There’s been abundant change in the world of logistics over the just the last two years, with much more expected in the years ahead.
Marcus Reimann, senior vice president at logistics specialist Kuehne + Nagel, has more than 26 years of experience in the shipping and logistics industry. He’s currently overseeing sea logistics in the Americas, Asia Pacific, and Oceania. Reimann is also known for his strategic vision and expertise in optimizing global supply chains.
Here, Reimann discusses supply chain visibility and disruptions, what challenges are ahead, diversifying sourcing outside of China using the China +1 strategy, and how digital tools including AI can help with predictive analysis.
Sourcing Journal: You’ve been in the shipping and logistics industry for over 26 years. What has been the two biggest changes you’ve seen in the last decade? Are the changes mostly due to adapting in a post-COVID environment or have the changes been slowly evolving over time?
Marcus Reimann: The biggest shifts I’ve noticed in these last 10 years are the surge in digital technology and the growing focus on sustainability. The pandemic definitely sped up our reliance on digital tools, like real-time tracking and remote management. But the push for greener practices has been a longer-term trend, driven by environmental concerns and new regulations.
SJ: We’ve seen companies in the fashion and textiles sectors get hit by high sea freight and container shipping costs in the last few years. And there’s been disarray in road transportation in the U.S. for both “less than truckload” and “full truckload” freight. Do you see these costs ameliorating over the near future, or will hot spots such as the Red Sea continue to pop up and cause new headaches?
MR: Disruptions and unexpected “black swan” events are likely to persist, appearing in various forms. For instance, the upcoming ILA [union] negotiations on the East Coast and the fact that 2024 is an election year in many major countries could lead to policy changes, such as adjustments in tariff amounts. Shippers can no longer plan their supply chains as they did 5-10 years ago; they must now consider “what if” scenarios to stay flexible and ensure products are delivered to the right place at the right time.
SJ:Tell me about your expectations regarding the latest trends and geopolitical events and how they could reshape international trade? Any suggestions for how companies should adapt their global supply chains?
MR: Recent geopolitical events and disruptions, particularly in the Red Sea and major elections worldwide, are reshaping international trade by creating instability and driving up costs. Reduced shipping capacity and imbalances are increasing freight rates and complicating logistics, while changing trade policies and political dynamics influence global supply chains.
Companies should adapt by diversifying their supplier bases, investing in data-driven supply chain management, and employing flexible strategies like the China +1 approach. Enhancing resilience through innovation and proactive risk management will help businesses navigate these turbulent conditions and maintain operational stability.
SJ:Moving production closer to home would certainly help with lowering shipping and transportation costs. There’s been talk about nearshoring and reshoring. Are those realistic options for U.S. fashion firms as they look at what their future global supply chains might look like?
MR: Nearshoring and reshoring can be great moves for U.S. fashion firms looking to cut shipping costs and streamline their supply chains. Bringing production closer to home helps reduce lead times and transportation expenses, and it can make the supply chain more flexible and resilient. While there’s some investment involved in making these changes, the benefits often outweigh the costs in the long run.
Companies like Kuehne+Nagel provide support through these changes, using global networks and advanced logistics solutions to make the transition smooth and keep operations running efficiently.
SJ:Many fashion firms and retailers on their earnings conference calls talk about contract negotiations with shippers to fix their rates and curtail cost increases. While this can be a big help, are there other options that should be considered that some firms might not be thinking about?
MR: Fixing rates with shippers is a great way to manage costs, but there are other strategies worth considering, too. For example, using a mix of shipping methods can offer more flexibility and potential savings. Investing in technology to improve supply chain visibility and predict disruptions can also help optimize routes and manage costs better.
SJ:Given the surge in logistics demand, what are the big challenges for companies looking at how best to stabilize their supply chains? What about their biggest opportunities?
MR: With the surge in logistics demand, companies are facing big challenges like managing increased shipping costs, dealing with supply chain disruptions, and juggling inventory levels. It’s a tricky balancing act to keep things running smoothly amid all the uncertainty.
On the flip side, there are some great opportunities too. Like embracing technology and AI for better forecasting and automation, which can really help stabilize operations and boost efficiency. Plus, investing in stronger supplier relationships and diversifying sources can make supply chains more resilient in the long run.
SJ:And what about technology and innovation? Where does that fit in with the current complexities in the logistics landscape?
MR: Technology, particularly AI and machine learning, is really transforming how we handle the complexities in logistics today. AI helps us predict demand more accurately and make smarter decisions, which is key when dealing with disruptions.
Machine learning takes it a step further by optimizing inventory, improving routes, and automating tasks to save on costs. Companies like Kuehne + Nagel are using these tools to stay ahead of market changes and manage risks more effectively, making supply chains more resilient and adaptable.
SJ:There’s a rail strike looming in Canada, which could occur on Thursday. Do you think this will happen or are threats of a work stoppage part of the negotiating tactics? What are the implications beyond Canada?
MR: It’s difficult to predict what will happen next as the discussions are dynamic and evolving hourly. At Kuehne+Nagel, we’re monitoring the situation closely, as any labor action could impact logistics and supply chains beyond Canada, especially the US Midwest. We continue to advise our customers of alternatives and ensuring agility in their supply chains.
SJ:At present, it looks like there is a high likelihood that dockworkers at U.S. East and Gulf Coast ports will go on strike on Oct. 1. What do you think is the likelihood that this will happen? And if it does, given that a strike would impact six of the 10 busiest U.S. ports, how long do you think this might last?
MR: It is difficult to predict if there will be labor action on October 1 as the discussions between parties are ongoing. Any labor action would most likely disrupt the ports. At Kuehne+Nagel, we continue to advise our customers to ensure flexibility and agility in their supply chains given the number of disruptive events that have taken place over the past few years.
