In 2018, the
logistics industry in the United States experienced an unprecedented
level of
volatility, making the already-complex scenario of international
shipping even
more challenging.
One of the primary
factors was an Electronic Logging Device (ELD) mandate by the U.S.
government
which become fully enforceable in 2018. This mandate requires that
drivers
record their driving hours electronically, rather than using the
traditional
paper logbook. Since paper logbooks were easier to falsify, it was
fairly
common for truckers to drive longer hours, allowing them to move
more freight
more quickly and, as a result, increase their income.
This new
regulation, in addition to enhanced enforcement regarding cab and
trailer
maintenance, resulted in a decrease of both drivers and trucks last
year, at a
time when demand was already outpacing supply (truck fleet
utilization was at
100% for much of 2018).
At the same time
fuel prices increased. The result of these various factors was a
“perfect
storm” of volatility and price surges as less-than-truckload (LTL)
and full truckload
(FTL) providers had more freight to move than they could readily
handle.
Meanwhile, ocean
transport was equally challenging, due in large part to several
mergers and
acquisitions that directly affected transport from South America to
North
America, such as Maersk’s purchase of Hamburg Süd and CMA CGM’s
takeover of
APL. This created a notable impact on shipping schedules, as the
newly merged
organizations adjusted routes and timetables multiple times (often
with little
or no warning). Ocean ports also struggled with shortages of
operational
chassis and drivers, so there were also delays at ports.
The overall result
for shippers/importers such as Daabon USA was a very challenging
year in the
world of logistics. It is expected that the outlook for the trucking
industry
in the U.S. in 2019 will stabilize somewhat as large companies
increase the
size of their fleets (orders for new trucks were noticeably higher
last year)
and make strong efforts to recruit additional drivers. However,
demand
continues to be high, and the upcoming implementation in 2020 of a
consolidated
database of drivers with drug or alcohol violations may continue to
generate
attrition in the current trucking workforce.
The ocean shipping
industry, on the other hand, is looking toward 2019 with
uncertainty. The
potential for a slowdown in the global economy and trade wars could
have a
noticeable impact. Oil prices may continue to rise as well, though
several risk
factors could affect the 2019 markets. We also continue to see
unusual volatility
in ocean transit times as the newly consolidated corporations are
still
adjusting their routes on a regular basis, which presents planning
challenges.
Overall, 2019 is
expected to be another year of unusual complexity for logistics in
the U.S.
Daabon USA’s dedicated logistics team has responded to these
challenges with
daily monitoring of transit times for inbound shipments, close
collaboration
with the team at Daabon’s headquarters as well with as our domestic
warehouses
and our logistics partners to maintain clear communication channels
throughout
the supply chain, and proactive planning and communication with our
customers
to ensure that every effort is made to minimize the impact of these
logistical
challenges on their palm oil supply.