Q&A: Mike Short, president of Global Forwarding at C.H. Robinson

While supply challenges remain front and center, that does not mean that there is any type of pause in the action, as it relates to moving goods and focusing on operations and throughput. In fact, it is quite the opposite. For Minneapolis, Minn.-based global logistics services provider and freight forwarder C.H. Robinson, that rings especially true, given its global scale and reach. With the company deep into Peak Season, Mike Short, president of Global Forwarding at C.H. Robinson, provided Logistics Management Group News Editor Jeff Berman with an overview of how the company approaches Peak Season and works with shippers to meet their objectives, at a time which may be the most unique and challenging market conditions the sector has ever seen. Their conversation follows below.

Logistics Management (LM): Given the onslaught of demand, coupled with ocean container capacity issues, and labor challenges, among other issues, how are you working with your shipper customers to most effectively navigate peak season?

Mike Short: We’re using every option available to help our customers navigate peak season, including leveraging every available ocean port, different shipping options like less-than-container-load (LCL), different air routings or air charters when needed, as well as on-the-spot troubleshooting. Each shipper’s situation is unique and we’re working closely with them to find creative solutions to keep goods moving.

LM: With 2.5% of global maritime workers vaccinated, it seems like it will continue to be an uphill battle to get port throughput to where it needs to be. What can be done to mitigate this situation for shippers?

Short: Certainly, the issue of port congestion is complex right now and shippers are having to work through very challenging situations. Some ports are announcing new measures aimed at alleviating the congestion, such as encouraging terminal operators to incentivize overnight open gate hours or offering extended night and weekend truck gate hours. Hopefully these measures will help, but in the meantime, the best thing shippers can do is remain flexible and be open to diversifying the routes, ports, and modes they use as it makes sense, as well as looking at how freight will move inland.

LM: What are the biggest challenges to moving from ocean to air, for shippers, to meet Peak Season demand, in addition to cost pressures?

Short: Demand continues to be at an all-time high, and we expect that demand to increase with the holiday season around the corner. Some of the larger air terminals in the U.S. continue to see delays of up to 5-7 days to claim cargo.

Additionally, it’s likely air capacity will look slightly different this fall. It’s not that capacity is leaving the market, but there was a slight decrease in August due to labor shortages. For example, when cargo operations at the Shanghai airport was shut down due to positive COVID-19 cases, this dropped capacity to about 25% of previous weeks. While capacity has gradually increased over the past several weeks, we likely won’t see the same levels in October through December—peak season for demand—compared to this past June and July. Right now, the industry is operating in the 60-70% range, and with quarantine guidelines in place at some major global air terminals, air capacity may only reach 75-85% levels in October and November compared to earlier this summer.

The new export screening requirements in the U.S. have also resulted in congestion at warehouses and terminals. Screening 100% of exported air freight takes time, especially if it cannot easily fit through a machine. Many shippers must rely on carriers/terminals for screening which has led to significant congestion and forced some terminals to reduce their windows of time for accepting freight. As a result, shippers face increased risk of their cargo missing a flight. Remaining compliant always requires work, but in today’s volatile market, shippers are having an even more difficult time keeping up.  

It’s important to note disruption and congestion is not new to global shipping, our teams at C.H. Robinson have been working alongside our customers through new challenges not only over the past two years, but decades. Specially for air, we’re set up to help them get the right mix of capacity (i.e. block space, allocations and spot), charter flights (running on average 12-15 charters a week globally), lock in extra space as early as possible, and look to alternative trade lanes or modes as needed. With our global scale and suite of logistics services, our team is like a rubber band, we can flex easily and help our customers do the same as new challenges arise.  

LM: With record numbers of vessels waiting to be unloaded at U.S. ports, it has led to myriad downstream issues for all verticals moving cargo through ports. How can this situation be alleviated?

Short: The situation at U.S. ports, particularly those on popular routes from Asia to the U.S. West Coast, has been a challenge for shippers in recent months. But as the industry learns from the situation, more solutions are developed. As mentioned earlier, the ports of Long Beach and Los Angeles announced new measures aimed at alleviating the congestion, such as encouraging terminal operators to incentivize overnight open gate hours or offering extended night and weekend truck gate hours.

While there are still multiple cargo ships waiting to berth at the ports of L.A. and Long Beach, many shippers are still using the ports because they need the available capacity on the West Coast, and even if they consider re-routing to the U.S. East Coast, those ports are also experiencing congestion on top of capacity and equipment shortages. Shippers are making difficult choices based on their unique situations. For example, some shippers need to import into L.A. and Long Beach because they can’t wait for capacity to a different port while risking losing warehouse space for their goods produced in Asia. Meanwhile, carriers continue to add capacity to the LA and Long Beach ports because the ROI is greater than others, given the larger size and closer proximity to Asia.

There are creative solutions to this challenging situation, but it’s not as simple as avoiding the backlogs at the California ports altogether. C.H. Robinson is working with customers to find alternative routes and transportation methods where it makes sense. We’ve also seen success with using LCL shipping solutions for shippers who are struggling to find full-container capacity due to delays. By staying flexible and looking at new options, we can help shippers strategize to help keep their goods moving in this current environment. For example, the largest ports may make the most sense for your supply chain, but you can also consider diversifying routes, ports, and modes, and look at how freight will move inland. This will continue to be important as U.S. port entry volumes continue to rise as we approach the holiday season.

LM: What, in your opinion, are the biggest lessons learned amid all of these ongoing challenges? How can shippers get things back on track eventually?

Short: Shippers are having to be more flexible, creative, and resilient than ever during these times. It’s important to note it has taken the industry about a year to get to this point, so it’s safe to say that it may take just as long for things to revert to normal levels or to adjust to the higher demand. In a market like this, one of the best thing shippers can do is remain open to different options, understand the delays their cargo will likely face, and communicate and collaborate closely with their supply chain partners.