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The past year has opened the door to many risks—and response strategies—that supply chain leaders must now keep top of mind when making critical inventory, demand, logistics, and pricing decisions.

STOCKPILING AND DEMAND VOLATILITY

A wave of organizations took up the practice of stockpiling over the past year to mitigate demand and offset transportation shortages and rising prices. However, this practice can often create more headaches than it alleviates. There are costs associated with stocking extra inventory, which may very well end up being passed on to the consumer.

In this scenario, supply chain leaders should look to a more active approach to demand management to help mitigate excess inventory and avoid passing added costs on to the consumer. Identify the demand signals that are critical to your business—whether raw point-of-sale data, social sentiment, or socioeconomic data—and then align on the actions you can take to actively shape demand to account for your increased inventory.

The challenges of the past year have also demonstrated how reliant organizations across industries are on a well-run ecosystem of suppliers, manufacturers, and logistics providers.

This ecosystem is often a global one, and while that can help with supply chain diversification, it can also lead to bottlenecks and disruptions—from tariffs and political negotiations that impact trade routes, unplanned weather events, or COVID flare-ups that can lead to factory or border closures, or temporary reduction of capacity.

Supply chain leaders can better prepare for unplanned disruptions by embedding more agility and visibility into their global ecosystem. Leveraging end-to-end supply chain management technology to share data across the supply chain in real time can help replan if downtime hits a supplier, or a factory is closed in a region. It is easier to change course on the fly, mitigate potential risk, and drive forward.

FREIGHT AND LOGISTICS

While it may have worked in the past, making assumptions at the beginning of the year about freight capacity, driver and warehouse availability, or associated costs, is no longer an option. Instead, supply chain leaders are tasked with navigating increases in shipping volume and diesel prices, a capacity squeeze, and a driver shortage—and that doesn’t account for unplanned disruptions.

Strong forecasting capabilities can help supply chain leaders more accurately predict their freight needs, and when combined with real-time visibility, can help make trade-off decisions to expedite or change lanes. They can also use more accurate forecasting to make pricing and promotion decisions that shape prime shopping windows and alleviate a potential logistics crunch in the future.

INTERACTION EFFECTS AND SCENARIOS

Often, these risks are scored or assessed independently, but never frequently compounding at the same time. Traditional risk management approaches often do not assume interaction effects, which leaves businesses more exposed when their often linear, discrete assumptions interact and produce far higher, or lower, outcomes than anticipated.

To counter, a robust and configurable scenario management approach that hinges on identifying “potential” interactions and elevating them for CXOs to review can help business leaders understand potential interactions and prepare for destabilizing options.

Author: Evan Quasney, Global VP of Supply Chain Line of Business, Anaplan

Source: www.inboundlogistics.com

Image:

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The new guidance is designed to help to accelerate the transition towards safer and more resilient supply chains, while supporting Covid-19 response and recovery efforts.

Digital innovations are helping the air transport sector to transition away from paper-based documents used to facilitate the movement of global airfreight, promoting a contactless air cargo environment and greater cross-border trade resilience in the face of future pandemic threats.

In line with the recommendations of the ICAO Council’s Aviation Recovery Task Force (CART), the specifications aim to help reduce physical contact among international trade and transport professionals, and in so doing better protect the fluidity of cross-border trade and international transport operations from pandemic-related restrictions.

“The latest innovations reflect ICAO’s integrated, collaborative, and multilateral approach to transport policies encompassing air cargo and mail supply chains, and will play an important part in addressing both current and future pandemic risks,” highlighted ICAO secretary general Juan Carlos Salazar. “It’s our expectation that they will help address the tremendous double strain now being placed on global supply chains, whether by the COVID-19 pandemic itself, or the incredible surge in international e-commerce which has accompanied it.”

ICAO’s collaboration with UNECE on supply chain digitalisation is an outcome of the Joint Statement on the Contribution of International Trade and Supply Chains to a Sustainable Socioeconomic Recovery in COVID-19 Times, which was signed by eight UN agencies in September 2020.

Digital specifications will now replace the formerly paper-based Air Waybill (AWB), Dangerous Goods Declaration (DGD), and the Consignment Security Declaration (CSD). These in turn form part of a broader suite of deliverables for multimodal transport data sharing, applicable to air, road, rail, maritime and inland water transport.

Source: www.aircargo.com

Image: www.pexels.com

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Upstream at all stages of the chain

The first signs of such a situation were already visible in the middle of 2020, when there was a certain upward trend in international trade at all stages of the chain. This was particularly pronounced compared to the global container fleet affected by the first half of the 2020 pandemic. In a highly competitive and volatile market, affected by persistent overproduction problems and erosion of freight rates, the situation of sea freight carriers has significantly improved.

Gross profit will reach about $ 47 billion

According to several experts, the container cargo market has never been as active as it is today. In the UK, for example, local container shipping rates have risen by 200%, while stock prices for ocean liner companies have risen by 300%. The gross annual profit of the container industry will also reach approximately USD 47 billion. The industry points out that practically all indicators have the same – upward – trend.
Cargo congestion in ports

However, there are always two sides of the coin, and rapid “warm-up” can have different consequences. In this case, it is worth paying attention to the quality of supply chain management – productivity in moving container cargo from ships to North American supply chains has been poor for months. In Denmark’s latest shipping market survey, the global container market was described as a frontier of chaos in the fourth quarter of 2020 and the first quarter of 2021. The example of congestion in the report shows that delivery from Tianjin, China to the port of Long Beach, California, took 92 days. The causes of cargo congestion in North American ports range from labor shortages, partly caused by the pandemic, to container shortages caused by shipping disruptions in early 2020, as well as lack of space in warehouses and other bottlenecks in the supply chain.
Although the situation has put freight owners in a difficult position, the consolidation of the ocean shipping industry from around 20 main lines five years ago to 10 lines, which now account for 85% of container capacity, has increased shipping discipline and strengthened the integrity of freight tariffs.

Overall increase of 10%

Forecasts for the rest of 2021 suggest that the boom in container shipping will soon slow down. Experts estimate that in the second quarter of 2021, container traffic will grow by 15% and overall growth will be around 10% compared to 2020. The profits of the container industry could reach $ 87 billion between 2020 and 2022. At the same time, it should be noted that experts are not concerned about future overcapacity in the container transport sector, when the market will inevitably start to decline. Nor are there any concerns about the prospects of ocean carriers who have chosen to invest windfall profits in their shipbuilding rather than charter them.

The post Impact of Covid-19 on container freight and global trade appeared first on Cargo News Today.

Upstream at all stages of the chain

The first signs of such a situation were already visible in the middle of 2020, when there was a certain upward trend in international trade at all stages of the chain. This was particularly pronounced compared to the global container fleet affected by the first half of the 2020 pandemic. In a highly competitive and volatile market, affected by persistent overproduction problems and erosion of freight rates, the situation of sea freight carriers has significantly improved.

Gross profit will reach about $ 47 billion

According to several experts, the container cargo market has never been as active as it is today. In the UK, for example, local container shipping rates have risen by 200%, while stock prices for ocean liner companies have risen by 300%. The gross annual profit of the container industry will also reach approximately USD 47 billion. The industry points out that practically all indicators have the same – upward – trend.
Cargo congestion in ports

However, there are always two sides of the coin, and rapid “warm-up” can have different consequences. In this case, it is worth paying attention to the quality of supply chain management – productivity in moving container cargo from ships to North American supply chains has been poor for months. In Denmark’s latest shipping market survey, the global container market was described as a frontier of chaos in the fourth quarter of 2020 and the first quarter of 2021. The example of congestion in the report shows that delivery from Tianjin, China to the port of Long Beach, California, took 92 days. The causes of cargo congestion in North American ports range from labor shortages, partly caused by the pandemic, to container shortages caused by shipping disruptions in early 2020, as well as lack of space in warehouses and other bottlenecks in the supply chain.
Although the situation has put freight owners in a difficult position, the consolidation of the ocean shipping industry from around 20 main lines five years ago to 10 lines, which now account for 85% of container capacity, has increased shipping discipline and strengthened the integrity of freight tariffs.

Overall increase of 10%

Forecasts for the rest of 2021 suggest that the boom in container shipping will soon slow down. Experts estimate that in the second quarter of 2021, container traffic will grow by 15% and overall growth will be around 10% compared to 2020. The profits of the container industry could reach $ 87 billion between 2020 and 2022. At the same time, it should be noted that experts are not concerned about future overcapacity in the container transport sector, when the market will inevitably start to decline. Nor are there any concerns about the prospects of ocean carriers who have chosen to invest windfall profits in their shipbuilding rather than charter them.

The post Impact of Covid-19 on container freight and global trade appeared first on Cargo News Today.