The Supply Chain Matters blog provides our latest updates for our blog column- Global Supply Chain News Capsule Follow-Up. In our efforts to provide readers with the complete story, this capsule presents a series of brief blogs that revisit prior supply chain developments that we have shared with readers.

As multi-industry supply chains continue efforts to try to overcome unprecedented global wide material shortages, extended supplier lead times and continued transportation disruptions, there is one reality that is becoming far more visible.

That reality is that ocean container, certain third-party logistics and domestic transportation carriers are financially benefiting from this ongoing crisis.

Conservative leaning publication The Wall Street Journal published a report last week with the headline: Supply Chain Pain Is Maersk’s Gain. (Paid subscription or metered view).

Ocean container industry leader A.P. Moeller Maersk reported profit of $5.44 billion for the September ending quarter. The report points out that Maersk’s latest profit performance is among the top ten of S&P 500 companies including Apple and Microsoft. In comparison, the carrier made as much money in one quarter as Amazon, which reported recent quarterly profit of upwards of $3 billion, and UPS, which reported $2.3 billion in profit.

To be balanced, the WSJ report notes that Maersk posted losses in the years 2016, 2017 and 2019, when the industry experienced a glut of shipping capacity. However, during those years, the industry formed aligned shipping networks to consolidate capacity for major shipping routes which provided greater influence on shipping schedules and service levels.

According to industry research firm Drewry Maritime Research, if very high industry rates continue on their existing path, the container lines could collectively haul in $100 billion in operating income in 2021. Reporting on this industry projection, Bloomberg opined in August that this level of profitability represents more than fifteen times industry generated profits in 2019 (pre-pandemic) and nearly as much as Apple makes in a typical year.

Other added evidence among U.S. transportation and services providers can include nationwide trucking firm Knight-Swift Transportation’s recent reporting of a nearly 69 percent increase in quarterly net income of $206.2 million. Freight broker C.H. Robinson Worldwide reported an 81 percent increase in net income to $247 million. Warehouse properties located in proximity to major ports have benefitted from the ongoing bottleneck and disruptions, principally due to lots of added inventory needing to be stored and accounted for. Warehouse real estate developers Prologis and Blackstone are similarly financially benefitting, the former recently reporting a doubling of earnings-per-share.

Carriers themselves have often pointed out that in profitability levels in prior years has barely exceeded the cost of capital, but obviously this has not been a normal year. With supply chain management and logistics teams literally bargaining with carriers for transport services regardless of spot market pricing, there is ample opportunity to make a lot of money from chronic demand and available supply imbalance.

Beyond those that benefit from disruption is the existence of a global transportation and logistics framework that provides very little synchronization among ocean, port, rail and trucking movements with operating stakeholders that optimize for their particular service needs as opposed to the whole system. Obviously, a cohort of transportation, logistics, government, and other industry participants need to come together in an overall strategy and framework that can foster improved synchronization among various supply chain execution network modes.

From our Supply Chain Matters lens, more leveraged use of analytics and machine learning capabilities leveraged among Cloud based B2B platforms would be an obvious opportunity as is more modernized logistics infrastructure and work practices.


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