Forecasting Is as Important as Flexibility: Sparx Logistics

Q: Why should companies trust Sparx Logistics as a partner during these times of uncertainty?

A: Freight forwarding has always been very competitive since its early days. It is an industry with many players, from small, local companies to regional players to global organizations . When we talk to our customers, we first try to identify their needs. If a customer requires transportation from Africa to Mexico, we probably are not the right partner and we will be very straightforward with them. But if a customer has trade flows from China or the US to Mexico, then we can definitely work with them and provide them industry-leading services and solutions.  

The pandemic disrupted the industry, creating many supply chain problems. So there is no need to add to the complexity of moving freight from point A to point B. However it is obviously going to me much more difficult to do that when dealing with an agent, an associate or representative, or any other third party located on the other side. Therefore being able to talk with a logistics supplier that is based not only at destination, but also in the country of origin makes a great difference. This is what we bring to our customers. Our company owned offices in China and Southeast Asia operate in the same way they do in Mexico. Thanks to our global operating system, We can see what is happening in China in real time, which is a big plus when addressing issues and delays. We can react and adjust immediately to this fast changing environment, including ports of loading, carriers, service options and more.

Lately, the automotive industry has experienced many challenges shipping goods out of China due to COVID-19 restrictions. To address this, clients need someone on site to really know what is going on. In China, there are sometimes different rules for different neighborhoods in the same city, sometimes impeding travel that could have been possible from a different neighborhood. Truckers may need several COVID-19 tests to move from the port to the production facility and then load up the container. In other cases, a last minute change in the port or terminal is needed to ensure timely departure. And in some critical cases a switch from sea to air freight might be needed. Without people on the ground to organize this, everything quickly becomes really complicated. At SPARX Logistics, we believe that our know-how, local footprint and technological setup are the assets we offer our customers to solve or at least minimize any type of disruptions in their supply chains.

Q: In your last interview with MBN you said that carriers’ itineraries would regularize by early 2Q22. Did your forecast pan out?

A: It did but not completely. As rates started to drop by the end of Q2/22, Many carriers started to cut some ships from their rotation, reducing the number of vessels on a typical service link from five or six to four or five, for example. This situation is ongoing and we expect many more blank sailings during Q3/22. This year, unlike previous years, carriers are really focusing on maintaining higher  freight rates in the market. They have not been completely successful as rates have continued to come down in the last six to eight weeks. IN any case, we expect them to increase rates again as soon as we get into the peak season in early Q4/22. However the big question then becomes what type of peak season will we see this year.

As far as service levels and schedule reliability, shipping lines have finally started to improve their on-time performance (although from very low levels) and freight forwaders are able to plan shipping with a decent amount of predictability, but the service level still remains far from  what we would expect. Itineraries are improving but only from China to the US West Coast; those from Asia to the EU are still a complete mess with issues at port of origin as well as many congested terminals in Europe. 

Q: How have labor negotiations at California’s LA/LB ports evolved and what is your outlook on this situation?

A: Their contract expired in July and both parties continue to negotiate, seemingly in good faith., Of course we all remember the last time this process took place and the ensuing strike on the West Coast. Clearly nobody has an interest in this happening again today  because it would have a major impact on the economy of the US and China. The US government is quietly getting involved trying to get both sides to agree on the next contract.

While negotiations seem to be heading in the right direction, the timeline is clearly off because this should have been done much earlier. This time however many customers took notice and organized their peak season shipments much earlier. Large retailers in the US, for example, have planned their year-end holiday season much earlier during Q2; instead of shipping their cargoin July or August, as in previous years. While this brings additional costs in terms of inventory, it allows them to have goods readily available for Halloween, Black Friday, and of course the largest shopping event of all, Christmas,.

Q: How does Sparx support its automotive customers to improve their supply chain despite international challenges?

A: Automotive customers are becoming increasingly open to planning because they belong to  one the industry that has probably suffered the most during these last 2 years of pandemic related disruptions  It is safe to say that it has been practically impossible to continue to rely on a “just-in-time” supply chain methodology. Forecasting, however, remains a problem for many customers, which  often leads to delays. When we talk to our customers in the automotive industry, we highlight the importance of forecasting but also of flexibility. It is a difficult and complex discussion but at the end of the day  The goal remains the same : to have the right parts at the right moment. It may require the customer to carry a larger inventory or a willingness to switch modes of transportation, or to change routings at the last minute. But it is perfectly achievable.

For example we have several automotive customers with suppliers located in Ningbo and Shanghai, China. Recently, Shanghai ports and airports basically had to shut down completely due to COVID, with nothing coming in or out so we had to divert some shipments to others ports and airports, in particular to port of Ningbo . Ningbo is relatively close to Shanghai and is also used by most shipping lines. But of course doing so may bring additional costs and complexity to supply chains. That is why Customers need to be flexible in terms of routing, as well as equipment (when a specific type of container is in short supply at origin), while always factoring in additional transit time in their planning.

Q: What goals does Sparx aim to achieve by the end of 2022?

A: This is a very competitive industry because there are so many players, large and small. Our goal is first and foremost to gain the trust of our customers, by ensuring top-notch service levels and always being very transparent and clear about what can and cannot be done. We will never promise something we cannot deliver. Our goal is not to be the largest player but the most reliable and trustworthy partner for our clients, especially on the transpacific trade. By doing so, I am convinced that we will increase our presence in the market and attract more and more customers.

Sparx Logistics, established in 2014, provides cutting-edge systems and superior services from its 50+ offices in over 20 countries