In a conversation with SupplyChainBrain editors, Christian Pedersen, head of ocean product and revenue management at Maersk, discusses the uncertainty created by trade tensions between the U.S. and its global partners. Consequently, a shipper’s judicious selection of its own partners is essential to being prepared for any obstacles.
SCB: Christian, let's talk about the opportunities that the U.S. shipper is going to be looking at throughout the rest of 2019. Let's talk about the challenges that he or she might be facing as well. What would you say?
Pedersen: So, first of all, I foresee that 2019 will be a very uncertain but very dynamic year. Uncertain, in many ways, driven by the impact of trade tariffs, impacting sudden spikes in demand, causing temporary bottlenecks in ports across the U.S. market, combined with the bottlenecks on the land side when it comes to trucking shortages.
So, one thing we can say for sure — it's going to be another exciting year and I would say that the key for '19 will really be about, instead of trying to predict and prevent everything, it's really about making sure you are prepared for anything.
SCB: Well, that really goes to the challenges that we're likely to see. But in terms of the opportunities that are going to present themselves in 2019, walk us through that. What do you think is on the horizon?
Pedersen: So, I think that there's going to be a lot of opportunities when it comes to being prepared to actually seize and be prepared to handle those fluctuations in those bottlenecks.
So, I think the key here for customers is, as I said, to be prepared for anything. For me, it really comes down to making sure that you have partnerships across your supply chain that will allow you to respond to and be prepared for any of these different bottlenecks.
SCB: But let's drill down into that because that's important. Clearly, partnership is top of mind in any kind of relationship, but what makes this situation different?
Pedersen: I think the degree and uncertainty really puts a lot more pressure on the agility. I think, when it comes to planning supply chains in 2019, I think it's very important that shippers really keep in mind that they challenge their partners to come up with new ways of looking at degrees of flexibility, the degree of risk management that their partners are able to provide, and maybe also to look at how to work with partners that can come up with more integrated solutions, helping customers to manage that risk across the supply chain. I think a lot of that will really come to a lot of the handler points around the bottlenecks.
So, challenging your supply chain partners instead of just looking at the usual discussions around capacity, around cost, and so on — it's really a discussion around how much flexibility can you provide me? How much risk can you take off my supply chain in terms of managing my variability? It's around what kind of alternative solutions can you offer me when a bottleneck will arise? Because, I think it's fair to say that it's not a question if bottlenecks will arise, it's really around what do you do when they arise.
I think, really, it's key for shippers to prepare for '19 by challenging their partners on those parameters and really ask their supply chain partners to come up with different solutions for how to prepare for anything.
SCB: So, it’s clear then that you need to be judicious in your selection of your transportation partners, isn’t that right?
Pedersen: I would absolutely say so. And I think it's also around us coming together to think of new ways of actually integrating the products.
So, instead of an importer in the U.S., for instance, to go out and buy all the sums of the parts, and having to deal with all the hand-over points and bottlenecks that may arise ... A good example of that is a lot of the poor congestion we're seeing in Southern California and the Northeast of the U.S., where the coordination between ocean carriers, terminal operators, truck providers, at the end of the day become the shippers’ headache. Whereas what our shippers really tell us is they want to spend their time driving their business, they want to spend that time figuring how they serve their customers. And they want to have supply chain partners — when they expect that they may get a headache — to allow them to focus on their own customer.
SCB: Okay, so what you're saying is you want them to be able to spend time on their core competencies while you are taking care of their business.
SCB: All the more reason why you must be careful who it is you ally yourself with as a logistics service partner, wouldn't you say?
Pedersen: I would absolutely say so. Especially so when it comes to one of the big pain points — whose problem is it if a truck is waiting extra time at the gates? Whose problem is it that the gate is not available at the right time? What happens with the unforeseen costs that may arise for additional wait time, demurrage charges, et cetera? So, I would really encourage asking suppliers, "How can you give me an integrative product? Will you as the expert in operating my container, my supply chain, will you handle that risk, will you handle that coordination on my behalf to make sure that I can focus on what I do best, which is really to serve my customers?”
SCB: Okay, now let’s drill down into this integrated supply chain. Let's talk about the customer experience there, all right? What should that be? What's the optimal picture there?
Pedersen: I think I'd like to use an example where the CEO of Footlocker talked about the integrated experience of buying sneakers online. That is the consumer experience that everybody growing up today is accustomed to. Why shouldn't it be as easy to book a container with a shipping line as it is to buy a pair of sneakers online?
By that I really mean that we need to get to a point where customers get control: to go online, through their own channels or through third-party channels, define the product they're going to buy. That could be price point, it could be evaluated services, whether that is additional free days, whether that is customs clearance to go with the ocean freight — that integrated experience where you put the shipper in control and then you don't have to worry about what is the routing of the cargo. What happens if there's wait time at the gate? You should simply just expect that container to be delivered at your door as booked and as promised by your ocean provider.
SCB: Now, let's be honest about that. Is that a scenario that is actually achievable?
Pedersen: Achievable? Absolutely, yes. Are we there yet? Not yet. I think we are coming a long way, and we're seeing across the industry established players — from ocean carriers, terminals and truckers — investing a lot in technology. We are seeing that if we as established players don't develop those solutions, somebody else will. I think this year we're seeing a record, more than $1bn being put into this industry in terms of venture capital to invest in tech start-ups to really make sure that we start driving the consumer customer experience to this industry as well. So, is it possible? Absolutely, yes. The question is, of course, are you making the right investments to get there? If not, somebody else will certainly deliver for the customers.
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