By Peter Giannetti
Historic supply chain disruption caused by soaring demand that is outpacing shipping capacity has elevated the dependence by consumer goods exporters on third-party export facilitators, said Thomas Cook, CEO and managing director of Blue Tiger International, a global supply chain consultant and service provider.
Cook culminated the three-day Connect GLOBAL, this year’s virtual edition of the IHA International Business Council’s Global Forum, with a keynote detailing how to qualify and leverage service providers, freight forwarders, brokers and third-party logistics (3PL) companies in export business development during a pressurized time for international shipping.
Skyrocketing import/export demand the past year has raced past available cargo capacity for the first time in modern shipping history, Cook said. He noted shipping delays are often at twice the norm on goods inbound from Asia and goods outbound from the east coast of the U.S. to Europe. The cost of a 40-foot container, meanwhile, has soared from about $2,500 pre-pandemic to a high range of $10,000 to $14,000 Asia to U.S. and upward of $6,000 U.S. to Europe.
Cook said initial forecasts for global supply chain disruption to ease by the end of this year have been amended to expect stabilization in the first quarter of 2022. Even then, he said, cargo ship companies buoyed by their first-ever profits are expected to normalize rates considerably higher than pre-pandemic rates.
“How do you plan to meet demand with all this uncertainty?” Cook asked. “Risks and loss experience have increased dramatically. It has caused many to rethink the supply chain. For a lot of companies, logistics was the last thought — sales and marketing are where emphasis has been. Management of supply chain has now taken on greater importance.
“The key is not how to eliminate the problems,” Cook continued. “It’s about how to mitigate them: The ability to successfully navigate disruption; the ability to provide service in the face of serious issues; the ability to offer solutions in the face of all issues.”
Cook outlined key considerations when vetting prospective freight forwarders, brokers and 3PLs:
• Understand the marketplace for export facilitators. Cook said as many as 70% of organizations identifying as export specialists have questionable reputations. He said this spotlights the need for consulting guidance to identify the companies that can responsibly move and deliver exports while solving a wide range of problems.
• Align with freight forwarders experienced in the home and housewares business. Cook cited, for example, the unique shipping needs of a fragile product such as glassware.
• Enlist companies with 24/7/365 customer service. This is necessitated, Cook said, by significant time zone differences across the globe.
• Insist on a presence in key export markets through direct offices or agencies.
• Check financial references thoroughly for evidence of financial stability.
• Require trade compliance management experienced in commerce regulations and requirements — such as registration, documentation, packing and labeling— in key export markets.
• Expect technology prowess, including the capability to track shipments in real time electronically throughout the supply chain.
• Obtain value for the spend. Look for optimum performance and service at competitive pricing, not necessarily the lowest price, Cook said.
Forging close relationships helps build more confidence in the accountability of freight-forwarding organizations, Cook said. “You want to get past the salespeople to customer service people who you will deal with on a daily basis,” he added.
Cook advised having a contract with freight forwarders that spells out primary costs and ancillary costs. Surcharges for fuel, labor and delays and more can add up to be considerably more than typical primary costs, he said.
Cook emphasized the importance of thorough risk assessment and claims anticipation. He encouraged U.S. exporters to buy cargo insurance from reputable companies — independently of the freight forwarder — covering all risks and potential disruptions from warehouse to warehouse.
He noted the pandemic and added supply chain pressure and expense has contributed to about a 12% reduction of available export management specialists. A number of smaller companies have exited or have been acquired by medium-sized and larger companies now responsible for facilitating larger shares of export business.
IHA and IBC members can learn more about Blue Tiger International at bluetigerintl.com.