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LSPs need to up their game to remain relevant to dynamic supply chains

Today we offer the second in our two-parter on dynamic supply chains. Following yesterday's look at things from the BCO perspective, we're considering the lay of the land from the LSP angle. Enjoy. Logistics services providers (LSPs) have been a permanent feature on the list of endangered species for decades, so it is hardly surprising that that advance of AI and the prospect of dynamic supply chains has again raised the spectre of their demise, with AI poised to make all the decisions and come up with the all the viable options to rescue a stray shipment or change suppliers. However, technology providers are planning for LSPs to remain in the picture. "They're not going out of business," said Brian Glick, CEO of supply chain orchestration provider Chain.io. LSPs make up about 70% of the firm's clientele. Typically beneficial cargo owners (BCOs) rely heavily on their LSPs for visibility of their supply chain. According to one study, more than 40% of supply chain executives at BCOs lack visibility beyond their tier-one suppliers. LSPs have installed features on their websites that give clients real-time visibility of their shipments, some with predictive alerts about potential hurdles on the way. Eric Rempel, chief innovation officer at Redwood Logistics, sees room for LSPs to up their game in order to remain relevant to their clients as they move to change their supply chain management. "Providers will need to bring more than transportation capacity, consulting advice or a standalone technology platform. They must be able to connect heterogeneous systems and partners, create a shared operational picture, help customers make decisions, and then coordinate execution across the physical and digital supply chain," he said. "Ultimately, the winning providers will combine technology, operational expertise, and continuous improvement. They will not simply tell a customer what happened or predict what might happen. They will help the customer decide what to do, execute that decision and continuously improve the network based on the outcome." Given their pivotal role at this stage of the game, it makes sense for BCOs to involve their LSPs from the outset in their quest to transform their supply chain, especially if the relationship is a real partnership, Mr Glick thinks. Mr Rempel sees the role of the LSP changing during the process. In the early stage, the ability to automate processes like quoting, scheduling appointments, tracing, and providing updates with the help of AI is important. They can also provide input what areas of their supply chains clients should invest in and what the ROI would look like, he believes. Down the road the LSP's particular expertise and how it fits with the customer's objectives becomes more central, which can lead to the development of services that are currently not in the pictures, he said. Naturally the involvement hinges on the role of the LSP for the BCO. The 4PLs are more suitable to help with supply chain orchestration and the development of capabilities to mix and match providers, while a more traditional forwarder would be more likely to be involved in setting up execution capabilities, he noted. "The question is: can you help analyse my network, do you understand the transformation we're doing from our business model perspective, where we're going, and how can you help us down that journey?" he said. While this suggests a high degree of involvement and integration, LSPs must also remain open and neutral, "because no single provider or platform will own every component of a customer's network," he pointed out. The concept of a dynamic supply chain implies a high degree of automation. At this stage, BCOs are overwhelmingly focused on using AI and orchestrating their supply chain to generate better insights, to enable more efficient operations rather than create autonomous systems that can decide on solutions and execute them. Nevertheless, automation is looming large, Mr Glick noted. He views the advance of automation and concepts, like dynamic supply chains, as a natural progression of making more and more judgement calls as an outcome of the availability of technology at viable costs. "The actual automation of these complex decisions is getting cheap enough that the logistics providers need to provide that kind of service, because otherwise, economically, they're going to be replaced by software companies," he noted. "Tasks that can be automated will be automated - through traditional workflow automation or agentic AI," added Mr Rempel.

Africa-LatAm trade on the up - but is mainly one-way traffic

Brazilian forwarders appear optimistic about the way trade opportunities are shaping up in Africa, and it seems there is certainly an appetite on the other side of the Atlantic to foster stronger relations. However, desire notwithstanding, this has yet to translate into hard volumes. Latest data from Container Trades Statistics (CTS) indicates that after a strong start to 2026, volumes headed from Latin America to Sub-Saharan Africa have proved less consistent, with June figures down 4.6% year on year. Asked if they were concerned by the numbers, forwarders told The Loadstar Brazil painted a far better picture, one noting they shipped "more than 3,000 containers a month" of sugar on the routing. "This is an ongoing deal and we are moving that amount every month for the entire year. The problem we're having is that space is always a challenge due to being over-weight, but it is a firm business." The June blip follows a May in which LatAm-Africa volumes climbed 8.6%, year on year, which in turn followed a 10.2% April downturn. "Part of it is the war in Middle East and all the uncertainty," a source explained. In the other direction, June's Sub-Saharan Africa-LatAm volumes may have jumped 4%, but from a far lower base, hitting 2,700 teu, compared with the 37,500 teu that moved Latam-Africa in the period. "We don't really see much coming back," said a LatAm-based forwarder. Given its economic heft, sources said it was interesting to note that South Africa "still" had a "massive trade deficit" with Brazil, but one pointed out that efforts were being made to reduce this as part of the two countries' efforts to foster greater trade between them. And there are improving connections, with Latam Airlines having started a thrice-weekly Cape Town-São Paulo service, offering additional capacity for those looking to ship between the two countries.

Full Asia-Europe return to Suez would reverse head-haul demand growth

A full return to Suez Canal routing could result in an 8.7% year-on-year contraction in global head-haul container demand during the first half of 2027, despite underlying cargo demand continuing to grow. According to Sea-Intelligence's recent analysis, 19% of Asia-Europe capacity is now transiting the canal, following moves by Maersk, Hapag-Lloyd, and MSC. French carrier CMA CGM has also returned selected sailings to the canal, along with smaller operators, including Fesco and CU Lines. Maersk and Hapag-Lloyd followed with two Gemini services between Asia and the Mediterranean. Maersk has also shifted its Middle East-US east coast MECL and West Africa-Middle East WAF6 services back to Suez routings, and MSC has announced the return of four services, Jade and Tiger Asia-Med, Albatross Asia-North Europe and the Himalaya Indian subcontinent-Mediterranean. Sea-Intelligence said the Red Sea crisis that began in December 2023 generated a substantial increase in global container demand when measured in head-haul teu-miles, helping underpin the strong carrier market through 2024 and beyond. Restoring shorter Suez routings reverses that effect. Assuming underlying demand growth remains at the average of the past 12 months - 6.6% year on year - Sea-Intelligence has modelled several scenarios. The first is that if the current 19% Suez shift is the only change, global head-haul teu-mile demand growth would slow to 3.8% year on year in the first half of 2027. Next, if 50% of services returned to Suez between August and December, that demand would contract by 1.1%. And if all head-haul services revert to Suez by the end of the year, global head-haul container demand would fall 8.7% year on year in the first half of 2027. Sea-Intelligence argued that a full return was the most realistic scenario, if Suez routing proved operationally safe, as carriers maintaining services around Africa would continue to pay higher costs for longer transit times. However, the analyst expects some Europe-Asia back-haul services to continue routing around Africa, both for cost reasons and to absorb capacity. But it stressed that market strength would be determined by head-haul, rather than back-haul, demand. "In the absence of such a new escalation, the math is quite straightforward: We will see negative demand growth in 2027, even if the underlying teu-miles head-haul container demand remains strong. "This is purely an effect of shortening distances," Sea-Intelligence concluded.