Take stock of the supply chain – Inside INdiana Business
We are all feeling the impact of supply chain disruption and unfortunately no one can predict a return to normal. Although it sounds frustrating, businesses that rely on imports and exports should control what they can now by planning supply chains for unforeseen circumstances. What does that mean? Here are six supply chain audit questions.
Supply chain disruptions range from normal events to global pandemic. While we’re on the subject of planning, what are “unscheduled disruptions” in shipping plans?
- Time. Mother Nature has always played a role in disruption. It’s typhoon season in the Asia-Pacific region, and July kicks off hurricane season in the Caribbean and the US East Coast. During the polar vortex years ago, it was so cold that trucks in Chicago weren’t running due to the potential for the gas to freeze.
- Truckers. Speaking of trucks, the demand for trucks, truckers and chassis was a challenge before the pandemic. The shortage has been exacerbated by port congestion and continued demand for trucks. We’ve all seen the headlines touting Wal-Mart hiring truckers for six-figure salaries.
- Virgin crossings. Void Sailing, sometimes referred to as Void Sailing, occurs when an ocean line service operator decides to cancel a call or skip a port, region, or possibly an entire leg on the planned route. Think of it like commercial airlines. Sometimes flights are cancelled, delayed or forced to land elsewhere, or passengers are evicted due to overbooking.
- COVID-19 In Asia the largest port city is Shanghai which experienced a two-stage lockdown in April This has impacted manufacturing and port operations throughout the region Some lines are chosen to skip the region’s ports in April These waves of COVID-19 will continue[FEMININEEnAsielaplusgrandevilleportuaireestShanghaiquiaconnuunverrouillageendeuxétapesenavrilCelaaeuunimpactsurlesopérationsdefabricationetportuairesdanstoutelarégionCertaineslignesontchoisidesauterlesportsdelarégionenavrilCesvaguesdeCOVID-19vontsepoursuivre
- Conflict in Europe. The Russian-Ukrainian war has the potential to seriously disrupt shipping and air cargo. Russian forces are cutting off shipping routes, logistics companies are suspending services and air freight rates are skyrocketing.
The reality is that manufacturers and people working in the freight transportation industry have no control over the disruptions described here. Yes, it’s frustrating, but it’s important to think about what can be done to avoid disruption when planning. We ask a series of questions that you can borrow:
Are foreign suppliers locked into a single preferred forwarding partnership?
If the answer is no, ask to expand partners and make recommendations. Prior to 2020, exclusive partnerships were driven by pricing, which is no longer the driving factor of relationships. Now the deciding factor is who has space to reserve. More partners translates to more access to shipping space so reservations are confirmed.
What are the port options for shipments?
If you are unsure, ask for the overseas partner’s shipping options. The decision to use a different port may increase the initial cost. But that cost can turn into an advantage by mitigating unforeseen shipping issues that arise due to disruptions. For example, during the Olympics in February, shipping via Qingdao was more efficient than Xingang.
Can expeditions be diversified between alliances?
There are three global steamship alliances controlling nearly 85% of the market. The structure gives carriers control of pricing by sharing the cost of decommissioning (launching) ships within the Alliance to match capacity with container demand. Diversifying shipments into two or three of the networks can be advantageous to avoid the blank bottleneck.
How is your product loaded into the container?
The way a shipment is loaded can increase the overall shipping cost and cause delays. Require the supplier to palletize the goods. The low added cost has a huge advantage. The loading of containers on the ground is done by hand, one by one, which increases the cost of labor. Goods loaded via pallets or transhipped means that goods are loaded and unloaded using forklifts at a lower cost and at a faster pace.
What port will the supplier use to enter the United States?
Port infrastructure is essential to the movement of shipments. Not all US ports can accommodate large steamships, nor do they have the necessary rail and road systems. We have all heard of the ship jams on the west coast. Many supply chain professionals have chosen to bypass LA/Long Beach by routing goods through the Panama Canal to an East Coast port. Although this route takes longer, the cargo is not left in a sea of ships waiting to dock and unload.
How is the product shipped within the country?
In the Midwest, there are several rail ramp options. Chicago is the epicenter where rail lines converge and shipments are loaded onto trucks. Rail stations are also available in less congested cities, including Indianapolis, Indiana; Cincinnati, Cleveland, Columbus and North Baltimore Ohio; Louisville, Kentucky; Detroit, Michigan; and St. Louis, Missouri. Diversifying incoming inventory through more than one rail ramp can ensure prompt delivery of product.
It will take some time for port congestion problems to dissipate. We can’t control disruptions, but we can focus on what we can control by asking questions and making the best decisions before a shipment leaves port for its final destination.
Jefferson Clay is director of global sales for Cargo Services, a freight forwarder headquartered in Indianapolis. Independently owned and operated company partners with companies in the Midwest to provide import and export services by land, sea and air, as well as customs brokerage, warehousing and distribution services .