The global supply chain has been disrupted by unprecedented issues in the last several years: a global pandemic; increased political tension, which has led to attacks on ships; droughts; port congestion; and accidents are just a few.
The current shortage of containers at Chinese ports and the rising demand for goods has created yet another challenge. Although port congestion in Singapore is easing, Asia to the EU and Asia to North America freight rates have soared beyond levels of the surge seen during the peak of the Red Sea crisis.
For example, spot rates on the Asia-to-Europe trade lane since the beginning of the Red Sea crisis reached around $3,713 per twenty-foot equivalent unit (TEU) compared to $2,813 per in February, a 32% increase.
On the Asia-to-North America trade lane, spot rates reached around $5,120 in June per TEU as compared to $4,283 per TEU in January, an increase of 20%.
The ongoing and growing uncertainty in freight costs demand that shippers be agile when planning their supply chains.
How businesses can navigate these turbulent times
In today’s business climate, companies can stay ahead of their competition through proactive - rather than reactive - measures when it comes to their supply chain. This will provide insights into reasons for delays and enable them to act in real-time to circumvent additional issues.
Visibility in real-time. By monitoring shipments in real-time, businesses can be proactive in minimizing anticipated disruptions and make data-backed decisions.
For example, a UK-based supplier needed better visibility into its shipments; about 30% of their total shipments were delayed, and sought a more effective method to plan and track imports and manage inventory. By automating its system, the company ensured end-to-end visibility of its 2,500 containers and enabled timely deliveries to - and a better experience for - its customers.
Predictive insights. Data provides businesses with necessary insights that enable them to circumvent shipping issues. This allows them to maintain production schedules, enhance inventory management and reroute ships when necessary.
For instance, by utilizing predictive ETAs, one of the largest food companies in the Philippines accurately planned raw material inventory and production schedules amidst geopolitical disruptions. The system learned from disruption data sets to accurately predict ETAs through the Red Sea as well as congestion issues at various Southeast Asian ports, helping them navigate those delays. Insights into carrier analytics helped the company make better service partner decisions and ultimately deliver on time.
Notifications, support and alerts automated. Proactively mitigating potential delays and changes to arrival times via automated alerts gives supply chain professionals a visibility advantage. Thus, they are empowered to maintain ongoing communication with customers; and increase trust and confidence in the company.
A North America-based international brand had to coordinate operations with seven co-manufacturers and more than 160 monthly shipments. Each manufacturer had complex, manual processes for various shipping lanes, limiting the brand’s visibility into detention costs, document delays and vendor bottlenecks. To counter this, it established dynamic workflows and teams based on Incoterms; common lanes and forwarders with automated due date alerts; and shipment tracking capabilities. Thus, the brand’s customers and distributors receive notifications about completion of steps and arrivals.
Navigating ongoing global supply chain disruptions
A result of the ongoing disruptions are delays in shipping, increasing costs and issues with inventory. However, predictive insights offer ways for businesses to minimize loss and increase operational efficiencies.
Delays in shipping. Shipping delays during a crisis are inevitable. However, businesses can proactively plan to increase production schedule efficiencies and mitigate potential losses with predictive insights.
Increasing costs. Circumventing rising costs is critical to a business’ bottom line, especially when those costs have increased by up to 25%. Tools that offer real-time visibility enable the tracking of shipments, providing necessary insights that support decisions to minimize the impact of rising costs.
Inventory issues. With production schedules affected by delays, inventory issues have increased. However, predictive analytics provide insights that can be used to better plan production schedules, thereby further minimizing disruptions.
The takeaway
International businesses have seen significant disruption to their supply chains in recent years due to a variety of factors. However, the right mix of tech-based solutions fosters a leg up on the competition, can improve customer satisfaction and reduce risks.
