2016 will go down as one of the most memorable years in international trade. The West Coast ports were still working to gain the trust of shippers after the port strike in 2015. Meanwhile, Hanjin Shipping went bankrupt which left some shippers frantic to find new, reliable carriers. Regulations were also hot topics this past year as the Advisory Committee of Enforcement (ACE) and Safety of Life at Sea (SOLAS), required shippers to ensure that their global supply chains were compliant. After such an impactful year in international trade, 2017 looks to be another year of changes as new administrations and partnerships emerge.
Robert Garrison, President of Global at NFI, shared his expectations for the New Year. “In 2017, the advantage within the logistics industry will continue to go the agile players who can anticipate and respond to these changes and those who view change as opportunity.”
New Ocean Alliances
At the end of 2016, shippers witnessed the formation of new shipping alliances. After the Hanjin bankruptcy, shippers saw a rapid consolidation of ocean carriers as the top 20 global carriers decreased to a group of 13 carriers. What used to be four shipping alliances is now at three. However, there are still independent carriers who don’t belong to any specific alliance1.
The new alliances will start operating this April, which means that it will also be the beginning of many new contracts. Currently shippers are undergoing negotiations as they begin to strategize a way to work with the new carrier partnerships2. Drewry, a maritime research company, predicts that global fleets will see a 5.9 percent growth. They even expect that global freight rates will improve by 8% after four years of decline3.
Changes in Trade
In addition to the shift in alliances, shippers are also apprehensive about the state of trade agreements in 2017. The new administration in the United States has a focus on renegotiating the trade agreements that already exist today, which could have an effect on the volume of cargo around the world. The new administration has already voiced its opposition to the Trans-Pacific Partnership (TPP). Other items up for reconsideration are changes to NAFTA and other international trade agreements. Aside from trade agreements, tariff and currency manipulation could also affect international trade and how countries handle inbound and outbound freight4.
This year will be another inventive year for supply chain technology. In 2016 there were innovations to improve global communication infrastructure and tools to improve visibility. With the growth of ecommerce, shippers are looking for ways to enhance their processes and provide exceptional service to their customers. Beth Peterson, president of the global trade consultancy BPE, gave advice to shippers in navigating the New Year. “If [shippers] automate and continuously measure high-risk operations, shippers can turn trade compliance into a strategic advantage5.”
Working with a 3PL and leveraging their expertise, partnerships, and technologies can also provide a competitive advantage and alleviate risk. Similar to domestic supply chains, the ability to have agility and strong communication can make for a successful year.