Lackluster real-time ocean freight visibility leads to assumed risk, tarnishes the customer experience and lessens competitive advantage. Find out how gaining visibility improves service now…
Amazon delivers purchases within 24 hours. UPS delivers prescription medication via drone. Major retailers, to reduce their warehousing and storage expenses, order smaller quantities of product from suppliers more frequently. Customers demand fast, reliable, customised, and cost-effective services. End-to-end, real-time visibility is not a nice-to-have function anymore. It’s a must for every supply chain executive to create unique value for the customer, and remain competitive.
Ninety percent of consumer goods reach customers by sea routes. It is possible currently to track the ETA of a $10 Amazon package, but many shippers can’t so easily track and reliably calculate the ETA of a $10,000 ocean freight shipment. The inability to track ocean freight in real time creates assumed risks. What happens if the shipment arrives early or late? What will the outcome be for consumers? How will the changes affect business-to-business resellers and other stakeholders in the supply chain? The questions go on. In this fast-changing market, shippers that seek to increase operational efficiency, optimise inventory and bolster customer service need to rethink their visibility strategies.
The compounding effects of small fees add up to large losses impacting the bottom line
It may seem that not tracking ocean shipments whilst in transit is a minor issue. That assumption is wrong. Poor visibility leads to higher total costs and use of resources. According to research from start up MizzenIT, the costs for a single error grow significantly when applied to multiple shipments.
For example, Glenn Butcher, Chairman of MizzenIT, who said in the FreightWaves article that ocean carriers miss out on$110 with each box shipped. He added, ‘if the number of TEUs shipped on the spot market was multiplied by US$110, then it’s a huge number. It’s indicative of the opportunity (with improved ocean freight visibility).’
Further, we were able to analyse a data set from Ocean Insights’ container visibility platform. We observed the following:
- Total 40′ containers = 430
- Total PODs = 73
- Total days at POD = 806
- Demurrage free days = 8
- Data analysis period = 3 months
Of these, 144 containers exceeded these eight free days at an average of five days per container.
Now assuming a minimum charge of $100 per container, per port, this shipper was charged a total to the tune of $72,000!
At this rate, the yearly charge would be roughly $216,000.
The chart below shows the top 8 ports that had the highest average of demurrage fee-incurred days, but the full report will show all 73 ports, providing the shipper deep insights into exactly which shipments at which ports had the highest instances of demurrage.
When multiplying all of that together, again, there are a lot of opportunities to improve cost reduction. When shippers lack real-time visibility, multiple problems can begin to materialise, including…
- Inability to fulfill customer orders on time
- Increased risk of out of stocks
- Higher carrying costs resulting from overstocking
- Poor management of ocean freight, including higher surcharges and accessorials, as well as demurrage/detention fees
Digital transformation augments ocean freight tracking and supply chain planning
The key to success lies in recognising where a shipment is in the journey and if there is a delay, for example, how to adapt the remainder of the supply chain to accommodate changes. Algorithmically driven predictive analytics empower shippers with actionable data and the ability to stay proactive with customers and provide them with much more than ‘out for delivery.’ Imagine a container shipment full of dry goods that are meant for a new product launch and there is a slight delay over the expected delivery date. More proactive updates on the status of delivery will aid shippers in informing their customers and creating transparent operations yielding more trust from customers that in return makes shippers distinguishable from their competitors.
Although the shipping industry receives lots of criticism and often is labeled as old-fashioned, thanks to technological developments shippers are not required anymore to spend time reviewing dozens of data streams via individual carrier EDI-enabled systems. Shippers must embrace the change and use one, easy-to-access track and trace web application and API platform.
Real-time data is mission critical for positive customer experiences and continued transformation
A shippers’ competitors are only one mouse click away even from the dearest customer. Customers will turn to a new supplier if a company cannot deliver. Although many business leaders are troubled by the notion of full visibility, beyond the reduced demurrage charges shippers will create additional customer value when they know when freight will arrive, where it is right this second, and what is necessary to get the products to customers faster in the event of unexpected disruptions or delays. Stop ignoring the gorilla in the room. It is time to reengineer business relationships and make supply chain data visible and actionable.