Meta-description: As the coronavirus sweeps around the globe, ocean freight rolled cargo rates will rise, despite spot rates approaching an economic bottom. Learn how advanced notifications and other data can improve collaboration and prevent catastrophic disruption.
While the global supply chain anticipates the potential disruption of coronavirus, COVD-19, the illness is already contributing to a dramatic effect on ocean freight. According to Bill Mongelluzzo via the Journal of Commerce, US imports from Asia remained weaker than usual for a post-Lunar New Year recovery period, and disruptions associated with the coronavirus have led to the cancelling of more than 80 sailings in February and March. Now, the coronavirus in this disruption is pushing carriers to forgo implementation of general rate increases, and relief does not yet appear on the horizon.
Unfortunately, the addition of blank or cancelled sailings, a sailing that has been cancelled by the container carrier means global shippers will face additional uncertainty with cargo arrival dates, inventory management, and much more. One thing is clear in this major disruption; rolled cargo advance notifications and other data affecting ocean freight shipping will improve collaboration between BCOs and steamship lines and help circumvent the challenges caused by not only the coronavirus, but as well as the day to day delays that might occur.
What was the pre-coronavirus status of rolled cargo?
A study of more than two million data points was done using the Ocean Insights platform. In the study, only container lines that moved more than 10,000 containers were included.
The result of this study was clear: container rollover is a serious issue affecting on average between 5 and 17% of all containers shipped.
Consider the below two charts derived from these data points:
Here you can see the cargo rollover ratio among steamship lines is almost a whopping 18%.
If we isolate containers that undergo transshipment at various hubs (transshipment ports), you can see that the ratio goes up quite drastically and carrier 2 that had only 16% of rollovers in total has almost 32% rollovers when transhipment cargo is considered.
Ocean shippers have already faced great problems in holding steam ship lines accountable and ensuring on-time performance even before the Coronavirus crisis. Only shippers that had managed to deploy a successful ocean freight tracking system were able to discern immeasurable gains in supply chain efficiency by understanding how their shipping network performed and how container lines compared to one another.
A retailer with manufacturing and e-commerce operations globally that implemented the Ocean Insights’ Ocean Freight Tracking System was able to realise that it’s biggest problems revolved around the established carriers’ consistent pattern of delays.
Isolating the biggest carrier’s performance data, the retailer realised that one-half of all shipments arrived between three and 27 days late which is already a significant disadvantage.
Disruption to the supply chain makes forecasting demand more difficult but not impossible
The Ocean Insights’ Ocean Freight Tracking System enables rolled cargo notifications through automated work flows. The platform by providing advanced notifications of rolled cargo provides users with the ability to recognize container carriers’ performance outside of potential disruption areas or times.
Users of the platform will have insights provided to understand the average delays across all steamship lines and how such delays contribute to potential delays for today.
Both graphs (figure 1 and figure 2) are the correlation of total shipping volumes and total delayed volumes (figure 1 is based on carrier perspective and figure 2 is based on the port-pairs perspective).
The correlation of total shipping volume and delayed volume, exhibited in the figure 1 below, where the X-axis is the number of volumes loaded and the Y-Axis is the number of volumes delayed, reveals that total shipping volumes that were delayed at least seven days (all Carriers shown on this graph are delayed 7 days or more) are significant. As the incidence of delays occurred, the number of additional delays grew exponentially. The insights provide the user with how many shipping volumes have the worst performance. The blue line shows the correlation between the x-axis and the y-axis. The shadow is the 95% confidence level interval for predictions from the linear model.
Ports also experienced similar trends, shown below.
(Figure 2): Correlation between total shipping volumes and at least 7-day delayed volumes by shipping ports in a regression model (R-2 Squared)
The high R-squared means there is a small difference between the observed data and the fitted values. A positive correlation coefficient means that as the value of one variable increases, the value of the other variable increases; as one decreases the other decreases. For instance, the regression model is good in this situation and it captures the properties of the data. Higher loaded volumes will get higher delayed volumes. But if higher loaded volumes get just a small amount of delayed volumes, this indicates good performance. If lower loaded volumes get a higher amount of delayed volumes, this indicates bad performance.
Volume delays might not be a big problem for shippers though. Delays will happen, but recognising when they happen, when they are likely to happen based on real data, and which carrier lines to work with at the height of a global supply chain crisis – like the coronavirus – can help keep delays in check.
What will happen now?
The coronavirus is going to keep spreading. Countries around the globe now have confirmed cases, and the chances of the virus’s sudden disappearance are slim to none. The global economy is in the unrest before the storm, and when the virus does take root, those with an eye on data and automated processes that streamline ocean freight management will have the greatest advantage. There is still the possibility of containment, but even if that does happen, the next economic disaster could be around the corner. By taking the steps to prepare for the future with more data and automation to manage rolled cargo, carrier selection, contract negotiation, and everything in between, shippers and container carriers can guarantee the continuance of their successes.
Josha Brazil, Chief Operations Officer, Ocean Insights
Josha Brazil works as the Chief Operations Officer of Ocean Insights. Ocean Insights has a best-in-class ocean visibility software and a team of experts to make supply chain data visible and actionable.
They bring down your demurrage and detention fees, support day-to-day operations and strategic decisions within the freight industry.