C.H. Robinson reveals costly transportation and logistics trends that are adding to budgetary challenges for US states in need of coronavirus PPE.
The hurdles are being exacerbated by US-wide reopening strategies which are driving further demand for PPE in the US, along with other countries which are progressively in greater need as well.
“COVID-19 has created unprecedented logistics challenges across the global supply chain when the rapid movement of PPE is more essential than ever,” says C.H. Robinson CEO and president Bob Biesterfeld.
“With our teams based all over the world, including over 20 offices in China, where the majority of PPE is sourced, we are tracking regulations that change weekly and leveraging our vast network to help our customers strategically manage the mounting risks the pandemic has presented.”
Increased demand for PPE, the proliferation of counterfeit products, enhanced FDA regulations of medical supplies, rapidly evolving customs compliance guidelines, and a sharp drop in passenger aircraft capacity have all contributed to a number of trends.
These trends include:
- Supply chain disruption: Over 90 per cent of internationally-sourced PPE shipments have been disrupted in some way;
- Compliance issues: Cargo inspection rates of PPE out of China have dramatically increased, lengthening the average waiting period prior to transportation from three hours to 2-3 days. Additionally, there are increased import customs delays and shipment refusals happening across the globe;
- Longer transit times: Normal delivery time for air freight from China to the US has doubled or tripled from 4-6 days to 8-14 days;
- Higher transportation costs: The price of expedited shipping out of China for PPE has gone up to 3-4 times the average (and at times, as high as 8-10 times the average) amid unprecedented global demand all hitting at the same time;
- Other rising costs: Increased commodity prices (e.g., the price of face masks has increased 2-5x the average) and transportation disruption are creating the need for more cargo insurance policies and at higher rates.
Navigating these trends effectively has been key for the state of Minnesota who leveraged C.H. Robinson which highlights the fact it is “known for its global supply chain expertise, advantage of experience, data, and scale, and reputation for being a strong partner in times of crisis, to be the transportation and logistics leader on the state’s task force.”
To date, C.H. Robinson has helped saved the State of Minnesota more than USD 1.0 million in transportation costs associated with procuring more than 72 million pieces of PPE, including face masks, eye protection, gloves, gowns and N95 respirators.
“C.H. Robinson’s global expertise and scale provided the state with critical logistics and supply chain assistance that reduced the transportation costs and time needed to secure PPE needed for frontline healthcare workers,” adds Wayne Waslaski, the State’s project manager for the Critical Care Supply Team.
As a major freight forwarder from China to the US, C.H. Robinson was able to take action, while leveraging its full suite of global services including customs, air, ocean, and surface transportation expertise, to ensure essential PPE was moved as quickly and inexpensively as possible for the State of Minnesota.
- Leveraging C.H. Robinson’s expertise and scale to secure better rates and reduce transportation costs by at least 25 per cent;
- Optimising dollars spent across air, ocean, and surface transportation modes, including at times, breaking up freight to get the most urgently need supplies to the state quickly, while finding cheaper transportation options for less time-sensitive supplies;
- Consulting on transportation strategies and deploying innovative solutions, such as selecting a ‘fast boat’ over air freight to deliver an order of surgical gowns, which saved USD 500,000;
- Deploying smarter solutions that seamlessly connected expedited ocean service with C.H. Robinson’s contracted truckload network, the largest in North America, shortening delivery times by 10-12 days, to get needed PPE faster for the state;
- Helping the state avoid shipment delays, refusals and fines by providing expert guidance on CBP and FDA regulations to ensure requirements are fulfilled before shipment departure;
- Providing local expertise on the ground globally, which included providing real-time information on regulatory changes in India that allowed the state to make smarter, faster decisions on where to source surgical masks;
- Offering real-time visibility via Navisphere, C.H. Robinson’s proprietary global multimodal technology platform, enabling near real-time tracking of million-dollar truckloads of supplies purchased by the State of Minnesota to ensure timely and safe delivery.
“At C.H. Robinson, we remain focused on the important role we serve to provide continuity in the global supply chain – especially in this time of crisis,” Biesterfeld says. “We were honoured to lend our global expertise, network of local experts around the world, and technology to help the State of Minnesota navigate the complex global logistics system and optimise their budget at this critical time.”
C.H. Robinson is a member of the volunteer Minnesota Task Force that brought together government and private organisations to supply personal protective equipment (PPE) for the state.