Global Logistics: Prepare or perish

By Michael Levans, Group Editorial Director
February 01, 2016

As it so often happens, we tend to not fully absorb the weight of events that unfold on distant shores—until it has a direct effect on us, that is. Over the past month, most of us have been feeling the pinch of negative global macroeconomic trends first hand as we watched U.S. markets wildly fluctuate on a daily basis, taking a chunk out of our investments and making us feel uneasy about our long-term financial planning.

It’s not until it arrives on our doorstep and hits us in the pocket—or our transportation budget—that we take a genuine interest. Last month, executive editor Patrick Burnson did a terrific job of putting context around the ongoing global slump and the ripple effect those declines could have on our freight rates and capacity this year.

“While the U.S. economy continues to move forward, logistics managers need to brace themselves for a volatile period of rate fluctuation due to global unease,” says Burnson. “Just on the oil front alone, we need to remember that the U.S. still relies on OPEC production to balance supply.”

And considering the continued unrest in the region, OPEC production could be significantly cut at any moment—another global event that would immediately darken our doorstep. It’s clear that oil supply and fuel cost uncertainty must remain top of mind. In fact, our “Oil and Fuel” columnist Derik Andreoli writes this month that the global oil and fuel markets heading into 2016 “could not be more unstable.”

“The good news for shippers, at least in the short term, is that oil and fuel prices are lower now than they’ve been at any point over the last decade,” writes Andreoli. “The bad news is that these low prices cooked the goose that laid the golden egg, and now threaten to further destabilize many of the world’s leading oil exporters.”

Not only can you read Andreoli’s analysis in our pages this month, but you can also hear his long-term forecast for the oil and fuel markets as part of our “2016 Rate Outlook” Webcast that’s now available on demand.

He’s part of a panel of analysts who explain the impact that the current environment is having on freight transportation markets. At press time, more than 1,500 shippers have attended this event.

This month we flip the lens and offer a collection of features to help global shippers prepare for the myriad challenges that emerge when extending supply chains across distant and unfamiliar borders.

Burnson takes a look at the progress that 10 Southeast Asian nations (the ASEAN marketplace) are making on the road toward economic integration to better compete with China, Japan, and South Korea. “While the rewards are plentiful in the ASEAN,” says Burnson, “so too are the risks. The wealth of an emerging middle class is booming, but infrastructure improvements have miles to go before the goal is realized and U.S. shippers can reap the rewards.”

And as global expansion become more enticing, so does the need for global trade management (GTM) software to better streamline processes and help eliminate some of that risk. Contributing editor Bridget McCrea writes that pending trade agreements, growth in ASEAN and the need to gain CBP compliance with new programs has GTM adoption hovering around 25 %—and has been increasing at an annual pace of about 9% to 10%.

“While it’s tough to predict how global events may alter our domestic planning,” says Burnson, “there are steps we can take to better manage the risks when going into new markets. An ounce of preparation and planning is worth a pound of cure.”