Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
Russia’s invasion of Ukraine is striking a blow to already battered global supply chains, and North American logistics professionals say the ripple effects will be felt here at home in the weeks to come.
Locally, businesses will feel the most immediate impact at the fuel pump, where already high prices are rising. Oil prices surged this week, raising concerns about higher transportation costs industry-wide. Transportation prices have been climbing since June of 2020, according to the Logistics Manager’s Index (LMI)—which tracks logistics industry growth across transportation, warehousing, and inventory—and have hit record highs over the past year. LMI researchers said this week they expect “broad and very strong upward pressure on transportation prices across the supply chain,” especially in light of geopolitical events.
Shippers and carriers can expect to pay more in the near term, according to Ryan Closser, director of program management and network collaboration at supply chain visibility platform FourKites.“It will cost more to go from A to B than it did last week, and more next week than this week,” Closser said Wednesday. “The cost of oil going up is going to be top of mind to all of us who are heavily involved in the North American transportation market. That will have a direct effect on the business.”
Delays and disruptions across Europe will spur longer term effects on global supply chains. FourKites tracked a decrease in loads delivered to Russia beginning last week, at the start of the invasion, with overall Russian imports down 28% week-over-week as of Monday and further double-digit declines mid-week. Similarly, logistics software vendor Project44 tracked a 35% decline in vessel traffic to and from Russian ports since sanctions against the country began in late February.
The sanctions, restricted airspace, and dangerous conditions in the region are forcing shippers and carriers to find alternate routes, leading to delays and backups, especially on freight routes from Asia to Europe. Rail lines through Russia are closed, causing Asian exporters to find new routes to European customers. Much of that will eventually convert to ocean shipping, Closser said, but it is having a more immediate effect on air freight, where he said prices are already rising.
“[Air freight] is the only quick path right now from Asia to Europe, and we’ve heard that air freight is going up significantly,” he said. “[We don’t have] any metrics on ocean rates increasing, but word on the street is that it is coming.”
Auburn University’s Glenn Richey said the shutdown of Russian air space is complicating both passenger and freight transportation because airlines must reroute volumes of traffic that utilize the space. Finnair said this week it may furlough hundreds of pilots and cabin crew due to cancelled flights to Russia and some destinations in Asia. Prior to the pandemic, more than half of Finnair’s revenue came from passenger and cargo traffic between Asia and Europe, with strong cargo demand continuing to support many of its Asian routes over the past two years, the airline said.
“So much of that air transportation goes over the top of the planet. [This is] causing both passenger and freight transportation to be more complex,” said Richey, who is the Harbert Eminent Scholar and chair of the department of supply chain management at Auburn. “We’re coming out of the coronavirus [pandemic] and things are starting to look better, and now we have another disaster.”
The immediate effects on ocean freight are being felt in Europe, where trade and container movements have ceased at the Ukrainian ports of Odessa and Mariupol, on the Black Sea. Movement has been restricted elsewhere in the area, causing Germany-based logistics technology company Container xChange to warn of container buildups at ports there as well as along the Baltic Sea.
“Russian and Belarussian ports in the Baltic and Black Sea will likely see a build-up of boxes if carriers refuse to make port calls due to the security situation and sanctions,” Container xChange co-founder and CEO Christian Roeloffs said in a statement Wednesday. “Overall, the situation for container availability is likely to worsen, but this will vary by port and region. Central and Northern Europe is already congested, and any further trigger to the cargo flow will only worsen the state of container pileups.”
Roeloffs also said he expects trade with Russia to worsen in the coming months and even years, a sentiment echoed by U.S.-based logistics professionals as well. Oleg Yanchyk, chief information officer for freight procurement software provider Sleek Technologies, said long-term concerns include the readjustment of supply chains when the crisis comes to an end.
“Things will be different when all this is over,” he said, adding that regardless of what happens next “this is a huge change. You cannot run supply chains as smoothly for a long while once it's over. Things will have to be readjusted.”
FourKites’ Closser agreed.
“Whether this is a two-week affair, a six-month engagement, we don’t know,” he said. “But the longer this goes on, the wider impact we’ll see across the global supply chain.”
For more on how the conflict is affecting the supply chain, listen to the episode of the Logistics Matters podcast below.
Autonomous mobile robot (AMR) manufacturer Seegrid Corp. is breaking up with Raymond Corp. (a division of Toyota), serving 90-day notice today that it will terminate its product and distribution agreements with the forklift vendor.
“This move will allow us to sell and service the full Seegrid-branded product line across all market segments rather than serving a large portion of the market through Raymond,” Joe Pajer, CEO of Seegrid, said in a release. “We are seeing more customers desire a direct relationship with Seegrid as we roll out our new lift truck products and release innovative technology enhancements across our product line.”
Raymond did not respond to a request for comment on the announcement.
Seegrid’s product catalog includes AMR solutions for palletized material handling, such as the Lift CR1, Lift RS1, and Tow Tractor S7 models. The company’s shift in go-to-market strategy follows a year marked by record-breaking end-user sales, with particularly high demand for our advanced autonomous lift truck solutions, he said.
“We appreciate Raymond’s partnership in our earlier years,” Pajer said. "At the same time, we have carefully studied our business relationship with Raymond and concluded that we are in a better position to deliver the benefits of our innovative technology to all customers if we do so directly and with Seegrid-branded products only. We are very excited to make our full product line available to all customers.”
Terms of the deal were not disclosed, but Aptean said the move will add new capabilities to its warehouse management and supply chain management offerings for manufacturers, wholesalers, distributors, retailers, and 3PLs. Aptean currently provides enterprise resource planning (ERP), transportation management systems (TMS), and product lifecycle management (PLM) platforms.
Founded in 1980 and headquartered in Durham, U.K., Indigo Software provides software designed for mid-market organizations, giving users real-time visibility and management from the initial receipt of stock all the way through to final dispatch of the finished product. That enables organizations to optimize an array of warehouse operations including receiving, storage, picking, packing, and shipping, the firm says.
Specific sectors served by Indigo Software include the food and beverage, fashion and apparel, fast moving consumer goods, automotive, manufacturing, 3PL, chemicals, and wholesale / distribution verticals.
Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.
“Collaborating with owner-operators is an important component in the success of our business and the reliable service we can provide customers, which is why the network has grown tremendously in the last 25 years,” Schneider Senior Vice President and General Manager of Truckload and Mexico John Bozec said in a release. "We want to invest in tools that support owner-operators in running and growing their businesses. With Schneider FreightPower, they gain access to better load management, increasing their productivity and revenue potential.”
Terms of the acquisition were not disclosed, but Mode Global said it will now assume Jillamy's comprehensive logistics and freight management solutions, while Jillamy's warehousing, packaging and fulfillment services remain unchanged. Under the agreement, Mode Global will gain more than 200 employees and add facilities in Pennsylvania, Arizona, Florida, Texas, Illinois, South Carolina, Maryland, and Ontario to its existing national footprint.
Chalfont, Pennsylvania-based Jillamy calls itself a 3PL provider with expertise in international freight, intermodal, less than truckload (LTL), consolidation, over the road truckload, partials, expedited, and air freight.
"We are excited to welcome the Jillamy freight team into the Mode Global family," Lance Malesh, Mode’s president and CEO, said in a release. "This acquisition represents a significant step forward in our growth strategy and aligns perfectly with Mode's strategic vision to expand our footprint, ensuring we remain at the forefront of the logistics industry. Joining forces with Jillamy enhances our service portfolio and provides our clients with more comprehensive and efficient logistics solutions."
In addition to its flagship Clorox bleach product, Oakland, California-based Clorox manages a diverse catalog of brands including Hidden Valley Ranch, Glad, Pine-Sol, Burt’s Bees, Kingsford, Scoop Away, Fresh Step, 409, Brita, Liquid Plumr, and Tilex.
British carbon emissions reduction platform provider M2030 is designed to help suppliers measure, manage and reduce carbon emissions. The new partnership aims to advance decarbonization throughout Clorox's value chain through the collection of emissions data, jointly identified and defined actions for reduction and continuous upskilling.
The program, which will record key figures on energy, will be gradually rolled out to several suppliers of the company's strategic raw materials and packaging, which collectively represents more than half of Clorox's scope 3 emissions.
M2030 enables suppliers to regularly track and share their progress with other customers using the M2030 platform. Suppliers will also be able to export relevant compatible data for submission to the Carbon Disclosure Project (CDP), a global disclosure system to manage environmental data.
"As part of Clorox's efforts to foster a cleaner world, we have a responsibility to ensure our suppliers are equipped with the capabilities necessary for forging their own sustainability journeys," said Niki King, Chief Sustainability Officer at The Clorox Company. "Climate action is a complex endeavor that requires companies to engage all parts of their supply chain in order to meaningfully reduce their environmental impact."