Logistics industry scrambling to address fluctuating needs worldwide
The logistics industry is facing two major challenges during the COVID-19 crisis: trying to navigate the fluctuating needs of its customers around the globe and keeping its workers safe.
“In certain sectors like food and beverage, we”™re obviously seeing an increase in volume,” said Bob Boyle, vice president, North America Managed Logistics Services (MLS) at Danbury”™s Odyssey Logistics & Technology Corp. “With all the retail churn going on right now, we”™re seeing a lot of consumables.”
With so many manufacturers of personal protective equipment (PPE) and the like in the supply chain, Boyle said the firm is also seeing an increase in those products, “with everyone ramping up to full capacity.”
The transport sector”™s global trade has been impacted as limitations have been put into place. U.S. retailers are running low on imported goods, especially those made in China, as 70% of shoes sold in the U.S. are made in that country. According to the Footwear Distributors & Retailers of America, U.S. footwear imports from China were down by 15.7% in January, the worst year-over-year decline in four years.
Manufacturers are also seeing dwindling amounts of the imported component parts needed for production, while exporters ”” especially in the agriculture field ”” are facing their own logistical challenges.
The Federal Maritime Commission (FMC), the agency responsible for regulating the nation”™s international ocean transportation, is monitoring the incidents of “blanked sailings” (canceled shipments) between the U.S. and China. It reported that, based on its consultations with ocean carriers, transpacific cargo levels and services seem to be returning to pre-virus levels.
“I was heartened to hear that shipping lines have indicated that there is cargo for pickup and that trucking and port operations have substantially resumed in China,” FMC Commissioner Carl Bentzel said. “I remain concerned that there will continue to be negative economic impacts as a result of delays as shipments transit the Pacific from China.
“Our ability to recover from this economic disruption through the resumption of maritime commerce underscores the criticality and importance of our maritime trade. We have to make sure that our policies continue to allow these vital functions to continue.”
On March 27, the Department of Homeland Security”™s Cybersecurity and Infrastructure Security Agency (CISA) took actions to identify what should be considered the “essential critical infrastructure industry.”
Bentzel said he expects the listing “should clarify that our transportation system workers working as longshoremen, trucking, railroad employees and other affiliated organizations such as truck and rest stop operators, should be exempted from restrictions that restrict their abilities to function.
“The transportation industry continues to be invaluable to supply U.S. citizens as they are sheltered.”
The American Trucking Associations asked the U.S. Department of Transportation to provide guidance to states to keep them open for commercial drivers during the crisis, and to find alternatives for drivers who need to renew or obtain commercial driver”™s licensing credentials.
CONTINGENCY PLANS
Charlie Midkiff, global vice president, MLS at Odyssey, said the company began to roll out its “blocking and tackling” strategy the week of Jan. 27, when its Shanghai office notified it of the outbreak”™s rapidly growing presence.
“We have contingency plans in place for events like hurricanes,” Midkiff said. “We have been able to institute that on a global basis, to make sure our employees are safe and can work from home, while also providing continuity of service to our customers.”
One new innovation at Odyssey was the March 19 launch of an interactive technology for its North American MLS customers. The technology provides visibility into shipments that overlay with geography profiles that present risk, including COVID-19 hotspots and transportation embargoes. Boyle said the tool has increased Odyssey”™s customer engagement, and the incoming data is reviewed, aggregated and posted in as close to real-time as possible.
Midkiff noted that the firm has seen “a significant spike” in the number of user-account requests, “mostly from customers who don”™t normally engage in that way.”
SCRAMBLING
Greenwich”™s XPO Logistics has also been scrambling. In January, it announced that its board of directors had authorized a review of strategic alternatives, including the possible sale or spin-off of one or more of XPO’s business units.
On March 20, however, the company issued a statement to the U.S. Securities and Exchange Commission, stating, “In light of current market conditions, XPO has terminated the strategic review process.”
While XPO was not available for comment, the publicly traded firm”™s stock took a beating in March, dropping from $75.99 per share on March 2 to $52.92 on March 26 ”” a 30% plunge.
The company has implemented its own business continuity plan, with a coordinator assigned to each business unit who, in conjunction with executive leaders, will be responsible for internal policy creation, triage responses and other measures.
XPO is issuing alerts to its customers regarding any changes in its road (it is exempted from the federal “non-essential business” proviso blocking traffic across the Canadian border), ocean (it is experiencing some port closures and restricted access to some marine terminals and customer locations) and air (travel prohibitions and/or restrictions between various countries) operations. Of the latter, it noted, “We are seeing capacity drop relative to an overall decrease in production and demand.”
The company has also instituted, retroactive to March 1, a program that adds protections and time off benefits for XPO employees across the globe. Those changes include Pandemic Paid Sick Leave, where employees can take advantage of up to two weeks (10 days/80 hours) of 100% paid leave under a variety of circumstances.