By Michael Coughlin and JJ Van Aman
The global trade system has never contended with anything quite like the Coronavirus.
The pandemic has triggered inflation across the supply chain from labor to raw materials, forcing corporate America to raise prices of everything from burgers to hoodies. However, hit by higher freight expenses, many companies still cannot fully offset the impact on their profits.
Canada’s trucker protesters blocked the 92-year old Ambassador Bridge between Detroit and Windsor, Ontario demanding an end to Canada’s vaccine mandate for truck drivers, prompting Ontario province to declare a state of emergency, and auto companies to resort to costly air freights for crucial parts.
https://www.statista.com/chart/25960/supply-chain-disruption-index/
This untenable situation is a stark reminder that the supply chain discussion isn’t just about the ports in LA-Long Beach. In fact, trade channels in general, have become so clogged it could be well into next year before the worst-hit industries see business remotely as usual – even assuming that a new turn in the pandemic doesn’t create fresh havoc.
As reported by Reuters, Jens Bjorn Andersen, chief executive of transport and logistics group DSV, said the dislocation had been so complete that, whatever emerges, the sector will not look the same as it did before COVID-19.
And supply chain analyst Sea-Intelligence said the current logjam had no precedent but past experience suggested it would take 8-9 months for port and hinterland networks to recover. “In addition, the market is showing no indication that we have started on the path to resolution,” Sea-Intelligence CEO Alan Murphy said in an analysis of current trends compared to past data on average vessel delays caused by disruptions.
The supply chain has been so dramatically dislocated, food industry leaders predict that it won’t be until 2024 when longer than usual transit times, backlogs, and congestion find balance and inbound shipping delays subside, at which time we could return to a normal environment.
While we have yet to learn its duration, or what additional variables may come into play compounding these risks and disruptions, the purpose of this article is to offer some ideas to mitigate some of the disruptions and subsequent losses.
There are many ways shipping management can overcome these challenges and remain adaptable but not without having a thorough analysis of their shipping capacity issues you have faced, or may yet face.
ANALYSIS
Capture the data
If you have an ample amount of data to analyze, then you have ample opportunity to avoid potential issues. Utilizing multiple data streams that offer real-time or near-real-time information about trends, cycles, and process is a must. There are companies that offer this service to help reduce demurrage costs, optimize your logistics process, increase cargo security, as well as monitor cargo condition and quality in real-time.
Analyze shipping data from End-to-End
End-to-end monitoring is critical not only for better preparation but also to strengthen the supply chain to make it more reliable and scalable. Predictive algorithms are playing a big role in the evaluation of food supply chains. Thorough analysis can also determine inconsistencies that may otherwise go unnoticed, which is crucial in saving time, money, labor, and resources.
Track costs and freight payment
Keeping a real-time tracker of costs and expenses can make space to pivot as necessary to avoid shipment loss. Again, there are companies providing this service or applications and/or software to help provide accurate scheduling, as well as real-time data to assist you with a successful and timely handoff of cold food goods.
ADAPTATION
Re-evaluate fulfillment models
Today’s uncertain market requires adapting to changes rather than sticking to the traditional process. It may be time to get creative with your company’s fulfillment model to facilitate success and avert serious loss. Are omnichannel and/or micro fulfillment models a viable option for your company? Have you evaluated the benefits of a partnership with a flexible warehousing platform?
Diversify Carriers
Consistently review and add to your list of vetted carriers. The more carriers of choice you have access to, the faster you can pivot as issues arise. Uber Freight, for example, offers one-touch booking at fixed rates while offering real-time pricing and capacity. Some companies have also opted to start their own trucking companies.
Diversify import locations
Moving from one importer to another during capacity crunches may be more costly, though one can avoid a total loss of their shipment, in addition to the time and money already spent if the issue isn’t quickly averted. For instance, some shippers have recently re-routed their shipments from the Port of Long Beach to the Port of San Diego—more costly than usual, but they were able to avert a total loss because their cold food supply arrived in good condition.
Leverage zone-skipping services and local deliveries
Optimize your network and streamline delivery routes by taking advantage of last-mile, local, and zone-skipping options. You can enjoy lower costs by skipping the cross-direct shipping across multiple zones by using less-than-truckload and full-truckload shipments into the “last mile of delivery.” Having adaptive delivery and shipment plans to meet modern trends is a necessity. Using multi-modal transport options may also help if you ship large amounts of cold freight on a regular basis.
Despite high hopes and lifted lock downs, the food supply chain will remain at risk until further notice. Current projections report shipping delays and disruption through 2022, and likely into the first quarter of 2023. Looking ahead by conducting a thorough analysis of real-time shipping data from end-to-end while tracking costs and freight payment can provide actionable insights to avert crisis and/or loss of shipment altogether. Shippers can prepare for disruptions and supply chain issues with predictive planning through software or specialists in the industry offering this service. This practical step can save a lot of time, money, labor, and resources.
The uncertainty of these times requires an in-depth, consistent model of data analysis to swiftly pivot and adapt to the challenges unique to the food chain supply. An abundance of data will help you adapt in meaningful and calculable ways to mitigate the threats to both the food supply chain and most importantly, your company’s bottom line.
Michael Coughlin is CEO and JJ Van Aman is Vice President Sales, Coughlin Insurance Services, Inc. a major provider of specialized insurance services to the food industry. Michael and JJ have been subject matter experts and trusted advisors to the food industry for over thirty years. To connect email Michael Coughlin michael@coughlinis.com or JJ Van Aman at jj@coughlinis.com.
Citations:
Brinks News, “Supply Chains in 2022: Shortages will Continue,” Published January 11, 2022, https://www.brinknews.com/supply-chains-in-2022-shortages-will-continue-for-some/
U.S. News, “Glimmers of Hope for the Supply Chain Shortage But Americans will Have to Be Patient,” Published January 27, 2022, https://www.usnews.com/news/economy/articles/2022-01-27/glimmers-of-hope-for-the-supply-chain-shortage-but-americans-will-have-to-be-patient
Food Logistics, “Keeping Supply Chain Threats at Bay: Ensure Supply Chain Visibility,” Published February 18, 2022, https://www.foodlogistics.com/safety-security/risk-compliance/article/22043408/partnerlinq-keeping-supply-chain-threats-at-bay-ensure-supply-chain-visibility
PLS Logistics Services, “Multimodal Transport: What is Multimodal Shipping?” Published February, 2022, https://www.plslogistics.com/blog/multimodal-transport-what-is-multimodal-shipping