We’re more than halfway through the summer and you can be excused for sleeping on some of the supply chain headlines last month. The sunshine season has a similar effect on all of us!
Thankfully, our team of fulfillment-focused analysts stay up to date with the industry’s news and views so that you don’t have to. As usual, here’s our monthly round-up of all the issues and information that caught our eye during July. Continue reading Order Fulfillment in Review: July 2016
On Sunday, a Chinese container vessel will navigate its way through the expanded locks, in what shippers around the world hope will be the first of many successful passages by today’s larger commercial ships. It’s been a long time coming for shipping lines especially, many of whom have invested heavily in the 14,000 TEU capacity vessels that the expanded waterway is designed for.
The disagreement centers on costs that appear to have run over-budget and the associated bills that are outstanding. A Spanish-led group of engineers tasked with completing the expansion work is becoming increasingly frustrated at what is sees as underpayment and a lack of commitment, while the Panama Canal Authority is reportedly saying that the claims “amounted to blackmail.”
As with most labor disputes the truth behind the latest Panama Canal strike probably lies somewhere in the middle, but that’s of no comfort to the many global businesses counting on a project that is running over on many counts.
Checking the other box true of most projects, the expansion is already expected to run over its previous deadline of August this year. This would have seen the Panama Canal celebrate its centenary – the first navigation of the waterway was on August 15th, 1914 – in fine style, but work isn’t now expected to be completed until some time in 2015.
Any extended delay now risks pushing the project into a second year of delay, not something acceptable for a channel that the ASCE describes as one of the seven wonders of the modern world.
Though happening thousand miles away, the disruption isn’t something that tri-state area businesses can ignore. The route is a vital one for global trade, affecting goods both in and out of the United States to the tune of hundreds of millions of dollars. The expansion will allow passage for vessels carrying more than 2.5 times the current maximum capacity, bringing down supply chain costs for import and export businesses alike.
And historically-speaking we have even deeper reason to take an interest locally.
The supervision and completion of the Panama Canal was under the control of none other than George Washington Goethals, the very same man for whom the bridge connecting Staten Island, NY to New Jersey is named.
Goethals has a storied place in U.S. history, both engineering and military, so it’s just one more item to add to the laundry list of reasons hoping that one of the world’s most important waterways gets its act together, before the project sails into more dangerous waters.
At Capacity LLC we’re proud to call New Jersey home (not forgetting our crucial California warehousing operation!). We already know that the area is a vital distribution hub, of course, but it’s always welcome to have that viewpoint validated by a third party, as this feature on DC Velocity explains.
The Port of New York/New Jersey is one of the largest entry points for goods coming into the U.S., behind only its West coast peers in Los Angeles and Long Beach. The port district itself is 25 miles long and handles in excess of 75 million metric tons (RITA, 2009) every year. That’s a lot of cargo to sort, store, and redistribute to final destinations! Whether moving further into the U.S. via intermodal transport solutions or finding a consumer closer to the New Jersey-area, goods must move quickly through the port and make use of solid infrastructure to travel to a distribution center (DC) to await the next phase of their journey. New Jersey – and particularly central NJ – provides “easy access to all the major modes of transportation: road, rail, air, and ocean.”
With a high concentration of the population in the Northeast, New Jersey doubles as a core base of operations for warehousing and logistics. We see time and again that major retailers find their sweet spot in this state, whether that means creating their own facility, as exemplified by Amazon’s massive facility under construction in Robbinsville, NJ, or employing a company like Capacity LLC to provide retail fulfillment solutions, as have brand names like Macy’s and Target. The combined efficiency of pulling cargo straight from port to DC, and efficiently managing its storage/delivery through to final point-of-sale is an attractive proposition for company and consumer alike.
Even with this prime position, however, New Jersey’s logistics providers can’t rest on their laurels. Major impacts are expected from such transport developments as the impending Panama Canal expansion, meaning that the state and region must be ready to handle the anticipated growth. Already an efficient operation, new developments will see billions of dollars of investment come to fruition in the near future, with the raising of the Bayonne Bridge and the implementation of the ExpressRail System being two projects at the heart of this expansion.
The jobs and economic growth that come with this adaptation of our industry is hugely welcome after a tough year of natural disasters and the struggle to get things back to normal. Watching our area develop is one of the highlights and, we’ll say just one more time, something that we’ at Capacity LLC are proud to play a part in!
The Panama Canal has long been a crucial route for U.S. supply chains, with around 70% of all cargo moving in and out of the country passing through it every year. Next year sees the waterway’s centennial and some significant events will mark the occasion, not least of which is the targeted completion of its expanded capacity.
The improvement, which has been ongoing since its approval in 2006, will double the capacity of the route and allow three times as much cargo to pass through it every year. In reality the project is likely to go into overtime, perhaps into early 2015, but the ramifications of the work are already the subject of much speculation. Logistics analysts are assessing how this is likely to change the logistics business in the U.S.
For over 60 years the Pacific coast ports have seen greater growth than their Atlantic coast peers, boosted primarily by the vast volume of imports utilizing the North America-Asia trade routes. The combination of relatively unrestricted transit conditions and efficient intermodal transport solutions from the west coast inland have proved to be a winning formula. As the Panama Canal expands to allow for increasingly large container vessels, and North America’s imports are sourced from more diverse locations around the world, growth is beginning to swing in favor of the Eastern seaboard.
Rather than pit this as a good old fashioned East vs. West grudge match, however, logistics professionals around the country are likely to embrace these developments. Anyone who has spent time in the industry knows how uncomfortable it is for businesses to be heavily reliant on just one transportation route, so anything that opens up new options and redistributes the balance of goods flowing in and out of the country should be seen as a positive. A flexible supply chain allows for alternate routing, which is something that the Panama Canal will be better able to accommodate in the near future.
Any major expansion in one mode of transport tends to necessitate improvements in others, meaning that the knock-on investment in transportation infrastructure provides a boost to businesses up and down the supply chain. This can already be seen in the Tri-State area with the increases in height of the Bayonne Bridge in New Jersey. Though we can expect the usual construction grumbles in the short term, the longer term efficiency improvements will be a boost to a wide range of businesses.