Category Archives: Strategy

Freightos’ shareholders unveiled: does transparency really matter?

It turns out that major shareholders of Freightos are also large logistics companies— FedEx, Qatar Airways, and IAG Cargo. Thre are others, such as Singapore Exchange, who participated in Freightos’s Series C round of financing. There has been a policy of keeping major shareholders hidden.

Is this bad? Not necessarily, but there could be conflicts of interest. Some customers won’t care, but others might if their interests are not being addressed.

Freightos operates an online international freight marketplace [Wikipedia]. It also sells multimodal freight, and booking automation for carriers and freight forwarders. The Wikipedia article does a good job of explaining what they do and what acquisitions they have made. They’re a freight broker and carrier, with a software platform, though they started out as a software company.

Complicated ownership structures are not uncommon in business. Whether they influence how they do business in the small is a different question. At present we don’t hear of any customer issues.

Partners’ business relations should always include checking on whether ownership affects the partner’s way of doing business with you.

By Alex Lennane 27/05/2022

Freightos’ shareholders unveiled: does transparency really matter? – The Loadstar

Synchronisation across maritime value chains can ease inflation

This interesting article suggests that slot management across supply chain entities could help ease the current supply chain congestion woes. It’s an attempt to define this concept that could induce more cooperation between firms and supply chain entities such as ports, terminals, and hauliers.

There’s no question that today’s world of maritime logistics and supply chains is dominated by decision-making for the benefit of each individual participant. The flow of goods overall could be improved by introducing a discipline that would make decisions for the common good look better.

The article leaves open the question of how to induce the players to participate.

We already see signs that some large shippers have already decided not to play on the same terms. Firms like Home Depot, Walmart, Amazon, and IKEA are trying out chartering their own ships and selecting their own ports, terminals, and inland transport to make their specific supply chains work better. This individual management could bring gains especially for them, and there’s a chance that if enough of it happens, some of the major bottleneck ports such as Shanghai, LA/Long Beach, and Rotterdam could see a reduction of traffic enough to lower backlogs and congestion. And the smaller ports these individual shippers might use, such as Seattle/Tacoma, Norfolk, and Savannah, will see increasing traffic and congestion. If they have the capacity that’s ok, but if not the woes will continue.

These are just examples of how not to participate.

I agree with the authors that just allowing market principles to work won’t create the gains in throughput we need to see. The markets don’t work fast enough to prevent hardship and business and personal failure.

A suggestion made earlier was for a system to ‘label’ each container (in the paperwork, and perhaps physically on it, like the priority mail labels in the US mail) with a service level standard required for this container. Those handling the container would know its priority and could adjust their individual workflows to meet the standard delivery time. Even if there were bottlenecks, the standard would help those in a position to relieve one to see which containers needed to be handled or placed first, second, and so on.

I submit that introduction of a world-wide slot system for maritime container transport needs to be accompanied by a system to reallocate the benefits and costs of the system. There need to be charges or inducements at ports and terminals to get players to fit their needs and actions in with the slot optimization system.

In fact, any system that would operate throughout whole maritime value chains needs to have the incentives designed along with the tracking or resource allocation system.

A worthwhile start would be a model of a realistic slot allocation system and its effects on, say the current congestion worldwide at ports and in hinterland supply chains. Not an easy study to conduct, but it would show where inducements need to be given, and where penalties need to be put, to prevent or reduce gaming the supply chain. Experiments with inducements could be made to gauge their effect and help choose the right ones.

By Mikael Lind et al 01/02/2022

Synchronisation across maritime value chains can ease inflation – The Loadstar

New disruptions to supply chains in 2022

In December, Drewry published on their blog this article describing four significant disruptions likely to happen to shipping in 2022.

I feel these are right on target for the business, and will affect international shippers of all sizes, and intermediaries, such as brokers and freight forwarders.

I’m especially concerned with disruption in the resale of blocks of container space. Drewry’s discussion of MQCs (Minimum Quantity Commitments) indicates that contracts being tried out will require the MQC to be evenly spread across the year. This will be very hard for most forwarders to meet. While some of the business is of the level-quantity, just-in-time sort, lots of other shippers have seasonal blips in their demand. Those seasonal demands cannot be supported by regular fixed-quantity shipments; inventory costs would balloon, jeopardizing the business.

I’m using the word ‘seasonal’ in a time-series sense, not a climate sense; there is a lot of business that experiences ups and downs in demand, not related to weather, but to the needs of their customers. Clothing retail offers an example; summer wardrobes need to be brought in in early spring; winter clothes in late summer. Christmas tree lights and trees themselves are only needed in September-October to be ready for the Thanksgiving to Christmas buying period.

Smaller brokers and forwarders usually exist because they can provide special services to smaller shippers. They need to get access to space in order to help these shippers. Having to purchase on the spot market exclusively will mean that many small shippers will be handicapped.

But we cannot expect the brokers and forwarders to provide inventory consolidation services for the shippers who have these seasonal needs.

I recommend reading the brief article provided.

Drewry – Browse Recent Opinion Articles – New disruptions to supply chains in 2022 and how international shippers can respond

Drewry – Browse Recent Opinion Articles – New disruptions to supply chains in 2022 and how international shippers can respond