When Hanjin Shipping filed for bankruptcy protection, the line had 66 vessels at sea, carrying an estimated US$14.5 billion worth of goods. For owners and recipients of these goods, the news triggered off frantic efforts to try and locate their cargo and figure out how to get hold of it as quickly as possible. With inventory for the Christmas shopping season in doubt, the situation casts a glaring light on shippers’ need for better supply chain visibility.
With the relentless downward pressure on rates, shippers may have come across as being obsessed with driving costs down, but a growing number of them have voiced concerns about quality levels in the logistics sector and visibility while their goods are in transit.
At this year’s Container Supply Chain conference organized by TOC Europe, Carlos Vazquez, steering operations and purchasing of intercontinental logistics services at the French tyre manufacturer Michelin, called for better visibility and improved service levels from carriers.
“Our operations are becoming more complex and more challenging to manage,” he said. “They also call for more shipping options, for instance, a mix of slow and fast services, for higher levels of reliability, greater predictability and improved visibility.”
The fast rise of e-commerce is adding pressure to achieve better visibility from end to end, across all modes. At this point, though, visibility is often grainy and incomplete, with considerable gaps opening up when freight changes hands en route. With delivery windows emerging as a major battleground for customers and the need to balance inventories better, on-line and omni-channel merchants have been pushing for faster flow of data, according to technology firm project44, which offers an integration platform that connects shippers, logistics providers and transport companies.
Christopher Shawdon, vice-president of logistics solutions, global transportation at Unisys, emphasized that the availability and quality of data plays a critical role in the shortening of transit times. The ability to track at the piece level is imperative, he added.
Shippers and logistics consultants have highlighted several areas where visibility has been notoriously difficult. On the maritime side the transfer from vessel to shore has been one problem area. What has compounded this has been lack of data on delays and arrival times, especially since lines have shown flexible approaches to regular and slow steaming, leaving shippers in the dark when exactly their cargo is due to hit land.
There has also been poor visibility into the deconsolidation process.
According to one industry executive, a fundamental problem at the root of many of these issues is that shippers, carriers and the other operators in the supply chain have different priorities when it comes to improving processes and visibility.
Still, standards implemented by Amazon are having a powerful impact on the industry, forcing operators to up their capabilities. Uwe Glaser, chief executive officer of forwarder Cargomind, expects end-to-end visibility to become part of the regular arsenal of services that logistics firms offer their clients.
“I think end-to-end visibility will become standard,” he said.
Without this, forwarders will be at a serious disadvantage vis-a-vis the intergrators, Glaser reckons. Moreover, visibility will result in improved quality levels, he argued. “I am convinced that if we make the processes visible, quality will come as a consequence,” he stated.
The road to get there will be long and challenging, though. Parts of it have been mapped out before, but not to the necessary level, and operators have been slow to push the agenda, according to Glaser.
According to Shawdon, cloud computing is one powerful catalyst for change and improvement.
Another trend that looks likely to improve visibility is the increasing interest from venture capital and the technology sector in logistics. One such upshoot is US-owned forwarder Flexport. Backed by Founders Fund, Google Ventures, Bloomberg Beta, Y Combinator and others, Flexport is a licensed freight forwarder built around an online system which provides clients with real-time shipment visibility and analytics for international routes, rates, speeds and customs compliance data.
The company is on the expansion trail. In August it opened an Asian regional headquarters in Hong Kong.
By Ian Putzger
Correspondent | Toronto