C.H. Robinson, one of the world’s largest logistics companies, and a member of the volunteer Minnesota Task Force that brought together government and private organizations to get personal protective equipment (PPE) for the state, has revealed costly transportation and logistics trends that are adding to budgetary challenges for states in need of PPE, especially as they deploy reopening strategies.
“Covid-19 has created unprecedented logistics challenges across the global supply chain when the rapid movement of PPE is more essential than ever,” said 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 the following trends:
- Supply chain disruption: Over 90% 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 3 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 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 $1 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,” said Wayne Waslaski, the State’s project manager for the Critical Care Supply Team.
As the number one 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, largely produced in China, was moved as quickly and inexpensively as possible for the State of Minnesota.
“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 said. “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.”