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4 The Journal of Commerce | Januar y 7 2019 www.joc.com 2019 Annual Review & Outlook Editor's Note Mark Szakonyi FOR US SHIPPERS and transportation providers, so much of 2019 is uncertain and uncontrollable, on both the micro and macro levels. Will China and the US reach a trade deal? Will the US enter an economic slowdown or recession? Closer to the highway and on the ocean, plenty of uncertainty awaits the freight indus- try. Will carriers be able to fully push to shippers the higher costs of meeting the global low- sulfur fuel mandate, which becomes effective on Jan. 1, 2020, but is impacting contracting now? Will trucking companies be able to press through even higher rates, or will shippers win back some pricing power? All are pressing questions, but shippers and transportation providers deal with the "knowns," and supply chains don't run smoothly by waiting for answers to appear. It's why this year's Annual Review and Outlook is so infused with forward- looking declarations on what the industry can expect. You'll find that in the news analysis, export perspectives, and executive commen- taries. Equally important, you'll read about how shippers and transportation providers are inno- vating to succeed in a changing landscape. That appetite to do things differently and take a tighter rein of the factors one can control resonated in a December conversation with three logistics managers — as did the frustration. As David Pearlman, vice president of logistics and inventory management at disposable medical products provider Welmed, noted on low trans- Pacific ocean reliability and murkiness on inland moves, "You have to chase for everything, and not having that level of support on the ocean side is very frustrating. It's difficult to get accurate, transparent information about not only units in transit but certainly with what's going to happen with my bookings two or three weeks out, more or less two months out." (Story, page 8) For the sake of accurate and transparent information in this industry, here are a few certainties shippers and their transportation providers can bank on for 2019: l Tough trans-Pacific service contract negotiations. Yes, they're tough every year, but throw in the low-sulfur mandate, shipper frustration with having to shell out premiums to get slots during last fall's peak season, and signs of increasing capacity management by carriers, and you have a recipe for some tough, multiple rounds of back-and-forth negotiations. (Story, page 30) l Tight US truck capacity but not 2018-tight. Just as shippers won't see the same pace of shrinking truckload capacity as they did last year, the spot and contract gains will pale in comparison. Prices will remain high, though, compared with 2017 or 2016. The balance is shifting in the less-than-truckload market, with regional carriers expanding their networks. On the drayage side, don't be surprised if some carriers start expanding as they look to inject value beyond Point A-to-Point B ocean shipping. (Story, page 92) l Growing allure of in-house and dedicated/contract capacity. Online retailers such as JD.com and Amazon will beef up their in-house air cargo capacity, a reflection less of their drive to disrupt transportation and more about an effort to guarantee delivery for impatient customers. Similarly, US truck- load shippers may feel less pain related to strained capacity, but the draw to lock in capacity by having their own fleet or moving more toward longer-term rate agreements will only grow. l Bolder moves of container lines to inject value. The first wave of carrier efforts to inject more value into their systems has been modest, from Maersk Line and CMA CGM offering confirmed bookings to APL's expansion of its guaranteed services. Expect bigger strides this year, as the divide becomes more apparent between supply chain management-focused and port-to-port carriers. l Awakening of maritime regulators. Stirred by complaints of Asia subsidies in container shipping and shipbuilding, European regulators are set to come out swinging. US regu- lators aren't wading in with fervor, but the first reworking of the US Shipping Act since 1988 put the US Federal Maritime Commission on the hook to report annually to Congress on the power of shipping alliances. l Lessened priority of Blockchain. While executives gush on the potential for Blockchain to transport container shipping, they privately raise doubts not just about whether it will gain critical mass to move beyond proofs of concept and pilots, but even if the technology is the right solution. With less of a glaring spot- light on the Blockchain buzz, some viable value creation for shippers around Blockchain might emerge. JOC What we know "You have to chase for everything, and not having that level of support on the ocean side is very frustrating."