Above the Fold: Supply Chain Logistics News (April 3, 2020)

A couple of years ago, I noticed that Andy Clarke, former CFO at C.H. Robinson and a past member of our Logistics Leaders for T1D Cure cycling team, would title many of his rides on Strava with song lyrics. I thought it was a cool thing to do, so I started doing the same. Here are three rides that I did this past week (indoors on Zwift), all inspired by the situation we find ourselves in due to the COVID-19 crisis:

I may be wrong, I thought we said, It couldn’t happen here

Look ahead, But don’t mix it up, Baby look ahead, To better days And Better ways

Old friends meet at the edge of town, Sharing conversation, Hoping things’ll soon get better

Can you name the artist and song for each lyric without cheating (that is, without Googling them)? Post your guesses in the comments.

Moving on, here’s the supply chain and logistics news that caught my attention this week, dominated by — you guessed it! — coronavirus.

Coronavirus: Impacts on Air and Ocean Cargo

As you can see from the links above, the coronavirus pandemic is impacting literally every industry, business, and aspect of our lives. There’s too much happening to quickly summarize here, so I’ll just focus on what’s happening in air and ocean cargo.

As reported by Kate O’Keeffe, Ted Mann and Paul Ziobro in the Wall Street Journal, “China’s new coronavirus policies roiled the operations of FedEx Corp. and United Parcel Service Inc., rattling flight crews, disrupting cargo shipments and prompting appeals from the carriers to the White House and other U.S. officials to stave off supply-chain disturbances amid the pandemic, according to people familiar with the matter.” Here’s more from the article:

The disruptions were caused by more stringent Chinese coronavirus testing procedures — including nasal swabs — and quarantine threats that flight crews objected to, the people said. Adding to tensions, the people said, a UPS pilot was suspected of contracting the virus, which UPS confirmed…Some Chinese officials told cargo airlines that crews would need to undergo lengthy quarantine procedures upon entering the country even though other governments allow such employees to enter the border, isolate in a hotel, and get on their next flight out, according to a person familiar with an interagency briefing held by U.S. officials Wednesday.

Chinese officials also demanded crews already staying at hotels in the country move to government quarantine facilities, this person said. 

Meanwhile, as Sam Chambers reports in Splash 247, “[Ocean] carriers are rushing through blanked sailing announcements on a scale and speed never seen before, giving shippers very little chance to make alternative plans.” According to the article:

Last week, the carriers had blanked two sailings due to the pandemic spread. As of Sunday, this had increased to 45 blank sailings, according to data carried in the latest report from Copenhagen-based Sea-Intelligence Consulting.

2M partners MSC and Maersk are leading the way, cancelling 21% of Asia-Europe capacity in Q2.

“We would expect THE Alliance and Ocean Alliance to follow suit with substantial blank sailings in the coming period,” analysts at Sea-Intelligence predicted in their Sunday Spotlight report.

It is not just the scale of the blanked sailings, but the speed with which they are being announced that is expected to create supply chain troubles for many clients.

If that isn’t enough bad news, “Moody’s Investors Service sent a grim warning sign of the troubles spreading through shipping when the firm cut the ratings outlook for Denmark’s A.P. Moller-Maersk A/S, the world’s biggest boxship operator by capacity, from stable to negative,” as reported by Costas Paris in the Wall Street Journal.

Many supply chains are like Swiss watches, with many interlocking gears moving with precision. Coronavirus has basically thrown sand into those gears. Gone is the soothing tick-tock of frictionless movement, replaced by the awful grinding sound of gears breaking apart.

Force Majeure in Logistics

Last month I wrote “Force Majeure In The Time Of Coronavirus,” and just a few days later DHL Global Forwarding declared force majeure.

“With almost all elements of the air and ocean supply chain on certain trade lanes currently being impossible to predict or control, DHL Global Forwarding decided to declare ‘Force Majeure’ and to reserve the right to modify its services to the prevailing circumstances consequent to the virus,” a Deutsche Post DHL Group spokesperson told Supply Chain Dive in an email.

CEVA Logistics did the same this week. As reported by Air Cargo News:

CEVA Logistics has declared Force Majeure as a result of the coronavirus outbreak, removing it from certain contractual obligations. The announcement applies to all CEVA Services, including (but not limited to) its airfreight, ocean freight, ground freight, rail, customs brokerage and contract logistics services.

“Having declared Force Majeure, CEVA Logistics reserves the right to modify all or part of its services,” it said. “To change its working procedures and any previously agreed rates and prices, to levy surcharges, or otherwise to take any measures necessary to adjust its business operations and its obligations to its customers, suppliers and other stakeholders, in response to the prevailing circumstances.”

Similarly, “FedEx and UPS suspended their respective service guarantees last week, citing expected delays and disruptions related to the global coronavirus response,” according to Supply Chain Dive.

It looks like “competing on customer experience” is being put on hold for now due to the coronavirus crisis.

Command Alkon Acquired by Thoma Bravo

While coronavirus continues to disrupt virtually everything, we’re still seeing deals happening in the supply chain technology realm. The latest example: Command Alkon announced that Thoma Bravo is acquiring the company.

I’ve had the opportunity to work with the Command Alkon team and its customers the past few years. Here’s what I wrote in December 2017 after attending the Command Alkon ELEVATE 2017 conference:

Command Alkon is in a unique position to help the industry move up the supply chain maturity curve. In addition to fleet visibility, the company has other supply-chain related applications, including demand and inventory management and dispatch optimization. The missing piece, and where I believe the biggest opportunity resides, is providing a network platform for suppliers, producers, contractors, and haulers to communicate and collaborate with each other in a more efficient and scalable manner.

Simply put, Command Alkon has the opportunity to become a supply chain operating network for the heavy building materials industry, which would not only provide the company with new avenues for growth, but would also help the entire HBM ecosystem reach higher levels of supply chain performance.

Last September, Command Alkon took a big step in that direction by introducing CONNEX (pronounced “connects”), “a next-generation vertical cloud solution designed to increase productivity levels and create unprecedented results across project performance, schedule, workforce management, and safety.”

This latest news is another step. According to the press release:

Once completed, the acquisition by Thoma Bravo is expected to speed the execution of Command Alkon’s strategy to integrate inter-company supply chain operations in heavy construction via CONNEX, the company’s many-to-many technology platform. By focusing resources and investing in next-generation, vertical-cloud capabilities, customers will benefit from real-time collaboration tools that replace manual and paper-based processes, maximize efficiency and productivity, improve real-time decision making, and ensure certainty of project outcomes. 

As I’ve written in the past, digital transformation matters in the heavy building materials / construction industry because it’s the only way the industry will be able to meet — both cost-effectively and on time — the large need for infrastructure investments around the world. It also matters because federal and state agencies and competitive pressures will also demand it.

Command Alkon has come a long way over the past two years in transforming its technology platform to address this challenge and opportunity. The work is not done, but under this new ownership (Thoma Bravo also acquired Elemica a few years ago, another digital supply chain network provider), the company gains additional funding and talent to get there faster.

And with that, have a happy weekend!

Song of the Week: “Simmer” by Hayley Williams