• DTS.USA
    5.811
    -0.009
    -0.2%
  • NTI.USA
    2.860
    0.000
    0%
  • NTID.USA
    2.900
    0.060
    2.1%
  • NTIDL.USA
    2.000
    0.060
    3.1%
  • OTRI.USA
    8.180
    0.090
    1.1%
  • OTVI.USA
    12,818.890
    -172.860
    -1.3%
  • DTS.USA
    5.811
    -0.009
    -0.2%
  • NTI.USA
    2.860
    0.000
    0%
  • NTID.USA
    2.900
    0.060
    2.1%
  • NTIDL.USA
    2.000
    0.060
    3.1%
  • OTRI.USA
    8.180
    0.090
    1.1%
  • OTVI.USA
    12,818.890
    -172.860
    -1.3%
American ShipperBusinessNews

Prompt COO: Freight forwarders need to go with digital flow

Between port congestion and geopolitical issues, the state of global shipping seems more uncertain than ever, leaving shippers to strategize in unprecedented waters.

In an interview with FreightWaves, Kai Timmermann, the chief operating officer for Prompt, an automation solutions provider for freight forwarders like DSV, Ceva Logistics and Crowley Maritime, describes his outlook on global shipping, the investments that need to be made to fix its operational problems and the solutions currently being proposed.

Questions and answers were edited for clarity and length.


FREIGHTWAVES: What is your outlook on global shipping costs and capacity for the next two years?

TIMMERMANN: “In regards to rates, I don’t expect to see significant relief until 2024. Instead, I think what we are going to see is shippers going outside of the traditional norms and investing in capacity to make sure they are in a much better state for the second part of this year.

“Ports are just now investing in additional capacities. Fortunately, the Port of Savannah started early in investing in additional capacity and warehousing off dock. California is looking to go down that path and we are beginning to see companies working with the railroads to pull freight off the terminals faster. I think you will start to see those investments begin to pay off in 2023 at the earliest.

FREIGHTWAVES: Speaking of the Port of Savannah, a lot of large retailers, like Walmart, have pushed for those off-dock investments. Do you think we will see more retailers working directly with global shipping participants to improve overall operations?

TIMMERMANN: “Absolutely. Walmarts, Targets, The Home Depots, Aldis and Albertsonses all have a lot of port transactions, right? Because of that volume, they will be the ones to drive investment outside of traditional norms.

“Last year Walmart even chartered some of its own vessels. I fully expect those transactions are going to continue to happen for the next few years.”

FREIGHTWAVES: How do you think these market constraints will affect smaller retailers or those looking to get their retail businesses up and running?

TIMMERMANN: “They are the ones who, unfortunately, are going to take the hit. If ocean capacity does get freed up, retailers like Walmart may be kind enough to push that extra capacity to its vendors. Overall, I think the small retailers may potentially get some spot market benefits but unfortunately I don’t see relief for them in the short term. 

FREIGHTWAVES: We often hear from experts that a big part of optimizing ocean capacity will come from standardizing maritime data to eliminate miscommunication, pickup delays and other drayage-related issues. Do you think actions like those in the Federal Maritime Commission’s Maritime Transportation Data Initiative could help optimize our current container capacity?

TIMMERMANN: “I think the FMC’s data initiative itself is well overdue. … If you listen to their conversations on this, a relatively standardized narrow dataset will solve a large portion of operational issues.

“I think that data initiative could significantly help freight forwarders have a single place to go to get shipment updates and make it easier for the terminals to update their records. 

“I think that standardization can happen, and sort of tangentially, the companies that have made business models out of aggregating and distributing that information could have a slight problem on their hands depending on their business models at the time that data is standardized.”

FREIGHTWAVES: The Biden administration also came out with its own standardization plan called the Freight Logistics Optimization Works (FLOW). What are your thoughts on that program and do you think their data partnership list is extensive enough to standardize the ocean shipping industry?

TIMMERMANN: “I think with the extent of the issues we are experiencing, the administration was obliged to act. The FMC process will take time and I think that the Biden administration felt they needed to be seen doing something about the problems.

“However, let’s take a step back and look at this plan. Take the trucking perspective. C.H. Robinson, FedEx and UPS are involved with FLOW right now. How many assets do they actually own that are going to the terminals and experiencing these problems? You can certainly see the obvious gaps in the conversations the administration is having. 

“It is great that they have high-volume companies like Albertsons and Target with a lot of transaction information, but it goes back to your question before. The larger players have a different situation than the small and midsized players.

“Rather, when you look back at the FMC Data Initiative meetings, you have a really good sense that those people know what they need to do. They know what information they need to have to improve operations for merchants of every size.”

FREIGHTWAVES: When reviewing geopolitical issues, like the Shanghai shutdowns and the Ukraine-Russia conflict, what global shipping predictions could you make?

TIMMERMANN: “Let’s even step back to 2018 with tariffs starting to be imposed on China. Countries like India, Vietnam and other Southeast Asian countries were a big beneficiary of moving things out of China. I think we will likely see those disbursement trends continue, including nearshoring with a number of manufacturing bids coming out of Mexico.

“What we have to think about though is the sheer size of manufacturing going on in China. A 5% reduction is the equivalent of 25% or 100% increase in other locations. China’s global supply chain contribution has taken decades to build. I think the expectation of nearshoring makes all the sense in the world but it’s going to take time to build, much longer than 2023 or 2024. But it is a long-term strategy that makes sense.

FREIGHTWAVES: Where does Prompt fit into this global shipping turmoil? How are you working with customers to strategically get through these times of uncertainty?

TIMMERMANN: “Overall, we see companies threading the needle between having access to global markets and general consumer sentiment and a lot of that comes with sourcing, available capacity and rate questions.

“We suspect that in 2024 rates will start to normalize. Freight forwarders have two years to get their ducks in a row and make investments to catch up with the digital freight forwarding world.

“A lot of what we do for our customers is providing them a tool kit to perform in that realm of freight forwarders, giving them solutions for operations automation, integrations and viability of global shipping capacity.

“It is really important that freight forwarders and global shippers are taking advantage of this environment for the next two years because after that, it will go back to tighter margins, which will be less forgiving than in the past.”


Watch now: Forecasting global shipping costs

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Grace Sharkey

Grace is an entrepreneur and former supply chain executive who has held positions in sales, operations, and consulting. She is passionate about the future of the industry and how technology can improve the experience for all supply chain members. She believes supply chain is the one industry that affects every human directly, and is looking forward to creating content that mirrors that sentiment. If you have a story to share, please contact me at gsharkey@freightwaves.com.

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