By Peter Hurme, Programming Director and Logistics Industry Market Analysis, Informa

Multimodal supply chains are evolving, and expanding in interesting ways, as recent industry panels moderated by CLC around North America have proven as supply chain stakeholders look for alternatives to congested trade pipelines, or how to effectively source distribution and warehousing in the age of e-commerce, as well as trying to get a grasp on how blockchain might transform inter-connected logistics business processes.

Multimodal partners leverage inland matchback

Containerized supply chains have experienced space and equipment capacity crunches in recent months resulting in part from: a strong economy; shippers trying to get ahead of the specter of steep Trump tariffs on China in the New Year with what could be a longer-than-usual Peak Shipping Season before this year winds down; plus what seems to have been a steady retreat from inland-focused container business by the ocean shipping lines.

“We think there’s a niche here,” said Dennis Whalen, Vice-President, International Logistics and Intermodal, for agricultural food giant, Archer Daniels Midland (ADM), on a CLC-moderated panel at the CSCMP Edge event in Nashville, focused on multimodal collaboration, including matchback opportunities at ADM’s privately owned intermodal ramp in Decatur, Illinois.

“ADM’s largest footprint in the world is Illinois,” Whalen said, as it is also the headquarters for the company. “We were working through port congestion and trying to push empty and loaded [containers] inland faster, with congestion at the ramps in major cities.”

Whalen said the Decatur ramp, located in a more rural, less populated region of Illinois as opposed to the massive intermodal hub in the Chicago area, won’t replace high volume intermodal moves in, and near major cities, but the matchback container business that has been created there has been an outgrowth of global supply chain pressures, and in this case, a Class One Railroad – Canadian National – played the matchmaker, bringing in containerized importers like Montreal-based Dorel Industries, known for owning well-known cycling, juvenile, and home products brands.

“The role of ADM has been an enabler for shippers,” said Michael Grier, vice president, Global Logistics for Dorel.

“Collaboration creates value for all three parties [ADM, Dorel, CN]: flexibility, cost, creating infrastructure,” said Grier, who praised CN for “working with the partners.”

Dan Bresolin, CN’s assistant vice president for international intermodal said: “Working together with importers and exporters – and really understanding their supply chains – allows CN to match loads and effectively increase capacity in [North America].”

The two principal Canadian ports that CN has been able to leverage the import containers from have been arriving from Prince Rupert and Montreal in the three-times weekly Decatur service.

Inland to Saskatchewan

Inland logistics opportunities have also arisen in the western Canadian prairie province of Saskatchewan, as a CLC-moderated panel proved out at the recent Rail to Ports Conference in Calgary, AB, organized by the Van Horne Institute.

“There is no efficiency change without an infrastructure change,” said Bryan Richards, president and CEO of the 1800-acre Global Transportation Hub in Regina, SK, that includes a 300-acre Canadian Pacific intermodal rail facility, and a one-million-square-foot distribution center for Canada’s largest food retailer, Loblaws, among other tenants.

In an increasingly populated world that is projected to hit 10 billion people by 2050, Richards said inland port developments are key to help alleviate mounting multimodal pipeline pressure, especially for an export-heavy province like Saskatchewan where 75 percent of what is produced there is exported elsewhere.

“We are a major exporter of cereal crops, pulses and canola. We are the fifth largest oil producer in North America and one of the world’s top uranium producers. We are the world’s largest producer of potash – the most effective fertilizer on the planet. We just have to get it to the world,” said Richards.

Providing export reach for commodities to global markets is not just a goal of Global Transportation Hub, as another inland terminal is located closer to the U.S. border in Oxbow, Saskatchewan – the 1300-acre Northgate Terminal operated by Ceres Global.

“Shippers need the alternative gateways,” said Paul Ferguson, general manager of energy and industrial products for Northgate.

“Saskatchewan is the breadbasket of Canada and we’re in it. About 2000 and growing Saskatchewan farmers see Northgate as a competitive alternate for their products to global markets,” Ferguson said.

The Northgate facility handles a variety of commodities, including fertilizer, crude oil, and a variety of agricultural products, among other related cargo types. The unique rail connection is that the terminal is served not by a Canadian railroad but a U.S. Class One operator, the Burlington Northern Sante Fe (BNSF).

“Ceres can ship direct to Mexico with BNSF,” said Ferguson.

Distribution in the E-Commerce age

Properly situated, and connected inland ports may offer relief, and market access opportunities for congested supply chains, however, there is another disruptive presence for logistical networks to contend with, thanks to the booming business of e-commerce – which is already about 10 percent of all retail sales - and what this is coming to mean for distribution, fulfillment, and warehousing.

A group of industry experts discussed the ever-encroaching age of e-commerce on distribution logistics at a panel CLC moderated at TIACA’s Air Cargo Forum in Toronto.

Chris Steele, the COO and president of Investment Consulting Associates, said his site selection and industrial real estate consulting firm is working with “a large e-commerce company,” and that “their objective is to get closer to the population centers,” such as in the Greater Toronto Area, the third largest industrial land market in North America with close to one million square feet of warehousing space.

Alexi Lachambre, vice president of development and investments for Aeroterm, which develops and leases industrial property at airports, concurred: “Consumers want speed – getting their products within 24-48 hours.”

However, as major distribution and fulfillment center footprints further densify in and near major metropolitan areas to service increasing “last mile” delivery demands generated by e-commerce-driven customer needs, both Kyri Fabios, the managing director of Fedex Trade Networks for Canada, and Lance Trumble, the managing director and founder partner of real estate developer Tribal Partners, referred to disruption to the labor force that, despite the expanding use of automation, is still needed for e-commerce-focused warehouses.

Both gentlemen agreed there are warehouse labor hiring challenges to attracting these not as high of paying jobs relative to the rising cost of living in major metropolitan areas.

Who are the Blocks in the Chain?

No matter whether you’re focused on warehousing, trucking, rail, ocean shipping, or all of the above, your supply chain is complex and has many stakeholders connected in a variety of ways, and this is where one of the most talked-about, but arguably least understood solutions in this new age of technological advancements is making a move into the business of global logistics: Blockchain.

At the 70th Anniversary conference for the Canadian International Freight Forwarders Association (CIFFA) that was held in Toronto recently, CLC moderated a panel on Blockchain – a concept borne out of the cryptocurrency of Bitcoin transactions – where there is a distributed, digital ledger recorded in a series of “blocks” that is now finding its way into supply chain management, offering the potential for much more dynamic, end-to-end, traceable visibility of freight on a number of levels.

“There have not been many true innovations in the shipping industry since the invention of the container,” said Alison Clafin, the director of network development for Tradelens, the trailblazing blockchain tie-up between the world’s largest container-shipping line, Maersk, and global computing giant, IBM, which counts approximately 100 customers to date.

The next big innovation to the shipping industry that Clafin was referring to, of course, is the implementation of blockchain in logistics, and the digitization of global trade.

“Kuehn & Nagle will reduce paperwork 80 percent,” said Don Miller, vice president of global sales and marketing for the container tracking service, Globe Tracker ApS. Miller was referring to one of the largest third-party logistics companies in the world, Switzerland’s Kuehn & Nagel, using blockchain technology for its Verified Gross Mass (VGM) portal where their customers’ VGM declarations must be filed as per international (SOLAS) requirements – averaging 800,000 such transactions a month.

However, blockchain is still very much in a nascent phase despite increasing adoption from larger scale business interests, and along with the many benefits being touted, there are also the many questions, some of which were asked by the CIFFA blockchain panel such as potential legal issues posed by Rui Fernandes, a partner with Toronto-based Fernandes Hearn LLP.

“Where is the liability?” Fernandes asked, especially regarding the advent of digital “smart contracts” in blockchain, and will there be any indication that a Canadian court, for example, won’t enforce, or even reverse a blockchain transaction that is “self-executed” in a smart contract?

Globe Tracker’s Don Miller, said there is also the risk of “garbage in, garbage out” in terms of the data being shared.

Despite some of these pressing concerns, blockchain in shipping and logistics is on the move with the latest news of a new Oracle-based Blockchain consortium of container-shipping lines CMA CGM, COSCO Shipping Lines, Evergreen, Yang Ming, and global terminal operators DP World, Hutchison Ports, PSA International, and Shanghai International Port.