CHR President of Global Forwarding Mike Short assesses logistics and supply chain challenges

Mike Short, president of Global Forwarding at C.H. Robinson, provided Logistics Management Group News Editor Jeff Berman with a detailed overview of the many issues shippers are facing, including the labor shortage, inflation, and mode selection, among many others. Their conversation follows below. 

Logistics Management (LM): How do you view the ongoing labor/worker shortage and its impact on supply chain and logistics processes and operations?

Mike Short: The current worker shortage has presented an ongoing challenge for the shipping industry. We’ve seen unpredictable changes in labor availability due to quarantines and COVID-19 outbreaks, which are directly at odds with the increased demand the industry has been experiencing over the past two years.

The pressure of e-commerce on logistics, combined with low labor-force participation, are conditions we expect to persist long after port congestion clears. Growth in e-commerce requires more inventory in more places than before and correspondingly more trucks, trailers, drivers, and warehouse space than before. Every one of those things is still in short supply.

LM: Given all the challenges in the ocean container shipping sector, how can things like implementing new modes, trade lanes, or inland transportation strategies throughout the supply chain help mitigate the impact of continued ocean congestion?

Short: A January 2022 C.H. Robinson customer research study revealed a significant number of shippers are leveraging new strategies to help manage through supply chain disruption. Specifically, 52% shifted their supply chains strategies over the past year by leveraging new modes, ports, or trade lanes that they plan to continue using in 2022.

As shippers continue managing through disruption, considering different modes, trade lanes, or inland transportation strategies will be critical. For example, while it may not be feasible to transport 100% of freight via air, air freight continues to be the fastest way to replenish inventory, so prioritizing specific freight can help keep cargo moving.

Additionally, less-than-container load (LCL) shipping is a strategy to consider. Typically, space for LCL shipments is easier to find especially in a constrained capacity market since only some container space is needed rather than an entire empty container. Shippers are seeing large cost savings with expedited LCL services compared to today’s airfreight environment.

Keep in mind, LCL shipments are not going to bypass congestion at the ports, so inland strategies need to be considered. Currently, many ocean carriers are looking to move more IPI (interior point intermodal) cargo versus focusing on port-to-port. C.H. Robinson has been able to help increase the flow of cargo inland for customers by sending more 53-foot containers so cargo on the smaller 40-foot ocean containers can be efficiently consolidated in the larger ones and loaded onto trucks or trains to be taken to inland destinations more quickly. Overall, this increased our container capacity by 25% in Southern California.

As you can see, looking at only one portion of the supply chain or one mode can only get a shipper so far. It’s important to consider all areas to keep cargo moving.

LM: Do you think that, at some point, there will be a legitimate push to bring sourcing/manufacturing operations closer to North America across myriad verticals? It seems like there are significant benefits that could be achieved through this approach?

Short: Time will tell, but it is apparent that shifting supply chains is easier said than done. There can be issues with having the talent necessary, the raw materials needed, and, in some cases, the infrastructure to move the goods to compete with the current supply chains that have taken decades to build.

LM: In working with your large roster of shipper customers, in what ways is CHR utilizing data and technology to make smarter supply chain decisions?  How can new technology tools help to provide the operational visibility needed to make adjustments moving forward?

Short: Although the current market is rendering a lot of unique situations, historical data can still help us find solutions. Finding common trends and themes in cyclical data can give shippers an information advantage to make smarter decisions for their supply chains.

Additionally, the right technology tools can give shippers the visibility and predictability they need to adjust. For example, with the ongoing port congestion and delays, C.H. Robinson enhanced the vessel routing and tracking features within our transportation management system, Navisphere, to increase the efficiency and accuracy of port ETAs and automatically send updates if changes were discovered. This is important because ocean shipping is only one piece of the equation. Having visibility to changes in real-time gives our team and customers a chance to react and adjust other tactics down the road.

LM: What are some of the key aspects of the latest changes in international trade policies that may impact an enterprise’s landed costs, such as costs to import, duty recovery possibilities and reducing duty exposure?

Short: With pending U.S. legislation, we’ve seen the possibility that many Section 301 tariff exclusions could be reinstated in 2022. These exclusions were designed to provide financial relief on some products being imported to the U.S. from China. At the end of 2020, a majority of these tariff product exclusions expired, increasing duty fees for shippers.

While there hasn’t been a decision on the reinstatement of these exclusions, the United States Trade Representative (USTR) is currently deliberating on a petition and comments provided by shippers endorsing their reinstatement.

If reinstated, these exclusions could not only mean future financial relief, but would also present retroactive refund potential as far back as October 15, 2021, totaling millions of dollars for shippers nationwide. To help shippers better understand the impact this could have on their enterprise, C.H. Robinson has created an online Tariff Search Tool they can use to uncover potential duty refunds if the exclusions become reinstated and help importer better understand their total landed costs.

In general, since each country’s trade policies are unique and can change, it’s important for shippers to have regular meetings with their trade advisor to break through the complexity of their total landed costs, including understanding their costs to import, identifying duty recovery possibilities, and reducing duty exposure via trade agreements.

LM: With inflation at 40-year highs, how is that impacting your shippers’ logistics procurement efforts and what is CHR doing to help them?

Short: Inflation is certainly presenting additional challenges to shippers. In Logistics Management’s recent reader survey, 97% of respondents said inflation has driven up their supply chain and logistics costs. One area that has been impacted strongly by recent inflation is contract rates—higher shipping costs and higher costs of goods have inevitably pushed up freight prices as well, putting strain on shippers across all modes. At C.H. Robinson, we are helping our customers navigate the current situation as cost-efficiently as possible.