Remember when the world ran out of everything?
In the first years of the COVID-19 pandemic, skyrocketing consumer demand and labor shortages led to empty shelves around the world. Mishaps like the Ever Given container ship blocking the Suez Canal wreaked even greater havoc on global supply chains. IHS Markit found that shipping delivery times in late 2021 were significantly slower than in the entire previous decade.
By late 2022, as both demand and labor issues eased, shipping times returned to normal.
But recent unrest in the Middle East has pushed shipping times back up in 2024. As ships reroute to avoid danger near the Suez Canal, J.P. Morgan reports that transit times have increased by 30%. At the same time, online sales remain strong, with sales for nonstore retailers up 6.4% from a year ago.
Is another “everything shortage” looming? Some signs point to yes — but our industry is much better prepared this time around. We know how important it is to plan for possible disruptions, and we have exciting new technological capabilities that enable us to strategize and adapt.
Here’s how shippers can leverage technology to develop master plans to withstand the unexpected.
Prepare for Disruption with Master Planning
If our industry has learned anything over the past four years, it’s that disruptions will always happen. Pandemics, war and natural disasters are impossible to anticipate.
Because of that, we’ve also learned the importance of master planning in our supply chain strategies.
Master planning is about more than just determining schedules and routes — it’s about creating a long-term approach that allows for inevitable disruptions, big and small. It involves developing lasting relationships between shippers and carriers that provide certainty in an unpredictable environment.
For example, it’s one thing for a shipper to develop an inland freight plan and determine product prices according to the cost of shipping at that time. But shipping rates can fluctuate massively in the short term due to uncontrollable and unforeseeable factors. Master planning enables shippers to account for potential fluctuations. This might involve working with carriers to lock in rates up front (avoiding the spot market) or it might involve nearshoring to minimize your overall shipping costs.
Master plans also involve planning for potential disruptions before they happen. Shippers that rely heavily on specific routes are exposed to potential costs and delays if those routes become unavailable. An effective strategy might include a contingency plan that provides alternate routes and transport modalities.
However, master plans are only effective when you can quickly identify and adapt to unexpected issues. This is where technology comes in.
Technology is Your Most Powerful Ally for Master Planning
Effective master planning provides certainty while allowing for flexibility. It requires visibility and connectivity — which are challenging in the highly-fragmented freight industry.
To get products from origin to destination, a shipper manages a wide variety of partners. From full truckload (FTL) and less-than-truckload (LTL) providers to freight consolidators to drayage, inland freight is extremely complex. Shippers bear the burden of figuring out the best way to move cargo while minimizing costs and maximizing customer satisfaction.
Technology can help shippers gain a comprehensive view of this disorganized process, but not all platforms are created equally. Many vendors focus on a narrow part of the market or offer a single capability.
This isn’t necessarily a bad thing, but it’s critical to make sure that your technology is open. Each tool should integrate with your other tools, and your planning platform should be able to connect to all of your APIs. You must be able to understand all moving parts in real time, from procurement to capacity to consolidation and beyond.
Fortunately, interoperability is becoming more common in shipping technology. More technology vendors are building their platforms with openness in mind, and many carriers now provide APIs that shippers can integrate into their planning process as well.
Another exciting area of progress in technology is artificial intelligence (AI). AI offers many benefits for master planning in terms of both preparing for an unpredictable environment and adapting to change.
Some of the most promising use cases for AI in master planning include:
Improving data and forecasting so we can use historical experience and market data to more accurately predict what will happen in the future
Helping plan more efficient and cost-effective routes (for example, by minimizing fuel consumption)
Enabling a faster and more data-driven matching process between shippers and carriers
Maintain Your Competitive Advantage with Master Planning
Shipping is a key determinant of business performance. Done well, shipping can provide extraordinary competitive advantages, but poor shipping practices can negatively impact a customer’s impression of a company.
Fortunately, the first “Everything Shortage” taught us valuable lessons about preparing and adapting to disruption. With the benefit of hindsight — and increasingly sophisticated technology — shippers can develop master plans that help supply chains run smoothly, no matter what is happening in the world.
