Published on JOC.com (https://www.joc.com) Hugh R. Morley, Senior Editor | Apr 12, 2018 5:19PM EDT
NEWPORT, Rhode Island — Amid fast-changing technology and rising US-China trade tensions, roughly 300 attendees of the Northeast Trade & Transportation Conference got updates on the shipping industry’s hottest issues. The following are the highlights from the event held on Wednesday and Thursday, ranging from the latest on the Maersk-IBM blockchain effort to the need for higher pay to attract scarce US truck drivers.
Neutral blockchain company coming next month
Annette Muller, commercial manager of Maersk Line’s global trade digitization team, speaking on a panel addressing blockchain, said the carrier expects next month to open the new “neutral” company that will operate the system with IBM.
The company expects by the fourth quarter of this year to have a finished information pipeline ready for “limited availability” – usable by those stakeholders that have helped put together a “beta” test version, Muller said. And the system should be available widely to subscribers in 2019, she said.
Maersk, announcing the initiative in January, said it had begun putting together the platform with input from DuPont, Dow Chemical, Tetra Pak, Port Houston, Rotterdam Port Community System Portbase, the Customs Administration of the Netherlands, and US Customs.
The initiative so far has tested the system on shipments of bananas to the Netherlands from Kenya, which was picked as a test sight due to the numerous “inefficiencies” inherent in that part of the world, Muller told a panel on the use of blockchain in the supply chain. The company counted 300 documents and 100 players needed to make the move, Muller said.
So far she said, the company has compiled a list of 150 data “events” that participants have said they would like information on in the pipeline, of which about 80 were common among several participants, she said, adding the goal is to provide information for “shippers, exporters, [perhaps] some small freight forwarders and brokers” to to do better planning “upstream.”
“One of the pain points that we found for this journey is that shippers, and even railroads, are saying how do we get our information on all these data events so we can plan for rail cars and their situation,” she said. “Or somebody [says] ‘Hey did my container leave, and can I know that before the vessel leaves or do I have to get the arrival notice afterward?”
Muller said the system uses an 18-number and letter permission system to enter the portal.
One of the biggest unknowns — or liabilities — regarding blockchain concerns the risk of hack, in an age permeated with them. Officials Thursday did not incontrovertibly refute this risk, but suggested the joint-venture will contain advanced safeguards.
“There is nothing that” can’t be hacked, Muller said. “Someone can always figure it out. But we can say, on behalf of the Maersk-IBM joint venture, that the blockchain technology that IBM is using … is the most secure in the market today.”
Port of Long Beach chief: US trade will remain core economic value
Despite all the turbulence in Washington over potential tariffs and trade wars, Mario Cordero, former Federal Maritime commissioner and chairman, remains optimistic that global trade will remain a key plank in the US economy. Still, said Cordero, who is now executive director of the Port of Long Beach, shippers and players across the logistics industry can’t be complacent.
“We need to have an Amazon state of mind,” he said. “We’ve got to be quicker. We’ve got to be faster. … The industry has changed. We must change our operational mindset. It’s not just having an Amazon state of mind. It’s having a 24-7 state of mind.”
“I know that raises some sensitivity with some port authorities and marine terminal operators,” he added. “But at the end of the day, given the cargo volume, it’s going to get there. I would argue it’s already there. If you are a carrier you are not going to visit any port if they tell you we are going to load and unload your vessel between the hours of eight (p.m.) and 5 p.m., or even if you say eight and 8 p.m.”
Higher pay key to attracting truck drivers
Truck driver salaries need to increase by $10.000 to $15,000 a year to help alleviate the driver shortage, and still the situation won’t improve much, said Greg Ritter, chief customer office for XPO Logistics. He also predicted that that driver salary increases would help push up truck rates by “some place north of 10 percent, maybe 15 percent.”
“We are going to be short some place in the neighborhood of around 100,000 drivers by 2020 — and those drivers aren’t coming back,” Ritter said. Moreover, warehouse workers and other non-driver labor is in short supply as well too, he said.
“We are one of the largest users of temporary labor in North America. Peak season we hire 10,000” workers, he said. “We are seeing wages going up to the tune of $4 or $5 an hour in some markets just to try and get labor.”
He said it could be “late 2019 to early 2020 before we see relief from a customer perspective,” and added that “I don’t know that we are ever going to get there …. I am not a federal government person but the only way you could do it is if you have some sort of immigration piece, to bring in qualified drivers. But I just don’t see that happening.”
ACE stakeholders: new system is not perfect, but it’s better, and here
The implementation of the final phase of the core of the US Customs and Border Protection (CBP) agency’s — years late and $1 billion over budget — Automated Commercial Environment (ACE) didn’t go off so badly after all, the president of the National Customs Brokers and Forwarders Association of America said.
The association issued a tough white paper just days before the implementation of the final phase of the “core” ACE that called the troubled system a “work in progress” that is “still in need of a substantial infusion of common sense policy, solid programming, additional budget allocation and good government oversight.”
Still, the rolling out of the final phase raised relatively few problems, said Geoff Powell, president of NCBFAA, after completing a speaking on a panel about trade regulations.
“We had some [issues] with drawback,” he said, referring to the task of getting the excises repaid on cargo when it is exported, after the excise was paid when the cargo entered the country. Elsewhere, “we were surprised with late requirements of spreadsheets. But nothing major. CBP was available, set up telephone calls for the trade to call in to deal with issues,” Powell said.
Yet the job is by no means completed, with some outstanding adjustments needed to be implemented from the launch, and new ones already stacking up, Powell said. One task for the future – for which funding still has to be found – is how to re-tool the ACE system to allow users to document steel, aluminum and other items on which president Trump has just placed tariffs.