With its essential role, the Master Bill of Lading facilitates the shipping process and is a key document in international trade. It records the agreement between the mainline carrier transporting the goods and the actual shipper, differentiating itself from other types like the House Bill of Lading issued by freight forwarders.

This guide delves deep into the Master Bill of Lading’s functions, its significance, and how it contrasts with other bills, offering a comprehensive understanding that navigates the intricacies of global logistics operations.

What is a Master Bill of Lading?

A Master Bill of Lading (MBL) functions as the official transport document issued by the mainline carrier of sea freight.

It details the agreement for the transportation of goods between the main carrier and the actual shipper. The Master Bill of Lading acts as a receipt, a contract, and a title document, facilitating the smooth handling of cargo across international borders.

Distinct from the House Bill of Lading, which freight forwarders issue, the Master Bill covers the entire shipment under a single document, offering a consolidated overview often required by shipping carriers, customs officials, and insurance companies.

The House Bill may represent portions of the cargo when multiple shippers or forwarders are involved, making it essential in the logistics chain but less comprehensive.

Industries ranging from automotive to consumer goods frequently rely on the Master Bill of Lading. Its use spans various scenarios, including the shipment of bulk commodities, oversized equipment, and regulated goods requiring detailed documentation for customs clearance and compliance.

Key Features of the Master Bill of Lading

The Master Bill of Lading (MBL) is pivotal for orchestrating international shipments and ensuring adherence to legal, documentation, and trade requirements.

Legal Implications and Responsibilities

The MBL serves as a legal contract and evidence, defining the responsibilities and liabilities of the shipping line and cargo shipper. It is crucial for resolving disputes over cargo loss or damage, outlining the conditions and terms of transportation.

Documentation and Information Included

This document details all necessary information for shipment transit and customs clearance, including commodity descriptions, package types, and key dates like sail dates and delivery timelines. It ensures all data related to the shipment are traceable and verifiable, facilitating efficient logistics management.

Role in International Trade

Essential for international trade, the MBL facilitates legal cargo movement across borders and expedites customs processes. Providing detailed and accurate shipment information supports compliance with international and domestic regulations, which is essential for smooth global shipping operations.

The Process of Issuing a Master Bill of Lading

Issuing a Master Bill of Lading (MBL) involves a series of precise steps undertaken by the mainline carrier or a non-vessel operating company (NVOCC).

This crucial document, central to the global shipping industry, formalizes the agreement for transporting goods, marking a key step in preparing for an international shipment.

1. Initial Engagement and Contract Formation: Initially, the cargo shipper or freight forwarder engages in a shipping contract with the carrier, outlining the terms of cargo transportation.
2. Detailing the Shipment: The shipper provides the carrier with detailed shipment information, including cargo details, commodity description, and pickup location.
3. Assignment of Tracking and Booking Numbers: Internal reference and booking numbers are assigned to the shipment, facilitating easy tracking and management.
4. Verification of Cargo Details: The carrier verifies the cargo details against the booking information, ensuring everything matches the contractual agreement.
5. Issuance of the Master Bill of Lading: Upon confirmation, the carrier or NVOCC issues the Master Bill of Lading, recording essential details like vessel information, voyage reference number, container number, and final destination.
6. Transfer of Documents and Cargo Readiness: This document is then handed over to the shipper or freight forwarder, signifying the cargo’s readiness for shipment and its legal transfer under the carrier’s responsibility.

In this way, the issuance of the MBL marks a critical step in the shipping process, securing the legal and logistical framework necessary for transporting goods internationally.

Coordination with Other Shipping Documents

The Master Bill of Lading works with other essential shipping documents to streamline logistics. It aligns with House Bills of Lading, serving as the overarching document covering the entire shipment, whereas House Bills may cover individual consignments within the larger shipment.

Furthermore, it coordinates with customs documentation, ensuring smooth customs clearance and minimizing potential revenue disruptions. The MBL is pivotal in efficiently managing international shipments through this integrated documentation approach.

Comparing Master and House Bills of Lading

Grasping the distinctions between the Master Bill of Lading and the House Bill of Lading is pivotal for maritime transportation. While serving the broader purpose of documenting the shipment of goods, these documents diverge in issuance, use, and the intricacies of their roles within international trade.

To learn more, see our full guide on House Bill of Lading vs. Master Bill of Lading.

Differences in Issuance and Use

Understanding the distinct roles and procedures associated with the Master Bill of Lading and the House Bill of Lading is crucial for anyone involved in the complex logistics of international shipping.

While similar in purpose, these documents differ significantly in terms of issuance authority, scope of documentation, and operational use.

Issuance Authorities and Roles

The Master Bill of Lading, an important document issued by the mainline carrier or NVOCC, contrasts with the House Bill of Lading issued by freight forwarders. This showcases one of the only differences in the roles and responsibilities of the parties involved in issuing these two documents.

Coverage and Detailing in Documentation

The Master Bill of Lading covers a single shipment comprehensively, including the FMC number, tax ID numbers, and internal reference numbers. In contrast, the House Bill of Lading may manage several minor parts of a consolidated shipment, specifying different pickup location fields and package types for each consignment.

Operational Use and Release Types

In operations, the House Bill of Lading often deals with varying release types depending on the cargo and its final routing, accommodating the specific needs of different shippers. 

The Master Bill of Lading, usually called ‘lading master bill‘ in industry jargon, is typically used in ocean freight and deals with a broader scope, involving a BL release type that signifies a transfer of responsibility from the carrier to the other party involved.

Legal and Practical Implications

The Master Bill holds sway in the legal domain, facilitating international trade by serving as a crucial document in financial transactions and customs processes. Though binding, its counterpart, the House Bill, primarily addresses logistics, ensuring the consignee can claim and manage their goods upon arrival.

These documents are instrumental in avoiding revenue disruptions, streamlining the delivery process, and ensuring all parties, from the shipping line to the freight forwarder and consignee, remain informed and coordinated throughout a shipment’s journey.

Mastering Global Logistics with the Master Bill of Lading

In navigating the complexities of global shipping and logistics, the Master Bill of Lading emerges as a cornerstone document, orchestrating the seamless movement of goods across oceans.

This pivotal document, issued by the shipping carrier or an NVOCC operator, encapsulates the contract for cargo transportation, detailing everything from the sail date and lading number to the precise cargo specifications like piece count and seal numbers.

With insights into the Master and House Bills of Lading, including their issuance, legal implications, and operational uses, readers thoroughly understand how these documents facilitate the delivery process for single and multiple shipments.

This knowledge equips individuals in the shipping industry, from freight forwarders to shippers and consignees, with the tools to navigate commercial trade operations efficiently, reinforcing the significance of the Master Bill of Lading in maintaining the integrity and reliability of international shipping ventures.

So, it’s not surprising that Canada, Mexico, and the United States are among each other’s top trade partners. Canada and Mexico have been one of the top three merchandise export markets for 49 states in the United States, the U.S. Chamber of Commerce reports.

“Cross-border trade with respect to Mexico, the United States, and Canada is more relevant than it ever has been. We have a stable geopolitical environment, free trade, and half a billion people between the three countries,” says David Cox, chief executive officer of Polaris Transportation Group, a provider of less-than-truckload (LTL) service between Canada and the United States, and other services. Each of the countries also boasts an educated workforce, making cross-border trade even more efficient, Cox says.

The focus on business opportunities within North America has grown over the past few years. “After 2008, we saw a lot of companies open up shop across the world, but predominantly Asia,” says Andreea Crisan, president and chief executive officer with ANDY, a provider of transportation and supply chain solutions, based in St-Laurent, Quebec.

For example, annual foreign direct investment (FDI) into China grew from around $40 billion in 2000 to $124 billion in 2011, and then growth rates dropped. In 2022, FDI into China hit about $189 billion—a massive number, but up just 4.5% from the previous year.

Rising costs for shipping, labor, and other expenses, along with the push for sustainability, have prompted companies to consider a wider range of countries when locating operations. Many organizations based in North America are assessing opportunities closer to home.

“It’s a natural transition, given all that’s going on, to come back on to the North American continent,” says Crisan. It’s also good for the planet to manufacture closer to the market for a company’s products, cutting the distance items have to be transported, she adds.

A growing number of U.S. companies are turning to nearshoring, typically in Mexico, for greater visibility, shorter delivery times, and a greater ability to influence the quality of their products, says Jose Minarro, managing director with Sunset Transportation’s Cross-Border Operations.

Mexico’s proximity to the United States, its availability of skilled labor, competitive labor costs, favorable trade conditions, and tax exemptions make it attractive for manufacturing, he adds.

The shorter transportation times are especially significant for products that are seasonal and/or time sensitive, like fashion items, says Jerry Haar, professor of international business at Florida International University. In addition, by shifting some operations from other parts of the world to Mexico, companies diversify their supply chains, lowering risk, he adds.

Boosting Nearshoring Benefits

Trade agreements between Canada, Mexico, and the United States further boost the benefits of nearshoring and cross-border trade. The most prominent, the United States Mexico-Canada Agreement (USMCA) went into effect July 1, 2020, replacing the North American Free Trade Agreement (NAFTA). The USMCA contributes significantly to stability in rules and norms, reducing the risk to trading and investing across North America, Haar says.

The USMCA allows for a wide variety of duty-free items that can be exchanged among the United States and Mexico, Minarro says. An added benefit: Many manufacturing companies that set up shop in Mexico end up selling a portion of their production into the domestic market of approximately 130 million people, he says.

Surging Trade

“Since the inception of USMCA, trade throughout North America has experienced a surge, accompanied by a substantial uptick in investment within industries capitalizing on this opportunity,” says Rachel Honbarger, project manager with Tompkins Solutions, a provider of supply chain solutions.

In 2022, exports of U.S. goods with the USMCA were $680.8 billion, up 16% from 2021 and a 34% jump from 2012, according to the Office of the United States Trade Representative. Imports of goods through the USMCA also grew, rising 20.5% between 2021 and 2022, to total $891.3 billion.

Cross-border trade and nearshoring within North America offers companies based in Canada, Mexico, and the United States greater opportunity for profit and growth. At the same time, companies need to consider potential risks.

One is potential changes to trade agreements or policies. Even minor adjustments can profoundly affect the functionality or expenses associated with operating such a supply chain.

An example is recent efforts by some policymakers to amend aspects of Section 321, which allows many imported items to enter the United States free of duties and taxes, so long as the aggregate retail value of the products imported in one day and exempted from the payment doesn’t top $800. A slight modification to the scope of duty-free exemptions could lead to substantial shipping expenses, making nearshore distribution economically unviable, Honbarger says.

In addition, locating manufacturing operations across the border from distribution networks increases transportation expenses due to tariffs, longer travel distances, and a rise in shipment volumes to compensate for extended travel times.

Pulling Off Cross-Border Operations

Executing a cross-border operation requires complex technological integration to ensure seamless oversight and control of the entire supply chain process.

Without this, businesses face potential product loss, challenges in restocking distribution centers or meeting customer demands, and expenses stemming from inadequate visibility into operations.

Achieving the benefits of cross-border trade and nearshoring within North America—including increased profit and accelerated growth—demands an in-depth knowledge of the relevant regulations and documentation requirements to minimize the risk that shipments are held up by the authorities.

Working with a logistics provider with expertise and a commitment to this trade area is essential. “We’re in a 24-hour industry,” Cox says. Partnering with a quality broker that can support its clients around the clock cuts the chance of border mistakes and delays, he adds.

These providers can help shippers navigate trade across North America.

ANDY: High Standards and Customized Services

Supply chain solutions provider ANDY is well equipped to manage cross-border shipments, relying on its experience and expertise on the processes and requirements.

From its start with a single, burgundy-colored delivery truck, ANDY has grown into one of the 250 largest fleets in North America, as well as one of the fastest growing companies in Canada.

It also holds the distinction of being one of a handful of women-owned companies in the supply chain and transportation sector. “We try to empower women and place them in pivotal roles where they’re decision makers,” Crisan says.

At the same time, the men who are part of ANDY also contribute to its success. “Great men work here as well,” Crisan says. “It’s a diverse place. Our success boils down to our company culture.”

The culture has helped fuel ANDY’s tremendous growth since its start in 2001. That’s when Crisan and her father, Ilie Crisan, emigrated from Romania to Canada. A former bus driver, the older Crisan tried to find a job as a truck driver in Canada but was unable to. With savings running low, he purchased his own truck and got to work. “That’s how it started,” Crisan says.

Then 11 years old, Andreea Crisan has been key to ANDY’s growth. Among other responsibilities, she helped her father translate documents. “I grew in parallel with the company and so did my responsibilities,” she says.

ANDY now operates out of 15 locations across Canada, including eight terminals that are CTPAT and PIP certified, as well as a fleet of about 300 trucks and 800 trailers.

Its clients range from industrial and natural resource firms to retailers and manufacturers, and they can choose from drayage, transportation, logistics, distribution, and warehousing, and other transportation and logistics services.

Shippers also can choose from flatbeds, less-than-truckload and full truckload, and dedicated transport, among other options, as well as brokerage, warehousing, cross-docking, and other services. “We can act like a one-stop shop,” Crisan says. All trucks are outfitted with live tracking technology, providing clients with visibility into the movement of their shipments. They also can assess performance through reporting and analysis.

Building Cross-border Expertise

Since its earliest days as a company, ANDY has been handling cross-border shipments. “We’re experts on the processes and requirements, and well equipped to manage cross-border shipments, so there are no delays,” she says.

Because of its commitment and responsiveness to its clients, ANDY earned all the transportation business of one of its clients, in a dedicated contract arrangement. “We’ve become this company’s outsourced, dedicated private fleet,” Crisan says. For this company, ANDY provides planning, cross-docking, and daily deliveries and other services.

It’s an important and challenging role, and ANDY is more than up to the task. Because the client ships every day, its customers can place orders until late afternoon, and be confident their products will be shipped the next day.

“That’s our client’s promise to its customers, and our partnership makes us a very integral part of that promise,” Crisan says. Through the dedicated contract arrangement, the client gains quality service, predictability, and cost savings, she adds.

To achieve these benefits, ANDY worked with the company to truly understand its needs, and then tailored its services to meet them. “It’s a true partnership, and we’re working together to provide the services that can help our client achieve its objectives,” Crisan says.

Polaris Transportation Group: Customer-Focused Logistics Specialists

Along with its cross-border service, Polaris Transportation Group offers third-party logistics, warehousing, distribution, and supply chain management services.

Over the past three decades Polaris, one of the largest privately held Canadian LTL carriers, has moved 6 million shipments between Canada and the United States. “At Polaris, our principal activity is quick, transparent, cross-border transportation,” Cox says.

To ensure it can continue providing this, Polaris has cultivated an in-depth understanding of customs regulations, as well as strong relationships with customs and border protection agencies in both Canada and the United States, Cox says.

He and his team also have been very deliberate in investing in technologies that enable Polaris’ clients to work in a digitally transparent fashion.

Polaris ships a range of commodities, with a specialization in dry goods and high-value products. It also works in all transport modes. Along with its cross-border service, Polaris offers third-party logistics, warehousing, distribution, and supply chain management services.

Customers come in all sizes. “Smaller companies may move a handful of shipments a month, but those shipments impact their business, their well-being, and their reputation. I am equally in love with those businesses as much as I am the larger ones,” Cox says.

Four companies make up Polaris; three are Polaris Transport, Polaris Global Logistics, and Polaris Commercial Warehousing. In 2019, with the launch of NorthStar Digital Solutions—the fourth Polaris company—the head office housed a state-of-the-art digital lab. Among other initiatives, NorthStar Digital Solutions has explored artificial intelligence and machine learning, enabling it to continue searching for efficiencies within its processes.

Making Strategic Investments in Technology and Workforce

Polaris has also invested in robotic processing automation, artificial intelligence, and blockchain. By deploying a mobile driver application (FR8Focus) and integrating it into their TMS, clients can check the location of their freight through the customer portal in real-time.

“Everyone wants to know where their shipments are. This needs to be transparent,” Cox says. That holds true even when Polaris is working with supply chain partners, such as other carriers. “It’s seamless, transparent, and digital,” Cox says.

The use of systems like intelligent document workflow for order entry, accounts payables, and other functions, offers a “wealth of insight that enables the Polaris team to focus on managing complex situations,” Cox says.

Polaris operates a consolidation program for several U.S.-based clients that are shipping products to Canada from various regions within the United States. For this program, Polaris directs the companies’ shipments to a hub in the central United States, and then transports the cargo across the border on a single trailer.

“Shippers gain savings and certainty,” Cox says. They can be confident of the date their inventory or merchandise will arrive in Canada. This is harder to predict when products move in a piecemeal fashion.

Along with technology, Cox has been deliberate about searching for top employees, implementing best-in-class processes, and making sustainability a foundation of Polaris. “Whether it’s the environment or the social issues that affect business and the communities we’re working within—these are important to me as a business owner,” he says.

Sunset Transportation: Family Roots and Global Reach

Sunset Transportation offers all the services shippers need to conduct cross-border trade, from import/export transportation management to warehousing and transloading services.

The employee roster at Sunset Transportation includes a farmer, an Emmy winner, an Arabic speaker, a hometown pageant queen, and an amateur tractor pull competitor, along with several military veterans. The range of interests and experience among Sunsetters, as the employees are known, mirrors the broad roster of transportation and logistics services Sunset offers.

Sunset Transportation was founded in 1989 by Jim Williams. However, Sunset traces its start to 1861, when Jim Williams’ grandfather opened Williams Paper Company, which remains in operation today. Williams Paper Co. expanded its operations in 1970, when Jim Williams began managing the business’s fleet of trucks and established a thriving backhaul program.

In 1989, Sunset Transportation launched. In 2022, Sunset joined Armada Supply Chain Solutions, a food and restaurant logistics company.

For companies looking to do business between the United States and Canada, Sunset offers transportation services in all 10 Canadian provinces. It also provides import/export transportation management, truckload and LTL service, international export and import management, customs filing and management, financial support of goods and services tax (GST), and warehousing and transloading services. “We offer everything you need for cross-border trade,” Minarro says.

Working Between Mexico and the United States

Sunset also provides expertise and services for companies looking to trade between Mexico and the United States.

To help clients streamline their supply chains, Sunset takes a strategic approach to mapping their flows for inbound and outbound shipments, analyzing historical shipping data to identify sustainable opportunities to optimize freight, enhance service, save money, and improve technology. Using this insight, the Sunset team then presents a cross-border logistics solution that incorporates all the services needed for a streamlined supply chain.

In 2019, Sunset added a branch office in Laredo, Texas, offering cross-border logistics and border warehouse solutions. This was bolstered in 2021 with the opening of a cross-border office in Querétaro, Mexico, which includes an airport customs office, as well as a sales office.

Today, Sunset Transportation offers a range of services, including expedited freight, cross-border and customs solutions, international logistics, logistics management, and domestic, Mexico, and drayage carrier solutions. It also provides a comprehensive line of customs, warehouse, and freight brokers.

As important, Sunset internally handles every link of its supply chain services. “We don’t outsource customs and compliance functions,” Minarro says.

With CTPAT-certified warehouses in Laredo and Nuevo Laredo, Sunset can offer shippers solutions that keep them CTPAT-compliant from a warehousing and transloading perspective.

Sunset Transportation continues to innovate and adapt. Over the past three years, the company has collaborated with companies from Europe, Asia, and North America that are looking to establish new operations in Mexico. “Different industries, but all have the same goal: choose the best location within Mexico to manufacture a finished product or sub assembly that will be shipped into the United States,” Minarro says.

The Sunset team interacts with the customers from the planning stage onward and takes a holistic approach with every engagement.

“The deliverable at the end of the process is to provide suggestions on how to set up the logistics strategy, incorporating import and exports flows, technological requirements, and process automation,” Minarro says. “We listen to our customers and their needs, in addition to listening to the market, so we can provide the best, most efficient, and tailored solutions for our customers.”

Among its variations, the surrender bill of lading stands out as a unique instrument, facilitating international trade transactions without the physical exchange of the original document. 

This guide will explore the intricacies of the surrender bill of lading, offering comprehensive insights into its uses, benefits, and crucial role in streamlining ownership transfer in global commerce.

Understanding the Surrender Bill of Lading

A Surrender Bill of Lading marks a pivotal shift in the shipping process, distinguishing itself from traditional bills of lading by its method of transferring ownership. 

Unlike the standard version, which requires the physical handover of the document to transfer legal ownership, a surrender bill allows for the ownership rights to change hands through a telex release or electronic communication, often facilitated by a local bank or shipping agent. 

This legal document is instrumental in scenarios where speed and efficiency are paramount. It enables importers and exporters to expedite the shipping goods process without delaying physical document exchange.

Essential characteristics include:

• Electronic transfer of ownership.
• No need for an original bill handover.
• Telex release for quick processing.
• Legal problems avoidance by ensuring ownership clarity.

Typically employed when:

• Quick cargo release at the destination port is needed.
• Importers pay for goods and require immediate ownership transfer.
• International trade transactions demand speed and efficiency.

The Role of the Surrender Bill of Lading in Shipping

The Surrender Bill of Lading is essential in modern shipping. It streamlines the transfer of ownership and facilitates smoother global trade operations.

Here’s a closer look at its role across different shipping facets:

Facilitating Trade Transactions

The surrender bill of lading makes international trade more efficient by eliminating the need for physical document exchanges. This document allows exporters and importers to agree on payment terms and transfer ownership quickly, keeping goods moving swiftly across international borders and thereby enhancing trade fluidity.

Impact on Cargo Release

The Surrender Bill of Lading speeds up the cargo release process at the destination port. Without the necessity for an original bill to claim ownership, importers can access their shipped goods more rapidly. This efficiency is crucial for maintaining the momentum of international logistics operations and meeting delivery deadlines.

Advantages in Shipping Logistics

Employing a Surrender Bill of Lading brings unparalleled efficiency and security to shipping logistics. It minimizes legal problems related to ownership claims and ensures timely release of shipped items to their rightful owners. This document is a cornerstone for reliable and swift international shipping, reducing delays and enhancing trust among trading partners.

Information and Documentation Included

A Surrender Bill of Lading includes critical information such as payment details, parties involved, and descriptions of the shipped goods. It acts as a legal document that underpins trustworthy relationships between exporters and importers, providing a clear record of the transaction and the items being transported.

Format and Legal Considerations

The format of a Surrender Bill of Lading is designed to meet international legal considerations, ensuring its global acceptance. It specifies conditions for telex release and express BL, key for the official closure of shipping transactions, and the smooth transfer of legal ownership. 

This standardization is vital for preventing disputes and facilitating a clear understanding between all parties involved in the shipping process.

Practical Applications of a Surrender Bill of Lading

Understanding the practical applications of a Surrender Bill of Lading reveals its versatility and efficiency in modern shipping. Here is a closer look:

Ideal Situations for Its Use

A Surrender Bill of Lading is instrumental in transactions requiring rapid transfer of ownership and cargo release. It’s ideal for high-speed international trade where exporters surrender the document in favor of a telex release, ensuring importers receive goods without delay. 

This process is beneficial in maintaining a trustworthy relationship between trading partners, especially when payment has been secured and both parties seek an expedited shipping process.

Guidelines for Shippers and Carriers

The Surrender Bill of Lading offers a streamlined approach to handling documentation for shippers and carriers. It’s crucial when the importer’s bank has confirmed payment, and legal ownership needs to be transferred swiftly. 

Shippers should ensure all surrender bills are accurately completed and submitted to the carrier or local bank promptly. This facilitates a smooth telex release or express BL, minimizing the risk of legal problems and ensuring the cargo reaches the importer efficiently.

Conclusion

Understanding the complexities of global shipping demands a thorough understanding of documents like the surrender bill of lading. This guide has illuminated its role in transferring legal ownership, streamlining the shipping process, and minimizing legal problems. 

By leveraging telex release and surrendered BL mechanisms, businesses can expedite cargo release and claims ownership, fostering a smoother logistical process. The involvement of local banks in submitting documents and confirming payments underscores the surrender bill’s importance in international trade.

As you step forward, armed with knowledge about the surrender bill of lading, you’re now better equipped to understand the shipping and logistics landscape more effectively. This prepares you to handle legal ownership with confidence and ensures you can utilize surrender bills to optimize your shipping operations.

Here are four sets of rules and regulations likely to make some of the biggest impact on supply chains in 2024.

1. Uyghur Forced Labor Prevention Act

Under the Uyghur Forced Labor Prevention Act (UFLPA), which U.S. Customs and Border Protection (CBP) started to enforce in 2022, companies may not import into the United States any products with content made by forced labor in China’s Xinjiang province, or products sourced from companies with links to forced labor there.

While the UFLPA is about two years old, CBP keeps expanding its list of companies associated with forced labor, and it keeps sharpening its focus on certain products.

“Going into 2024, I see more fixation on the different sectors within electronics,” says Jamie Wallisch, regulatory and sustainability expert at Assent, an Ottawa-based global firm that helps manufacturers use data to comply with supply chain regulations.

When a company imports a product with materials that CBP considers high risk, the importer must prove that the product doesn’t involve forced labor.

“It’s called rebuttable presumption; it’s like guilty until proven innocent,” says Jerry Peck, vice president of product strategy at QAD, a supply chain solutions provider based in California.

High-risk products include: items that contain certain industrial metals; clothing and apparel; industrial and consumer electronics; automotive parts; and construction and building materials, among others, according to a document published by QAD. And just because a supplier isn’t based in Xiangjiang, or anywhere at all in China, doesn’t mean the import is safe.

“Transshipments come out of China, and go into Malaysia, Thailand, and other countries where they produce the finished goods,” says Peck. Shipments from those countries could also draw scrutiny.

If CBP detains a shipment and the importer can’t prove that it complies with the UFLPA, the government can seize the goods. Even if CBP ultimately clears the import, a shipper that can’t make its case quickly will suffer.

“It’s costly for companies, every single day, to hold their goods until they’re able to provide that evidence,” Wallisch says.

A company needs to lay the groundwork for UFLPA compliance long before goods go on the water.

“First, become educated on what the forced labor requirements are,” suggests Peck. “Then include those as part of your corporate ESG [environmental, social, and corporate governance] program.”

Next, analyze overseas suppliers and their products to determine which ones might pose a risk under UFLPA. When you identify such a product, you need to trace it back to its raw materials, gathering proof that there’s no forced labor in the supply chain.

“You have to assume that your shipment will be selected for detention and have that rebuttable evidence prepared in advance of the importation,” Peck says.

Some of the evidence may come from publicly-available sources such as news articles, reports from non-governmental organizations, and corporate tax records. A shipper should also press suppliers for information: “How are they dealing with concepts of forced labor? What is their process for validating or onboarding their tier one and tier two suppliers?” Peck says.

Assent monitors publicly-available information on behalf of customers, and it administers a survey called the Slavery and Trafficking Risk Template to gather information from vendors.

QAD, through its supplier relationship management solution, also helps importers administer questionnaires. “You have to vet your suppliers and their supply chain—everyone who’s touching those goods,” Peck says.

2. European Union Deforestation Regulation

To facilitate compliance with the EUDR, Source Intelligence offers software that identifies risks to ensure suppliers, parts, and products meet core compliance obligations and uncovers possible exposure to suppliers engaged in human rights violations.

Manufacturers, distributors, and retailers that operate in the European Union will soon have to prove that their products aren’t complicit in stripping the world of trees. The European Union Deforestation Regulation (EUDR) takes effect at the end of 2024 for large companies and in June 2025 for small and mid-sized ones.

The EUDR covers seven commodities—timber, beef, palm oil, soy, coffee, cocoa, and rubber—plus certain products derived from those commodities, such as leather, chocolate, and furniture.

Any company that sells a product covered by the regulation will need to: gather information on that product; assess the risk that it has contributed to deforestation; take steps to mitigate that risk; and place a statement about these efforts in an information system developed by the European Union.

The information a company collects must first show that the commodity was sourced legally, and that it doesn’t involve any human rights violations.

“The second part is to obtain geolocations for where your commodity was grown or harvested,” says Charles Getter, sustainability consultant at Source Intelligence, a San Diego-based firm whose software and services help supply chains comply with government regulations. “You need to be certain that that particular plot of land had not been subject to deforestation.”

Responsibility to comply with the EUDR runs up and down the supply chain. But, luckily, the law doesn’t force each trading partner to perform due diligence from scratch if another supplier has already completed that function.

For example, a supermarket chain whose products include thousands of packaged foods made with soy can check to see if food processors or distributors have already performed due diligence on those products. “If so, you can just quote the reference number associated with that statement,” Getter says.

To prepare for the EUDR, first determine whether you already use a due diligence management system to comply with other government rules, such as the EU Timber Regulation. If you don’t have such a system, start planning to implement one, and start gathering data to populate the system. “You might discover that you don’t exactly know where a lot of your products are coming from, or the legality around your products,” Getter says.

In addition, study the EUDR, particularly Annex I of the regulation, which lists the Harmonized Tariff Schedule (HTS) code of all commodities the law covers.

It’s also important to pinpoint exactly where products were produced—where the soybeans were grown, for example, or the cattle grazed. Source Intelligence uses these geolocations, plus high-resolution satellite imagery provided by the EU, to look for signs of deforestation.

“We can check for conversion of forest to agricultural land by applying designations to satellite imagery and mapping land use,” Getter says.

Thanks to its automated processes, Source Intelligence can quickly conduct due diligence and risk assessment for products that originate in hundreds of locations. “We can check commodities and the legality around them, and get almost instant verdicts on whether or not deforestation was detected on that plot.”

3. Drug Supply Chain Security Act

The final phase of the Drug Supply Chain Security Act stipulates that pharmaceutical products in the United States must be electronically traceable at all times in the future, not only at batch level but also at package level. (Photo: ©Arvato)

Since 2013, the Drug Supply Chain Security Act (DSCA) has required all parties from manufacturers to pharmacists to track and trace prescription drugs and certain prescription medical devices throughout the entire supply chain.

Currently, companies can use paper-based systems and capture data on products at the lot level. But starting in November 2024, they will need to use electronic systems to collect, store, and share their data, and each product will need to carry a unique serial number at the lowest unit of sale.

Congress designed the DSCA to prevent drug counterfeiting and theft and to make it easier to recall drugs when necessary.

“It allows the supply chain to have visibility of a drug as it moves throughout the supply chain,” says Andre Caprio, director of business development, pharmaceutical and health care at Covectra, a company in Westborough, Massachusetts that provides serialization, tracking, and tracing solutions.

When the new requirements take effect, each case, vial, or other sellable unit will carry a two-dimensional barcode with data such as the product’s name and dosage, a lot number, expiration date, and a unique serial number.

Each entity in the supply chain must capture that data and store it for at least six years. Say, for example, that manufacturer Pfizer ships a product to a distributor. “Pfizer sends an electronic file that says, ‘I’m shipping 10 units of this particular product. Here are the serial numbers,” Caprio says. Receiving the product and data, the distributor verifies that they match.

“As they push that product downstream, they need to send the same information to the downstream partner, which needs to receive and store that data as well,” he adds.

Most companies in the drug supply chain are still working to comply with the new requirements, Caprio says. One key step is to implement a DSCSA compliance technology solution from Covectra or another provider. The company also needs to collaborate with its suppliers and customers, creating links that will allow them to share data.

Even before choosing a solution, a company should reach out to the Healthcare Distribution Alliance (HDA), an industry organization that includes panels for pharmacies as well as distributors. “The HDA is the best neutral resource for a company to get insight on DSCSA,” says Caprio. Companies may also get valuable advice from peer organizations.

4. SEC Climate Disclosure

Since March 2022, the U.S. Securities and Exchange Commission (SEC) has been preparing to release a new set of rules that will require publicly traded companies to report how they are managing their climate risk, and also report on their greenhouse gas emissions. While the plan could face further delay, the SEC expects to release the new rules in April 2024.

Once that happens, companies will have between one and three years to comply, depending on what’s known as their “filer status” at the SEC, says Deon Glaser, senior vice president of sustainability, social impact and ESG at The Uplift Agency, a social impact and sustainability services firm based in Detroit.

The main point of the rules is to give investors information they can use to assess, for example, how climate-driven events such as floods or wildfires might affect a company’s operations, or how much carbon the company releases through its activities.

“Investors have demanded that companies report this information,” says Mark Mellen, industry principal, ESG at Workiva, a company in Ames, Iowa that provides a cloud-based compliance reporting platform. “They want the same caliber of disclosure from organizations that they see for financial statements.”

The proposed rule divides greenhouse gas emissions into three categories:

• Scope 1: Direct emissions, such as the carbon released in a manufacturing process.
• Scope 2: Indirect emissions from purchased services such as electricity, heat, and cooling.
• Scope 3: All other emissions linked to the company’s activities, including its supply chain.

It’s not yet clear whether the SEC will include Scope 3 in the final rules. If it does, then companies will have to take a hard look at their supply chains to estimate how components, materials, or finished goods they buy contribute to emissions, both when these items are made and when they’re transported.

Just like companies affected by the UFLPA or the EUDR, companies may need to gather information from several tiers’ worth of suppliers. Fortunately, those suppliers—if they are publicly-traded in the United States—will be doing their own research. “They need to follow the same process that you are with them, with their own suppliers,” Glaser says.

To get ready for compliance, companies should first set up a governance structure. “Get the right teams together within the organization,” says Mellen. Many companies have already created such structures to comply with other sets of rules and regulations, such as those focused on conflict minerals.

Workiva offers technology to support this kind of cross-functional collaboration, helping teams assemble data and create reports, Mellen says.

Many companies already calculate their climate risk and emissions so they can comply with rules from other jurisdictions, such as California or the European Union. But those who haven’t made that move should start right away.

The first step is to study how the SEC’s rules, and other climate disclosure rules, apply to the company’s situation. Then figure out which requirements the company is not already equipped to meet, and map out how to get into compliance. “We do that all the time with our clients, to help them understand what their existing capabilities are and where they will need us to help—what gaps to fill.”

Gateway to Delays

Thousands of Porsche, Bentley, and Audi finished vehicles were reportedly impounded at several U.S. ports in mid-February 2024 due to allegations that the vehicles were manufactured using Chinese subcomponents called gateways that breach U.S. anti-forced labor laws under the Uyghur Forced Labor Prevention Act (UFLPA).

As automakers struggle to find parts that are in compliance with UFLPA, they face backlogs that will likely extend the current expected delivery delays, putting revenue and reputation at risk.

Jena Santoro, senior manager of intelligence solutions at Everstream Analytics, which has been tracking this situation, shares some key points:

1,000 Porsche sports cars and SUVs, several hundred Bentleys, and several thousand Audis were impacted.

• A vehicle gateway is a crucial component in modern automotive manufacturing as it facilitates communication and data exchange between different networks or systems within the vehicle. Without it, a vehicle’s electronic control units operate independently and much less effectively. More importantly, gateways also fortify against cybersecurity issues, and are critical in the development of autonomous vehicles that rely on advanced data exchange and safety protocols.

Though the vehicle manufacturers are now working diligently to replace the parts with those that are in compliance with U.S. laws, delivery delays to dealerships, and therefore to customers, are expected at least until the end of March.

Depending on the complexity of the vehicle concerned, the part can be replaced within between 30 minutes to several hours. The issue, however, is identifying alternate sources of reliable product that will not be found in violation of the UFLPA, and procuring them quickly.

Luckily, the landscape for global automotive central gateway manufacturing is highly competitive and not as centralized regionally like some other automotive components, such as semiconductors.

In this case, the supplier found in violation of forced labor was farther down the sub-tier automotive supply chain. As such, it will take time to verify that alternate product suppliers do not have the same vulnerabilities in their extended networks. As seized vehicles mount at U.S. ports of entry, automakers will be faced with backlogs that will likely extend the current expected delivery delays.

Supply Chains Search for New Sources

All eyes are on emerging markets as logistics and supply chain professionals look for the next opportunity to combat an uncertain global economic climate. These executives also remain wary of recession, express concerns over elevated costs, and expect supply chains to continue moving out of China, according to the newly released Agility Emerging Markets Logistics Index.

The Index ranks countries for overall competitiveness based on their logistics strengths, business climates, and digital readiness—factors that make them attractive to third-party logistics providers, freight forwarders, air and ocean carriers, distributors, and investors.

Here are some key findings from the 2024 Index:

• India, Europe, and North America rank ahead of China as destinations executives expect to move production to in 2024 and onwards.
• A large percentage of executives see increased risk/decreased rewards in emerging markets.
• Many see India growing in importance as a producer and market, but cite inadequate infrastructure and corruption as the biggest obstacles there.
• Many predict a surge in Africa investment.
• 66% say climate change is something they’re planning for, or is already affecting their businesses.

Readers React: New Cybersecurity Executive Order

To address growing concern over cyber threats, President Biden signed an executive order amending regulations designed to safeguard U.S. vessels, harbors, ports, and waterfront facilities. The order aims to further protect these assets against cyber attacks and other threats.

Here’s what Inbound Logistics readers say about this new action:

“The new executive order will give the U.S. Coast Guard greater authority to enforce cybersecurity requirements. Securing the maritime sector is an essential part of building resilient supply chains.”

—Abe Eshkenazi, CEO, Association for Supply Chain Management (ASCM)

“This is a critical step forward in protecting U.S. ports. We also have to pay attention to common wireless vulnerabilities. Attacks leveraging wi-fi, Bluetooth, and IoT protocols may be used to access authorized infrastructure including IT and OT systems.”

—Dr. Brett Walkenhorst, CTO, Bastille

“This is a crucial advancement. Cyberattacks serve as stark reminders of the cascading impacts on America’s shipping ports and the U.S. economy. Employing due diligence and verifying partnerships are also key to mitigating external risks.”

—Cole Garson, COO, Remcoda

Is Same-Day Delivery Worth the Hype?

While implementing same-day delivery presents challenges, many companies say that the benefits are worth it. A majority of companies (80%) say they increased revenue after implementing same-day delivery, according to new research from Roadie, a UPS Company that offers a logistics management delivery platform.

The research, which provides an overview of the challenges and benefits associated with implementing same-day delivery services, finds that nearly one-third of retailers report a revenue increase of more than 10%. Executives also cite benefits including higher customer satisfaction (80%), and an increase in sales (70%) and retention rates (66%).

Additional research highlights include:

• Most companies (63%) offering same-day delivery have done so for three years or more.
• 68% report that same-day delivery ROI consistently increased each year.
• Companies say that growing ROI unlocks insights that help them make decisions about:
  ‣ Product and service offerings (65%)
  ‣ Expansion of same-day delivery in new regions (59%)
  ‣ Warehouse space (54%)
  ‣ Distribution facility locations (51%)
  ‣ Logistics investments (45%)
  ‣ Labor (37%)

One caveat: The transition to same-day delivery introduces higher operational costs for most companies surveyed, who report the need for innovative pricing strategies to mitigate these expenses.

This article examines the critical role and definition of a clean bill of lading, highlighting its significance in ensuring successful global transactions.

Clean Bill Of Lading Definition

A clean bill of lading is a legal document issued by the product carrier after inspecting the shipment. It declares that there’s no damage or loss of goods during transportation.

This document is specifically used for goods shipped overseas by sea. It provides detailed information about the shipment and serves as a contract between the shipper, carrier, and receiver. The clean bill of lading acts as a receipt of shipment at the predetermined destination.

The concept of a clean bill of lading dates back to the early days of maritime trade, reflecting the evolution of shipping practices and international commerce. Originally, it served as a basic agreement, but as global trade expanded, its role became more complex and legally binding. 

This transition mirrors the increasing need for stringent standards in international shipping, ensuring that goods are transported safely and efficiently across vast distances.

The Significance Of A Bill Of Lading In The Transport Industry

The significance of a bill of lading in the transport industry can’t be overstated. It is a crucial document that guarantees the condition and quantity of goods shipped, ensuring accountability and transparency between the shipper, carrier, and receiver.

A clean bill of lading plays a vital role in verifying the shipment’s integrity and facilitating smooth financial transactions in international trade.

Clean Bill Of Lading

A clean bill of lading is a key document in international shipping issued by the carrier after inspecting the cargo. It certifies that goods are in good condition, with no damage or defects, as a contract between the shipper, carrier, and receiver. 

It also acts as a receipt at the destination, ensuring shipment integrity. A clause or dirty bill is issued for damaged or missing goods, impacting the importer’s acceptance of international trade contracts​​​​​.

Clause Bill Of Lading

Clause Bill of Lading is a critical document in the transport industry that specifically highlights discrepancies in the shipped cargo, such as missing quantities or damage. This contrasts sharply with a clean bill of lading, which certifies that the goods are in good condition and free from visible defects or damage.

Unlike a clean bill of lading, which declares that the goods are in good condition, a clause bill of lading highlights discrepancies or issues with the shipment.

Foul Or Dirty Bill Of Lading

The Foul Bill or Dirty Bill of Lading are identical. These terms are used interchangeably in the transport industry to describe a bill of lading that contains notations or clauses indicating defects, damages, or shortages in shipping goods. 

These types of bills of lading serve as a record that the goods were not in perfect condition at the time of shipment, highlighting any carrier issues like damaged packaging, broken items, or a shortfall in the expected quantity.

Pertinent Detail Of A Bill Of Lading

The clean bill of lading is an essential document in international shipping, encompassing several key roles:

• Evidence of Cargo Condition: Confirms that goods are shipped in good condition, indicating proper inspection and satisfactory condition before loading.
• Contractual Agreement: Acts as a binding contract between shipper, carrier, and receiver, detailing carriage terms and assigning responsibilities and liabilities.
• Receipt of Shipment: Serves as a receipt for cargo transfer to the carrier, marking a shift in responsibility from shipper to carrier, crucial for tracking and accountability.
• Facilitation of Financial Transactions: Essential in letters of credit transactions, it assures banks that goods are shipped as per contract terms, enabling payment to be released to the shipper.
• Detailed Information: Includes critical shipment details such as date, packaging, and item descriptions, which are important for customs, inspections, and insurance.
• Assurance to Receiver: Ensures the goods received will be delivered in the same condition as shipped, reducing dispute or claim risks.
• Global Trade Facilitation: Enhances trust and transparency in international trade, ensuring smooth shipping logistics and contributing to reliable global trade.

In essence, a clean bill of lading underpins the integrity of international shipping, ensuring legal, financial, and logistical efficiency.

FAQs

Here are the FAQs about a clean bill of lading.

What Is The Difference Between A Clean Bill Of Lading And A Dirty Bill Of Lading?

A clean bill of lading declares that the goods are in good condition without damage or defects. On the other hand, a dirty bill of lading indicates issues with the shipment, such as missing quantities or damage to the cargo.

What Is A Dirty And Clean Bill?

A clean bill of lading certifies goods were shipped undamaged and in the correct quantity, while a dirty bill indicates discrepancies like damage or missing items in the shipment.

Why Is A Clean Bill Of Lading Disadvantageous?

While confirming apparent good condition, a clean bill of lading can mask hidden damages or quality issues, leading to disputes and financial losses for receivers upon cargo discovery.

What Is The Meaning Of A Clean Bill?

A clean bill of lading confirms goods are shipped in good condition, serving as a contract and receipt among the shipper, carrier, and receiver, ensuring order accuracy and integrity.

Summary Of A Clean Bill Of Lading

A clean bill of lading is a crucial sea transport document in global trade that guarantees the condition of shipped goods. It is a contract between the shipper, carrier, and receiver, ensuring the goods haven’t suffered any damage or loss during transit.

The importance of a clean bill of lading can’t be overstated, as it impacts payment transactions and allows the receiver to verify the condition of the shipment. Explore the Inbound Logistics website to research warehouses, supply chain management, and key logistics insights.

With planned and unplanned cargo that ranges from fashion to finished vehicles to delicate flowers and produce, Sea-Air Logistics provides savings in either lead time or cost. Companies can leverage Sea-Air as a primary mode for forecasted volume or cost-effectively meet an unexpected spike in demand.

Each Sea-Air shipment is pre-booked onto an ocean vessel, within dedicated containers that enjoy high priority for equipment and space.

During the sea transport stage, the shipment is assigned air freight space, ensuring it is uplifted without dwell time. Once the vessel reaches its hub destination, shipments are transloaded to an aircraft, typically within 8 to 12 hours.

“Even during COVID, the Sea-Air product maintained an on-time performance level of 95%.”

-Leo Qvarnström
Director, Sea-Air Logistics
and Air Sustainability,
North America
Kuehne+Nagel

Because Kuehne+Nagel works only with premium carriers and requires their adherence to stringent performance requirements, it can confidently forecast transit times. “Even during COVID, the Sea-Air product maintained an on-time performance level of 95%,” says Leo Qvarnström, Director, Sea-Air Logistics and Air Sustainability, North America with Kuehne+Nagel.

A cross-functional team within Kuehne+Nagel oversees each shipment. “One ‘control tower’ team handles the whole shipment from origin to destination and across modes, providing an integrated, controlled operation that’s also scalable,” says Robin Knopf, Global Head of Sea-Air Logistics with Kuehne+Nagel.

The experts on the Sea-Air team boast decades of experience and speak the language of both modes. “They are magicians,” Knopf says. They leverage their sea and air freight knowledge, using Kuehne+Nagel’s global network and the latest technology to predict movements and track shipments. Because the handling processes are so tightly managed, the damage rate on shipments is close to zero.

“One ‘control tower’ team handles the whole shipment from origin to destination and across modes, providing an integrated, controlled operation that’s also scalable.”

-Robin Knopf
Global Head,
Sea-Air Logistics
Kuehne+Nagel

The Sea-Air product often works in lanes with an imbalance of trade—that is, more cargo typically comes into a hub than exits it. These markets tend to experience less volatility than many other trade lanes, and the shipments capture capacity that would otherwise sit empty on a return flight, Qvarnström says.

Shippers of all sizes and verticals use the Sea-Air product to save time and money, and minimize carbon emissions, when compared to air freight alone.

Some also use the solution as a kind of mobile warehouse, avoiding the cost of warehousing freight while it’s in transit. Kuehne+Nagel’s Sea-Air Logistics also helps companies diversify their supply chain and logistics operations, boosting flexibility and resilience. It works year-round as a true alternative to other transport modes.

“That’s the beauty of the product; it’s something that everyone can take advantage of,” Qvarnström says.

The bridge, spanning 1.6 miles, served as a lifeline for the Port of Baltimore, facilitating the movement of goods crucial to the region’s economy. Known as the busiest U.S. seaport for autos and light trucks, in 2023, the Port of Baltimore handled 52.3 million tons of foreign cargo, valued at nearly $81 billion, including a record 847,158 cars and light trucks, as well as 1.3 million tons of roll on/roll off farm and construction machinery, according to the Maryland Port Administration. It is also a busy hub for shipments of coal, petroleum products, and sugar. In total, roughly 30 to 40 container vessels call the Port of Baltimore every week, unloading or loading some 21,000 TEU (containers).

The port is also a key economic engine for the city and the state, directly employing more than 15,000 workers and indirectly responsible for nearly 140,000 more jobs in trucking, warehousing and other related industries. It generates nearly $2.6 billion in total business income.

While President Joe Biden has pledged federal support for rebuilding efforts, supply chain and manufacturing leaders are focused on the impact from the immediate disruptions, which include the initial need to remove the vessel and the collapsed bridge from the shipping channel. 

The resulting closure of the port now has logistics, transportation, supply chain, and manufacturing professionals preparing for the impact of disrupted service. With vessel traffic suspended and cargo stuck in limbo, manufacturers such as food giant McCormick & Co. and automakers General Motors and Ford are assessing operational impacts and rerouting shipments as necessary, notes Mirko Woitzik, Global Director of Intelligence for Everstream Analytics.

Cargo currently en route is being diverted to alternatives, which Woitzik reports “is expected to strain labor and handling capacities at nearby ports such as Philadelphia and Norfolk, leading to spill-over congestion and delays.”

Experts also say the incident underscores the vulnerability of global supply chains. “The disruption comes as geopolitical conflicts and natural disasters wreak havoc elsewhere. Shipping headed for the Suez Canal is being disrupted from attacks by Houthi rebels, while drought is limiting shipping through the Panama Canal. What’s more, industrial actions in some key ports, including in Australia and Finland, are adding to delays. All that is to say, it won’t take much to hobble supply chains and reinflate price pressures,” notes Harry Murphy Cruise, Economist, Moody’s Analytics. 

Supply chain managers need to act quickly, adds Andrei Quinn-Barabanov, Supply Chain Industry Practice Lead at Moody’s. “The tragic Key Bridge collapse will inevitably lead to delays in deliveries that go through the I-95 corridor between Washington DC and New York or through the Port of Baltimore. Supply chain managers who get their deliveries via either of these routes need to immediately accelerate orders that are likely to be affected. Speed of action is critical.”

The silver lining, if there is one? 

“Although many automotive manufacturers import parts through the Port of Baltimore, we expect that they will be able to reroute parts quickly through other ports to avoid lengthy factory line shutdowns,” say Ben Ruddell and Richard Rushforth, professors in the School of Informatics, Computing, and Cyber Systems at Northern Arizona University. And while they expect major supply chain delays due to this bridge collapse, they believe those delays “should be measured in days or weeks, not months. The abundance of alternative ports on the U.S. Atlantic provides redundancy and resilience and will expedite supply chain adaptation, limiting overall consequences from this disaster.” 

Every year lately, “a big unknown” has impacted supply chains, says Leo Qvarnström, director, Sea-Air Logistics and air sustainability, North America with Kuehne+Nagel, a provider of logistics services. Recent examples include the war in Ukraine, the ecommerce boom, and the current conflict in the Red Sea.

The acronym VUCA, which has its roots in the military and stands for volatility, uncertainty, complexity, and ambiguity, is now being used to describe the world of commerce, says Tom Goldsby, executive director of the Global Supply Chain Institute at the University of Tennessee, Knoxville. Supply chain and logistics professionals can gain an edge by understanding the trends and shifts contributing to the current global logistics environment.

Geopolitical Upheaval

In addition to exacting a human cost, conflict impacts supply chain and logistics operations. For instance, Red Sea attacks are forcing more shipments around the horn of Africa, lengthening cycle times and driving up fuel costs and carbon emissions, says Ted Stank, co-executive director, with Tom Goldsby, of the Global Supply Chain Institute.

Between November 2023 and February 2024, container leasing rates on the China-to-U.S. trade route more than doubled, finds Container Xchange, an online container logistics platform.

Challenges in the Red Sea will even indirectly impact shippers whose cargo doesn’t travel this route, says Robin Knopf, global head of Sea-Air Logistics with Kuehne+Nagel. The reason? As carriers move to avoid the Red Sea, they create disruptions or container shortages along other routes, he adds.

Other trade lanes are also at risk, says the Boston Consulting Group (BCG). One is the Strait of Hormuz, which accounts for 20 to 30% of oil trade. If Iran is drawn into the conflict in the Middle East, vessels navigating this strait could be at risk.

Another lane, the Strait of Malaca, accounts for 30% of global trade. An ongoing dispute between China and several members of the Association of Southeast Asian Nations (ASEAN) over an area in the South China Sea may impact this strait, BCG says.

Along with rising transit costs, it’s likely that confirming bookings will be more difficult by summer 2024. “Companies will need to plan longer lead times for getting goods to their final destinations,” says Christa Pitts, co-CEO with The Lumistella Company, the firm behind Elf on the Shelf.

China Plus One

To offset rising labor and other costs in China, many companies are employing a “China + One” strategy. “Firms are reducing their concentration in China and adding capacity in Southeast Asia, India, and Mexico,” says Marc Gilbert, managing director and senior partner with BCG.

Countries in Southeast Asia, for instance, currently supply multiple regions of the world, including China and North America, Gilbert says. In India, leadership has taken steps to address corruption and enhanced the country’s ability to move goods around, he adds.

Nearshoring/Reshoring

More North American companies also are looking to locate operations closer to home. In early 2023, Mexico replaced China as the United States’ top trading partner, benefiting from its geographic proximity, strong manufacturing-based economy, skilled workers, and free-trade pacts, reports research firm MSCI.

Along with Mexico, all of Latin America offers strong potential for nearshoring, says Rick Jordon, senior managing director with FTI Consulting. Many companies will still need to rely on supply networks based in Asia. However, as Latin American companies implement new technology, it’s possible they’ll leapfrog ahead of their Asian counterparts.

Regionalization

A major gateway for global cargo shipments, the Oakland Seaport in Northern California serves a local market of more than 14.5 million consumers and 50% of the U.S. population by rail.

Interest in regional supply chains is growing. The idea is to “move away from thinking that we have one manufacturing hub for the whole world,” Stank says. Instead, companies can set up regional supply chains, which tend to be more agile, to support their major markets. If operations are disrupted in one area, other locations can compensate.

Artificial Intelligence

“The biggest impact to the global supply chain will continue to be the use of artificial intelligence (AI),” Pitts says. Among other benefits, AI allows supply chains to maximize efficiency in ways that hadn’t been possible previously, such as maximizing space utilization on a container or a pallet.

“AI allows companies to work smarter,” she adds.

Given ongoing disruptions, supply chain transparency and visibility to the sources of goods will factor in planning. “AI can enhance that power,” says Melinda McLaughlin, global head of research with logistics real estate company Prologis.

One company employing AI in the supply chain is Good360 is a nonprofit that distributes product donations through its network of 100,000+ vetted nonprofit partners.

The company is trying to use AI to help determine if it can efficiently move products where they’re needed after an event occurs, says CEO Romaine Seguin.

For example, Seguin has been working with a donor to determine how Good360 can help in areas impacted by wildfires. “We’re bringing in AI technology for mapping weather and identifying how much damage is in an area and what’s needed, such as water or hygiene products,” she says.

Cybersecurity

As supply chains digitalize, the risk of cyber attacks increases. “It’s the flip side of the digitalization and automation coin,” Stank says. Some chief information officers are even throttling back supply chain initiatives because of cybersecurity concerns, he adds.

A criminal may act as a carrier, broker, or even a customer to break into a system and then try to hijack freight or access customer or employee data. “Any system is open to attack,” warns Nathan Johnson, founder and CEO of transportation consultancy GLCS.

Sustainability

While it’s difficult to pin a single weather event on climate change, the drought at the Panama Canal is capturing the attention of supply chain experts. Drought cycles used to occur once every five years, but now are happening every three years, said Ricaurte Vásquez Morales, administrator of the Panama Canal, in a statement.

Another sign of the emphasis on sustainability is the European Commission’s Carbon Border Adjustment Mechanism. CBAM, which will be phased in between 2023 and 2026, is intended to fairly price the carbon emitted during the production of carbon intensive goods entering the EU.

CBAM will initially apply to some goods whose production is carbon intensive and at most risk of carbon leakage, such as cement, iron, and steel; additional goods will be added.

Navigating Evolving Global Logistics

As global logistics evolves, here’s how shippers can adjust.

Strengthen Agility
Resilience remains essential, but it doesn’t mean trying to create bulletproof supply chains. “There is no such thing as being bulletproof,” says Goldsby of the University of Tennessee. Instead, resilience should take the form of agility, or developing options before they’re needed. Plasticity, or the ability to make rapid structural changes, such as sourcing in new locations, is also necessary, he says.

Understand Geopolitics
Supply chain leaders today need to understand a range of subjects, including geopolitics, economics, and cybersecurity, Goldsby says. “They have to be global citizens and understand that what takes place in, say, Indonesia could very much influence their supply chains and business,” he adds.

Create a Task Force
More than three-quarters of respondents to BDO’s Global Risk Landscape 2023 indicated that the risk landscape is shaped more by connections between risks than individual risk factors. Addressing these connections requires a company-wide focus.

Assemble an enterprise-wide task force to take a control tower view of the supply chain, advises Tony Nuzio, founder and chief executive officer with ICC Logistics Services Inc. It should be cross-functional and include employees from all levels. Employees on the ground might be best suited to identify, for instance, suppliers that are critical to production, even if the company purchases relatively small amounts from them. Task force members can run scenarios and assess how prepared the company is for them, he adds.

Beef Up Cybersecurity
Nearly three-quarters of cyber incidents include a human element, such as an employee clicking a phishing link, according to Infosec, a cyber security training company. Employee education is key to preventing attacks.

“All it takes is one person in the organization to click on something they shouldn’t, and then the entire company is exposed,” says Nathan Johnson from consultancy GLCS. Another essential safeguard is multifactor authentication, or requiring users to present two pieces, or factors, that show their identity before they can access a system.

Find Partners or Platforms
The very largest companies may have the resources they’ll need to manage the evolving global logistics environment by themselves. Many other organizations will need to work with partners and/or platforms to achieve the benefits of scale, says Prologis’ McLaughlin.

Global Trade Management Solutions

Technology tools can help shippers tackle the challenges of global logistics operations. Here are a few of the many available solutions.

Descartes: Datamyne™ is a searchable trade database that provides real-time access to import and export information from customs authorities and trade ministries across 230 markets.

e2open: Features on e2open’s global trade management software include due diligence screening, the ability to automate export compliance and import management, as well as a database of government trade regulations.

ImportKey: The AI-driven algorithm leverages global and U.S. import and export data, as well as U.S. customs data and records, to identify top products, sellers, and buyers for given time periods.

Oracle Global Trade Management: This solution allows companies of any size and in all geographies to centrally manage global trade operations and to optimize, automate, and monitor cross-border transactions from a unified trade and transportation platform.

PartnerLinQ: This supply chain platform integrates with more than 70 TMS, WMS, and ERP systems using industry best practices, common workflows, and data structures.

SAP Global Trade Services: This platform integrates trade services across the entire enterprise and automates and streamlines trade processes.

Trademo: This solution connects billions of supply chain data points and leverages software to provide organizations visibility into their global supply chain networks.

Zonos: The platform provides a range of cross-border solutions, like Landed Cost, which offers the ability to show guaranteed duty, tax, and carrier fee calculations on all orders.

There are several reasons for the sharp year-over-year increase that could overstate this February’s results. Leap year occurred in 2024, adding one day of capacity in February. In addition, Chinese Lunar New Year occurred on February 11 this year versus January 22 in 2023, so February 2024 saw no impact on U.S. imports from China while February 2023 did. 

To gain more clarity on the year-over-year performance, Descartes analyzed TEU volume for the first 15 days in February of both years where there would be no impact from Chinese Lunar New Year. During this timeframe, the growth in container imports was 13.3%, which is much more representative.

Overall, Figure 1 shows that the first two months of 2024 are more in line with the consumer-fueled pandemic growth.

Figure 1: U.S. Container Import Volume Year-over-Year Comparison; Source: Descartes Datamyne™

February port transit times decreased on all coasts with East and Gulf Coast ports still experiencing the longest delays. The economy is still exceeding expectations, which indicates healthy import volumes; however, challenges with the Panama drought, Middle East conflict, and pending ILA contract negotiations at South Atlantic and Gulf Coast ports point to further trade flow disruptions in global shipping.