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.