Retail supply chain management has always been a complicated and complex process. But in the timeframe between 2020 to 2022, a volatile supply chain market showed the weakness in outdated, legacy supply chain execution built on rigid technology or lacking any accurate data that can improve overall decision-making. Everything from a lack of capacity, manufacturing shortages, cost control difficulties, regional supply delays and disruptions, length and complexity of supply shipping routes, driver and worker shortages, rising costs and expenses, and COVID-related disruptions have contributed to the retail supply chain process today.
As highlighted by RetailDive, "COVID-19 also disrupted manufacturing areas in Bangladesh, India and other major producing countries, not least of all China. A demand surge in the US-led to shortages in cargo space, shipping containers, and other equipment, leading to skyrocketing ocean freight prices." This has significantly impacted retail value chains across the globe. The question for retailers, company managers, 3PL vendors, shipping service providers, and business owners worldwide is whether supply chains will recover and rebuild to be better prepared to handle future disruptions. Retail supply chain management and continued growth and recovery depend on freight analytics and applying data to the modern supply chain network.
With the growth of e-commerce, felt by the increasing pressure and demands of a post-pandemic market has significantly contributed to the disruptions within supply chain networks today. Adding to the already high-pressure reality of retail supply chain management, the need to do more with less has dominated transportation services for the last two years.
At the heart of the retail supply chain process, it is about overcoming market volatility, customer demands, business logistics challenges, and changing supply and demand balances to keep materials and goods moving- forwards and backward- along the supply chain.
Poor adaptability and scalability only bring these risks into greater focus, making their effects more potent and concentrated for shippers and transportation companies. Those tasked with retail supply chain management often lack diversification and alternative options, especially with specialty freight transportation, including ocean freight shipping. Bloomberg highlighted in a report in early 2022 that ocean-freight carriers made an estimated $150 billion in profits for 2021, up nine times over from the previous year. As few as eight carriers contain more than 80% of the market for ocean freight capacity, which makes this figure all the more impactful. And many of these carriers form tight connections and networks, making it all the more challenging for smaller shippers to operate and optimize retail supply chain management and networking procedures.
The retailer supply network has taken a significant blow over the last few years as retail supply chain management teams continue to struggle with recovery efforts. Supply chains are not defined by geographical location or industry service areas alone. In many cases, the products shipped rely on many other supply chains to even get to that point. For example, the production of a good can be centered on just a few factories, where raw materials and other parts come together to make the final product that ends up on the last delivery truck heading to the retailers. Freight cost logistics plays a vital role in keeping all these interconnected chains organized and working together rather than against each other.
Semiconductors, automobiles, other goods, and products that depend on raw materials or parts from different suppliers and supply chains are prime examples of how a delay or problem in one area can create a domino effect of delays and disruptions. Raw materials are needed to produce everything from gears and wiring to circuit boards and machinery parts. All of those components must be shipped to assembly plants and other distribution hubs to be used to create final goods and products. As a result, delays or shortages in one area create a chain reaction that impacts multiple supply lines, transportation service markets, and retail supply chain processes.
According to 2022 calculations of retail value chains by Statista, "The volume of seaborne trade has been showing a growing trend since 1990. Between 1990 and 2020, the volume of cargo transported by ships more than doubled, from four to nearly 10.7 billion tons. Hand in hand with the rise in seaborne trade goes the increasing capacity of the global merchant fleet. Between 2013 and 2020, the capacity of the worldwide merchant fleet grew by about 37 percent, reaching almost two million deadweight tons in 2020." This continued rise in volume and demand only increases the pressure on supply chain managers to optimize retail supply chain processes from start to finish. It is an ongoing pain point retail supply chain management and transportation strategy providers must focus on and work to resolve.
The biggest challenges for many supply chain back-office managers today, especially those revolving around ocean freight transportation, are unpredictability in ocean shipping and ongoing delays at the ports. Even with disruptions anticipated, it is difficult for shippers to accurately predict when ships will arrive, when containers will get processed, and when goods will make it through customs. For example, a 20-day transit might take 30 days one month, then a month later that number might be close to 50, then it could be as many as 60 or more, before dropping back closer to 20 for a few weeks. Instability on top of unpredictability only further complicates the retail supply chain process. In situations like this, the best course of action for shippers is to turn to their industry partners and collaborate to try and speed up shipping processes and avoid additional freight risks. This is best achieved by tapping into more predictable and reliable shipping lanes and carriers.
Considering what is shipped and shipping into and out of the country also plays a role in retail supply chain process management. Finding the right retail supply chain management partner to collaborate with can improve import and export shipping times in powerful ways. The Bureau of Transportation and Statistics highlights, "A higher percentage of US imports move in containers than US exports, reflecting the nature of US export and import commodities. The leading US exports include commodities such as cereal and grains that ship via break-bulk. In contrast, the leading US imports include commodities such as apparel and home goods that ship via containers." Retail supply chain management often comes down to matching the rig cargo with the correct shipping mode and finding the suitable carrier to collaborate with for that shipment.
To shore up ocean freight logistics and optimize retail supply chain management, practices, improved freight visibility, and insight are essential for the modern-day supply chain. Actionable insights, backed with real-time data and supported by collaborative technologies and machine learning, can improve shipping and transportation services. A shipping technology and solutions partner can help source actionable insights that work together to improve overall transportation management efficacy and spend management, including, but not limited to:
The delays and disruptions plaguing ocean freight lane management for retailers importing goods were evident during the COVID-19 pandemic. Consumers displaced services with more goods since many were indoors and shopped online. Therefore, it put extreme pressure on importers as shippers paid rates higher than ever recorded for containers. Furthermore, after getting goods to a port, retail supply chain executives were tasked with securing capacity in inland modes like drayage, full truckload, LTL, parcel, and last mile.
It is evident that retail supply chain processes are interdependent and need actionable insights to make retail shippers more effective. Companies used to know how long it took to get a ship across the ocean, unload the cargo, and get it to the customer with simple processes. They could easily give customers an estimate of 6 weeks and be sure that would be accurate. However, this surety is no longer the case when every port is experiencing congestion and delays. Like a highway at rush hour, a delayed leg of a supply chain means that knock-on retail supply chain management processes are disrupted. To avoid disruptions and unnecessary issues with routine retail supply chain process management and execution require retail supply chain management to have actionable insights at the retailers€™ fingertips. The supply chain professionals in the organization must have instant access to accurate and reliable data and a game plan based on adaptability, visibility, and scalability. Overcoming supply chain volatility requires optimized visibility and insight at all times within all areas of the supply chain.
The last two years have been full of unknowns on both the supply and demand side of the global ocean supply chain. However, many experts working with retail supply chain processes say the end is not yet in sight, despite ongoing recovery and implementation of actionable analytics and insights. It is expected that supply chains will continue to struggle and face unprecedented disruptions through the rest of 2022 and well into 2023 and beyond. Ultimately, the way retail supply chain management and consumers, in general, respond and adapt will determine how fast recovery takes and how much impact ongoing challenges will have. Prepare for the uncertain future of retailer supply chain logistics and contact Intelligent Audit today.
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Tracking and auditing container shipping costs help lower ocean freight spend. Learn more today.
Available supply chain capacity in ocean and airfreight is still subject to significant uncertainty and can add significantly to total transportation spend.