Ocean Shipping Season: Insights for Navigating High Demand and Other Disruptions

[Sri] Hello, and welcome everyone to our 2021 TransPacific Ocean contracting season. I'm Sir Laxmana, Vice President of global transportation at C.H. Robinson and I'm here today with a Jenna Kuehn, senior manager of Inland Logistics, and Greg Scott, Director of our LCL Ocean product.

As we move into 202, we wanted to take the opportunity to connect with you our valued market partners and bring you some new insights about the ocean and inland logistics market. As a market leader, C.H. Robinson has the global suite of services and logistical expertise to help customers drive business. C.H. Robinson is the number one NBOCC from China, the US and one of the largest NBOCC in the world. But it's our people that really sets us apart, and this is why we're bringing some of their expertise to you today.

Before we dive into the details, however, I'd like to highlight some important marketplace dynamics. Unfortunately, many of the challenges we saw in 2020 will continue in 2021. As you can see from these likely disruptors, we are not anticipating a slack season. This is unprecedented in many ways, and adds a layer of complexity to supply chain management. This light represents a small sampling of the challenges we faced in 2020 and what to anticipate in 2021, and years to come. As you look at this, you should ask yourself a question. Are you prepared? Increased demand, tight capacity, unpredictable vessel schedules port congestions and container shortages are all ingredients for another turbulent year.

These and other challenges only emphasize the importance of an agile supply chain. As you look at this calendar, visualize your import supply chain and how these events influence your inbound patterns. Start thinking about whether you have the right pricing models, and if you have the ability to flex up and down without worrying about equipment, space and premiums. How are you advertising your risk across various gateways? And how can you circumnavigate around congestions that is plaguing our port systems? Are you asking the right questions to the carriers, in light of the frequent accidents on the Pacific and what solutions you need to think of?

Another extremely important thing to consider when putting your strategic shipping plants in place is the ocean carrier market. In recent years, there have been a lot of consolidation and change to successfully secure capacity, you should align your goal through the current market conditions. As you can see on the slide, there is and has been, a lot of consolidation and change within the ocean carrier market. In the past, Distributing freight across multiple carriers offered some protection against rising costs, blank sailing and delays. Today, you only have nine global carriers to choose from, and all of this are part of three primary alliances making it more challenging to diversify your options. This is important as you truly understand how each carrier operates the terminals they call and the alliances when you're planning your contracts. Think about how independent carriers that are not part of any of these alliances can complement your selections. These are all important things to consider. Connecting the dots on market dynamics and carrying capacity can ensure your positioned to align all of these areas to your specific goals. To be clear, this is only a peek at the market information that could impact the ocean contracting season this year. Beyond market insights, having the right services align at the right place along the supply chain is critical. So Jenna is going to take over and talk a little bit about Inland services.

[Jenna] Thank you, Sri. I appreciate being here today and wholeheartedly agree that knowing your options is key. A big portion of ocean logistics is what happens both upstream and downstream from the on the water service. These services, like drayage, yard or warehouse storage, transloading and equipment sourcing, are part of a bigger picture that shippers should be thinking about. And there will likely be some changes in 2021.

I want to share some details regarding what we anticipate. Looking forward in this space. Over the last five years, steamship lines have continued to reduce free time for detention and emerge and increase the cost associated to container usage. We expect this to continue in 2021. At C. H. Robinson we give our customers the option to accrue inland accessorials so that we can include these costs upon empty container return to aid with things like automation, auditing and further help drive efficiencies for our customers. Higher import volumes are making 2021 feel like a continued peak season. Congestion and equipment charges do not stop at the port. The U. S. Inland market is being tested like never before and understanding what you can control is critical to avoiding additional costs in your supply chain. There are a number of factors causing costs to increase. Capacity is limited, equipment is at a deficit and it's not helping the dual transactions are no longer the norm due to lack of chassis choice and IPI (Interior Point Intermodal) terminal elections of wheeled versus grounded. When the entire supply chain infrastructure is taxed, shippers will need to think ahead and plan for equipment usage. If I get one message across, it is this: communication collaboration and proactive forecasting have never been more important. Our C.H. Robinson drayage partners across the US are planning out capacity at least 10 days in advance. Same day service is non existent and customers need to understand what they can control and put communication first to avoid unnecessary inland accessorials.

It's critical to leverage technology and look for strategic relationships to drive incremental costs out of the supply chain. So how can we put plans together to tackle these challenges head on? First, I would say you need to know and understand the market. Sri did a great job in a short amount of time, highlighting the big picture market trends. Shippers who utilize additional services should also have a general understanding of market dynamics at the service level; or work with experts who do.

Second, shippers should plug into provider networks to ensure they have access to a broad scope of carriers. A reference Sri's comment on the carrier market. Ensuring you have access to capacity you need is the first step. Aligning this capacity with the additional service offerings your business needs is Step two.

And finally, shippers should utilize additional services in appropriate areas of the supply chain. These combined inland services help drive efficiency, and create streamlined supply chains. You do not need to move all of your goods the same way. We all need to think differently and be open to change.

With the inland activities, It's important to ask yourself some underlying questions. Do you choose chassis equipment you're leveraging? And if not, what is the impact? Is your freight predictable? Your facilities well run? Our carriers punished for things outside of their control. Do you route your freight to a grounded IPI over a wheeled facility and what is the benefit of each. How can we all support interoperability at the ramp locations throughout the US? And why are we not talking about this more? By asking yourself these questions and having these conversations with supply chain partners, you will best be able to address market challenges with success.

As Sri mentioned earlier, a primary focus area for shippers should be managing costs and driving efficiency. Without a doubt, consolidation services can help with both. So Greg is going to chat a bit about LCL.

[Greg] Thanks, Jenna. And, yes, consolidation programs are an impactful way to optimize supply chain efficiency. When thinking about LCL in terms of both cost and efficiency, it really all boils down to two primary areas: Space and Service.

C.H. Robinson LCL program is successful, due in part to our extensive FCL network and volumes. We establish guaranteed or reserve space allowing for consistent shipping schedules, which brings confidence to our customers supply chains. It's important to think about both the space and getting onto a vessel as well as having the space available inside each C.H. Robinson consolidation container.

Our ability to load multiple consolidation containers per sailing allows for more LCL converted airfreight to ocean and FCL conversions. Alternate port routings and expedited LCL services can also assist in reducing transit time and cost. Working with providers who can offer multiple service options with different tiers of spend and transit times allow for the customization Shippers need to meet their goals.

Our services are ultimately tailored to your supply chain needs. Establishing additional service programs with reliable, fully integrated providers is critical in completing the big picture. By working with the provider who can facilitate both ocean shipping and the adjacent services, shippers will be able to drive incremental efficiency. At C. H. Robinson, we have teams of experts supporting all of these services, including LCL, when utilizing a large established global shipping network. There are many advantages for LCL shipping options, visibility, handling, delivery times and the ability to control goods in all transportation phases.

Our C.H. Robinson LCL product provides you timely and flexible service options. C.H. Robinson consolidate shipments from several customers to fill an entire container, and you only pay for the space that your shipment uses. LCL also offers consistent weekly sailing schedules for ocean freight, which means you can ship your products by LCL as soon as they come off the production line, helping to expedite the supply chain. LCL truncated shipping times means you can accept orders on demand and customers get the product they need, when they need it. This also equates to less inventory to hold and store, helping reduce overall warehousing costs. So, as you can see, having a well aligned strategic LCL consolidation program in place can help manage for the trends that we're seeing in today's marketplace.

[Sri] Before I wrap up, I would like to thank our experts Jenna Kuehn and Greg Scott. In summary, this is the time to start talking about strategic shipping plans for 2021 into the future. Jenna, Greg and myself and the broader C.H. Robinson team would like to chat with you and your team, how we can optimize and customize the right ocean logistics and inland blueprint for your business. Listen, 2020 has come and gone and ultimately taught us all a lot about logistics and how to be nimble and forward thinking in an uncertain environment.

,p>At C.H. Robinson, we are always focused on addressing these challenges with customers and ensuring their supply chains marry up to the needs and demands of their businesses and marketplace. We invite you to reach out directly with questions and hope you found this information helpful.

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This presentation and any materials discussed herin are for informational purposes only and do not constitute as legal advice. You should always independently check any related Statutes, Regulations, Laws and Requirements and, if needed, consult with the applicabale country government agency or legal counsel where any questions or doubt may exist.

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What you need to know about ocean shipping in 2021

Overcome challenging market conditions in ocean shipping this season. Use these insights and best practices to improve your ocean service and the efficiency of your supply chain—even when facing unprecedented disruptions, delays, and surges in demand.

In this video Sri Laxmana, vice president of global transportation is joined by experts, Jenna Kuehn, senior manager of inland logistics, and Greg Scott, director of LCL product development, to offer the information you need to navigate challenging market conditions. Discover:

  • Which market dynamics will likely affect your ocean service
  • Why it’s important to also plan for inland services
  • What best-in-class LCL services can do for your supply chain