Last fall, concerned members of the Journal of Commerce editorial team went crystal-ball gazing, attempting to identify the major shipping container and shipping industry themes that might predominate in 2016. They had plenty to choose from: continuing port congestion; the opening of the Panama Canal’s new locks; container weight regulations that place the burden on shippers to verify their containerized freight weight; and the carriers’ on-going battle to keep their heads above water in a period of record-low freight rates.
When 2015 began, global supply chains likely misjudged just how unsettling the year would turn out, according to Journal of Commerce Executive Editor Chris Brooks, even though the International Longshore and Warehouse Union and employers were then more than six months into antagonistic labor dealings, with intermittent disruption hitting West Coast ports.
Though the contract was resolved early in the year, the residual impact lasted well into spring, with both importers and exporters experiencing billions of dollars in lost sales and damaged product. The Federal Reserve said the clash likely contributed to the 0.2 percent decline in second-quarter U.S. GDP. “Without a doubt,” Brooks wrote, “it became the story of the year.”
Now, due to some strategic activity late last year, the feeling is that consolidation will rule the day in 2016. A wave of mergers and acquisitions that began in early 2015 among logistics providers swelled when CMA CGM, the world’s third-largest container carrier by fleet capacity, acquired Singapore-based NOL and its APL shipping line. Then China approved the expected merger of its two biggest carriers, Cosco and China Shipping. Stateside, CP Rail and BNSF Railway could ignite a groundswell of consolidation among North America’s largest railroads, with Norfolk Southern a common target.
How the acquisition furor plays out this year will strongly affect supply chains, from the realignment of major shipping alliances to the effect on service quality that, as Brooks noted, “already can be classified as inconsistent, at best, across many freight transportation modes.”
Other challenges will face shippers in 2016: a driver shortage and new federal regulations that again could tighten trucking capacity plus a stuttering global economy led by further slowing in China could begin to rub off on the United States. Change is coming. As some industry officials point out, it certainly won’t be dull!
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