Here’s a wrap-up of September Supply Chain Highlights

As we enter October, we take a look back at last month's significant events.

Airports seek support.

Airports Council International (ACI) World – gathering with industry leaders from the aviation industry at the International Air Transport Association's (IATA) Aviation Day in Panama last month – stressed the need for quality and timely airport infrastructure that keeps pace with the level of projected growth and interest of shippers. Speaking on the panel “Maintaining Tocumen as the Hub of the Americas by maximizing its potential,” ACI World Director General Angela Gittens discussed aviation’s largest opportunities and key challenges. “Many airports are near, at, or even exceeding capacity which is causing congestion, affecting levels of service, and frustrating demand,” Gittens said. To meet this demand, governments have a responsibility to incentivize continuous investments in the airport sector. While ACI has a neutral position on airport ownership models, in situations where government spending cannot be relied upon, private investment has become an important vehicle for the development of infrastructure to accommodate air service demand.

New shipping index.

While not all the news emanating from China has been particularly positive these days, a new development in the ocean cargo arena looks promising for supply chain managers. Shanghai Shipping Exchange, a leading shipping index organization, and CargoSmart Limited, a leading global shipment management software provider, have signed a Memorandum of Cooperation to develop a new shipping index for ocean carrier schedule reliability. Working together, Shanghai Shipping Exchange and CargoSmart may create a new methodology to calculate schedule reliability for key trade lanes to help shippers optimize their supply chains and improve service quality. As an open, fair and unbiased platform, Shanghai Shipping Exchange has been playing a significant role in providing up-to-date and accurate shipping information for the global shipping market, including publishing the China Containerized Freight Index and Shanghai Containerized Freight Index.

Bullish forecast.

The 2020 outlook for U.S. industrial real estate remains positive, with low vacancy rates and rising rental rates balancing the influx of new construction and the volatility caused by economic shifts and the tariffs on Chinese imports, according to speakers at Avison Young's U.S. Industrial Summit. The two-day event, held recently in Chicago, included approximately 100 Avison Young real estate professionals, as well as leaders from global supply chain, development and investment firms. “The industrial sector has experienced significant growth over the past 10 years as ecommerce and supply chain realignment have reshaped the way businesses utilize industrial space and deliver goods to businesses and consumers,” said Clint Miller, Avison Young Principal and the firm's Global Director of Affinity Groups. “While there is concern regarding the long-term impact of tariffs and the potential for an economic downturn, we expect the industrial sector to weather any storm and maintain positive momentum.”

St. Louis rocks.

Recent trends in construction and development in the St. Louis region show that bulk distribution buildings is a growing sector for the regional inventory. Since 2014, more than 18 million square feet of new industrial space has been constructed or is currently under construction in the St. Louis region, and more than 50% of that represents buildings of that significant size. In addition, over the past five years, 85% of all construction and 70% of the new major industrial parks have been focused on the North I-270 Corridor, which is a major logistics corridor for local and national manufacturers, suppliers and distributors and reinforces the vital link between Missouri and Illinois. “The St. Louis region's central location in the U.S. and its logistics capabilities has made the metro area a coveted destination for industrial users,” said Katie Haywood, Vice President on the Industrial & Logistics, Advisory & Transaction team at CBRE.

Demurrage and detention.

The Federal Maritime Commission (FMC) adopted a set of recommendations made by Commissioner Rebecca Dye to address detention and demurrage charge issues uncovered during her 18-month Fact Finding 28 investigation. Commissioner Dye submitted proposals to the FMC. First, she recommended the agency publish an interpretive rule that clarifies how the Commission will assess the reasonableness of detention and demurrage practices. She also recommended establishing a Shipper Advisory Board and continued support for the Supply Chain Innovation Team working to address chassis availability issues in Memphis, TN., Commissioner Dye found that significant benefits to the U.S. international ocean freight delivery system and the American economy as a whole would result from transparent, standardized language for demurrage and detention practices, and clear, simplified, and accessible demurrage and detention billing practices and dispute resolution processes.

Driving issues.

Trade credit insurer Atradius released an in-depth report on the automotive sector last month, providing a sector-wide analysis and takes a deep dive into the performance and outlook of the sector in China, France, Germany, Italy, the UK and the U.S. It also provides snapshots for the Czech Republic, Japan, Mexico, Poland, Spain and Sweden. Among the major insights was that the automotive industry is facing structural challenges that could lead to upheaval, including a shakeout with many companies leaving the market. The issues include the switch away from combustion engines, autonomous driving technology and changing consumer habits. Researchers also found that global car sales are forecast to decrease 5% in 2019, and the ongoing global economic uncertainty does not bode well for a rebound in 2020. In the U.S., the outlook remains fair, but the credit risk outlook has deteriorated and import tariffs continue to fuel uncertainty and lower demand. After years of steady growth, it is expected that annual car sales will decrease below 17 million units in 2019.

Digital transformation.

Deloitte and the Association for Supply Chain Management (ASCM) announced the first release of the Digital Capabilities Model designed to help transform supply chain management for today's increasingly interconnected and digital world. Compatible with the Supply Chain Operations Reference (SCOR) Digital Standard, this new model helps companies advance their capabilities from traditional linear supply chains to digital supply networks, the dynamic, interconnected systems that simultaneously plan, execute and enable digital supply chains. “Traditional supply chain objectives are becoming harder to achieve, given increased market volatility and complexity, digital disruption and shifting consumer expectations,” said Chris Richard, principal high tech sector lead for supply chain and network operations, Deloitte Consulting LLP. “Through our collaboration with ASCM, we are setting a new standard for supply networks management and helping businesses and nonprofits update and adapt practices to increase efficiency, drive results, and innovatively enhance performance in a rapidly changing world.”

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