This Week in Logistics News (August 29 -September 2, 2016)

With a holiday weekend upon us, let’s go straight to the supply chain and logistics news that caught my attention this week:

The biggest news this week is the ripple effect Hanjin Shipping’s bankruptcy filing is having on supply chains. Hanjin handles about 7.8 percent of the trans-Pacific trade volume for the U.S. market, and as reported by the Wall Street Journal yesterday:

Since the shipping company filed for bankruptcy protection in a Seoul court Wednesday, terminal operators, ports, cargo handlers, truckers and others have refused to handle its cargo, for fear they won’t get paid. That is causing turmoil at U.S. ports and beyond, said shippers, importers and freight forwarders.

U.S.-bound cargo has been delayed at the point of origin, and cargo-laden Hanjin ships are unable to get into U.S. ports. Already delivered cargo is sitting unhandled, clogging ports and occupying containers needed elsewhere. Several Hanjin ships have been seized by creditors or barred from shipping cargo from Busan, South Korea’s main port, and vessels have been turned away from ports in the U.S., China, Canada, Spain and elsewhere.

Freight brokers in Asia said about 540,000 containers are expected to face delivery delays that one of them said could range from a few days to more than a month.

With Hanjin’s capacity on the sidelines, rates have also spiked this past week, as much as $1,300 more per container in some cases.

This is yet another example of how supply chain management is all about risk management, and the companies least affected by this disruption will be those that have already simulated, analyzed, and quantified the impact of it on their supply chains and have identified appropriate actions to take in the days and weeks ahead — as well as companies that have established strong partnerships with their third-party logistics providers (3PLs), viewing them not as vendors but as supply chain risk management partners.

Speaking of 3PLs, C.H. Robinson this week announced that it has entered into a definitive agreement to acquire APC Logistics, a leading provider of freight forwarding and customs brokerage services in Australia and New Zealand. Here are some details from the press release:

APC Logistics is a privately held international freight forwarder, providing ocean, air, customs brokerage and consultancy services, currently serving over 3,000 customers and suppliers. Founded in 1974 and headquartered in Melbourne, Australia, APC Logistics employs approximately 300 people and has seven offices in Australia and two offices in New Zealand. APC had $334.2 million AUD (approximately $251 million USD) in total revenues for the fiscal year ended June 30, 2016. C.H. Robinson intends to purchase APC Logistics for approximately $300 million AUD (approximately $225 million USD) in cash.

C.H. Robinson’s Global Forwarding business currently serves four continents and 37 countries, with approximately 3,500 employees and 109 offices worldwide, and is the #1 non-vessel operator (NVO) from China to the United States.

As I wrote last year, the 3PL industry is becoming barbell shaped, with small, niche providers growing and thriving at one end; very large, global providers growing and thriving at the other end; and everybody else getting squeezed out in the middle. This acquisition underscores how achieving global scale remains a strategic objective for many large 3PLs.

On the technology front, GE Transportation announced its acquisition of ShipXpress, “a top provider of cloud-based software solutions that enable transportation, industrial, and commodities businesses to efficiently operate with supply chain partners.” Here’s a quote from the press release:

“By combining ShipXpress’ innovative software products with GE’s sensing technology and industrial-strength platform Predix, we’ll deliver the industry’s most advanced, scalable cloud-based solution to accelerate the movement of goods and information, and enhance supply chain performance and customer service,” said Jamie Miller, GE Transportation President and CEO. “Our combined capabilities will help short-line railroads better analyze their rail operations, car accounting and supply chain information, and deliver a data-rich path to ongoing performance improvement, asset and operations optimization.”

I can see how ShipXpress’ product for the rail industry (RailSync) aligns with GE Transportation’s existing products and solutions; it’s less clear to me how well it’s shipper-focused solution (ShipX) fits in moving forward. The ability to track and manage rail shipments, which is ShipXpress’ core focus, is arguably the weakest link for most transportation management systems. Perhaps we’ll see more partnerships and integrations between the company and TMS vendors moving forward.

And with that, have a happy weekend!

Song of the Week: “Natural Blues” by Moby