Above the Fold: Supply Chain Logistics News (March 19, 2021)

The clocks sprung forward last Sunday, but I haven’t caught up.

In fact, I’m more than an hour behind now, in this daylight, casting
a long shadow on the pavement, like a sundial, not moving but


Moving on, here’s the supply chain and logistics news that caught my attention this week:

The Bullwhip Effect Strikes Again in Supply Chain

“Several forces are coming together to squeeze the world’s supply chains, from the pandemic-driven rise in consumer demand for tech goods to a backlog of imports at clogged California ports to U.S. factory outages caused by weather woes,” write Sean McLain, Christopher M. Matthews, and Costas Paris in the Wall Street Journal. “They are creating cost increases and delays for numerous industries, company executives and analysts say, affecting profit margins and the prices that companies and consumers ultimately pay for many goods.”

Nike reported this week that its sales were hindered “by a global container shortage and congestion at West Coast ports that delayed the flow of inventory by more than three weeks.” Similarly, the CEO of Tilly’s said that 20% of its planned inventory was stuck at ports.

Apples and other farm goods are sitting in warehouses instead of shipping out to export markets. As reported by Paul Roberts in the Seattle Times:

In normal times, “we ship 10 to 15 containers of fruit every week into Taiwan,” says Dave Martin, export sales manager for Stemilt Growers in Wenatchee, one of Washington’s biggest tree-fruit exporters. “This week, we will not have a ship.”

The surge in Asian imports has had another effect on Northwest farmers. Because U.S. demand for Asian products is so high, shipping companies can now make far more money sending empty containers back to China as soon as possible, rather than take the time to refill them with American farm products.

According to a CNBC analysis, as reported by Lori Ann LaRocco, “at least $1.3 billion in potential agricultural exports [were] rejected at major ports on the East and West coasts, from July to December last year.” Here’s more from the article:

According to the Freightos Baltic Index, carriers are charging $5,548 a container to the East Coast, and $4,571 to the West Coast. U.S. agricultural export containers take longer to process because the product needs to be unloaded and the container needs to be cleaned. The route from the U.S. to China is also a fraction of the price ($715 a container), so carriers can afford to return empties instead of containers full of agriculture.

“In general, shutting things down is quicker and easier than restarting them again.” That’s what I wrote last June as manufacturing operations and supply chains were starting up again after being shut down due to the pandemic. Almost a year later and the restarting pains have only gotten worse. And while fancy software can help companies navigate through these challenges more effectively than in the past, there’s a limit to what they can do. When you only have so many containers, when you can only process so many ships through ports, when you furlough employees and have a hard time hiring them back, and when economic incentives drive certain behaviors, there’s very little “AI-powered, machine learning enabled, fully autonomous software” can do about it. 

Reality bites, and bites hard sometimes.

Transplace Expands to Europe

Since its founding, Transplace (a Talking Logistics sponsor) has been focused on North America. While other logistics service providers were expanding globally, Transplace stayed focused on strengthening its capabilities in North America, with particular emphasis on cross border trade between the US, Mexico, and Canada. This week, however, Transplace announced that it has opened its first European office in Leusden, Netherlands “to better serve its customers while also extending its industry-leading supply chain strategies for global shippers.” Here’s more from the press release:

“As our customers continue to expand their businesses internationally, there has been a growing need for our tech-enabled solutions to drive optimization and visibility across their global networks,” said Frank McGuigan, CEO of Transplace. “We’re confident that by opening the Leusden office we can support these requirements with our logistics platform and solutions.”

Transplace is well positioned for growth in Europe and expects to have $300MM / € 250MM in freight under management by midyear. Powering the largest transportation and logistics network, Transplace’s global repository of transportation data offers standardization across the world to optimize service delivery, lower operational risk and reduce costs.

Ultimately, you go where your customers take you. And as customers are looking to have a common technology platform for supply chain visibility, optimization, and analytics, moving beyond a single geographic region has become imperative for Transplace and others in the industry that now compete as much on the scale and scope of their logistics networks and technology platforms as they do on the scale and scope of the services they provide.

Stay tuned for more on this trend.

And with that, have a happy weekend!

Song of the Week: “Circadian Rhythm (Last Dance)” by Silversun Pickups