Logistics Technology Trends
During the second half of June, Amazon and Alibaba both held conferences in the United States, appealing to small and midsize businesses selling on their platform. While Alibaba was advocating sales to China as Amazon advocated cross-border importing, both are clearly pursuing an SMB focus, as Big Box retailers continue to struggle.
For enterprise forwarders and carriers, the marching orders for Q2 appeared to be freight visibility, as a number of companies unveiled solutions to enhance cross-supply chain visibility of shipments. The last-mile drone delivery space stayed hot, both in the air and on the ground. Meanwhile, Uber Freight formally launched its product, while continuing to face strong competition from other on-demand trucking startups.
The quarter ended on a somber note for digitization, as a global cyber attack called Petya infiltrated Maersk Line’s systems, leading to a freeze on new bookings of containers on Maersk ships and halting operations at APM terminals for a couple of days.
And on the low-tech side of things…
The underlying theme of ocean freight pricing in this quarter was stability, as opposed to the volatility that characterized ocean freight in 2016. According to the Freightos International Freight Index, the standard deviation for China – US (West Coast) prices between March and May 2017 was $69 (5% of the average price), compared to $450, or 30% of the average price, in Q2 2016. Insufficient demand continues to constrain upward rate mobility, as demonstrated by the negligible pricing impact of the combined effect of Memorial Day, Dragon Boat day and congestion in Shanghai.
Following weak 2016 pricing and lower shipping volumes, logistics spend as a percentage of the US GDP dropped from 7.84% in 2015 to 7.5% in 2016. Meanwhile, US import changes from the expanded Panama Canal will gradually shift some 10% of West Coast imports to the East Coast.