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The recent 24th annual TPM conference, held between March 3-6 at the Long Beach Convention Center, painted a vivid picture of a global supply chain grappling with an increasingly complex and disrupted landscape. Shippeo was well-represented by our resident ocean supply chain expert, Chris Mazza, SVP of International Growth. Chris actively participated in the event, leveraging his expertise to network with the shipping audience and attend keynotes and sessions that are shaping the future of the industry.
This year's event painted a vivid picture of a world in flux. Here are some of the insights key takeaways that Chris gathered over the course of the conference.
Day 1:
A World Redefined
The opening keynote set the stage for the conference, with Dr. Robert Gates, moderated by Natznet Tesfay, Vice President, Economics & Country Risk, S&P Global Market Intelligence, emphasizing that the era of complacency is over. The relatively stable period witnessed over the past decades is largely gone, replaced by a world fraught with geopolitical tensions. Experts painted a picture of a world moving away from the US-led "unipolar moment" towards a multipolar environment. The rise of regional powers like India, coupled with heightened tensions between China and Taiwan, North Korea, and Russia, creates a complex and potentially volatile situation. The "West" is no longer seen as the undisputed leader, with other regions charting their own course.
The Hub-and-Spoke Model: A Viable Solution or Recipe for Delays?
One of the most talked-about topics at TPM was the proposed hub-and-spoke model from the Gemini Cooperation, a partnership between Maersk and Hapag-Lloyd. This model leverages a network of central hubs and dedicated feeder services to optimize efficiency and reduce costs. However, concerns about schedule reliability were a major point of discussion.
Hapag-Lloyd CEO Rolf Habben Jansen positioned the hub-and-spoke model as a direct response to shipping's chronic issues with schedule reliability. He pointed to industry data indicating a troubling reality: "Over the past five years, not a single carrier has managed to get above 70% schedule reliability," Jansen said. This dismal statistic highlights the significant gap between the current situation and the Gemini partners' ambitious target of a 90% on-time arrival rate for their proposed hub-and-spoke model.
Skeptics, including industry analysts and Vespucci Maritime's Lars Jensen, echoed these concerns. Jensen took an even more critical stance, emphasizing the current challenges. "In the past three and a half years, reliability has been absolutely abysmal, barely anyone managed to get to 50% of on-time arrivals," he said.
These concerns highlight the need for the Gemini Cooperation, and any other proponents of the hub-and-spoke model, to address the issue of schedule reliability head-on. Can such a model be successful if the industry is already struggling to meet basic on-time arrival targets? This remains a key question as the industry weighs the potential benefits and drawbacks of this new approach.
Day 2:
A Multi-Faceted Day: Green Shipping and the Evolving Trade Landscape
The second day of TPM24 offered a glimpse into two pressing issues facing the shipping industry. First, the environment took center stage with a clear message for cargo owners. A panel of industry executives delivered a blunt message: if they are serious about accelerating the decarbonization of container shipping, they need to be willing to pay a premium for the currently available green options. "Sustainability doesn't come cheap," emphasized Thorsten Meincke, board member for air and ocean freight at DB Schenker. "Focusing solely on cost reduction won't achieve the green transition. The industry needs to invest, and cargo owners need to be willing to share the burden."
The afternoon sessions shifted focus to the broader impact of a changing geopolitical landscape. Discussions centered on how this "new world order" will reshape global trade. Experts pointed out that the established patterns of trade routes and alliances are likely to be disrupted. The example of China potentially forcing carriers to choose between calling on Taiwan or mainland China highlights the potential for friction. While global trade is expected to continue, it will likely take new forms, with regional blocs and protectionist measures playing a larger role.
Day 3:
The Red Sea: Just a Challenge, Not a Crisis
Another key discussion point centered around the ongoing attacks on commercial shipping in the Red Sea. These attacks have forced container lines to divert vessels around the southern tip of Africa, a longer route that many feared would disrupt the delicate balance between capacity and demand on major trade lanes. However, Lars Jensen, CEO of Vespucci Maritime, offered a surprising perspective. He believes that the Red Sea situation, coupled with the longer transit times, has actually helped to absorb excess capacity. "This is just a challenge. It's not a crisis," Jensen said. In fact, the overcapacity that carriers feared would develop has been mitigated by the need to reroute ships due to the Red Sea situation, allowing them to meet current demand for capacity on key routes.
The Critical Role of Real-Time Visibility (RTTV) in Disrupted Ocean Shipping
The message from TPM24 was clear: the days of business as usual are over. Companies need to embrace agility in a world increasingly defined by disruption. This sentiment was echoed by industry leaders, including Shippeo's SVP for International Growth, who attended the event. He highlighted a key takeaway: Real-Time Transportation Visibility (RTTV) will be more crucial than ever before in the realm of ocean shipping.
In an era of heightened uncertainty and disruption, both from geopolitical tensions and unforeseen events like piracy, RTTV becomes essential. Companies will need robust RTTV solutions to track shipments, anticipate disruptions caused by geopolitical shifts or piracy (like the ongoing attacks in the Red Sea), and adjust their strategies accordingly. The ability to react quickly and efficiently to unforeseen challenges will be the key to success in this new environment. Whether it's adapting to geopolitical shifts, mitigating the risks of piracy, or navigating disruptions caused by proposed changes in network design, RTTV empowers businesses with the information they need to make informed decisions and ensure the smooth flow of goods.
Final Key Learnings from TPM24
In conclusion, the 24th annual TPM conference painted a vivid picture of a global supply chain grappling with an increasingly complex and disrupted landscape. Here are the key takeaways:
1. Building Trust in Uncertain Times: After years of disruptions, trust and strong partnerships are more important than ever. Shippers are seeking reliable partners who can offer expert advice and navigate these tumultuous waters together. Building successful partnerships requires agility, innovative thinking, and a focus on efficient solutions.
2. Diversification is the New Normal: Gone are the days of predictable contracts and fixed routes. Shippers are embracing diversification to build agility in their supply chains. This includes using a wider range of carriers and forwarders, exploring alternative routings to mitigate disruptions, and seeking creative solutions for global movement of goods.
3. Technology Empowers Visibility: Real-time data is king. Customers are hungry for accurate shipment and SKU-level visibility across their entire supply chain. This empowers them to manage operations efficiently, improve customer experiences (by setting accurate delivery expectations), and navigate disruptions proactively. Shippeo, for example, offers an Ocean Visibility solution with Predictive ETAs, which addresses delays in obtaining data from carriers, giving customers a strategic advantage.
4. Charting a Course Through Uncertainty: The Red Sea attacks, Panama Canal restrictions, and upcoming ILA contract negotiations highlight the persistent uncertainties plaguing the shipping industry. This volatility creates anxiety, but RTTV platforms like ours can help. Shippeo's Ocean Visibility ETA solution offers a strategic advantage to customers by addressing delays in obtaining data from carriers.
