Industrial Shippers: Expect 2019 to Bring Big Changes (Part 1)

Industrial Shippers: Expect 2019 to Bring Big Changes (Part 1)

By Dan Cser

 

Three considerations are top of mind for industrial freight forwarders and logistics professionals at the start of the new year: exciting breakthroughs in innovation, customer demands for greater efficiency, and a turbulent economic-political climate.

 

From self-driven vehicles and autonomous ships -- to Artificial Intelligence and data management -- the marketplace is crackling with new ideas and experimentation.

 

At the same time, there is unrelenting pressure up and down the supply chain for productivity gains that attack costs, deliver service and assure quality. Potential solutions range from warehouses without humans to drones that inspect inventory inside cavernous cargo ships.

 

It’s all playing out in national and global environments buffeted by U.S.-China trade tensions, slowing foreign economies, a convulsive domestic stock market and a gridlocked American government.

 

It’s enough to give pause to even the most experienced analysts and forecasters. At ICAT Logistics DTW, we are watching 19 areas to keep 2019 in focus. In this installment, we list 11 external forces with direct impact on our business. An upcoming second installment will examine eight industry-specific tools, technologies and tactics to watch in 2019.

 

1. The Arsenal of Mobility

Detroit and Michigan combined manpower and willpower during World War II – creating an “Arsenal of Democracy” -- to build the planes and machines essential to winning a war. Today, the cause is mobility – self-driven, autonomous and electric vehicles. A refocused General Motors is closing five North America plants and Ford has ditched sedan production and launched a $740 million campus for mobility innovation.

 

2. A Global Mobility Network

From Silicon Valley to Traverse City and Israel to India, auto suppliers and start-ups are collaborating with vehicle manufacturers to speed development of products to support the cars and trucks of tomorrow. This will be on display this month at the Consumer Electronics Show in Las Vegas and at the North American International Auto Show in Detroit.

    

3. Along the Supply Lines

Auto industry suppliers have shared in America’s growth economy and the U.S. auto industry’s recovery. But there is growing caution over tariff skirmishes and industry makeovers. The October quarterly outlook survey of more than 100 companies by the Original Equipment Supplier Association fell its lowest level since 2011. “All the unknowns …are creating this uneasiness,” OESA’s Julie Fream told Crain’s Detroit Business.

 

4. Labor Pains

Labor agreements between the auto industry and the United Auto Workers union expire in September 2019. Tough talks are expected against a backdrop of plant closings, tight labor markets and the industry’s need for highly skilled workers. “If anyone was thinking contract talks were going to be easy, they were fooling themselves,” Kristin Dziczek, vice-president of the Center for Auto Studies, told The Detroit News. Separately, Amazon is seeing labor unrest at warehouses, marked by one-day strikes across Europe in November and strikes at two German facilities in December.

 

5. Going Green

Shipping operators are exploring the use of liquefied natural gas to replace traditional marine fuel oil as part of a campaign to reduce sulphur content and carbon emissions. New emissions standards take effect this year at the Ports of Tacoma and Seattle, requiring all trucks serving container terminals to have a 2007 or newer engine, or a certified emissions control system. In London and Paris, UPS is using a pilot fleet of 35 electric delivery vehicles with zero tailpipe emissions and a battery range of more than 150 miles. The California Air Resources Board said transit agencies will be barred from purchasing gas-powered buses by 2029. And the global fashion industry – including Adidas, Levi Strauss, Target and Gap – signed on to a Fashion Climate Charter that includes low-carbon transport and zero emissions practices.

 

6. Cybersecurity

Logistics companies that outsource, form partnerships and share data with third parties are increasingly at risk and in need of a vendor risk management program, reports Inbound Logistics. Hacking victims include Maersk, which estimates the cost of a 2017 ransomware attack at more than $300 million. In 2018, a suspected cyberattack coming from China disrupted operations of German manufacturer Krauss Maffei.

 

7. The Tariff War

The good news is that China and the U.S. began the new year with plans for face-to-face talks about trade and tariff rules. Few expect a large-scale breakthrough, although a full-out trade war also seems to be less likely. United State Trade Representative Robert Lighthizer has said March 1 is a “hard deadline” for the negotiations to yield results, but other members of President Trump’s trade team said invoking additional tariffs could be delayed if the two sides make progress.

 

8. Trade Uncertainties

Among the most durable sayings of New York Yankee great Yogi Berra was: “It ain’t over till it’s over.” Such is the case with ongoing confusion around Britain’s impending withdrawal from the European Union. On this side of the Atlantic, much remains to be implemented and understood about the United States-Mexico-Canada Agreement (USMCA) reached in December to replace the North American Free Trade Agreement (NAFTA). The USMCA must be ratified by each member nation to take effect in 2020.

 

9. Wall Street Volatility

It’s been a wild ride and more may be in store. Analysts interviewed by the Atlanta Journal-Constitution offer this advice: “The antidote to roller-coaster nausea is perspective: the stock market matters, but it is not the same as the economy. We are not in a recession.”

 

10. Trump and Other World Leaders

As the year begins, President Trump and his Democrat detractors are arguing about budgets, walls, immigration and more. As Democrats take control of the U.S. House of Representatives, Congress will face key issues affecting trade, shipping and logistics, including  the new United States-Mexico-Canada Agreement, and spending on the nation’s roads, airports and ports. Meanwhile, French President Emmanuel Macron is beset by violent protests in large part over the cost of national energy policies. Theresa May, prime minister of Great Britain, soldiered through a vote of confidence that questioned her leadership on the Brexit withdrawal. German Chancellor Angela Merkel, sometimes described as the most powerful woman in the world, is not expected to seek reelection in 2021. And China President Xi Jinping faces hardline Communist generals, a new breed of technology entrepreneurs and a slowing Chinese economy.

 

11. Predictions

The National Auto Dealers Association forecasts new vehicles sales of 16.8 million in 2019, snapping a string of three consecutive years when sales exceeded 17 million.  The global auto industry is poised for its first year-over-year production decline since 2009, according to RBC Capital Markets. Among global forecasts, there is a lack of agreement. Consider these headlines: “A Strong U.S. Economy Will Boost Global Growth in 2019” -- Bloomberg. “Global Growth Outlook for 2019 Dims for First Time” – Reuters. And, “The Economic Forecast for 2019: Less Growth and More Uncertainty.” – Wall Street Journal.

Best wishes for a happy and prosperous new year.

 

The second installment in this series will be published, Tuesday January 8.

 

Dan Cser is Agency Owner of ICAT Logistics DTW.

HAVE A QUESTION ABOUT YOUR BUSINESS SHIPPING?
(Please note: We do not ship personal items)

Contact Us

or call us at 800-536-5571

  View Blog
Contact UsLoading...