attitude, we can surely make it a WIN-WIN situation!

CSS TAKES PART IN THE ICONIC EXPO 2020 DUBAI RUN 3

Hailed as the most iconic Run Event of the year, Expo 2020 Dubai Run 3 was the last opportunity to be a part of one of the landmark events of this era. Never to be left behind, CSS marked our support with the enthusiastic participation of our athletic and agile employees – Emson Tomy (Sales Coordinator), Edhu Krishnan (Sales Coordinator), Ranjith Haridas (Sales Manager-NVOCC), and Shabas CP (BDM-NVOCC).

Expo 2020 Dubai Run 3 lowered the curtain on the hugely successful sporting series on March 26th, which started with Runs 1 and 2.

Resilience in the Face of Challenges

The Dubai Expo 2020 was the biggest event ever held in the Arab world. The event displayed massive resilience in the face of unprecedented challenges. With 192 countries coming together to showcase their nation’s best, Expo 2020 has proved to be an unparalleled amalgam of cultural, educational, and entertainment experiences, attracting nearly 3 million visitors since its launch on October 1st, 2021 successfully completing on March 31st, 2022

A Run for the People and the Planet

The March 20-26 Run was a part of the Programme for People and Planet, which seeks to explore humanity’s challenges and opportunities. 26th March 2022 was the final part of the trilogy for all abilities. In this spirit of optimism, more than 15,000 runners came together for the Expo 2020 Dubai Run 3. This Fun Run series was designed to promote active communities and a healthy lifestyle, attracting runners of all abilities and nationalities.

With the run beginning at 7 am, it was the fastest way to see the whole world in one place, taking in the best of the Expo 2020. The amazing route mapped for the runners went past the international pavilions, the stunning architecture of the Expo’s magnificence in the Sustainability, Mobility, and Opportunity Districts, and finally, the incredible Al Wasl Dome.

The event offered three race lengths to its participants -three km, five km, or ten km. The Minister of Sports of the Grand Duchy of Luxembourg, Georges Engel, joined runners in the Expo 2020 Dubai Run 3 in the morning. He also gave away prizes for winners of the 3, 5, or 10 km fun run. The third and final run of the successful community running series was a unique sporting event. The first two community runs also had resounding success, and Expo 2020 Run 3 was the grand finale of this epic Fun Run series.

The able CSS contingent participated in the 10 km course. All the CSS participants completed the 10 km course. “Finishing a marathon isn’t just an athletic achievement. It is a state of mind that says Anything is Possible!” said John Hanc, the author of “The Coolest Race on Earth”.

We want to commend the CSS runners for their stamina and grit and display sportsmanship spirit.

Bravo Emson, Edhu, Ranjith and Shabas!

UAE TRADERS OPT FOR FOODSTUFF FROM OTHER COUNTRIES TO MAKE UP FOR UKRAINE SHIPMENTS

The Russia-Ukraine conflict has paralyzed not just Ukraine but also many countries. Food supply constraint is a major concern for most of them. Wheat, a key commodity, has seen a sudden surge in its price as Ukraine has been its major exporter. All shipments have been barred, with the strife between the two nations still raging on. UAE foodstuff trader and major retail player Dr. Dhananjay Datar, MD at Al Adil, states that wheat can be brought in from India, Pakistan, and Australia. He also expressed his opinion about the shipments from the Mumbai port, “Yes, rising container costs are a worry, but that’s something all importers in all industries have been dealing with. Our shipment costs are at $950 for a TEU presently. It used to be $50 – $100. The important thing is to absorb the costs and try not to pass them to the customers.

Sky High Container Rates

Roshmon Manoli, Vice President, Freight Forwarding at Consolidated Shipping Services, expressed his views to the Gulf News, “On shipments from Jebel Ali to East Africa – a major food export route from here – carriers are releasing bookings only with a premium.” Shipment premium is based on sea priority and shipping guarantee. The container space situation is tight, and space is available only for bookings made two weeks in advance. The Ukraine situation has impacted cargo ships that pass through the Black Sea and created backlogs at European ports, another reason for higher shipping rates.

Rising Oil Prices

Another factor that has fueled the rocketing food cost is the never-ending rise in oil prices. When the year started, it was $100 a barrel, which spiked to $200 since the invasion of Ukraine.

Farad Mourad, a senior market analyst at XTB MENA, admits that the price hike raises the transport cost for all agricultural products, leading to inflation, which again could affect a country’s monetary policy. “Countries like Egypt could feel a significant impact as it remains largely exposed to the spillover effects of the war in Ukraine. Egypt’s import of agricultural products comes mainly from Russia and Ukraine as they provide 58 percent of cereals and wheat needs. Following this, they have diverted attention towards other producers like France, Canada, and the US. However, these countries could struggle to respond to the rapid increase in demand.”

According to commodity market analysts, the food commodities have started to show an upward pull, and the impact is severe. The Russia-Ukraine invasion has disrupted shipments, with the trade ministry suspending exports of fertilizers.

Steeper rates in oil have directly added to foodstuff production and transportation costs, although vacillating within a smaller band. The escalating geopolitical tensions also have a direct bearing on foodstuff, especially since both Ukraine and Russia are export giants in key food commodities like wheat, corn, and sunflower oil. Wheat futures have soared to a high not seen since the year 2008. The higher prices will eventually affect customers as it proves to be expensive for food makers who are likely to mark up their product pricing.

Wheat or Rice – Which Is Most Affected?

The wheat price has shot higher, making it an expensive food item. Interestingly, rice prices have not risen. As Sudhakar Tomar, President of India Middle East Agro Trade Industry & Investment Forum states, “Rice prices have not risen as much as other grains, but because it is an alternative staple, prices will climb up owing to freight and logistical expenses as well as increased demand.”

The price rise is not restricted to wheat and rice but includes corn and sunflower, which have gone up since February 24th at the onset of the Russian invasion. Sudhakar Tomar added, “Russia and Ukraine are two of the world’s top wheat exporters exporting more than 60 million tons of wheat each year, accounting for 25 percent of global wheat commerce. If the conflict and sanctions continue, the supply chain for food and fertilizers, petroleum, and banking transactions will remain disrupted, causing hardship for millions who rely on imports. Weather problems in Iran, Syria, Iraq, Turkey, and Egypt have exacerbated worldwide wheat shortages.”

ODYSSEY

Rahat Talreja

Vice President – CSS India Operations

…Tring Tring…

Steve, the freight forwarder: Hi it’s Steve

Exporter: Morning Steve, I have urgent cargo to airfreight from Heathrow to

JFK New York

Steve: What’s the tonnage?

Exporter: About 1 ton.

Steve: That’ll be 2 Pounds and 10 cents on British airways.

Exporter: Got that, Steve; sending the cargo today to your warehouse. Has it shipped on the 1st flight?

Steve: Don’t worry about it. We have daily flights to New York from

Heathrow, the cargo won’t wait.

Are you shocked? Not at all. It’s 2022, not 1940. This is a very, very normal conversation in 2022.

So now, let’s see the next conversation, sometime in 2045.

…Tring Tring…

Suzy, the space forwarder on Space Station Mars.

Exporter on Earth: Suzy, it’s Sven from Earth.

Suzy: Sven, how can I help you.

Sven: I got cargo to ship to Mars for my cosmic hotel this week. If you ever need a room, let me know. I got a Mars view room.

Suzy: Thanks, Sven. I have options on Virgin, Space X, Axiom , ESA,

Roscosmos.

Sven: I also have an accompanying technician with the cargo. Tell me the price

Suzy: 60 Million Space Francs

Sven: I’ll have it wired today. You’d like a 50% advance on the Mars account?

Suzy: Sure. Thank you, Sven.

Are you shocked? Yes, but no. We know it’s coming. This is going to be an everyday conversation in the next 20 years.

So as exporters, importers, entrepreneurs, and logistics executives, we ought to know the kind of cargo that will be transported to and fro Earth to Space Stations across the solar system. And the opportunities available for future business ventures and investment.

Protective Suits

Space First Aid Kits

Space batteries for vehicles

Space horn to send signals to other astronauts

Terraforming

Space base construction technology, glues, mortars

Meteorite protection technology

Solar Batteries

Spacecraft Navigation and communication services, repair and insurance

Components and Accessories for Space rockets

Space weapons

Space debris

Space Production: Zero gravitational manufacturing

Space backpacks

Creams and Products for ultraviolet radiation protection, force fields protection.

Components and Accessories for spacecraft, rockets, and space stations

New durable materials for building structures in space like graphene and fullerene

Space energy charging points

Space weather forecasting and remote sensing

Space internet and communication systems

Space tourism: Cosmic Hotels, Hostels, Cosmic Holidays, and Travel

stations, trips to planets, moons, asteroids

Space Taxi

Space sanatoriums

Space Summer schools

Space Healthcare and Therapy for muscle wasting due to lack of gravity

Space Food

Space Law

NORTH ASIAN EXPORTERS ARE UNDER PRESSURE DUE TO HIGHER RATES AND FEWER PORT CALLS

With the drop in direct trans, and Pacific calls with carriers, Japanese and South Korean cargo owners are paying high rates to ship their products to North America. China, however, has been offering transshipment to mainline services. The fall in connectivity has led shippers to use short sea services from Japan and South Korea to China.

The transpacific container volumes have shown a significant fall in 2020 The transpacific calls fell from 400 in 2019 to 350 in 2020. This figure was pegged at Yokohama, Japan’s second-busiest container port. However, it triggered the feeder services connecting ports in China, totaling 1,860 in the same year.

Managing Director at Geodis China, Ivan Siew, said “Carriers have rescheduled their vessels and implemented recovery plans to improve schedule reliability. In some cases, port calls have been cut off from Japan and South Korea. Some routings from Japan to the US West coast will ship via Shanghai. US East Coast services will keep the original ex-Japan/South Korea port schedule.” The spot rate to ship a 40-foot container from Japan to the US West Coast stands at 64 percent, higher than China, while South Korea stands at 32 percent higher. This has compelled most shippers to use short sea services from Japan and South Korea to China, where cargo is shipped to mainline services.

VOLUME DECLINED FROM MAJOR JAPANESE PORTS

The top ports in Japan like — Tokyo, Yokohama, Kobe, Nagoya, and Osaka, showed that volumes plunged in 2020. “Most shippers suffer from space availability, especially to the US West Coast,” said Keiko Kiso, managing director of Rhenus Sankyo Logistics Japan. He further indicated, “From Japan, we have only one direct service — the Far East Pacific 1 (FP1). The situation is worse now, as there have only been three vessels coming to Japan over the past eight weeks.”

AFFORDABLE RATES IN CHINA

Presently the freight rates from Japan to the US West Coast stand at $14,000 per FEU, South Korea to the US West Coast stand at $11,200 per FEU, and China stands at $8500 per FEU. The rates have been provided by the freight rate benchmarking platform Xeneta. Xeneta chief Peter Sand states, “Chinese ports are consolidating cargo before leaving the region. Since May 2021, the rates out of China on the trans-Pacific have become much cheaper than those out of Japan and South Korea.

2020 saw downward plunges in all of Japan’s ports -Tokyo, Kobe, Nagoya, and Osaka while China climbed upwards. The prices per FEU for spot export cargo from Busan to Los Angeles have gone up by 50% in January compared to August last year. At the same time, the prices from Shanghai to Los Angeles were down by 8%. Eunice Yu, Dacshers head of Ocean Freight Asia Pacific, mentioned, “Capacity from Busan and Japanese ports is always tight. Most of the time, Busan serves as the call on the trans-Pacific trade, so carriers tend to drop the Busan call to catch up on overall service reliability.”

SURGE IN RO-RO VOLUMES AT NORTHWEST SEAPORT ALLIANCE

The Northwest Seaport Alliance (NWSA) saw a surge in roll-on/roll-off (Ro/Ro) volumes from cargo out of boxes, with the increasing trend of port congestion and high container rates in 2021. The overall breakbulk volumes are up by 25 percent, with port executives expecting the movement to strengthen in 2022. The NWSA is a marine cargo operating partnership of the Port of Seattle and Port of Tacoma and manages the container, breakbulk, auto, and some bulk terminals in Seattle and Tacoma. This partnership also connects to the second-largest concentration of distribution centers on the West Coast.

Andre Elmaleh, senior manager of non-container business development at Northwest Seaport Alliance, spoke about this scenario, “The surge in the breakbulk tonnage is driven by rate increase on containers. The big factor is the increase in the rates in the trans-Pacific trade for container ships”.

RORO – A FASTER ALTERNATIVE

The supply chain conundrum changed the scenario from container ships being the transport mode of choice for many RO-RO shippers. Elmaleh explained, “Ro-ro became more reliable, faster, and cheaper to the benefit of NWSA.”

The NSWA is slated to top its 2021 breakbulk volume in 2022. Elmaleh states, “Our customers indicate another record year, with a potential 10 percent improvement over 2021. RO-RO becomes more reliable, faster, and cheaper.” The ports handled 246,411 MT breakbulk in 2019, which shot up to 25.6 percent in 2020, which again grew to 366,184 MT in 2021. So the numbers speak for themselves. Companies like Caterpillar, John Deere, and Case New Holland Industrial, predict an increased demand for their goods. Growth is expected in all sectors, including construction and agricultural equipment. The NWSA operates breakbulk terminals handling automobiles and heavy cargo. “We attract RO-RO carriers but do not work on traditional lift-on, lift-off high, and heavy project cargoes,” Elmaleh added.

As per port data, RO-RO construction equipment constituted 67 percent of 2021 tonnage. Some RO-RO carriers involve EUKOR car carriers, Hyundai Glovis, MOL RO-RO, K-Line Ro-Ro, and NYK Ro-Ro.

SLOW IMPORTS ARE NOT A SIGN OF RELIEF AS YET FOR CONGESTED US PORTS

The slow rise in imports is not an immediate relief for the already congested US ports. US retailers expect sense to pick up in the first half of 2022, unlike the quicker pace of the previous year. However, even slower growth on top of already historic volumes means ports are unlikely to see much relief in clearing cargo backlogs.

Ben Hackett, the founder of Hackett Associates and co-author of Global Port Tracker and National Retail Federation, said, “A shortage of equipment, worker availability and storage space at distribution centers and warehouses across the country remains problematic as does the export of empty containers back to Asia.”

Additionally, the monthly import volumes in the future are complex due to vessel backlogs at significant gateways on the West and East coasts. The delays in vessel berthing arise primarily because few containers are on idle vessels. Though the Global Port Tracker (GPT) stated that the December imports are set to increase by 3.7 percent in 2020, the imports fell by 1 percent. The January imports were projected to rise by 4.4 percent compared to 2021, while February is projected to increase to 8.7 percent due to the pre lunar New year rush. As the first six months of 2020 had plunged due to Covid 19 related closures of factories in Asia and lockdowns in the US, the first half of 2021 showed an import surge of 35.7 percent. The US imports market is projected to increase 1.5 percent in the first six months of 2022 compared to 2021, while March projects a drop of 6.7 percent in US imports owing to the Lunar New Year holidays in Asia when factories are normally closed. However, April is set to see an increase of 2.2 percent, while May is set to fall by 2.6 percent before surging to 5.2 percent in June. (Numbers courtesy: Global Port Tracker)

PILING BACKLOGS

The Los Angeles Long beach was recorded as the most congested US port complex, with 34 of 78 vessels waiting within 25 miles of the coast and several following slowly. The Marine Exchange of Southern California recorded this container ship backlog. Hackett says, “Backups cannot be erased quickly as long as terminals continue to face a lack of space brought on by the supply chain’s inability to efficiently transfer cargo out of the terminals to its end destination.”

According to PIERS, US imports from Asia increased 14.4 percent compared to 2020″ A return to a more typical single-digit growth is expected this year given the much higher bar for imports that was set in 2021. The numbers remain high as consumers continue to spend despite Covid 19 and inflation. The slowdown in cargo growth will be welcome as the supply chain continues to adapt to the high volumes”, says Jonathan Gold, the NRF vice president for supply chain and customs policy.

PLANES, TRAINS, TRUCKS, AND OTHER VEHICLES MAKE WORLDWIDE DELIVERIES

THE UNWRITTEN RULE ACROSS ANY INDUSTRY IS THAT DISRUPTIVE FORCES ARE CONSTANTLY AT PLAY, RESHAPING HOW ORGANIZATIONS THINK ABOUT TECHNOLOGY, CONDUCT BUSINESS, AND LOOK TO THE FUTURE.

This is, of course, true for the logistics industry, where market trends are impacting the sector to a great degree. From new technologies to explore and take advantage of to shifting regulations that require new strategies and tactics to ensure compliance, logistics companies must stay plugged into new and emerging trends to stay at the bleeding edge and remain competitive. Companies that succeed are the ones that embrace a combination of the latest trends and utilize them in a way that capitalizes on traditional and established technologies.

Going forward, how will the current trends in logistics impact us?

1. RFID – For over a decade, Radio-frequency Identity (RFID) chips have promised to provide real-time tracking information. However, while many OFD (out-for-delivery) companies have invested much money in RFID, they have yet to see a real ROI from the technology.

So why is that – Simply having RFID chips doesn’t mean you have better access to the data because you need computers near the data to collect it and share it. Companies also need file-based integration technology to connect devices and edge computing systems back to the core enterprise systems to transfer reporting documents. The data can be stored and analyzed for insight and business decision-making. Further, the logistics companies that do utilize RFID technology to a value-producing extent are the ones that can blend traditional line-of-sight technology such as barcode labels with RFID. Barcode labels are well-established and relatively low-cost. The underlying systems and business processes are well-understood and common. By comparison, RFID implementation can be a high-cost addition to the logistics supply chain. Some estimate a 10X cost factor for implementing RFID tags versus bar codes. The price barrier for investment is why a blended approach to traditional and new makes sense. Additional concerns around data accuracy and reliability should also play a role in how a company chooses to leverage RFID.

However, there are viable applications companies should investigate – RFID in logistics has potential, particularly in route optimization and the real-time tracking of goods. RFID systems can provide precise location and quantity data in real-time when effectively integrated. For instance, tagging trucks, pallets, and inventory provide multi-lateral views of what is happening across the supply chain. Knowing exactly where a specific truck is at any given moment can allow a logistics company to be more proactive, to change a delivery route given unpredictable events such as accidents and weather. Companies that mix and match traditional and legacy technology with next-generation advancements are the ones who end up most successful. Those companies understand that completely replacing established technology and business processes is unwise. New technology tends to perform better than what is established and standardized.

2. Omnichannel Shipping – Omni-channel fulfillment is an increasing reality in the logistics industry, one that is being spurred on by a shifting approach to meeting customer expectations in the retail sector. According to the Harvard Business Review, the Amazon effect drives traditional retailers to offer more omnichannel touchpoints to increase customer loyalty. The goal is to provide a seamless and easy way to shop, whether it’s conducted digitally or in-store. In this context, successful logistics companies have evolved to offer more creative approaches to shipping to navigate growing omnichannel complexities within the supply chain. Here is a simplified look at possible omnichannel fulfillment and return order flows directly to (and from) the end customer:

†   Warehouse to consumer and back

†   Supplier to consumer and back

†   Store to consumer and back

†   Distribution center to consumer and back

Traditionally, the shoppers would travel to the purchased item. The “last mile,” so to speak, was thereby on the customer. Now, last-mile logistics are falling on the shoulders of the retail logistics providers and their partners. The changing expectation is for retail logistics deliveries to operate like UPS. Companies such as Amazon contract UPS to handle these deliveries since their system is already in place.

3. The Big Promise of Big Data – UPS may be the biggest success story for big data in the logistics industry. The company has made massive strides in operational efficiencies and cost savings through data collection, analysis, and demand forecasting.

1000’s of vehicles each have more than 100’s onboard sensors that measure speed, braking, backing up, location, and idling time. Some sensors collect diagnostic data on the vehicle battery and tire pressure, allowing for preemptive maintenance. The goal is to maximize the time a vehicle is on the road versus in the shop. Further, big-data-driven predictive modeling is the basis for massive gains in route optimization. Because of the proliferation of GPS and location sensors and real-time traffic updates, companies can now optimize delivery windows regardless of construction, parades, accidents, and the like. Companies utilizing big data technology create systems to allow them to change their route in real-time. This is done for a couple of reasons. Another big data outcome related to route optimization is to decrease mileage. The level of savings that companies in terms of mileage impact the wear and tear on vehicles.

While some forward-thinking companies are starting to invest in greener technology and big data initiatives, many supply chain companies are coming up with new techniques that parallel route optimization through how a mastery of inventory logistics management, optimizing shipments for efficiency.

4. Embedded Integration Technology – Logistics companies utilize embedded technology to better connect with their customers. They recognize that they need a data movement platform to share data back and forth between their customers seamlessly.

Embedded integration capabilities provide SaaS companies in the logistics space to offer value-added services related to logistics and supply chain data. This is a true encapsulation of digital transformation as more traditional logistics enterprises evolve into data-centric services companies. Organizations utilize modern services and solutions to process data and provide insight to customers. Being more dynamic than ever before by providing fast and critical information to and from customers is central to a business’s success. An embedded data platform provides secure communications protocol flexibility that enables robust transactional business flows. You need to be able to connect, transform, and integrate data through capabilities that are already built into the solution. Customers want to know everything, and information is of the utmost importance. Service-level agreements (SLA) must also be met, and companies are taking advantage of embedded software with business-level dashboard views and 24/7 monitoring to extend visibility throughout the process to ensure compliance with tough SLAs.

5. Globalization and Compliance – Globalization is forcing many logistics companies to focus on a strategy of achieving delivery KPIs while keeping costs in check.

The need for increased flexibility across the supply chain is paramount, and it recognizes that no single solution to the growing complexity will be one-size-fits-all. The landscape of global trade is constantly shifting. There is an unwavering need for logistics companies to stay ahead of evolving compliance requirements. This rings especially true for all the ways the enterprise needs to manage critical customer and partner data. Take the recently created Federal Maritime Commission plan to reform regulatory priorities. One recent change in governance directly affected the New York Shipping Exchange and aimed to combat shippers leaving less lucrative cargo behind. While this is a positive change, it is still a change – one that is increasingly happening everywhere.

Further, across the globe, the ability to comply with the plethora of data-related mandates is tied to how capable a company is in its ability to find, view, record, and report on the data. The regulation calls for full audibility. Companies need to provide full audit trails to keep track of their data and customers’ data with built-in governance and control throughout the process. Without the proper ability to comply with provable digital documentation, trucks could sit at the dock, ships get stuck in the harbor, and goods are stranded on trains or tarmac – for hours or even days.

6. Integrated 3PL Services – As e-commerce continues to expand beyond epic proportions, many companies also see quite a bit of potential in integrated 3PL services.

Businesses are seeing this by bringing in heavy assets in trucking and adding freight brokerage capabilities and warehouse facilities to provide deep integration into customers’ systems. As customers advance through their use of modern technology, logistics companies are embracing logistics automation trends by utilizing API integrations to connect e-commerce stores with a fulfillment center in addition to traditional EDI. Because supply chains have so many different channels and change so quickly to meet consumer demand, fulfillment practices must evolve to cope with COVID-19 and any other supply chain disruption that may arise. Logistics industry trends demand that customers have options for delivery, from last-mile services to same-day and next-day delivery, and it’s up to providers to make sure that customers have those very delivery options.

7. Re-Optimized Service Lines – When COVID-19 first struck, logistics companies started to re-optimize service lines to focus on industries that thrived the most during the pandemic, such as food, paper, and packaging.

This allowed these logistics enterprises to have a regular fleet rather than a non-dedicated, irregular fleet. No, it is not easy for companies to transition and pivot their strategic initiatives, but the result will prove beneficial for years to come.

8. Embracing Modern Integration Technology – Logistics companies recognize the importance of upgrading their legacy environment and evolving to a modern integration platform. The allure of a modern integration platform provides quicker onboarding of customers, trading partners, and suppliers and provides end-to-end visibility so logistics companies can conduct business quicker. From frictionless supplier integration to the ability to unlock back-office systems critical to third-party logistics (3PL) services, modernized integration technology can do it all. Logistics businesses everywhere see integration technology’s value for their supply chain. Those companies that migrated to a modern integration platform before COVID-19 were the ones that put themselves in the very best position to manage disruption to their supply chain. COVID-19 has shined a light on the importance of a modern integration platform.

 

To conclude – Today, the logistics industry looks entirely different from ten years ago. The question now becomes, what will it look like in another 10.

Market trends, such as those outlined above, will continue to impact the logistics sector well into the future. However, the success of trend-shaping nascent technologies requires that they are integrated with existing solutions and infrastructure. Logistics operation needs to enable processes like ingesting a load tender, but companies also need to look to how future technology can be leveraged to reduce margins. Businesses can create a next-generation stack that leverages previous technology investments while incubating big data and omnichannel solutions. Furthermore, the events of 2022 have disrupted the entire supply chain, and the logistics industry is no exception. The logistics landscape is plagued by uncertainty and disruption, but it is also ripe for digital transformation. Companies that succeed in 2022 and beyond will embrace a combination of the top trends in logistics management to become resilient to supply chain shocks.

JAWAHARLAL NEHRU PORT AUTHORITY OF INDIA TO FOCUS ON MULTIMODALITY

The Indian Government had started a flagship program in liaison with the Ministry of Shipping in 2015 called the Sagarmala. The program successfully covered seven years, and the Jawaharlal Nehru Port Authority (JNPA) has renewed its focus on multimodality under the PM Gati Shakti program. The program’s highlight was the development of dry ports in Wardha and Jalna in Maharashtra in Western India. Under the banner of Sagarmala phase has been completed, and will further bolster the economy in this region by connecting the upcoming multimodal parks seaports using big road and rail projects. A scheme with a budget of ₹184 crores, the dry port in Wardha, Nagpur, has been developed as a multimodal logistics park with the National Highways Authority of India(NHAI). The Jalna project has 90 percent of its Inland Container Depot (ICD) works completed. NHAI and Container Corporation of India (CONCOR) has expressed interest in its operationalization, with the project cost set at ₹327 crores.

Port-led Industrialization

The chairman of JNPA, Sanjay Sethi IAS, spoke about this focus on multimodality, “JNPA plays a pivotal role in the Governments initiative of the Sagarmala to boost the port-led industrialization. JNPA has multiple projects under Sagarmala based on the four-fold view – to change dynamics and reduce logistics costs in India, boost overall economic development through ports and empower coastal communities put across by the ministry.”

He emphasized, “Acting as the major catalyst for the trade and shipping industry, JNPA’s projects like the fourth container terminal, JNPA SEZ, Dry Ports at Wardha and Jalna, additional liquid cargo jetty, and many more will foster the port’s ease of doing business and take Indian EXIM to greater heights.”

Spurring Development of Indian Ports

Giving an update on the recent IT disruption that disturbed the terminal operations, Sanjay Sethi adds that the port had initiated a sanitization process for the entire digital infrastructure and set up a new protocol to avoid such future occurrences. He further added that the port would finalize the process of privatization of JNPCT on April 28 and the coastal berth on May 2, 2022.

Due to the Sri Lankan economic crisis, its effect on the Colombo Port is not small as most Indian ports on the eastern coast depend on them for transshipment. The Sagarmala initiative has allowed the Indian ports to handle large volumes efficiently. Owing to the immense potential in Maharashtra’s coastal region, 131 projects worth ₹1.05 lakh crore have been proposed to be implemented in Maharashtra, and these projects involve various categories like port modernization, rail, road, cruise tourism, RORO, ROPAX, fisheries, coastal infrastructure, and skill development.

IMPACT OF THE DISSOLUTION OF THE DIFC’S ARBITRATION INSTITUTE AND EMIRATES MARITIME ARBITRATION CENTRE

From its inception, the Dubai International Financial Centre (the “DIFC”) intended to establish an example for regional dispute resolution. In addition to the now well-known DIFC Courts, an arbitration Centre was created to provide alternative dispute resolution services (i.e., Arbitration and Mediation as “ADR”) for local and foreign businesses in the region. In 2008 the DIFC negotiated an agreement with the LCIA pursuant to which arbitrations under DIFC-LCIA Rules would be managed and administered with LCIA’s assistance.css

To deal with the alleged jurisdictional issues, Dubai Law 7 of 2014 was passed to amend Dubai Law 9 of 2004, the founding law of the DIFC. Pursuant to the Amended Law, the DIFC Dispute Resolution Authority (the “DRA”) was created, which comprises the DIFC Courts, the Academy of Law, the DIFC Wills, and Probate Registry, and the DIFC Arbitration Institute (“DAI”).

In November 2015, DAI entered into agreements with LCIA to manage and administer arbitrations in which the parties had selected DIFC-LCIA Rules, leading to the re-launch of DIFC-LCIA. However, on 14 September 2021, The Ruler of Dubai issued Decree No. 34 of 2021 (the “Decree”), accompanied by the Statute of Dubai International Arbitration Centre (the “Statute”). The decree came into effect on 20 September 2021 (the “Effective Date”) and took many within the dispute resolution community by surprise as it introduced fundamental amendments to the arbitration framework in the Emirate of Dubai, including the offshore free zone commonly known as the Dubai International Financial Centre (DIFC). Wherein, the same abolishes both the: (i) Emirates Maritime Arbitration Centre and; (ii) DIFC’s Arbitration Institute (DAI) (collectively the “Abolished Centres”); and provides:

  • for the Dubai International Arbitration Centre (“DIAC”) to assume the rights and obligations of the Abolished Centres and, after that administer cases; and
  • Lays down key details relating to the objectives, scope, and organization of DIAC.

From the Effective Date, the following (in respect of each Abolished Centre) shall be transferred to DIAC:

  • ownership of properties, movables, assets, devices, equipment, and funds;
  • employees (subject to a decision by the DIAC Board Chairman);
  • financial allocation designated to the Abolished Centres by the Government of Dubai; and
  • The Abolished Centre’s arbitrators, conciliators, and experts list.

In view of the above, the main concerns are as follows:

Impact on the maritime sector

DIFC’s Arbitration Institute was the administering body of the DIFC-LCIA Arbitration Centre. DIFC-LCIA Arbitration Rules are similar to LCIA rules, and this was a convenient option available to the parties in the maritime sector resorting to arbitration in their agreements.

This move certainly has repercussions in the UAE Maritime sector as EMAC was considered a specialized centre created for dealing with maritime disputes predominately. Though the decree ensures that the experts of EMAC will be retained, this decision has created much confusion and a lack of confidence in the maritime sector of UAE. Unlike the US, India, London, etc., UAE lacks an Admiralty Court.

Validity of existing arbitration agreements:

All agreements entered into before the Effective Date that refers to dispute resolution through an Abolished Centre’s regulations shall be deemed valid and effective unless otherwise agreed by the parties to such an agreement. In such circumstances, DIAC shall replace the Abolished Centres in considering and determining disputes. With regard to any agreement entered into after the Effective Date providing for the jurisdiction of an Abolished Centre will not be valid.

Competent Courts:

Dubai Courts and DIFC Courts will continue to consider cases, requests, and challenges relating to any arbitration award or procedure issued by arbitral tribunals within DIAC and the Abolished Centers, in accordance with their respective procedures and standards.

Default Seat

Pursuant to the Statute, the Dubai International Financial Centre shall be designated as the default seat of DIAC arbitration proceedings except where the parties do not agree to a seat or place of arbitration pursuant to their arbitration agreement or otherwise.

Transition Period

The decree provides DIAC with six months from the Effective Date to coordinate with all concerned entities and give effect to the transition set forth in the Decree and the Statute.

Described as aggressive yet progressive, the decree has taken the masses by surprise, and it is for the parties to take immediate action on any references in existing standard terms and conditions or existing and/or new contracts that are being currently negotiated that provide for arbitration in an Abolished Centre should be urgently reviewed and revised.

It is also expected for DIAC to issue new arbitration rules, form a new arbitration court similar to that of the ICC International Court of Arbitration, and a new board and a new administering body.

EMPLOYEES OF THE MONTH

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RAPHAEL GODSON – Assistant Manager, Ocean Pricing awarded by Susanth Shekar, General Manager, H.R & Administration
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VARGHESE THOMAS – Sales Co-Ordinator, Freight Forwarding, awarded by Thomas Mathew, General Manager, CSS Kingston
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MOHAMMED JINSHID – Coordinator, NVOCC-operation awarded by Julie Adersh, Sales Manager NVOCC
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SIVASUBRAMANIAN KUTHALINGAM – Cleaner, awarded by Sunny Xavier, General Manager, Project division.

U.S. SENATE PASSES SHIPPING ACT IN A BID TO EASE SUPPLY CHAIN WOES

The U.S. Senate has passed the Ocean Shipping Reform Act 22 (OSRA 22) and will seek to pass the bill’s final version with the House of Representatives before President Biden signs the legislation into law. The Act is designed to increase the federal oversight of ocean carriers and seeks to address the logjams in U.S. ports and the ensuing supply chain woes. The bipartisan bill gives the government more authority at ports and allows federal agencies to investigate unfair practices.

However, several shipping operators and cargo owners have expressed concerns over the Act. The World Shipping Council (WSC) wants the supply chain woes to be addressed even as imports continue at record levels, with the ports and workers on land finding it challenging to process the cargo.

Rising levels of consumption

In February 2022, the Port of Los Angeles processed 857,764 TEUs, a 7.3 percent increase compared to last year. The busiest month in its 115-year old history, this is followed by a track record of record-breaking months from the beginning of 2022. “NRF expects retail sales to increase in 2022, as consumers are ready to spend and have the resources to do so,” says Matthew Shay, President, and CEO of the National Retail Federation.

“We should see durable growth this year given consumer confidence to continue this expansion, notwithstanding risks related to inflation, COVID-19, and geopolitical threats.” The National Retail Federation has pegged retail sales in 2022 between $4.86 trillion and $4.95 trillion. This figure is 14% of the annual growth rate in 2021, the highest in more than 20 years. With the National Retail Federation expecting a stupendous growth in 2022 and the Port of Los Angeles recording its best-ever container handling in February, U.S. consumer spending shows an upward trend despite Covid, inflation, rising fuel prices, and the war situation. Given this background, the OSRA 22 is attracting disapproval from shipping operators.

Discontentment over OSRA 22

“Ocean carriers have deployed every vessel and container available and are moving more goods than at any point in history, but the U.S. landside logjams are keeping vessels stuck outside U.S. ports,” asserted WSC in response to the Act. “This import congestion is also consuming the capacity and space needed to ensure the uninterrupted flow of U.S. exports. The American people are looking for solutions to supply chain congestion resulting from the impacts of Covid-19. Unfortunately, the Ocean Shipping Reform Act of 2022, S.3580, addresses none of the root causes of the U.S. landside congestion.”

WSC has also stressed that the bill would worsen the existing congestion while the Senate bill passed in 2021 provides regulators enough authority to get the final rules right. The Council has further emphasized, “Instead of passing legislation that would do nothing to address the nation’s supply chain congestion, Congress should seek real solutions that take a comprehensive, forwardlooking view. That means continued investment in port infrastructure and promoting communication, innovation, and collaboration across sectors to strengthen further the intermodal transportation system that has supported the U.S. economy throughout the pandemic. The World Shipping Council will continue to partner with Congress and other stakeholders on these worthwhile efforts.”

Freight Logistics Optimization Works (FLOW)

Freight Logistics Optimization Works (FLOW) is the new initiative by the Biden administration for regulating supply chains. A fact sheet issued by the White House explains that FLOW is an information-sharing initiative to pilot key freight information exchange between parts of the supply chain. The commitment to moving the transportation logistics system to 21st-century digitization follows the commitment to move toward 24/7 operations many made last fall.

A slight dip in shipping rates

The Asia-US West Coast prices dropped by a meager 2% to $15,908/FEU. However, it has to be noted that the figure is up 170 percent from 2021. As lockdowns were imposed in China’s major export hubs like Shanghai and Shenzhen, minor effects have been on the supply chains. North Asia to the west coast of North America dipped below $9,000/FEU for the first time since December 14, 2021, and was assessed at $8,000/FEU on a FAK basis on March 18, S&P said in its report.

Congestion lessens in Long Beach/Los Angeles (LA/LB)

Total container ships backed up across the ports of Los Angeles/Long Beach was 42 as of March 22, 2022 – a new low, and 67 fewer than the record of 109 on January 9, 2022. “The 42 container ships backed up to include 3 container ships at anchor off the ports of LA/LB, plus 0 loitering within 25 miles, plus 39 slow speed steaming or loitering outside the Safety and Air Quality Area (SAQA),” according to data from Captain J. Kipling (Kip) Louttit, Executive Director, Marine Exchange of Southern California & Vessel Traffic Service Los Angeles and Long Beach San Pedro, CA.

According to an analysis by Sea- Intelligence, the decline in ships queued outside LA/LB ports is just the start. “What we saw during January appeared to be a kind of steady-state balance between the desire to operate the required vessels and the need to blank sailings due to the vessels being unavailable. Hence, more realistically, we might be back to the 100-105 vessels in the queue by the time we get to April.”