By: Mike Gavle, Logistics Manager
As anyone in the logistics field knows, a confluence of stressors continue to strain a highly congested and extremely delicate network. Ocean freight demand at all origins around the world already far exceeds capacity, with no end in sight to that demand. Congestion in one region, whether caused by demand or low water, can wreak havoc at other ports. Domestic rail congestion combined with container truck chassis shortages conspire to make dray operations a challenge everywhere. And that’s without taking into account the impact wildfires and other natural disasters have on supply chains.
From COVID-19 outbreaks to container shortages, from record demand to domestic rail congestion and truck lease walkouts, the ability to synchronize the network is all but lost. In this unprecedented environment, manufacturers are looking for ways to mitigate risks, keep their supply chain moving, and avoid production stoppages. Here are three strategies that can help.
Strategy #1: Secure Future Capacity Now
Manufacturers can help assure their shipments won’t be impacted by booking freight as far in advance as possible.
- Commit specific weekly volume to transportation partners (then stand behind that commitment).
- Forecast your volume by week through the end of Q1, 2022. Without a forecast, shipping partners are flying blind during the worst transportation crisis in history.
- Create a “fallout pool” of inventory with sourcing partners. Take full advantage of ad-hoc or unplanned capacity from your shipping partners for any finished goods that are ready to ship.
Strategy #2: Evacuate Freight at Origins
With the North American freight situation in disarray, manufacturers need to take creative steps to mitigate risk. Possibilities include:
- Diversify arrival ports to North America.
- Consider ports not normally leveraged in your specific network.
- Leverage any available capacity to historically underutilized ports.
- Rail service from Mexico and Canada can get your container to the US.
- Where LCL is normally slower than FCL, today it can be much faster.
Strategy #3: Gain Control Upon Vessel Arrival
Risks abound in the domestic rail and trucking outlook across the US and Canada, with the overwhelming volume of containerized freight pushing the network to its limits. Assert control as near the ports as possible.
- Evaluate transload opportunities. For example: steamship lines prefer to keep their asset (the empty container) near the port, which can make your freight more attractive than a container going all the way to the US Midwest.
- Consider leveraging existing warehouse facilities to break freight and ship the appropriate cargo on to its final destination via FTL or LTL.
Choosing the Right Partner Can Mitigate Risks
Strain on global logistics is such that any historically minor event can result in a significant negative impact. By securing future capacity, diversifying arrival points, and gaining control of freight upon arrival, US manufacturers can begin to mitigate the risk of production stoppages.
The right logistics partner can bring value-added expertise and management to your supply chain. EQI continues to secure capacity and safeguard the supply chain of some of the world’s leading OEMs. We can help you, too. Contact us to learn more.