Contributing Editor Toby Gooley is a freelance writer and editor specializing in supply chain, logistics, material handling, and international trade. She previously was Editor at CSCMP's Supply Chain Quarterly. and Senior Editor of SCQ's sister publication, DC VELOCITY. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
Because it is a quarterly publication with lead times that are measured in months, it's rare
that CSCMP's Supply Chain Quarterly is able to publish "ripped from the headlines" articles that reflect current events.
But we've managed to do that in our last two issues, and I'd like to call your attention to those stories, as they address
newsworthy trends that could have a significant impact on your business.
Our Q2 cover story, "Uncertainty on the high seas," by Erik Peterson and Stephen Klimczuk-Massion of A.T. Kearney's Global
Business Policy Council, looked at such issues as climate change and geopolitical tensions, and their potential impact on supply
chains. We're not talking about something that's hypothetical or far in the future. Two of the developments Peterson and
Klimczuk-Massion discuss in their article—China's aggressive expansion of its territorial claims in the Pacific and
potential threats to the undersea data cables that carry the world's Internet communications—have become front-page news
around the world in the months since their article was published.
These are not subjects one generally thinks of as "supply chain issues," yet, as the authors point out, they could have a
profound impact on supply chains. For one thing, shipping lanes may have to shift and cargo may have to be rerouted if hostilities
break out as a result of China's move to take control of a number of tiny islands in the Pacific and claim territorial waters
around them. For another, if any harm—deliberate or otherwise—should come to
undersea data cables, Internet traffic around the world would be seriously disrupted—not a good thing for any supply chain organization that relies on the Internet for
collecting, transmitting, and managing data across its global network. "Uncertainty on the high seas" is a must-read for anyone
who is involved in international trade or transportation.
The very timely article in our Q3 issue is "Consolidation in the 3PL industry: Why is
it happening, and what does it mean?" by Robert C. Lieb of Northeastern University. Dr. Lieb, who has been studying the
third-party logistics (3PL) industry for more than two decades, leveraged his research relationships to find out the reasons
behind the unprecedented series of large 3PL mergers and acquisitions that have occurred over the past two years. And they're not
over yet: More M&A announcements hit the wires after we went to press, and there almost certainly are more to come.
While the article reviews why so many deals have been concluded recently, it also considers their potential impact on logistics
service providers and their customers. Post-acquisition problems 3PLs may face are fallout from leadership changes, damage to
employee morale, and poorly executed systems integration, among others. These and similar challenges could affect service quality,
competition, and shipper-3PL relationships. If you do business with 3PLs of any type or size, you'll want to read this article
about the startling changes in the industry's competitive landscape and what it could mean for you.
A hefty 42% of procurement leaders say the biggest threat to their future success is supply disruptions—such as natural disasters and transportation issues—a Gartner survey shows.
The survey, conducted from June through July 2024 among 258 sourcing and procurement leaders, was designed to help chief procurement officers (CPOs) understand and prioritize the most significant risks that could impede procurement operations, and what actions can be taken to manage them effectively.
"CPOs’ concerns about supply disruptions reflect the often unpredictable nature and potentially existential impacts of these events," Andrea Greenwald, Senior Director Analyst in Gartner’s Supply Chain practice, said in a release. "They are coming to understand that the reactive measures they have employed to manage risks over the past four years will not be sufficient for the next four.”
Following supply disruptions at #1, the survey showed that the second biggest threat to procurement is seen as macroeconomic factors, which include economic downturns, inflation, and other economic factors. While more predictable, those variables can substantially influence long-term procurement strategies.
And the third-most serious perceived risk was geopolitical issues, including tariffs and regulatory changes, and compliance issues, including regulatory and contractual risks.
In addition, the survey also revealed that “leading organizations” are 2.2 times more likely to view energy availability and cost as a top risk; indicating a focus on future emerging risks. As electrification drives demand for power, brittle grid infrastructure raises concern about whether the energy supply can keep pace. Therefore, leading organizations recognize that access to energy will become a significant future risk.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
Weather conditions in central Florida are forecasted to rapidly improve throughout the day as Hurricane Milton spins out into the Atlantic, leaving behind a trail of wind and flood damage.
Nurtured by historically hot waters in the Gulf of Mexico, the furious storm was stronger than Hurricane Katrina at peak pressure, and registered the lowest barometric pressure—and thus the most destructive storm power—in the Gulf since Hurricane Wilma in 2005, according to analysis by Everstream Analytics.
Fortunately, it weakened slightly to a Category 3 hurricane by the time it made landfall in Siesta Key, just south of Tampa Bay, at 8:30 pm on Wednesday night. However, extremely heavy rainfall totals caused major flooding in the northern portion of that region, soaking Tampa, St. Petersburg, and Clearwater. It also triggered storm surge levels of 4-9 feet, and spun off scores of tornadoes. The National Weather Service issued 126 tornado warnings in Florida on October 9 alone, which was the most in Florida history.
Supply chain impacts of that weather are occurring largely where the flooding hit, and have caused major disruptions on port operations, roads, rails, air travel, and interruptions to business operations – possibly for an extended period. The interior sections of Florida will also likely have significant impacts via overland and river/creek flooding and damaging winds (fallen trees), according to Jon Davis, chief meteorologist, Everstream Analytics.
As the weather clears, businesses in the citrus belt of central/southern Florida will also start to measure the damage. At this time of year, most of the citrus remains unharvested on the trees, so the impact on crop yields could be severe. And Davis says that tree damage is always the biggest concern since it impacts production for years.
But the group also warned that the true rebuilding process usually lags behind the initial emergency response. “During the first 48 to 72 hours after a hurricane, most of the work on the ground is focused on search and rescue efforts,” Kathy Fulton, ALAN’s Executive Director, said in a release. “Because of this, ALAN usually doesn’t receive the first substantial wave of donated logistics requests until after that, when humanitarian organizations can get in, conduct their initial assessments, and determine what’s most needed.”
“We know that can be frustrating for organizations that want to do something tangible as soon as possible. But we hope they will still be willing to provide their logistics help when the need arises, whether it’s in a few days, a few months – or even beyond that,” Fulton said. “The devastation Hurricane Milton and its many tornadoes have caused is heartbreaking. We mourn for those who have lost family members, pets and homes, and we are already working hand-in-hand with various non-profit partners to deliver help.”
Editor's note:This article was revised on October 10 to add input from ALAN.
For example, millions of residents and workers in the Tampa region have now left their homes and jobs, heeding increasingly dire evacuation warnings from state officials. They’re fleeing the estimated 10 to 20 feet of storm surge that is forecast to swamp the area, due to Hurricane Milton’s status as the strongest hurricane in the Gulf since Rita in 2005, the fifth-strongest Atlantic hurricane based on pressure, and the sixth-strongest Atlantic hurricane based on its peak winds, according to market data provider Industrial Info Resources.
Between that mass migration and the storm’s effect on buildings and infrastructure, supply chain impacts could hit the energy logistics and agriculture sectors particularly hard, according to a report from Everstream Analytics.
The Tampa Bay metro area is the most vulnerable area, with the potential for storm surge to halt port operations, roads, rails, air travel, and business operations – possibly for an extended period of time. In contrast to those “severe to potentially catastrophic” effects, key supply chain hubs outside of the core zone of impact—including the Miami metro area along with Jacksonville, FL and Savannah, GA—could also be impacted but to a more moderate level, such as slowdowns in port operations and air cargo, Everstream Analytics’ Chief Meteorologist Jon Davis said in a report.
Although it was recently downgraded from a Category 5 to Category 4 storm, Milton is anticipated to have major disruptions for transportation, in large part because it will strike an “already fragile supply chain environment” that is still reeling from the fury of Hurricane Helene less than two weeks ago and the ILA port strike that ended just five days ago and crippled ports along the East and Gulf Coasts, a report from Project44 said.
The storm will also affect supply chain operations at sea, since approximately 74 container vessels are located near the storm and may experience delays as they await safe entry into major ports. Vessels already at the ports may face delays departing as they wait for storm conditions to clear, Project44 said.
On land, Florida will likely also face impacts in the Last Mile delivery industry as roads become difficult to navigate and workers evacuate for safety.
Likewise, freight rail networks are also shifting engines, cars, and shipments out of the path of the storm as the industry continues “adapting to a world shaped by climate change,” the Association of American Railroads (AAR) said. Before floods arrive, railroads may relocate locomotives, elevate track infrastructure, and remove sensitive electronic equipment such as sensors, signals and switches. However, forceful water can move a bridge from its support beams or destabilize it by unearthing the supporting soil, so in certain conditions, railroads may park rail cars full of heavy materials — like rocks and ballast — on a bridge before a flood to weigh it down, AAR said.
Imports at the nation’s major container ports should continue at elevated levels this month despite the strike, the groups said in their Global Port Tracker report.
To be sure, the strike wasn’t without impacts. NRF found that retailers who brought in cargo early or shifted delivery to the West Coast face added warehousing and transportation costs. But the overall effect of the three-day work stoppage on national economic trends will be fairly muted.
“It was a huge relief for retailers, their customers and the nation’s economy that the strike was short lived,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a release. “It will take the affected ports a couple of weeks to recover, but we can rest assured that all ports across the country will be working hard to meet demand, and no impact on the holiday shopping season is expected.”
Looking at next steps, NRF said the focus now is on bringing the International Longshoremen’s Association (ILA)—the union representing some 45,000 workers—and the United States Maritime Alliance Ltd. (USMX) back to the bargaining table. “The priority now is for both parties to negotiate in good faith and reach a long-term contract before the short-term extension ends in mid-January. We don’t want to face a disruption like this all over again,” Gold said.
By the numbers, the report forecasts that U.S. ports covered by Global Port Tracker will handle 2.12 million twenty-foot equivalent units (TEU) for October, which would be an increase of 3.1% year over year. That is slightly higher than the 2.08 million TEU forecast for October a month ago, and the strike did not appear to affect national totals.
In comparison, the August number was 2.34 million TEU, up 19.3% year over year. The September forecast 2.29 million TEU, up 12.9% year over year, November is forecast at 1.91 million TEU, up 0.9% year over year, and December at 1.88 million TEU, up 0.2%. For the year, that would bring 2024 to 24.9 million TEU, up 12.1% from 2023. The import numbers come as NRF is forecasting that 2024 retail sales – excluding automobile dealers, gasoline stations and restaurants to focus on core retail – will grow between 2.5% and 3.5% over 2023.
Global Port Tracker, which is produced for NRF by Hackett Associates, provides historical data and forecasts for the U.S. ports of Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Port of Virginia, Charleston, Savannah, Port Everglades, Miami and Jacksonville on the East Coast, and Houston on the Gulf Coast.