Analyst Insight: Fewer lockdowns may make it feel like the pandemic hardships are behind us. But several forces continue to strain supply chains, from congested ports and chassis shortages to geopolitical uncertainty, rising fuel costs and possible labor strikes.
To manage costs and risks amid this lingering volatility in 2023, shippers will need more resilient supply chains — and can build them with lessons learned over the last three years of disruptions.
In addition to those that continue to slow shipments, factors like ever-changing compliance requirements, pressures to improve sustainability and the potential for new tariffs are adding further cost and complexity to global supply chains. It’s no surprise, then, that the supply chain has become an integral part of strategy and budgetary planning at the C-suite level.
Shippers that want to protect their shipments from today’s top risks — and put minds at ease in the C-suite — can do so by strengthening their supply chains with the following actions:
Building in sufficient lead times. Ocean capacity may be opening up, but it’s still not guaranteed. Meanwhile, congestion and drayage challenges continue to slow container movement in and out of ports.
Given this potential for delay, shippers should increase lead times by at least four to six weeks for ocean shipments. The added time can give them more carrier and port options to work with, and allow them to plan drayage activities further out to help reduce the impact of chassis and driver shortages.
Taking a holistic view. Real-time supply chain visibility can help shippers monitor shipments across all modes and regions, and see whether those shipments are trending toward committed delivery dates. It can also help shippers monitor and quickly react to delays and disruptions as they happen.
Of course, even better than knowing what’s happening is knowing what’s potentially going to happen. With the right data and artificial intelligence capabilities, shippers can predict incidents such as severe weather events, capacity shortages or congested ports, then proactively plan for them to mitigate their disruptive impacts.
Diversifying the carrier base. In addition to contending with ongoing supply chain chokepoints, shippers today must be mindful of activity like geopolitical strife that can impact shipping routes and costs at a moment’s notice.
Shippers can reduce their exposure to such risks by diversifying their carriers. For example, making sure all carriers aren’t based in just one region can help protect shippers against congestion and geopolitical risks in that part of the world. And shippers that have historically used a one-carrier approach should consider using non-vessel operating common carriers (NVOs) or freight forwarders, so they can transfer shipments across carriers when capacity becomes limited.
Improving inventory management. Inventory shortages and empty shelves at the start of the pandemic have led to excess inventory problems today.
The past few years have shown shippers the heightened importance of managing inventory based on economic indicators like sales. Doing this will require using data to identify the trends between inventory and sales. Shippers that don’t have this capability in-house should look to a partner with supply chain engineering capabilities and experience in assessing, forecasting, predicting and solving these types of challenges.
Outlook: It wasn’t long ago that shippers would plan international supply chains primarily around the rates of shipping from one port to another. But today, supply chains and the risks to them are more complex. In 2023 and beyond, shippers will need a more holistic view of supply chains, as well as a more planned and diversified approach to keep shipments moving across the globe without delay.
Timely, incisive articles delivered directly to your inbox.