The global supply chain is facing continuing challenges, with the Covid-19 pandemic having triggered multiple disorders in the global supply chain processes, such as the severe global port congestion. At the same time, crises, like the Suez Canal blockage, are deteriorating, even more, the situation.
Tim Tudor, CEO of ECU Worldwide, has expressed his views on the global supply chain situation in an exclusive interview with Container News.
ECU Worldwide is an Antwerp-headquartered and privately owned global logistics player, valued at approximately US$2 billion, driving consolidation in the Less than Container Load (LCL), Full Container Load (FCL) and warehousing segments.
- How has global congestion impacted your operations?
Amidst the pandemic, we have seen global supply chains facing several disruptions involving congestion, capacity constraints, irregularities in container movement, interrupted ocean freight operations, and importantly a highly skewed air and shipping freight rates. However, it also opened new avenues for logistics companies to see how they can build resilience and move towards a digital supply chain ecosystem. A good example is the boost in buying patterns and behavior across the e-commerce value chain that nudged the industry heavily towards digitization.
What we are also seeing as a key trend is that the Less than Container Load (LCL) segment has seen immense growth and is often the highest margin segment in the ocean freight space. In light of the disruptions, small and medium businesses enterprises (SMB) and beneficial cargo owners (BCOs) continue to seek flexibility and agility to stay relevant and are depending on their logistics partners to deliver a ‘continual feed’ supply chain system with high-frequency movement.
LCL consolidation remains a poignant solution for SMB players as it seamlessly aggregates small shipments and ships weekly, rather than wait for full-cargo-load to ship -- which could take a couple of weeks or more, up until the volume justifies. Triggered by space constraints and escalating rates, the ECU Worldwide LCL momentum is keen to overcome these challenges by leveraging our company network and our platform ECU360 digital platform. We believe that the LCL space will continue to see positive momentum up until 2022.
- How have you tried to manage the disruptions in the global supply chain?
ECU is strategically poised to overcome challenges like the recent pandemic backed by its strong global network of 4500 people, exhaustive network across 180 countries, and ECU360 - our digital platform for global trade, offering single-window shipping. To be relevant in the new normal and deliver to a global network it became imperative for us to be more responsive and agile to customize our solutions to help our clients navigate through trying times.
The pandemic made it imperative to accelerate the need for digitization with a big push coming from the growth in the global e-commerce business that demanded precedence of next-day delivery that made it essential for us to stay ahead of the curve by creating new reliable services in booking and tracking shipments.
Additionally, we leveraged a sea-air service from China to Europe via Los Angeles, called XLERATE. Less-than-containerload (LCL) shipments booked by forwarders were moved via ocean carrier from six Chinese ports to Los Angeles for devanning and placement onto airplanes bound for Europe. Our XLERATE service offers the fastest port-to-port transit time of 10 days from Shanghai to Los Angeles. It is a CFS to CFS express service that leverages the industry-leading ocean services of MATSON Navigation.
- How do you think a similar situation [of global congestion] could be avoided in the future? What measures should be taken?
These are unprecedented times, crises like the pandemic and the Suez Canal blockage cannot be foreseen, therefore specific strategies cannot be put in place preemptively. The industry can learn from these experiences by building capacity to handle cargo smartly - prioritizing cargo by segment and creating more storage around the port facilities to avoid congestion. It will be important to see further investments in expanding port sizes to accommodate for future and rampant digitization for single window clearances that could reduce wait times. Finally, it will be important for logistics players to introduce short- and long-term greener supply-chain initiatives to maximize business outcomes.
- What are your predictions for the rest of 2021 in terms of ports congestion and traffic?
With an e-commerce surge and imports levels hitting astronomical levels the logistics infrastructure is stressed, however, congestion will eventually subside as the backlog clears and the demand for consumer goods decreases. The broad expectation is that ports and ocean carriers will be able to catch up on the backlog in early 2022, with a return to some semblance of normalcy by next spring.