TPM 2018 Tracker: News, insights, analysis

TPM 2018 Tracker: News, insights, analysis

TPM 2018.Attendees at the 18th Annual Conference in Long Beach, California, on March 5, 2018.
Photo credit: Caught in the Moment Photography

The latest news and insights from the JOC's TPM 2018 conference in Long Beach, California....  

 

Wednesday, March 7:

 

1:45 p.m. PST: 

The term “disruption” is hard to shake at any shipping, transportation or supply chain conference these days, but Lars Jensen doesn’t believe it’s really happening. “I don’t buy the premise we’re going to be disrupted,” the CEO and partner of SeaIntelligence Consulting said in the penultimate session at the TPM 2018 Conference. “We’re going to be transformed.”

The eventual impact may be the same, but that impact will be manifest over a long time. “It’s not a big wave that’s coming in, it’s the tide.” Sit on the beach, and you’ll still drown, but there’s a lot of time to take action and avoid that fate, he said. “The disruptors today would be the hipsters waiting with their surfboards to ride that big wave, but with a rising tide that won’t happen.”

The real transformation isn’t in technology, but in business processes, Jensen said. “On the software side of this industry, nothing you see out there is new. Nothing. Everything that’s being hyped was around 10 or 15 years ago.” One example might be application programming interfaces or APIs, which have been used for decades to connect computers and other devices.

Today those APIs are being used in radically different ways then first envisioned, replacing older communications channels such as electronic data interchange. That trend that can be traced to the rapid evolution of mobility technology centered on the smartphone in the 2000s. Suddenly, APIs were being used to connect mobile apps to databases via wireless networks.

Why do some technologies “fail to take off” when they’re initially introduced? “It’s because the industry was unable to change the way we do business or our business processes,” Jensen said. An example: Motor trucks introduced early in the 1900s were placed in the same service as horse wagons, as shipping firms resisted changing their freight networks.

 
1:35 p.m. PST:

“We have had the first shot fired in a trade war, and when you fire a shot in a trade war it doesn’t go unanswered. We can hope there are no more shots, but if there are we can’t predict the impact on volume for our industries,” said Lars Jensen, CEO, SeaIntelligence Consulting.

1:30 p.m. PST:

You don’t have to be the target of a cyberattack to be hurt by a cyberattack, Lars Jensen, CEO and partner of SeaIntelligence Consulting, said in the penultimate session of this year’s TPM Conference. Consider the cyberattack that cost AP Moller-Maersk $250 million to $300 million last year. “Maersk was not attacked,” Jensen pointed out. “Maersk was the unfortunate collateral damage in an attack on the state of Ukraine. The largest carrier in the world was brought to its knees just by sitting on the sidelines.” That’s a warning no one can ignore, he said.

 “I see Amazon as a huge threat to the freight forwarders. To the shipping lines no. The moment Amazon buys a ship is the signal for everyone who holds Amazon stock to sell it,” Jensen said.

12:40 p.m. PST:

Tracking containers with sensor technology - unlike other technological innovation that are much discussed but have yet to be put into practice - is already in use, the panel entitled “The value to BCOs from Real-Time Ocean ETA.”

“Even without artificial intelligence, let’s get down to brass tacks,” said panelist Keith Hitchcock, vice president, consumer, retail, fashion for Panalpina. “When a new customer comes to us to fill out a tender for ocean freight and they say we want you to put in your transit time, my question is “Do you want me to put in the transit time that is published by the ocean carrier?”, which we all know is one thing, or do you want me to provide you with perhaps Panalpina-NVOs global actually realized transit time against that port pair over the last 6 months? All that can go out the window when you start having real live data that enables you in near real time to measure actual performance … I think that’s really powerful.”

12:05 p.m. PST:

Carrier estimated time of arrival can be reliable or unreliable depending on the trade, with lower levels of reliability depending on the size and niche of the trade, such as the north-south, according to Chuck McDaniel, a consultant and former manager of global logistics for Procter & Gamble.

11:15 a.m. PST:

Freight on board (FOB) was never meant for container shipping, free-carrier (FCA) is how containers should be shipped, according to Dan Gardner, vice president, supply chain, Lakeshore Learning Materials.

10:10 a.m. PST:

 Some in the BCO-NVO community are keeping their concerns in check as far as the possibility that the International Longshoremen’s Association (ILA) does not strike a deal by the time the contract expires in September, triggering labor action.

“I’m not a clairvoyant, but if I was a betting man I would say no,” said William F. Rooney, vice president trade management, North America, Kuehne + Nagel, in a session on collaboration between the ports of Virginia and Georgia. “Most people, including myself, don’t think there is going to be a strike I don’t think the issue is whether there is going to be a strike or not, or a labor action in the fall, the issue is, when do you know with certainty that there is or isn’t. Because what happens is our customers end up spending a lot of time and money preparing if they don’t know. So we and others are trying to push for an early agreement.

Marlon Jones, manager of international transportation, International Paper, rejected the suggestion that he take actions to “mitigate risk.”

“No, I am not taking any actions. The South East labor is awesome. [They] are very, very good. I have had the opportunity to talk to them recently and I have got all the confidence in the world that it’s going to get done,” Jones said, of the contract. “So if it doesn’t get done, maybe I will get fired, but I am not taking any action.”

9:15 a.m. PST:

Two mega-trends are converging on supply chains and causing widespread disruption: increased velocity in supply chain pipelines and operational challenges “on the ground,” says William F. Rooney, vice president of strategic development for Kuehne + Nagel. “Things are going faster and faster and faster — they’re airfreighting dog food now, it’s crazy how things are speeding up.” At the same time, “operational challenges are crashing into each other.”

In particular, he mentioned the challenges surrounding bigger container ships delivering large volumes of TEUs in bunches at ports and the constraints the electronic logging mandate and high demand have placed on drayage and over-the-road trucking. “A lot more of the customer issues are on the ground, not necessarily the ship,” Rooney said at a session on the alliance between the Georgia Ports Authority and the Port of Virginia.

In light of the conflict between the demand for speed and capacity issues, “anything ports can do to improve efficiencies, the better,” he said.

9 a.m. PST:

As larger and larger container ships call at ports, “not everybody’s going to be a winner,” Griffith V. Lynch, executive director of the Georgia Ports Authority, told TPM. “They just can’t be. We’ll see less ports benefiting from these larger ships.” This is one reason the GPA has entered an alliance with the Port of Virginia, the subject of a special panel here at TPM.

 

Tuesday, March 6:

5:10 p.m. PST:

It will soon become clear how the ELD mandate on truck drivers is going to affect the warehouse market, and what areas are hot, said Michael P. Murphy, chief development office of Centerpoint Properties on #TPM2018 real estate panel. He told the panel “Industrial real estate: will supply keep pace with surging demand?” that he looked at the last 5 million square feet his company developed and found that while the specs of the building was important “the single biggest driver has been our ability to have the 20, 30, 40 acres of container yard truck facilities” where the user can control their dedicated truck fleet, park containers, perhaps run a chassis pool.

“That flexibility is only going to be more valuable as the ELD kicks in next month and we really start to see how this impacts truckers and if its going to play to us,” Murphy said. It could be that “being next to that transportation hub, or a close proximity of a port or an intermodal hub is just going to drive more value for the client. Because you have got that 11 hour drive max and you are going to be held to it. That paradigm and how that plays out over the next year will be fascinating.

4:45 p.m. PST:

Industrial real estate is not just about location any more, it involves taking into consideration a large array of factors. These include local labor pools for warehouses, the impact of the electronic logging device mandate on routing decisions, and considerations of rates over the long term in a market where e-commerce is driving up demand and rental rates.

4:30 p.m. PST:

Innovation Jam attendees voted the New York Shipping Exchange as the tech solution most likely to solve real-world shipping issues. 

4:15 p.m. PST:

In the last presentation of the Innovation Jam, Vladimir Pshonyak, founder and CEO of Pier Trucker, laid out how the platform draws on data from gate cameras, congestion maps, truck turn times, and container and booking status to provide harbor truckers and shippers with real-time information and supply chain planning.

4:00 p.m. PST:

Griff Lynch, Georgia Ports Authority CEO, said South Atlantic ports are still discussing a new regional chassis pool that they hope will help solve problems with chassis supply and quality. He said the ports are exploring a model similar to that of the port-wide HRCP 2 pool at the Port of Virginia, but that no final decisions have been made. Lynch said that during the last two years volume at ports from Jacksonville, Florida, to Wilmington, North Carolina, has increased by 32 percent, while the South Atlantic Chassis Pool operated by Consolidated Chassis Management has increased its equipment fleet by only 2 percent. “We can’t seem to fix it with the current mode and as a result we are looking at options like the HRCP 2 model,” he said.

Comparing and contrasting how easy it is for TPM attendees from the US Northeast to adjust their flights to avoid a coming winter storm, and the difficulty of finding a new sailing for a container, Karim Jumma, interim chief product officer, INTTRA, said that the company’s new ocean schedule and API solutions will allow shippers to make those adjustments with ease. The data the company has accumulated through its relationships with carriers can be used to optimize supply chains by helping to determine when, where, and with whom to ship.

3:45 p.m PST:

Dave Manning, president of TCW Inc. and president and chairman of the North American Chassis Pool Cooperative (NACPC), said it’s time for “open choice” on chassis for motor carriers. NACPC has formed a joint venture with Flexi-Van to provide open choice on chassis and at-cost pricing in the Port of New York and New Jersey. Open choice and at-cost pricing also are being considered for a new regional pool that South Atlantic ports are discussing. Manning said at-cost pricing typically is about $6 to $8 a day less than what a trucker would pay for a chassis used under regular merchant haulage arrangements.

“Terminal operations are a black box,” said XVELA vice president of operations Sumitha Sampath as she explained how the technology company can help resolve the issues surrounding visibility during transshipment by helping to understand the entire flow of a containers through the supply chain and where visibility is good or bad.

Most of the the shipping planning process is siloed, but XVELA says it can break down those silos with its “neutral cloud based collaboration platform” by connecting terminal operations, stowage plans, and AIS Live data as well as other third-party data sources.

3:30 p.m. PST:

New York Shipping Exchange CEO Gordon Downes argues his digital freight-booking platform’s policy of instituting penalties for either party that violates a shipping contract will help solve the recurring issues of no-shows and rolled cargo that create headaches and inefficiencies for carriers and shippers alike.

3:00 p.m. PST:

Ocean Insights collects data from a wide array of third-party sources such as sailing schedules and AIS Live to track and confirm the status of shipments as they make their way from origin to destination, according to Robin Jaacks, vice president, sales operations during the first half of the Innovation Jam. This data is then leverage to allow shippers to generate insights into their own supply chain, while its reliance on outside sources allows shippers to see alternatives that can provide solutions to a number of issues, such as a missed transshipment.

2:45 p.m.PST:

“It is like moving lightning, if you’re not ready for the next jolt of it, you’re gonna be in trouble,” Log-Net CEO John Motley said as he presented his company’s tracking and machine learning platform that leverages Big Data to inform shippers about the status of their shipment and how it stacks up to historical norms. Log-Net works to alert shippers to issues 10 weeks ahead of time so that the appropriate adjustments may be made by all partners in the supply chain all the way down the purchase order level.

2:40 p.m. PST:

Heard at TPM 2018: East Coast shippers concerned about possible labor strife are looking at West Coast ports. Even if the International Longshoremen’s Association (ILA) reaches an agreement  with employers without a labor action, lack of an agreement “doesn’t make our jobs easier,” said one shipper. His company was looking for ways to shift some freight “soon.”

2 p.m. PST:

Eight technology providers, eight supply chain problems, eight solutions: All provided and vetted by shippers. This two-part session begins with ClearMetal  CEO Adam Compain addressing the difficulties of getting a “continuous estimated time of arrival” for shipments moving through supply chains. “If this is so important, why is it so hard?” Compain asked.

The answer is the underlying data, and the ability to get it and use it. “We’ve seen systems that show you where your trucks are, but international is not just trucking on water,” he said.

“We took a fundamentally different approach, one that mimics the complexity of international and intermodal supply chains.” The ClearMetal system receives data and as data on freight “events” such as arrival at ports or transloading enters the system, ETAs are automatically adjusted. “We’re talking about 25 percent productivity gains,” he said.

Brian Laungh Aoeah, head and founder of the New York Supply Chain Meet Up, moderates the Innovation Jam at the 18th Annual TPM Conference. Photo credit:Caught in the Moment Photography.

12:30 p.m. PST:

Lior Ron, senior director of Uber Freight, doesn’t see “self-driving” trucks eliminating driving jobs. He believes the need for drivers will grow, shifting from long-haul to short-haul jobs. A network of transfer hubs will allow handoffs between short-haul drivers and long-haul operators of autonomous trucks, and that operating model is now being tested by Uber Freight in Southern California and Arizona. The transfer hub is only being tested in Arizona, though. 

“These long hauls will be transformed one step at a time to a virtual railroad,” Ron said. “Drivers can now be fully utilized, driving back and forth between the transfer hubs and shipping facilities.”

He doesn’t expect “self-driving” trucks to eliminate drivers. “The self-driving truck will never be able to do everything the driver can do today,” Ron said.

12:15 p.m. PST: 

Echoing a point made by CMA CGM in its Monday announcement of new efforts to improve responsiveness to customer needs, Arthur Bredehoft, director, key account sales, Safmarine, said that it is essential that those working with shippers at transportation companies are empowered to make decisions on the ground and on the fly.

12:00 p.m. PST:

Transportation providers and shippers must find a balance between the personal relationships of individuals working together on a daily basis, and sharing knowledge among teams and organizations to ensure that companies as a whole can understand problems as they arise and adequately respond, according to Mathieu Friedberg, senior vice president, commercial and agency network, CMA CGM.

11:30 a.m. PST:

Shippers and transportation providers on stage are sharing their keys to logistical and shipping success to ensure that freight keeps moving when complications arise. But at the core of all their strategies are strong relationships with their partners throughout the supply chain to facilitate trust and communication when things go wrong.

10:15 a.m. PST:

Home Depot is extending its Project Sync supply chain optimization program to the international shipping arena. The project, which has been in place for domestic shipments for several years, will cover 75 to 80 percent of ocean freight volume by the end of 2018, vice president of transportation Michelle Livingstone said during a session on enforceable contracts at TPM 2018. “It’s going to involve real tight delivery times, so we’ll have to have really good information from carriers,” Livingstone said.

9:50 a.m. PST:

Home Depot “wants to be a shipper of choice for all modes of transportation,” says Michelle Livingstone, vice president of transportation for the retailer. But since 2010, the company has been developing “enforceable contracts” with its ocean carriers. “We didn’t like some of our experiences” in the initial recovery market following the recession, she said. “We had some of our cargo being rolled.” Home Depot took a collaborative approach, Livingstone said. “If you roll us, there will be an expense offset, and if we don’t meet our promises, you will get an expense offset. Both sides have an opportunity to come back and change, and the contract keeps track of what has transpired,” she said. “What’s most important are the ongoing conversations between the carriers and ourselves so if any issues come up, we discuss them before they become a contract issue.”

  

Ocean Network Express CEO Jeremy Nixon gestures as he addresses the audience during the One-on-One panel. Photo credit: Caught in the Moment Photography.

9 a.m. PST: 

"The certainty of being able to get the freight inland, to service the ramps, the last mile delivery, that’s what we’ve really got to focus on," says Ocean Network Express (ONE) CEO Jeremy Nixon.

“We may get bigger, but we don’t want to get super big, we don’t want to lose closeness to the customer. The focus on customer service will be a very critical part of service to the market,” Nixon added.

“Let’s just really focus on doing shipping well,” Nixon said.

 
**

Ocean Network Express, the joint venture including Japan’s “K” Line, MOL, and NYK Line, is focused on “a very smooth changeover from the three legacy companies to one,” and not on expanding beyond the container shipping business, ONE CEO Jeremy Nixon said. “We’re focused on the liner product,” Nixon told TPM. Unlike the Maersk Group, “we’re not going into logistics.” Maersk recently announced plans to become an “integrator” in the international container market, moving beyond its core shipping business to encompass other aspects of the supply chain. “That’s their go-to-market strategy, and it will be very interesting to see how that plays out,” Nixon said. It’s not ONE’s strategy. “2018 for us is about doing the basics right. We’re very focused on that inland offering, we’ll have some strong rail offerings, but we’re not looking to get out of the business we’re in today. We just want to have a very good shipping line, a very smooth changeover from the three legacy companies to one.”

 

Monday, March 5:
 
5 p.m. PST:

Amid reports of a growing national drayage debacle, Frank A. Vingerhoets is optimistic. “Personally, I’m not sure there will be a shortage of drivers for drayage,” the president of Katoen Natie USA, the American arm of the international logistics and port operator. “At the end of the day, opening hours at the port will get longer, the drivers will go home at night. I think it will be a pretty good job if the ports function well, if you can get chassis.”

And there’s the rub. Exporters at TPM 2018 stress speeding drayage truckers through port terminal gates, and ensuring they get chassis without undue delay, is just as important as reducing detention time for truckload drivers far inland. “It’s not a matter of hanging it on the trucker,” said Michael Symonanis, director of North America Logistics for cotton exporter Louis Dreyfus. “I’ve watched it fall apart in real time, literally. The driver is in line, and there’s no chassis. He’s sent to another terminal, and he gets stuck in line again. Then he gives up and goes somewhere else.”

4:15 p.m. PST: 

“I think the truck question is a huge hurdle that all you logistics people are going to face in the next two or three years,” said Ed Zaninelli, president of Griffin Creek Consulting. “I’m worried about trucking, and the biggest worry I have is gate times. That needs to be addressed in some way, and I’d address it in my contracts. You have to guarantee turn times. I don’t know how you’re going to get carriers to be accountable for delays at a rail terminal. I’d go after the guy who’s paying the railroad, and that’s the [ocean] carrier.”

4 p.m. PST:

Retaliatory tariffs are a given, if the US proceeds with its plan to impose tariffs on imported steel and aluminum. But what export commodities might be at risk? “The lessons of the last few decades is that trade partners will focus retaliatory tariffs on high value exports with some political value, like Kentucky Bourbon,” said Paul Bingham, vice president of the Economic Development Research Group. That might concern a certain Republican senator. But tariffs and retaliatory tariffs can quickly spin out of control. “The Trump administration has already said it would retaliate against retaliation,” Bingham said during a session on US exports. “If that [retaliation] cascades through a whole host of commodities, we could start to see it quickly affect volumes. No one has won a trade war, and it would be bad for everybody in this room. This is a very significant risk to US trade in ways we haven’t had in a long time.”

Tom Behrens-Sorensen, Chairman and CEO, Behrens-Sorensen Advisory speaks during the View from the Top panel. Photo credit: Caught in the Moment Photography.

2:50 p.m. PST:

“We can talk about whether shipping is still in the Stone Age or Middle Ages, but when it comes to bills of lading, we are doing things the same way as we did in the Renaissance, 500 years ago,”  said Nicolas Sartini, CEO, APL.

2:45 p.m. PST:

Sanne Manders, chief operating officer of Flexport, doesn’t like the term “disruption” when applied to supply chain technology. “Why don’t I like the term disruption? There’s a lot to do to go between where we are now and where we want to be,” he said. “Supply chains don’t live in 2018, they live in 1993. So we have to be humble and start by doing something a little bit better. That’s not disruptive, it’s kind of an evolution. Venture capital and technology can accelerate that evolution. There’s a lot of value to be created. There’s a lot of paperwork, a lot of unstructured data. Customers are unhappy because they lack visibility. But this is not a disruption this is an evolution. We hope we can accelerate the evolution a little bit.”

2:30 p.m. PST:

Class I railroads are seeing a surge in intermodal traffic, but drayage has the same capacity problems as over-the-road trucking, Beth Whited, executive vice president and chief marketing officer of Union Pacific Railroad, said.  “Until the market adapts, you’ll see congestion in inland ports as they try to absorb the changing volume of intermodal,” she said. Demand for intermodal is rising, according to TPM attendees, as trucking capacity tightens. Sixty percent of attendees polled said they plan to increase their use of intermodal.

Railroads can add value by improving visibility, Whited said. “Customers really want visibility to their overall supply chain, but it really has to be an industry wide focus. We’re anxious to partner with the steamship lines as well as other partners in the transportation process so customers can get the visibility they need and we can provide more  streamlined solutions to them.”

2:25 p.m. PST:

A JOC shipper poll found that two-thirds of attendees say ocean carrier service levels have declined over the last 12 months, and the same figure said that technology was somewhat effective in helping them solve supply chain challenges.

2:05 p.m. PST:

Speakers at TPM’s View from the Top panel issue more warnings on trade conflicts. There’s concern that a trade war could torpedo what APL CEO Nicolas Sartini called “growth everywhere.”

“We could be at a defining moment,” said Tom Behrens-Sorensen, chairman and CEO of Behrens-Sorensen Advisory P/S. “A trade war could take growth significantly down, if it is not nipped in the bud.” If President Trump goes through with what he has alluded to, I wouldn’t want to be in the shoes of a certain company in Seattle. Boeing knows it would cause a lot of pain.”

“Agricultural exports are quite obvious targets,” for retaliation for tariffs, Behrens-Sorensen said.

Industrial markets "feel strong" across the US — there's "opportunity for all of us" as long as we "don't make a mistake on trade policy, says Beth Whited, executive vice president and chief marketing officer of Union Pacific Railroad. Absent potential trade conflict, APL’s Sartini sees “growth everywhere, and activity is going to be strong.  We see growth in areas we haven’t seen before. Brazil is coming back, Russia is back in the market.”

2 p.m. PST

“We could be at a defining moment," says Tom Behrens-Sorenson, Chairman and CEO of Behrens-Sorenson Advisory P/S, speaking on the prospect of trade wars and their impact on the global economy.
  
Industrial markets "feel strong" across the US — there's "opportunity for all of us" as long as we "don't make a mistake on trade policy, says UP's Beth Whited.

12:10 p.m. PST:

Shipping, like society, has allowed itself to become too digitized, hollowing out valuable relationships that enable the movement of freight and problem solving when things go awry, according to Pete Mento, vice president, global trade, and managed services, Crane Worldwide Logistics.

11:30 a.m. PST: 

“In short, you might say we’ve been focused too much on freight rates, and not enough on service,” said Graham Slack, chief economist, Maersk Group, emphasizing that shipper demands for visibility and data analysis are becoming a critical issue that the market must address. 

11:10 a.m. PST:

“Back in 2016 we saw the worst market for container shipping ever ... improvements came along last year, and improvements are expected to come along this year," said Peter Sand, chief shipping analyst, BIMCO. 

10:30 a.m. PST:
 
CMA CGM announced that that it will make a concerted effort to reverse the commoditization of the container shipping sector that has taken place in the wake of the 2008 financial crisis through a focus on customer service, digital transformation, and valued-added services.

10:05 a.m. PST: 

“Anybody who wants a job in this economy can find one ... Lack of jobs is not a problem in the US regardless of what any politician says,” said IHS Markit chief economist Nariman Behravesh. Further, IHS Markit expects the global economy to expand at a 3.5 percent rate in 2018 and 2019.
  
Jochen Thewes, CEO and chairman of the Board of Management at DB Schenker,
delivers the keynote address at the 18th Annual TPM Conference.

Photo credit: Caught in the Moment Photography.


9:25 a.m. PST:

Peter Tirschwell, senior director of content, Maritime & Trade, IHS Markit, kicks off the 18th Annual TPM Conference discussing the wide range of change and complications in US transportation, from maritime to trucking, and asks if an industry “still in the stone age” will be able to utilize technology for transformational, rather than incremental, change.

Lou Anne Bynum, president of the Long Beach Board of Harbor Commissioners, welcomes conference attendees to Long Beach and says “It is 2018, not the 1930s,” arguing that free trade is an instrument of peace and that there are no winners in a trade wars. The Trump administration last week announced still unfinalized plans to put tariffs in place on US imports of aluminum and steel.

“That time is up,” Jochen Thewes, CEO and chairman of the board of management at DB Schenker said during his keynote speech in reference to the insulation of the shipping and logistics industry from technological disruption seen elsewhere in the economy.