What’s on the Minds of Manufacturing CEOs?

Manufacturing CEOs are making big plans for 2024, including accelerating investments in artificial intelligence, automation and robotics, while also raising the skill level of their current employees and recruiting highly trained workers. That’s the consensus of a year-long series of polls conducted by Xometry, an AI-powered, on-demand industrial parts marketplace. Here are some in-depth findings from the polls:

• Modernizing through AI. Manufacturing CEOs say AI will play a significant role in their company in the next one to two years. Of the CEOs who have already implemented AI, more than 70% have seen significant ROI in key areas such as supply chain management, quality control, and procurement.
• Domesticating manufacturing. Reshoring will continue to trend upwards with 76% of manufacturing CEOs having successfully reshored some or all of their operations throughout 2023, a move accelerated by federal tax incentives and initiatives such as “Build America, Buy America.”
• Tapping the brakes on EVs. While the automotive industry is primed for growth and innovation in 2024, EV manufacturers may be taking their foot off the accelerator when it comes to electric vehicles. Xometry’s Automotive Survey finds that 84% of automotive executives said current production timelines and waning consumer demand may make it difficult for the industry to meet the Biden Administration’s goals for the years ahead.
• Tracking a more sustainable future. Though EVs may be hitting a road bump for now, manufacturers are taking proactive action to limit greenhouse gas emissions across their industrial supply chains. Fifty-two percent of CEOs view climate change as an existential threat caused by human activity. In 2024, companies will make sustainability a business goal with more investment in measuring and tracking tools to prioritize decarbonization of their operations.
• Investing to fight a skilled labor shortage. Nearly four years post-pandemic, there remains a shortage of more than 600,000 manufacturing jobs waiting to be filled. As American manufacturing becomes more high tech, CEOs remain worried about attracting highly skilled talent. According to Xometry’s research, more than half (56%) of CEOs said they struggle finding qualified employees in today’s tight labor market.
• Pushing aside politics. Xometry’s Q4 CEO survey shows a near 50/50 split on whether Democrats or Republicans will better support manufacturing and the economy at large. The priorities remain non-partisan: bipartisan collaboration, public-private partnerships that invest in skilled labor, and proactive assistance from the federal government for the reshoring of manufacturing.

Help Wanted x 2 Million

The logistics and transportation sector is no stranger to challenging employment trends. Combating driver shortages, for instance, has been a top priority for trucking and intermodal companies for the past several years. And finding and retaining skilled warehouse workers has also been problematic for the distribution field.

The sector should continue to expect ongoing employment difficulties in the near future, according to Chad Raube, president and CEO of IntelliTrans, a global provider of multimodal solutions for bulk and breakbulk industries. What’s driving these trends? Raube points to increased order complexities; lower levels of available, seasoned staff; and changes in economic conditions where recovery rarely generates a return to prior staff levels.

“With continued growth forecast for domestic freight in 2024 and beyond, there is an expected need of nearly two million new employees for transportation and warehousing jobs, due to growth and attrition,” he says.

Adding to the challenge is the fact that companies are competing for a shrinking share of the population. Raube points to these stats: For workers aged 25 to 65, only 19% of the labor force will increase from 2021 to 2031, and 80% of the workforce in 2031 will come from the over-65 population.

Also, construction of new manufacturing sites has tripled in the past two years because of reshoring, which will change distribution patterns and transportation modes, adding to the urgency around these trends, he notes.

Three Industrial Real Estate Predictions

1. Look for vacancy rates to inch up further, as the construction pipeline continues to deliver new product throughout the country, while demand moderates further. The national vacancy rate should peak at just over 6% in 2024 before re-tightening.

2. Net absorption will remain tempered in 2024, as cooler consumer demand for goods, persisting elevated interest rates, and sticky inflation hamper growth.

3. As this wave of industrial product delivers over the next 12 months, the construction pipeline will shrink further, leading some markets to become supply constrained in 2025 as absorption starts to regain momentum.

Source: Cushman & Wakefield

Oversupply Makes Waves for Ocean Shippers

What do ocean freight experts see for 2024?

Shippers should expect more service disruption as container lines seek to manage oversupply and limit losses, predicts Philip Damas, managing director of Drewry Shipping Consultants and head of Drewry’s Supply Chain Advisors practice.

To control the level of oversupply, Damas expects a greater number of blank sailings, which will significantly reduce the predictability of containership departures.

Here are Damas’ key predictions:

• Container lines will collectively record profits of roughly $20 billion for 2023, but the oversupply of vessels will result in a collective loss of $15 billion in 2024.
• 2024 will be an ocean freight buyer’s market, and shippers should be able to secure significant rate cuts. “But,” Damas warns, “there will be a price to pay: the service reliability and service level of carriers will probably worsen.”
• In 2024, shippers will also need to contend with new EU Emission Trading System (ETS) surcharges from carriers. While current ETS surcharges on most trades are not high, Drewry is concerned about whether surcharges are “set at a justified, reasonable level,” as ETS surcharges are likely to more than double in 2025 and 2026.

2024: Year of Optimism and Growth?

Overcoming a slew of recent challenges seems to be breeding optimism in the supply chain sector. After enduring disruptions such as the pandemic, geopolitical conflicts, and monetary tightening, businesses are now adopting a growth mindset, according to Dun & Bradstreet’s Q1 2024 Global Business Optimism Insights report.

This is despite the fact that the report shows a downturn in global supply chain continuity due to geopolitical tensions, trade disputes, and climate-related disruptions in maritime trade causing higher delivery costs and delayed delivery times.

“Global businesses are adopting a more pragmatic stance towards their future,” explains Neeraj Sahai, president, Dun & Bradstreet International. “This shift in mindset suggests anticipation of additional growth in the forthcoming quarters, albeit with an underlying sense of continued caution.”

Key findings from the report’s five indices—measuring Q1 2024 compared with Q4 2023—reveal the following:

• The Global Business Optimism Index increased by 6.6%, indicating that businesses in advanced economies now feel more confident about their ability to absorb geopolitical and policy shocks, and are focusing more on growth opportunities.
• The Global Supply Chain Continuity Index fell sharply by 6.3%, with suppliers’ delivery time and delivery cost indices both deteriorating.
• The Global Business Financial Confidence Index increased by 10.1%; in addition, liquidity is expected to increase across firms of all sizes and businesses are more optimistic about their competitive positioning.
• The Global Business Investment Confidence Index rose 10.7%, showing a growing consensus that major central banks in advanced economies have reached a peak in the current interest rate hike cycle.
• The Global Business Environmental, Social and Governance (ESG) Index increased 7%, reflecting a positive shift in the commitment of firms worldwide towards sustainability practices.

“Greenwashing” Gaffes

With the current intense focus on sustainability, it’s not surprising that many companies are accused of “greenwashing,” or conveying a false or misleading impression of the environmentally friendly nature of their products or supply chains. Increasingly, however, many firms may be unintentionally guilty of the practice.

Nearly half (45%) of U.S. organizations are concerned they could be at risk of unintentional greenwashing, finds new research from Ivalua. With pressures from customers and regulators on the rise, organizations also face pressure to ensure all green claims are legitimate.

The study reveals less than half (48%) of organizations claim they are “very confident” that they can “accurately” report on Scope 3 emissions (emissions resulting from activities or assets not owned or controlled by the reporting organization). Meanwhile, nearly two-thirds (62%) say reporting on Scope 3 emissions feels like a “best-guess” measurement.

The research also shows that while 88% of organizations are confident they’re on track to meet net-zero targets, many don’t have comprehensive, fully implemented plans in place for:

• Adopting renewable energy (78% are confident in their plans)
• Reducing carbon emissions (68%)
• Adopting circular economy principles (72%)
• Reducing air pollution (67%)
• Reducing water pollution (63%)

The research also finds that more than half (51%) of organizations agree that unless green initiatives to reach net-zero goals also involve suppliers, they are a waste of time.

Quick Take: Sector Sentiment

• 74% of supply chain professionals foresee positive growth in the global container shipping industry in 2024.
• 53% expect an increase in container prices, 26% anticipate stability, and only 21% express pessimism about price decline.
• 30% of supply chain professionals say forecasting and planning is the most important area of business to improve with technology in 2024, followed by real-time visibility and tracking (24%), collaboration and connectivity (27%), and process automation (18%).

Source: Container xChange Industry Speak Survey

A Sea of Investment

The Great Lakes St. Lawrence Seaway system, a marine highway that supports more than 100 ports and commercial docks located in each of the eight Great Lakes states, and the provinces of Ontario and Quebec, has been the recipient of significant investment from public and private sources over the past five years.

An independent survey conservatively estimates that investments made between 2018 and 2027 will total $8.4 billion.

Prepared by Martin Associates, and titled Infrastructure Investment Survey of the Great Lakes and St. Lawrence Seaway System, the survey quantifies ongoing investments in the navigation system to help support long-term planning and economic development goals, while also building confidence in the system’s future viability.

The survey also reveals investment in specific aspects of the system, including:

• $636 million in vessel enhancements between 2018 and 2022; $328 million planned between 2023 and 2027.
• $2.1 billion to enhance port and terminal infrastructure between 2018 and 2022; $1.1 billion planned between 2023 and 2027.
• $3 billion in waterway infrastructure (locks, breakwaters, navigation channels) between 2018 and 2022; $1.2 billion planned between 2023 and 2027.

“The survey’s conclusion is clear: both the public and private sector recognize that maritime commerce on the Great Lakes and St. Lawrence Seaway remains essential to the economies of the United States and Canada, and are investing to protect this irreplaceable system,” said U.S. Transportation Secretary Pete Buttigieg.

As you delve into this post, you’ll gain valuable insights into how Delivery at Place works in various scenarios, including buyer’s responsibilities and seller’s obligations. Additionally, we will address frequently asked questions to help clarify any lingering doubts or concerns about implementing DAP in your operations.

By understanding the nuances of DAP agreements and mastering their execution within your supply chain management strategies, you’ll be better equipped to navigate the complex world of international commerce with confidence and precision.

Delivery at place (DAP) is a crucial aspect of international trade. In this blog, we will explore the mechanics of DAP, how it can benefit your import/export business, and what strategies you should consider to maximize its effectiveness. Stay tuned to learn how to optimize your logistics processes with incoterms like DAP.

Delivery at Place is an efficient and cost-effective way to manage business logistics, offering a variety of benefits. By understanding how it works, businesses can ensure their delivery process runs smoothly and maximize the advantages of this service. Now let’s take a look at what Delivery at Place is.

What Is Delivery at Place?

Delivery at Place (DAP) is an Incoterm used in international trade. It indicates that the seller is responsible for delivering the goods to a specified location. In DAP transactions, the buyer assumes responsibility for import clearance and unloading costs. This arrangement simplifies logistics and cost allocation between parties involved in global shipping.

Delivery at Place is an inventive way of managing logistics that facilitates companies in streamlining their supply chain operations and augmenting delivery speed. Moving on, let’s explore how DAP works in more detail.

How DAP Works

In a Delivery at Place (DAP) arrangement, the seller is responsible for shipping goods to the named destination. This includes covering all transportation costs and bearing any risks until the goods are delivered at place. Once the shipment arrives at its terminal destination, the buyer becomes responsible for handling import customs clearance and paying any applicable duties or taxes, including customs duty and import duties. To ensure smooth transactions in international trade, both parties should maintain clear communication throughout this process.

The DAP deal requires the seller to load the goods on the transport vehicle for shipping and deliver them to the destination port. The buyer’s responsibilities include import customs clearance, import clearance, and paying the freight charges. The contract mentions the DAP agreement, which is introduced in the delivered at place Incoterms by the International Chamber of Commerce.

It’s important to note that delivered at place means delivered duty unpaid, which means the buyer bears the responsibility for customs clearance and paying any applicable duties or taxes. If the contract mentions delivered duty paid, the seller pays for customs clearance and duties.

For more information on delivered at place logistics management, refer to this comprehensive guide from Inbound Logistics.

Delivering straight to the customer’s destination, without additional delays or expenses, is a productive means of ensuring goods reach their goal. By understanding Delivery at Place obligations, businesses can maximize delivery efficiency and optimize supply chain operations.

Delivery at Place Obligations

To ensure a smooth Delivery at Place (DAP) transaction, buyers and sellers in the export and import countries must fulfill their respective obligations. Let’s discuss the responsibilities of each party in detail.

Sellers

The seller is responsible for arranging the transport of freight, covering all costs up to the agreed delivery location, and providing necessary documentation. They must also clear goods for export, but not import. The seller loads the goods and delivers them to the named place of destination.

The goods reach the named place when the transport arrives at the place of destination. The seller is responsible for customs clearance in the country of export but is not responsible for import customs clearance or paying import duties. 

Buyers

On the other hand, buyers are responsible for handling import customs clearance, paying any applicable duties or taxes on the freight, and unloading the shipment from the arriving means of transport at the destination. The buyer bears all risks and any additional costs after the goods have been delivered to the named place of destination. 

The buyer’s responsibilities include customs clearance in the country of import, payment of import duties and taxes, and unloading the freight at their final destination, such as the buyer’s warehouse.

It is important to note that the delivered at place deal does not include the payment of customs duty or any other taxes or charges payable upon import. If the parties wish the seller to bear those costs and risks associated with the import, they should consider using the Delivered Duty Paid (DDP) term.

The DAP agreement is introduced in the Incoterms® 2010 rules and is commonly used in international trade transactions. The contract mentions the named place of destination, and the buyer and seller agree on the place of delivery. The terminal destination must be a place that is easily accessible and safe for the delivery of goods.

Delivery at Place Obligations requires businesses to ensure that goods are delivered to their intended destination on time and in good condition. An overview of the pros and cons linked to this type of delivery arrangement can be examined.

Benefits and Drawbacks of DAP

DAP, or Delivery at Place, has advantages and disadvantages for buyers and sellers in international trade. Understanding these can help determine if utilizing delivered at place is the right choice for your business.

Benefits of DAP (Delivered at Place)

• Greater control over transportation costs for sellers.
• Simplified customs clearance process, as buyers handle import duties.
• Flexibility with Incoterms, allowing parties to negotiate terms that suit their needs.

Drawbacks of DAP (Delivered at Place)

• Potential delays in delivery due to customs or other unforeseen issues (problems with unloading) at the destination port.
• Risk exposure during transport remains with the seller until the goods are delivered to the named place.

Before settling on DAP, one must consider the possible ramifications of their decision and balance out its pros and cons. To ensure the successful management of DAP shipments, it is crucial to follow best practices for optimal results.

Best Practices for Managing DAP Shipments

Effective logistics management is critical to ensuring a shipment gets delivered at place. Following best practices can help you avoid common issues and streamline the process.

Preparing for a DAP Shipment

To prepare for a delivered at place shipment, ensure all parties understand their responsibilities, including payment terms, transportation arrangements, and customs clearance requirements. The contract should clearly state the named location where the goods will be delivered at place and the buyer’s responsibilities for import customs clearance and payment of any import duties.

Managing Documentation

Ensure you maintain accurate records of shipping documents such as commercial invoices, packing lists, bills of lading, and certificates of origin to facilitate smooth import processes at the destination country. The seller should provide the buyer with the necessary documents for import customs clearance, and the buyer should ensure that all documents are complete and accurate.

Communication and Collaboration

Promote open communication between buyers and sellers throughout the delivery process to prevent misunderstandings or delays in transport or customs clearance. The buyer and seller should agree on the freight forwarder and the terminal destination of the freight, and the seller should provide the buyer with the necessary information to track the shipment.

Tracking and Monitoring

Monitor shipments closely, using tracking tools provided by freight forwarders or carriers to stay informed about potential disruptions that may impact delivery timelines. The seller should ensure that the goods reach the named destination on time and that the buyer bears the risk of loss or damage to the goods from the time they are delivered duty unpaid until they get delivered at the named place.

By following the best practices for managing DAP shipments, businesses can ensure their goods are delivered in a timely and cost-effective manner through unloading. Let’s now explore some common queries regarding this procedure to understand how it operates.

FAQs

In this section, we will address some frequently asked questions about Delivery at Place (DAP).

What is the contrast between DAP and DDP?

The main difference between Delivered Duty Paid (DDP) and DAP lies in the responsibility for customs clearance. In a DDP arrangement, the seller takes full responsibility for import duties and taxes, while under DAP terms, these responsibilities fall on the buyer.

What is an example of delivery-at-place?

An example of a scenario where a shipment gets delivered at place would be when a US-based company sells goods to a European customer with agreed-upon terms that include delivering products to their warehouse. The seller arranges transportation but leaves customs clearance costs to the buyer.

Final Thoughts

In conclusion, Delivery at Place (DAP) is an international trade term that specifies the seller’s responsibility for delivering goods to a named place in the buyer’s country. DAP deals with the delivery of goods and not their unloading or customs clearance. The buyer bears all risks and costs associated with importing the goods from this point onwards.

Managing DAP shipments requires careful planning, coordination, and communication between all parties involved. It is essential to understand each party’s obligations and responsibilities under the contract to avoid any disputes or delays in delivery.

Check out Inbound Logistics for pro tips and guidance on managing shipments!

For shippers and logistics providers, the challenge of maximizing air cargo capacity—whether for soft goods or for furniture, electronics, and other heavy items moved by air—is not as easily solved. And at the height of the pandemic, the challenge was more complex still.

One year ago, airfreight capacity was just beginning its return to its pre-pandemic norms after more than two years during which demand for air cargo space was far greater than what was available.

Fast forward to today. Air cargo capacity exceeded pre-pandemic levels in the second quarter of 2023 for the first time in three years, according to the International Air Transport Association (IATA). (Air cargo capacity is measured by available cargo tonne-kilometers, commonly referred to as ACTKs. A tonne is a metric unit of mass equivalent to 1,000 kilograms or 2,200 pounds.)

The global air cargo industry registered 20.7 billion cargo tonne-kilometers in July 2023, extending its steady improvement since February, according to an IATA Air Cargo Market Analysis issued earlier this year. ACTKs, meanwhile, stood at 49.1 billion in July, an increase of more than 11% compared to the 2022 level and a better than 3% increase over the same month in 2019.

The restoration of passenger belly-hold capacity drove the strong annual expansion of ACTKs.

“In response to weak air cargo demand, airlines added less dedicated cargo capacity in June,” IATA reported in its Air Transport Chartbook for Q2 2023. However, ACTKs through the end of the quarter already surpassed levels for the same period in 2022 by nearly 10%.

“The air industry is still in a state of correction,” notes Debra Capko, president of Pegasus Freight Services, a Houston-based freight forwarding and logistics provider.

“Although freighters were scarce in 2020 due to the high volume of personal protective equipment such as gloves and face masks being shipped, the rest of the market was not strong globally,” Capko says. “We saw improvement in 2021 and 2022 was busy for everyone.”

At the height of the pandemic, “preighters” helped with the volume of shipments, Capko says. A preighter—also known as cargo in cabin—is an aircraft originally intended to carry passengers, but which is operated temporarily as a cargo aircraft by loading freight in the passenger cabin.

Airlines Fight Contraction and Then Experience Growth

Notwithstanding such solutions and improvements, airlines in both North America and Europe experienced a challenging start to the second quarter of 2023 with an annual contraction in international cargo capacity.

But the situation soon rebounded, IATA says. The ups and downs of cargo space on the Europe-North America trade lane, created traffic fluctuations by the airlines.

With global trade contracting year-over-year in 2023’s second quarter, air cargo demand followed suit.

“Notably, the gap between the growth in global goods trade and air cargo demand narrowed in Q2 to the lowest level since January 2022,” according to IATA. “However, this gap indicates that air cargo is still more affected by the slowdown in global trade than container cargo.”

Has passenger traffic affected air cargo capacity? “We have seen sufficient capacity for current volume levels,” says Andreas Von Pohl, senior vice president, airfreight, for DHL Global Forwarding Americas, which specializes in international shipping and courier services.

Belly capacity has continued to improve and travel demand remains high. “Capacity remains sufficient on the majority of trade lanes with no significant backlogs apart from some Asia and Intra Asia countries outbound,” Von Pohl says. “So even though we have capacity, we still face volume issues.”

Is it possible that the industry created too much capacity?

“The industry always adjusts to the new market realities,” Von Pohl says. “As we currently experience low demand with ample capacity, the industry will adjust their networks to deal with that reality.

“It will take some time, but underutilized infrastructure and assets will not continue to be available if the market does not show improvement,” he adds.

Effects on Booking and Rates

The outlook for air cargo capacity has improved since the pandemic-related crunch. Ongoing geopolitical events and inflationary pressures, however, remain concerns.

Amid the fluctuations in air cargo capacity, freight forwarders have found creative solutions to avoid potential problems with booking.

“We had not experienced significant issues with booking cargo on passenger flights although we have had to book more than normal on a priority basis,” says Capko. “We have had to be creative with moving cargo on freighters from various gateways to accommodate large shipments.”

DHL, meanwhile, has developed new technology to help streamline the booking process.

“Booking is a critical area in the airfreight process,” Von Pohl says. “It’s a key part of the customer experience and many players in the market have targeted ways of making it more efficient while also ensuring that it remains dynamic and responsive to changes in the market.”

One way DHL has addressed the challenge is with the myDHLi tool, which significantly simplifies booking for customers while providing 360-degree visibility and full control over shipments. “This is augmented by the strong relationships DHL has established with carriers and by their efforts to digitize and simplify the quotation and booking process,” Von Pohl says. Rates have fluctuated along with capacity. “Outbound rates from the United States dropped in 2020, and then increased in 2021,” says Capko. “I believe the market will return to normal during either the second half of 2024 or 2025.”

In the meantime, it has been a turbulent trip for logistics professionals.

“Due to the explosion of airfreight in 2022, rates skyrocketed. Now in 2023 the rates for most markets have crashed,” Capko says. “This is due to the supply chain shutting down through COVID. When countries started to open up again, it was not everyone across the board at the same time.

“Reopening was very difficult for both air and ocean carriers and the industry as a whole,” she adds. “Ocean carriers had to drastically alter their schedules with blank sailings and stranded cargo at transshipment points all over the world. When exporters could not get their product to their customers, they had to turn to air freight.”

For now, there seems to be relative calm. “With current low demand and sufficient capacity available, shippers are able to take advantage of aggressive rates in the current market,” Von Pohl says.

“However, we should not forget the lessons learned during the pandemic,” he adds. “Shippers may want to hedge their bets by leaving some of their cargo on dedicated flight operations/networks.

“If world supply chains become challenged again, at least you want to have a seat at the table to assure continuity, reliability, and stability for your goods and services,” Von Pohl notes.

As always, it remains vital to keep track of rates as they change. To help shippers keep abreast of rates in real time, IATA offers TACT Air Cargo Solutions, which allows users to search for current rates, rules, and regulations, air cargo schedules, and other air cargo compliance information.

The tool assists shippers and freight forwarders with vital up-to-date operational and compliance information for air cargo shipments. It removes the need for subscribers to connect with individual airlines, handling agents, or airport operators.

More than 70,000 cargo professionals, including airlines, freight forwarders, airports, ground handling agents, and customs authorities, use TACT daily, IATA says.

Process and Protocols

Along with coping with the exigencies of expanding and contracting air cargo space since the advent of the pandemic, air cargo professionals also have faced the need to respond to changes in safety and security protocols affecting air freight on both domestic and international routes.

“Pegasus is an indirect air carrier (IAC) governed by TSA regulations,” says Capko. “The TSA has been making changes to the industry’s security program over the past several years as part of their continuing process to ensure safety for all. These changes affect the air carriers, IACs, and their authorized representatives in the supply chain.”

For DHL, these changes in process and protocol have meant devising methods to meet increasingly stringent requirements.

“We have seen progressively stronger safety and security regulations in response to risks in the supply chain, as well as the deployment of new technologies that have enhanced security and safety in the sector,” Von Pohl says.

“DHL always seeks to be proactive and to continuously enhance our initiatives in both areas,” he adds. “This is supported by the strong working relationship we have with the authorities in areas such as certification.”

Staying Positive

Despite continuing challenges, the outlook for air cargo capacity and air transportation in general is positive. IATA characterizes the state of the business cycle as being in a “relative sweet spot,” with record employment offsetting the negative impacts of higher prices.

While acknowledging that cargo revenue will likely ease further from its pandemic-related high, reflecting a decline in both cargo tonne-kilometer volumes and a significant unwinding of cargo rates, IATA’s recent Quarterly Air Transport Chartbook reflects a positive picture for airlines.

“Cargo revenue is likely to still be around 40% higher than in 2019 and will account for around 20% of total airline revenue,” the report says.

That seems to indicate that airfreight shippers are looking beyond the horizon, seeing the trends, and focusing on the bright spots. Yet caution remains key in the overall air cargo market.

“Due to geopolitical events and ongoing inflationary pressure, we do not expect volume to recover in the short term,” says Von Pohl. “However, the market will continue to be volatile in some theaters of operations.”

6 Ways to Cut Airfreight Costs

Saving money on air shipments is not only about finding the lowest rate, says Debra Capko, president of Houston-based Pegasus Freight Services. She offers the following tips to minimize airfreight expenses:

1. Find an experienced and qualified freight forwarder who is licensed by the Federal Maritime Commission, is a TSA-certified independent air carrier, as well as an IATA agent, and is bonded—preferably through a referral from another company or an individual you work with in your industry.

2. Consolidate all orders going to the same destination and consignee into a single shipment.

3. Provide accurate information to your freight forwarder regarding commodity, weight, dimensional weights, your customer’s requirements, and other details.

4. Obtain approval from the consignee and/or their forwarder that documentation is correct for their customs clearance.

Andreas Von Pohl, senior vice president, airfreight, for DHL Global Forwarding Americas, additionally suggests:

5. Leverage multi-modal services. Multi-modal transport contracts involve two or more means of transport through one contract with carriers such as DHL.

6. Make good forecasts. While recognizing that the need for urgent shipments sometimes occurs, a quality forecast program can support cost reductions.

To hedge against global setbacks, consider product sourcing diversification and nearshoring. Both strategies can reduce risk by ensuring access to the necessary materials and labor resources.

Let’s take a deeper look at how both strategies not only reduce risk, but also optimize business efficiencies and create resiliency.

Product sourcing diversification. Businesses gravitate toward product sourcing diversification because it’s an effective way to spread their risk. By having multiple suppliers available for the same product, operations can fall back on a different supplier should one be impacted by unforeseen disruptions.

This strategy grew popular during the Trump administration because of tariffs placed on goods imported from China. Many companies were forced to rethink their dependence on trade with China and diversified elsewhere in Asia.

Businesses have looked specifically at India and Vietnam because they can offer the needed products at a cheaper price and lesser risk.

Spreading the risk is a key pillar to supply chain stability. The ability to still acquire necessary products, despite difficulties from events beyond their control, allows businesses to remain stable and trustworthy to their clientele.

Nearshoring. Moving supply chain operations to a country closer to the import destination, which still gives businesses the advantage of cost savings associated with offshore production, is a strategy that’s picking up steam. In an Accenture survey, 94% of companies said they are directly investing in nearshoring or onshoring, and 85% want their factories and material sources to be in the same hemisphere.

It’s easy to see why. Nearshoring not only spreads the risk, but also shortens lead times to result in faster cash-to-cash cycles, reduces inventory carrying costs, and facilitates more efficient visits by quality assurance and purchasing staff.

Nearshoring also helps businesses shift to a more practical “just in case” inventory management strategy, instead of the traditional “just in time” approach to foster better overall resiliency.

Most importantly, reaction time in a global setback is much faster with nearshoring. Being in the same time zone allows for easy communication and collaboration during a crisis.

Mexico is particularly attractive because it offers many more logistics options for moving goods. It’s not limited to ocean and air freight, which can prove to be a big difference during a global setback. Mexico also offers tariff stability due to the U.S., Mexico, Canada Agreement (USMCA).

Supply chain volatility requires businesses to do everything they can on the back end to minimize risk. Product sourcing diversification and nearshoring achieve those objectives and create more efficiencies.

By adopting these strategies, businesses reap the benefits of cost savings associated with overseas production and hedge against global setbacks or unexpected supply chain disruption.n

Pressure on global supply chains has eased in 2023 and shipping costs have dropped, which should alleviate some inflationary pressures and improve supply capacity, the report contends. However, global trade remains relatively weak. Consumer demand may also pick up in 2023, with European markets already seeing slight improvements.

“How we get back to sustainable, long-term growth is the big question facing boardrooms and political chambers around the world right now,” says Regina Mayor, global head of clients and markets for KPMG. “The actions taken over the coming months are likely to play a significant role in the pace and nature of the world’s economic recovery.”

Q. What do shippers need to know about current conditions and how we got here?

A. In peak years with tighter capacity and an increasingly fragmented and competitive supplier base of carriers, we’ve seen inflation for shippers increase by 6% in 2015 and 12% in 2018. Recent macroeconomic events steadily drove shipper truckload rates to new heights as inflation increased 23% in 2021.

The tides turned for shippers as markets started softening in early 2022 as capacity loosened and eventually turned into a surplus. By April 2022 the market inverted, with spot rates dropping below contract rates, pushing shippers to get creative and shift their procurement strategies again.

Q. Where do you anticipate the market heading and what new trends will have a lasting impact on shipper strategy?

A. We anticipate that rates will continue to drop or remain at lower levels in 2023. One of the key bid rollout periods occurs in the spring season, and we’re starting to see these new replacement rates starting to enter our data and driving further cost reductions for shippers. During this time, shippers shouldn’t expect to entirely recoup losses they endured, but there is a sizable opportunity for shippers to shift their approach from cost containment to cost reduction.

In the most recent Signal Report from DAT iQ, our team of experts provided the following guidance:

“Shippers should continue to take advantage of the inverted market to secure lower contract rates, but also to shift more loads away from the routing guide (after meeting carrier commitments) to leverage the spot market. We believe that the trend of using a mix of contract and strategic spot rates will continue beyond the current soft market.”

With more capacity available, shippers have regained greater leverage in negotiations—for now. Keep in mind shippers would be well-advised to build and maintain strong, cooperative partnerships with carriers regardless of market conditions.

Mid to large shippers in the U.S. generally ship over 80% of their freight under contract, avoiding the spot market if possible. In that context, the improved perception and increased strategic usage of the spot market, especially on low volume live load lanes, has certainly been one of the most significant recent trends.

The transportation and logistics industry is constantly changing, and shippers must be proactive in anticipating and adapting to new trends and market conditions to stay ahead of the competition. By leveraging accurate rate and capacity data, shippers can drive fair negotiations with carriers, find new cost savings opportunities, remain competitive, and navigate this complex landscape and come out ahead in the long run.

Chad Kennedy is group product manager for DAT iQ and responsible for delivering benchmark reporting solutions to customers. Prior to joining DAT in 2018, he led the transportation department for CHEP, where he was a customer of DAT for nine years. At CHEP, Kennedy leveraged data analytics and his prior experience as a manager with a small trucking company to partner with carriers and brokers to improve cost and service.

With more than 15 years of experience in transportation and data analytics, Kennedy has now focused his efforts on solving analytical and benchmarking problems for shippers, carriers, and brokers.

Enter Incoterms. These rules serve as a guidebook for many aspects of global cargo transportation, but are primarily designed to address the obligations of the seller and the buyer of a shipment relative to cost and risk throughout the process leading up to cargo being loaded and while in transit.

Why Use Incoterms?

“Incoterms allow for standardized technology and eliminate the risk of inconsistencies in language terms,” says Phil Denning, vice president of U.S. sea logistics and operations for Kuehne + Nagel. “They also clearly define the cost and risk responsibilities for both the seller and the buyer, in addition to assigning responsibility for customs clearance, first- and last-mile delivery, and insurance coverage.”

The International Chamber of Commerce first published Incoterms in 1936, and update the rules approximately every five years. The most recent changes were made in 2020.

It is a good idea for shippers to regularly refresh their knowledge of Incoterms to ensure they are aware of all current changes.
Here are the most current Incoterms and what they cover.

EXW (Ex Works or Ex-Warehouse)

When goods are sold, it is the seller’s responsibility to package the goods and make them available to the buyer. The buyer is responsible for collecting the goods and all costs associated with shipping, exporting, and importing. The seller is no longer responsible for the goods once the buyer is made aware that they are ready for collection.

FCA (Free Carrier)

The seller is responsible for making the goods available at an agreed-upon location, such as a warehouse or shipping terminal. If the goods need to be moved before the international shipment, the seller is responsible for arranging and paying for the transportation and for loading the goods onto the buyer’s chosen mode of transportation.

The seller is also responsible for clearing the goods for export and paying any export charges. At this point, the buyer assumes responsibility for the goods and should provide a bill of lading to the seller once the goods are loaded for transportation.

CTP (Carriage Paid To)

The seller is responsible for packing and transporting goods to the international carrier, covering customs and export costs, and paying for international shipping.

While the seller pays for the international transport, responsibility for loss or damage transfers to the buyer once the goods have been delivered to the international carrier.

CIP (Carriage Insurance Paid To)

In addition to the items addressed in the CTP rule, the CIP Incoterm also requires the seller to pay for insurance coverage for the goods in transit. Some companies choose to require insurance to cover 110% of the value of the goods. However, the seller and buyer can agree on the specific amount of coverage for a shipment.

DAP (Delivery at Place)

This rule states that the seller is responsible for delivering the goods to an agreed-upon location, bearing all costs for exporting and transporting the goods as well as the risks during transport until the goods are delivered to the destination the buyer selects.

At this point, all responsibility transfers to the buyer including covering the costs and process of unloading the goods and paying all import duties, taxes, and customs clearance fees.

DPU (Delivery at Place Unloaded)

When cargo arrives at its destination, the seller is responsible for providing resources to unload goods for the buyer. Once all the goods have been unloaded, the buyer is responsible for import duties, taxes, and customs clearance fees.

DDP (Delivery Duty Paid)

This Incoterm makes the seller responsible for delivering the goods to the buyer. The seller is also responsible for delivering the goods to the port or shipping terminal, overseeing the goods being unloaded, paying export fees and international shipping fees at the port of origin, and ensuring the goods are cleared through customs when they arrive at the destination port.

The seller pays import and customs clearance fees, delivers the goods, and is responsible for all risks involved in the transaction to this point.

FAS (Free Alongside Ship)

The seller is responsible for all charges and risks associated with transporting the goods from their location to the ship’s loading bay. After delivery, the buyer is responsible for the risk, cost of loading the goods, and essentially everything else associated with the shipment.

FOB (Free on Board)

The seller is responsible for all risks and costs associated with transporting the goods from their location to the shipping terminal. The seller also must make sure the goods are loaded onto the ship as well as handle export clearances and associated costs.

CFR (Cost and Freight)

This Incoterm states that the seller takes responsibility for all risks and costs of transporting the goods to the international carrier, arranging for the goods to be loaded, and acquiring and paying for export clearances.

The seller is also responsible for the cost of transporting the goods to the buyer’s destination port. Responsibility only transfers to the buyer once the goods arrive at their port of destination.

CIF (Cost, Insurance, and Freight)

This Incoterm is different from CFR because it stipulates that the seller is responsible for the cost of insuring the goods when they are in transit.

Are the Rules Easy to Use?

“Incoterms are a specialized body of knowledge,” says Andy Dyer, president of transportation management for AFS Logistics. “The buyer and seller must agree to the terms, so if either party does not have the same interpretation of the rules, there can be conflicts.”

Another factor that adds to the complexity of using Incoterms is that the sales contracting process typically involves different parties within a company than the ones who will be responsible for abiding by the terms.

No one is required to use Incoterms and some companies choose not to do so. In that scenario, “It’s all good until it isn’t,” says Radhika Mulastanam, director of international services for AFS.

Many aspects of global shipping can go awry, including not having adequate labor at the port for loading and unloading cargo, late deliveries by transportation providers, or even damage to the cargo or vessel in transit.

“That is why it is important to have terms in place to navigate unexpected issues or conflicts,” says Dyer.

How Incoterms Impact Shipping Costs

When choosing Incoterms for a contract, an old adage holds true: You get what you negotiated.

For example, buying goods under the Ex-Works or (EXW) rule or the Delivered at Place Unloaded (DPU) can result in very different costs for the buyer and seller.

Another aspect that is important for sellers and buyers to analyze is the distribution of transportation costs and duties to be performed, like loading, unloading, and packaging of goods. The combined cost of trucking, ocean, and rail can have a significant impact on the overall cost of the cargo being transported.

While a seller or buyer may pay less for an international shipment based on the allocation of transportation costs, deciding which party is best prepared to organize fast, safe, and cost-efficient transportation can have impacts beyond cost savings.

The goal is that the product being shipped globally reaches the end consumer on time and is undamaged. Rules can provide a framework, but not the expertise to select the best providers to ensure cargo gets to the port of origin and is ready to be processed at the destination port.

What Global Conditions Impact Incoterms?

International shipping has had its share of challenges over the past few years, from port congestion to the war in Ukraine.

“While global unrest can result in other challenges for global shippers, it is unlikely to impact the use of Incoterms,” notes Maren Corbett, director of operational transformation for Kuehne + Nagel.

Mulastanam shares this example: “When there was a tsunami several years ago, new cars were held at a port in Japan because conditions made it physically impossible to deliver the cars. Had the tsunami occurred while the cars were still on the vessel, rather than offloaded, cost allocation would have been different, based on Incoterms.”

“The financial instability of destination countries can influence the use of Incoterms,” says Corbett. “For example, all shipments for Venezuela must move on C-terms due to currency fluctuations.”

Incoterms provide a basic framework to allocate cost, risk, and duties to global shipments. However, the terms change, can be confusing, and only apply if both the seller and buyer agree. Shippers should review the rules periodically for changes and, when in doubt, partner with a third-party provider specializing in global shipping.

Asked & Answered: Incoterms FAQs

Here are some common questions shippers have about Incoterms.

Do Incoterms apply to services as well as goods?

Primarily, Incoterms apply to goods. They are not intended for services in trade. There are some exceptions when training is included with the goods being traded. If the training materials and demonstrations are imported, Incoterms may be relevant. However, the key takeaway is that Incoterms apply to goods.

How do Incoterms work?

The terms provide a foundation for commonly negotiated global or cross-border trade aspects. When buyers and sellers agree to do business following these universal terms, they simplify the process of global trade because companies have a framework for negotiations. Customs clearance authorities also use Incoterms to establish the base for import taxes.

How do Incoterms affect the price of global transactions?

The terms define which aspects of transportation and insurance are assigned to the buyer and the seller. For example, the seller must have shipments ready for collection by the buyer. In many cases, the goods can be collected from the seller’s warehouse or distribution center.

In DDP terms, the seller must have the shipment ready for unloading at the buyer’s warehouse. Any costs incurred in transporting the goods from the seller’s location to the buyer’s location can increase the price of the transaction for the seller—the party responsible for delivering the goods to the buyer.

What do Incoterms not cover?

Many aspects of global trade are not covered by Incoterms, including title transfer, conflict resolution, the currency of payment, exchange rates, the jurisdiction of trade law, and liability on post-clearance audits.

Can Incoterms be modified by a contract?

The simple answer is yes. The terms are not laws or regulations and can be modified by the seller or buyer. However, the more significantly the contract language varies from the concepts established by Incoterms, the more difficult it can become to refer to case law or precedents in the event of a claims dispute.

Are Incoterms legally binding?

The terms are legally binding to the degree that a sales contract is legally binding. On their own, the terms are not legally binding unless they are used in a contract or agreement between sellers and buyers.

Are Incoterms required on a commercial invoice?

They are not. However, Customs may use a specific term as the basis of valuation for goods being shipped internationally. By using an Incoterm for the transaction, the seller and buyer can influence the amount of the valuation and reduce valuation challenges.

What Incoterms should be used for domestic shipments?

There is no restriction on the use of Incoterms for domestic shipments. It is important that the sales contract clearly states which aspects of the terms do not apply to a specific transaction.

Should Incoterms be used for air freight?

The terms that can be applied to air cargo are: EXW, DDP, DPU, CIP, DAP, FCA, and CPT.

When does title transfer occur in Incoterms?

Incoterms does not address the issue of title transfer. However, the rules do address the point of delivery. Some companies use the words “title transfer” and “point of delivery” interchangeably.

For instance, 88% of respondents to a 2022 Capterra survey of supply chain professionals at small and mid-sized companies say they plan to switch at least some of their sourcing to suppliers closer to the United States, while 45% say they plan to switch all of their suppliers.

Some firms open factories or strike deals with vendors in the United States, Mexico, or elsewhere near home. Others seek alternatives to China in South or Southeast Asia. And some, like one client of Washington, D.C.-based FTI Consulting, plan to source from different regions to support different markets.

“The company is looking at India, Vietnam, and other places to support the EMEA [Europe, Middle East, and Africa] market,” says Ron Scalzo, senior managing director with FTI’s Corporate Finance and Restructuring section. “They are also looking at Mexico, or possibly onshoring in the United States, to support the U.S. market.”

Outsourcing to countries other than China is nothing new; Mexican maquiladoras have served U.S. brand owners since the 1960s. But for companies that rely on China’s prodigious manufacturing ecosystem, several recent factors are prompting a fresh look at other parts of the world.

Tariffs, COVID, and Conflict

One factor is the trade war that revved up in 2018, when the United States imposed hefty new tariffs on Chinese imports. One document, known as List 3, named about $200 billion worth of goods from China that would incur additional tariffs.

“When that list came out, business contacts started asking me to look for alternative manufacturing sources for them,” says Erik Brigham, who at the time ran an export business in Thailand. Observing a demand for Thai suppliers, Brigham launched a new enterprise to fill the need, Bangkok-based Thailand Sourcing.

Then came the pandemic and China’s Zero COVID policy.

“The pandemic introduced risk into supply chains like we’ve never seen before,” says Rosemary Coates, a supply chain consultant and executive director and chair of the Reshoring Institute, a nonprofit that helps U.S. firms start manufacturing in the United States.

“Companies couldn’t get product out of China,” Coates says. “They had real difficulties with the factories opening and closing. That’s still happening today.”

Along with production delays in recent years, port congestion and high shipping rates have also made some companies rethink long supply chains rooted in China. Consider the U.S. fashion industry.

“When there was port congestion coming out of China, some U.S. buyers responded to the long lead times by buying and storing larger quantities,” says Raine Mahdi, founder and CEO of Zipfox, an online sourcing marketplace with an initial focus on Mexico. “But that means more cash tied up for longer.”

With much shorter lead times on orders from Mexico, clothing brands can buy in smaller increments.

Other factors turning U.S. companies away from China include ongoing geopolitical tensions, concern about intellectual property, and—for some —the desire to label their products Made in the USA.

“There has always been a subset of consumers who might want to buy American,” says Scalzo. “That subset is growing.”

Breaking Up is Hard to Do

Whatever its reasons for moving away, a U.S. company entrenched in China might face a tough transition. First, cutting old ties can be tricky. “For example, if you have shipped a mold or tool to China to assist with production, you’re never getting that back,” Coates says.

Also, departure can turn a supplier into a competitor. After you’ve taught a manufacturer where to source materials and how to make your product according to your standards, when you leave, that knowledge stays behind. “They’re going to continue to manufacture your product and label it differently,” she warns.

For a company that owns a factory in China, multi-year employment contracts can also complicate an exit. “You have to pay out to the end of that contract,” Coates says. In a plant with thousands of workers, that’s a big expense.

The search for non-Chinese suppliers or contract manufacturers can also prove challenging.

“When you enter China, there’s a massive city that has 2,000 factories, of which 100 will meet with you,” says Kevin McGaffey, founder of Bangkok-based MOTOA Group, a sourcing company that specializes in finding alternatives to China. “You have time for 10. Five or six will say ‘yes,’ and four will be competitive.

“Try that same thing in Gujarat, India, Haiphong, Vietnam, or Samut Prakan, Thailand, and you will have a very different experience,” he adds.

Even when you locate a capable supplier, you won’t find the same supportive infrastructure that China provides.

“It’s not just where your plant is, but where your raw materials and components are coming from,” Scalzo says. Those sources tend to be in China or other parts of Asia. “How do you begin to shift the entire supply chain going upstream?” he asks.

A firm that moves out of China must also learn to navigate a new business culture.

For instance, in Latin America, personal relationships are crucial.

“You can’t just e-mail or text a supplier and say, ‘Can you make this product?’” explains Amy Wees, founder of Amazing at Home, an Austin-based consultancy for e-commerce merchants and co-founder of the EvoLatam Expo, an annual trade show in Mexico that introduces e-commerce brand owners to Latin American suppliers.

“You need to go in person and build those relationships to get things done,” she says.

Also, suppliers in Mexico aren’t always well-versed in the nuts and bolts of contract manufacturing. “It’s not that Mexico doesn’t have those capabilities,” Wees says. “It just requires more of a partnership and conversation.”

Companies migrating from China to another Asian country could get a shock when it comes time to negotiate a business deal. “I’ve visited 80-plus executive teams and owners, and they’ll say, ‘I don’t understand why this is difficult and why these terms aren’t what I want,” says McGaffey.

Chinese suppliers can rely on their government to finance production, but their counterparts in other countries look to their buyers for that money, he adds.

Brigham agrees that buyers will need to get used to different purchasing terms.

“If you’ve been getting net 90 days out of China for 20 years and then you move to Thailand, don’t be surprised if they want 30/70 FOB [30% deposit/70% due upon transfer of the bill of lading],” Brigham says. “They want skin in the game. Even if they don’t need the money, to them it’s an important part of building trust.”

Steps for Success

If you’re looking for alternatives to China, one important early step is to establish which criteria you’ll use to choose the new country and new suppliers.

“The criteria is a little different for everybody,” Scalzo says. “The basics are available labor, access to raw materials and components, and infrastructure.”

Along with what’s available now, keep in mind how the infrastructure is likely to improve in the coming years. Take Mexico, for example.

“The infrastructure for trans-border Mexico to U.S. support is not nearly what it needs to be,” says Scalzo. But we’re likely to see new investment, particularly in rail facilities, to support more cross-border trade, he says.

For companies trying to decide whether to reshore to the United States, the key might lie in how much labor their processes involve.

“If the process involves sewing, high labor content, and high-touch labor, then look for a low-cost country if you’re going to move out of China,” Coates advises. “If you are highly automated, or plan to be, the economics shift significantly.” Then it’s possible to make the case for domestic production.

Some further advice from the experts on sourcing from a country other than China:

Do the homework. “Go through the same steps you would when vetting any new supplier: Get quotes from a few different people, ask for samples, start with a prototype or small order first, test the relationship, work out the kinks,” says Mahdi.

Meet in person. Before Wees started leading sourcing trips to Mexico, she once asked a supplier there to give her a quote for a product she wanted for her own e-commerce business. “Their quote was higher than I sell that product for at retail,” she says.

Then Wees made a visit. Face-to-face discussions revealed that many Mexican suppliers thought Americans wanted to buy their existing products at wholesale rates. Once Wees explained that she was a brand owner, developing her own products and looking for a contract manufacturing relationship, she received more palatable quotes.

Consider the total cost. The cost per unit to produce an item in Mexico is generally higher than in China. “However, once you take into consideration that you’re not paying tariffs, in many cases you will realize a savings,” Wees says.

Be flexible. When approaching a potential supplier, don’t get hung up on the way you operate in China. “You have to manage your expectations and realize that it’s like a first date with a person from a different culture whom you’ve never met,” McGaffey says.

Don’t delay. While Mexico has enough production capacity today, that could change. “Some factories are already saying they can’t take any new business because they’re inundated with orders,” says Mahdi.

Now is the time to start making connections. “Make the decision to at least start testing manufacturers in Latin America and start establishing relationships, even if at a small scale, keeping somebody in your pocket as a backup supplier,” he advises.

The same goes for other parts of the world. “If you are able to get a quote from Thailand specifically, and you’re working with someone you trust, take it very seriously,” Brigham says. “And think about what it would mean in the long term to have a diverse supply chain for this specific product, even if it costs a little more up front.”

If, for your purposes, you think of China as a sinking Titanic, and countries such as Vietnam and India as potential lifeboats, make sure to secure your place while capacity remains. “If it’s Southeast Asia you want to go to, it’s filling up fast,” Brigham says.

Tomorrow’s Regional Trade Growth Leaders

World Regions 2021-2026:
Predicted Export Volume Growth Rates

Trade growth is spread across a wider variety of countries, according to DHL’s Trade Growth Atlas 2022. China accounted for 25% of trade growth in recent years and is predicted to continue to have the largest growth, but its share is likely to fall by half, to 13%.

Vietnam, India, and the Philippines stand out in terms of both speed and scale of projected trade growth through 2026. All three have potential to benefit from efforts to diversify China-centric strategies. While emerging economies increased their shares of world trade from 24% to 40% between 2000 and 2012, with half the increase driven by China alone, these shares have barely changed over the past decade.

Emerging economies continue to race forward on measures of connectivity, innovation, and leading companies. They are becoming more important exporters of sophisticated manufactured products, and increasingly compete not only on low costs, but also on innovation and quality.

New Tools For Sourcing From Latin America

Raine Mahdi founded the Zipfox online sourcing marketplace to give buyers an alternative to platforms such as China-based Alibaba and Global Sources. Those platforms pose risks, Mahdi says, because they sign on as many suppliers as possible. That leaves buyers to search through a field of listings with no clue about which vendors offer good value.

“If you’re looking for T-shirts or phone cases, do you need 500 options?” Mahdi asks. “Or would you rather have 25 high-quality options, maybe with different sizes and different minimum order quantities?”

Zipfox launched in 2022 as a place to find Mexican suppliers, which Mahdi says his company vets carefully before letting them join the platform. Eventually, Zipfox aims to become a global marketplace, with plans to expand into Central and South America in early 2023. “We’ve put feelers out in Egypt, South Africa, and India, just to test the markets,” he adds.

In the long run, Zipfox will probably even add Chinese suppliers. “But now is not the time,” Mahdi says.

For buyers—especially e-commerce brand owners—who want to make in-person contacts in Mexico and beyond, the EvoLatam Expo offers a chance to check out suppliers in many different categories.

“Most of us don’t just sell things made of wood, or just household goods,” says Amy Wees, an online merchant, e-commerce consultant, and co-founder of EvoLatam. “We’re used to going to trade shows like the Canton Fair in China, ASD in Las Vegas, or Global Sources in Hong Kong.”

When Wees and her business partner started to lead sourcing trips to Mexico, they found trade shows for single categories, such as ceramics. “But there was nothing that would help an e-commerce brand owner source from multiple categories at once,” she says.

They founded EvoLatam to fill that need. “If we were going to evolve e-commerce into sourcing in Latin America, this was an absolute requirement,” Wees says.

In the months after the invasion, total vessels moving in and out of Ukraine dropped from 109 in January 2022 to just two in June 2022, according to data tracked by project44. Combine the lack of vessel movement with trade sanctions on Russian exports, and you have a recipe for global inflation and commodity price spiking.

To mitigate these challenges, many companies are diversifying their supply chains by changing from single to multi-supplier sourcing. In some cases, they are shifting from offshoring to nearshoring.

“CEOs say they plan to mitigate risk by accelerating innovation and digital transformation, pursuing new opportunities in higher-growth markets, and revising business models—the three most-cited actions,” says Dana Peterson, chief economist for The Conference Board.

Some concerns are abating. Although COVID remains top of mind for many CEOs operating in Asia, their U.S. counterparts seem to have placed the issue in their rear-view mirrors. By-products of the pandemic, such as labor shortages, remain constant. Finding and retaining talent continues to be a huge challenge that nearly all CEOs place at the top of their internal priority list. 

“To attract and retain talent—the biggest internal worry of CEOs worldwide—leaders are focused on building stronger cultures,” says Rebecca Ray, PhD, executive vice president, human capital, The Conference Board. “But some key factors that contribute to such an environment—including addressing pay inequality, development opportunities, and a psychologically safe workplace—are relatively low on their list of priorities.

“This presents an opportunity for C-suites to revisit their companies’ goals for strengthening organizational culture and the specific actions required to do so,” she adds.