Multimodal transport operators can collaborate and cooperate—even between competitors—during this time when there are capacity issues and decrease in cargo demand brought by the coronavirus (COVID-19) pandemic, according to Philippine Multimodal Transport and Logistics Association, Inc. (PMTLAI) president Marilyn Alberto.
“What I can see is an opportunity for many of the parties in the supply chain to collaborate and even for competitors to cooperate, what I call coopetition,” Alberto said in a presentation during a recent webinar hosted by the Procurement & Supply Institute of Asia.
Multimodal transport and logistics companies have not stopped operating even during the current pandemic, which just shows “transportation and logistics is an essential service”, she noted.
But she admitted the pandemic has caused capacity issues in air, sea, and road transport.
‘Preighters’
For airfreight, Alberto said there was a capacity depletion due to grounding of aircraft and disappearance of belly capacities from passenger aircraft. There was also a shift from scheduled flights to charter flights, and an increase in freighter flights.
The situation likewise gave birth to “preighters”, or passenger aircraft used as freighters.
Flights at the Ninoy Aquino International Airport have gone down from 336 in 2019 to 270 flights in February, and further declined to just 14 in March 25 to April 8. From May 29 to June 1, flights have gone down to just 9.75 flights.
Cargo flights, on the other hand, increased from nine flights from March 29-April 1 to as much as 65 flights as of May 30-June 1.
Alberto noted, however, all these developments meant skyrocketing freight rates, especially since there is trade imbalance with most aircraft carrying no cargoes during return flights. She said the cost of one-way flights have, as a result, become prohibitive.
“Airlines, forwarders, exporters, importers, consolidators, they have to talk to each other so we (can) maximize usage of these underutilized capacities,” Alberto said.
Industry associations can also help facilitate sharing of information and a digital platform may be needed for this, she noted.
PMTLAI, for its part, is already announcing to its members, for example, the excess capacity of another member’s chartered flight “so that other members can make use of these space and also the member who [is] using this charter flight can maximize the space that they are paying for,” she explained.
Capacity is as much an issue for sea freight as it is for airfreight. Since the onset of the pandemic, a number of shipping lines has announced blank or void sailings, which means either a vessel is skipping one port or cancelling its service for an entire string of ports.
Because of blank sailings, there has been greater use of other transportation options, such as road freight service (Asia-Europe), rail freight service (Asia-Europe), transpacific express seafreight services, and sea-air/air-sea freight services, Alberto said.
Warehousing opportunities
She said she sees opportunity, especially for freight forwarders, in warehousing because what used to be just-in-time shipments now need to be “just-in-time and just-in-case supply chains.”
“Our customers may need buffer inventories because they don’t really know the exact time for the arrival of their products so they have extra inventories to sustain their operations,” she explained.
Alberto said this means higher demand for warehousing services to provide end-to-end value optimization for clients. Freight forwarders can also be the “one-stop-shop” for clients, including third-party logistics and vendor-managed inventory services.
In addition, freight forwarders can “look beyond traditional practices in sharing freight capacity to have more resilience and flexibility.”
“We know about shipper’s and buyer’s consolidation but should there be variations… considering that maybe the demand may not be as much as we used to have? Would there be new models that we can come up with in terms of co-loading?” she asked, adding these are issues that can be explored for opportunities.
For land transport, Alberto cited many trucks returning empty from a delivery, and how this could be another opportunity for collaboration and coopetition “to avoid multiple trips with empty miles.”
Container freight stations (CFS) can offer trucking consolidation and deliver to logistics service providers or consignees. Alberto noted her company (Kintetsu World Express) sometimes sends a truck just to pick up one or two crates or pallets from a CFS warehouse. She said trucking consolidation can reduce cost for CFS operators at the same time expand their service offerings.
Strategic partnerships can also be considered among freight forwarders and customs brokers in terms of less container loads and consolidations.
Alberto said there is a “need to explore opportunities for collaboration and coopetition so that we can all achieve something bigger than we normally do as individual companies.” She noted, however, this would require information sharing and a high level of trust “because we are still a very fragmented industry.”
On the much talked about “Uberization of freight” which traditional forwarders are afraid of because clients might just go direct to carriers or through certain online platforms, Alberto said this “as (is) being done now has not been successful.”
Factors prohibiting success of freight Uberization include clients’ need for customized services, guaranteed loading capacity, and pricing. Other factors are the clients’ need for consolidated invoicing; transport liabilities and insurance; and compliance issues.
“So at this point, as long as we are providing good service to our customers, I don’t think we should be very much afraid of… Uberization of freight,” Alberto pointed out.
On digitization, she remarked: “We don’t need to embrace everything being offered. We don’t need to be the disruptors at this point.” While there are a lot of digitization platforms being offered, companies can start with “low-hanging fruits” and subscribe only to those technologies relatively easy to adopt based on assessment of their organization. – Roumina Pablo
