Tuesday, May 28, 2024
Shippers make international trade happen

Shippers make international trade happen

Since the beginning of trade, there has been a need to move goods between producers and those who buy them. Where once it was a camel, river boat or donkey that took goods to market; in the 21st century these have been overtaken by aircraft, container ships, trains and trucking. 

The UK-based Global Shippers’ Forum (GSF) is the global trade body that speaks up for and advises shippers and cargo owners in the conduct of international trade. Members pay an annual membership fee to support the operating costs of the organisation. 

Any business that arranges for the import and export of their goods by land, sea or air is a shipper, notes the GSF. Shippers organise the flow of goods from country of manufacture or production to the country of consumption or use. They contract with shipping lines, airlines and road and railway operators to deliver their goods at pre-determined times and places so that their customers are able to further use or sell them. Shippers typically include manufacturers, producers, retailers, wholesalers and traders buying and selling goods between countries. 

Shippers are responsible for the selection and management of logistics providers and ensuring that contracted arrangements are performed to agreed standards. They select providers of transport services to move their goods, usually by competitively tendering their expected requirements, and then oversee the performance of the successful bidder against the contracted terms, including costs, reliability and other indicators, such as safety and environmental performance. 

According to James Hookham, director, Global Shippers Forum, the forum has been around for two decades, neatly providing a forum for shippers throughout this century. He says: “GSF was established in 2001 as an informal network of national shippers’ associations and was incorporated as a notfor-profit company in the UK in 2011, with a governance board and financial reporting. 

Read more: Just-in-time supply chain now a thing of the past

“As an advocacy organisation, GSF works on those issues creating friction in supply chains. As most shippers will work through forwarders to manage airfreight shipments some of those frictions are attenuated but generally airfreight works reliably and transparently. Of course, the past two years have been different, and hopefully unrepresentative of the future. I have highlighted our concerns about digitalisation. The other major concern is cargo safety and the correct declaration of dangerous goods in airfreight, especially electronic goods with lithium batteries. 

The GSF’s membership comprises national shippers’ associations in over 25 countries.

Pandemic lessons
Like many across the airfreight supply chain, Hookham is certain that GSF’s membership has learned lessons in the last 2.5 years that they can take forward. He says: “The three lessons for us are just how interconnected humanity is by communications, environment and trade; that shippers found their voice as the true owners of the supply chain and found out what ‘customer service’ really meant to their suppliers and carriers; if you want things to change in international trade and transport you have to organise and work at it: market distortions, digital benefits and low ESG scores won’t solve themselves.” 

The threats and opportunities of digitisation in the airfreight supply chain over the next few years are in the sights of the GSF, notes Hookham. 

He says: “Digitisation offers immense savings and efficiencies to carriers, but the benefits need to be shared with other parties to secure the necessary engagement and investment of time and money to make the switch. As is becoming clear in the ocean freight sector, this will require a change in the traditional business models and roles for the full benefits to be gained, so there will be winners and losers in that process. 

“Another issue is data ownership and protection. There are too few protections in place for the privacy of commercially-sensitive information that could be harvested from shipping data, including names, addresses, products and volumes. There needs to be a debate about ‘owns’ this data and what rights do they have to act on it or sell it on to third parties. What are the liabilities in event of loss or leakage and the obligations on platform operators to report such losses? 

Jobs displaced
While a major part of logistics involves managing the storage and warehousing of goods, it may not be really a shipper issue, notes Hookham, these facilities are often staffed to the lowest levels thanks to IT. Is this the sort of activity that might de-skill the sector? 

“It’s not really a shipper issue, but generally if the job can be done by a robot then is it really a skilled job anymore? Automation and AI will displace jobs but the challenge for logistics businesses will be to secure the skilled people to design and operate supply chains that realise these savings. That’s where the skills shortage lays at the moment – supply chain logistics as a business function needs to attract the next generation of logistics people that will keep supply chains functioning despite the many challenges and developments they encounter from managing world trade in real-time,” he says. 

“Like many new technologies the pace on drones is being set by the prospective suppliers of assets and services, rather than those that may use them. Intuitively, drones feel like a niche solution, due to the relatively small payloads and the liability exposures. Ultimately, shippers will evaluate drones as they do any other delivery mode, on the basis of a safety case and on the average cost per delivered item. I have yet to hear of promoters of drones articulating their case in these terms.” 

Read more: MXP: Riding the cargo wave

Environmental concerns
Shippers do not work in a vacuum and are aware that many consumers are raising issues around food or air-miles in all modes of transport but especially aviation. Is this being reflected in their thinking?

He says: “Some shippers with strong consumer-facing activities do factor in the environmental impact of airfreight on their supply chain emission profiles. This number will rise as more businesses commit to the achievement of corporate 

‘Net-zero’ targets for the reduction of greenhouse gases, and third-party emissions (so called Scope 3 emissions) are factored into corporate carbon footprints. 

“Hopefully, this will coincide with a wider availability of Sustainable Aviation Fuels (SAFs) to allow these emissions to be offset, in an accountable and transparent way. 

Shippers may not rely on crystal balls but they are rightly concerned with trend spotting and direction of travel of their industries and transport generally. Hookham shares his thoughts on what matters are concerning shippers at the moment. 

He says: “It depends where you are in the world but right now for UK and North American shippers, I would list the following front-of-mind issues: 1) How will Peak Season 2022 play out in terms of costs, reliability and capacity, in all modes? 2) Will China-Taiwan-US tensions escalate to the point where trade is affected through closure of shipping lanes and air space? 3) What contingency should I provide in my supply chains for next year as sourcing patterns adapt to changing geopolitical situations and product availability?”

Picture of Edward Hardy

Edward Hardy

Having become a journalist after university, Edward Hardy has been a reporter and editor at some of the world's leading publications and news sites. In 2022, he became Air Cargo Week's Editor. Got news to share? Contact me on Edward.Hardy@AirCargoWeek.com


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