Supply Chain Archives | Page 57 of 91

Supply chain shock absorber

Mar 1, 2023 | MVT, Supply Chain, Technology

The COVID-19 pandemic turned the public gaze towards supply chains and a previously unrecognised business sector became a household name, but after two plus years of navigating monumental challenges, supply chain executives, are faced with more challenges and need to secure their supply chains before the next shock hits.

Even as shippers try to make sense of the most tumultuous period ever seen in global supply chain management, the market is changing so rapidly that no matter how difficult the past few years have been, the future is once again taking centre stage.

Global container and air freight markets are shifting on multiple levels. Quickly moving on from the pandemic period and moving into a phase that had been expected to be a return to the pre-pandemic status quo, but is instead entirely new and unpredictable.

Today’s supply chains are operating in a radically altered geopolitical and economic environment and a soon-to-be altered industry structure, with the impending breakup of the 2M Alliance likely to entirely transform the global container shipping market.

Even as rates fall from their historic highs and port congestion and delays are fading, shippers need to recognise that the new era will have its own challenges, which need to be acknowledged, for the avoidance of risk.

For the last 30+ years supply chains have been defined by opportunity to drive down cost and improve efficiency. Reliability was taken for granted and risk was an abstract that was rarely built into the business strategy and disruptive events were easily isolated, or avoided, because they were not part of the operating environment.

All this has now changed and unpredictability has to be anticipated, even if there are no apparent triggers, because even if the industry looks normal, operational impacts will follow from a heightened perception of risk.

This is demonstrated by the much greater than expected diversions from the West Coast to avoid ILWU labour disruption if contract negotiations stuttered or failed, as happened during earlier negotiations.

And on top of unpredictable risk factors, shippers are balancing supply chain complexity against geopolitical demands over supply sources, but which is more resilient, having two suppliers for a critical component, or one that’s not ‘political’, It’s a really tough situation.

Metro’s MVT supply chain platform reduces the cost, time and risk of re-sourcing to new vendors and locations, with PO management, visibility and communication tools that onboard and integrate new suppliers into the supply chain.

To learn more or to arrange a demo EMAIL Simon George, Technical Solutions Director

Brighter looking future for China and Asia

Mar 1, 2023 | MVT, Supply Chain

The sidewalk booths, where residents took compulsory COVID tests almost daily, have gone and queues are again forming outside restaurants, while face masks, which were omnipresent for nearly three years, have almost disappeared, but some challenges remain.

China’s Centre for Disease Control (CDC) said that there are no new COVID variants circulating in China and research published in the Lancet Medical Journal, confirmed that no new variants had emerged. Two weeks ago, the Communist Party of China declared victory over COVID-19 and the General Administration of Customs (GAC) announced last week, that they will no longer require COVID prevention measures for imports from the 1st March onward.

South Korea has already lifted testing requirements for travellers from China and from the 16th February, the EU phased out testing requirements that were imposed on travellers from China, with Chinese and foreign airlines increasing the number of international flights that link China with the rest of the world.

In view of the faster-than-expected recovery of consumption and other activities, rating agency Fitch has revised its growth forecast for China to 5.0% from 4.1%.

Shanghai will be a critical factor for reviving growth, as the city contributes more to China’s economy than any other and Shanghai is eager to court foreign business, with Apple’s CEO Tim Cook expected to visit in March.

Chinese factory owners and exporters are looking to woo back there overseas buyers, after three years of effective shutdown under Beijing’s zero-COVID policy, with delegations visiting trade shows across the US and Europe to drum up business.

Factory production was disrupted by rolling lockdowns, rising shipping costs delayed orders and geopolitical tensions, with China’s exports dropping 9.9% year on year in December, as global inflation and interest rate rises dampened demand.

The worst of the economic headwinds that faced Asia last year have started to fade and global financial conditions have eased, food and oil prices are down, and China’s economy is rebounding.

With growth across Asia set to accelerate to 4.7% this year from 3.8% in 2022, this will make it by far the most dynamic of the world’s major regions and a bright spot in a slowing global economy.

Despite their economic challenges, with pandemic supply-chain disruptions fading, China and India are expected to contribute more than half of global growth this year, with the rest of Asia contributing an additional quarter.

Cambodia, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam are already back to their robust pre-pandemic growth.

As new opportunities to trade with China, India and South East Asia emerge, we have fixed price and long-term capacity agreements in place with our partner carriers, to give you peace of mind, with resilient, consistent and reliable supply chain solutions.

Metro’s cloud-based supply chain management platform, MVT, simplifies global trading, by making every milestone and participant in the supply chain transparent and controllable, down to individual SKU level.

To discuss how our technology could support your supply chain, EMAIL Simon George our Technical Solutions Director or EMAIL Elliot Carlile to discover all options relating to current freight profile movements to and from China and Asia.

Making visibility a strategic tool

Mar 1, 2023 | MVT, Supply Chain, Technology

Now in its 22nd year, the annual TPM conference, in Long Beach California, considers the pressing supply chain and freight challenges affecting shippers globally. TPM attracts the most senior-level audience in the industry, including an executive team from Metro and is considered to be the ‘Davos’ of the shipping world.

Founded in 2001, TPM feature a rigorous program of topics and challenges, developed by specialised journalists covering international transportation and logistics.

TPM annually presents the industry's most in-depth program, delving into the most pressing challenges affecting shippers and is a platform for a week of essential and intensive networking, negotiations, and relationship building among shippers, carriers, forwarders, technology providers, trucking operators, railroads, ports, terminals, and many other market participants.

Shippers who survived the pandemics’s supply chain disruptions did so by achieving visibility, but to improve their performance going forward, they must better manage the data they receive, participants in a TPM technology seminar agreed.

Supply chain visibility became a priority challenge for importers during the pandemic, because many over-ordered merchandise, to provide buffer stock, against freight and logistics disruptions.

With inventory held at origin, in containers, at transit points and warehouses throughout their networks, many shippers found they did not have the visibility they needed, at the locations where their inventory was being stored.

While shippers may believe that their technology provider’s single platform collects all the data needed to track shipments throughout the supply chain, the reality is that the critical data generators are usually the shipping lines, airlines, logistics operators and warehouses moving or storing their cargo and that data is not being collated in real-time.

Shippers learned over the past two years that they need an accurate view of their global supply chain, to overcome disruptions as they occur, using available information to make better, faster decisions and many technology providers were not up to the task.

Metro is increasing use of predictive and AI technology, to collate real-time carrier updates, to maintain accurate vessel ETA’s, data for purchase order management, route optimisation and supply chain visibility.

We are developing our telematics capability, to offer shippers a much more effective alternative to the data aggregators, who are quite simply compiling data from open APIs and screen scraping historic data. We favour the ‘smart container’ technology that a number of carriers are developing, and are actively involved with UN CEFACT in creating industry standards for sharing this data.

In addition to creating visibility along the supply chain, Metro’s technical solutions team have worked hard to ensure the quality of data and provide a suite of reporting tools that make it easier to interpret and implement actions in a meaningful way.

To learn more or to arrange a demo EMAIL Simon George, Technical Solutions Director.

US freight market round-up

Feb 16, 2023 | Air, Sea, Supply Chain, United States

There was no pre-CNY transpacific rush this year and with China re-opening, factories are expected to open again in the second half of February, which is why carriers have tried to maintain rates. The CNY has given US ports a respite and most are now clear, with hardly any ships waiting outside West Coast ports and very few off the East Coast and Gulf.

Asia

The traditional ex-Asia space and volume crunch around Chinese New Year was extremely muted and market capacity remained higher than previous years, so we expect blank sailings to continue, as the lines attempt to stabilise rates.

Maersk’s 2022 Q4 volumes were down 14% on 2021 and it announced on Monday the “temporary suspension” of its TP20 transpacific loop, while OOCL’s North American liftings were down 16% over the year.

Despite US retail sales performing well in 2022, amidst higher inflation, global economic turmoil is adding to the uncertainty as to how strong demand from Asia will be in the second half of this year, with the lines struggling to balance transpacific capacity, if demand does not pick up in the summer-fall peak season.

In the current transpacific environment in which spot rates and demand have fallen dramatically, the focus is now on cutting additional fees, such as detention charges for the late return of equipment, which can add hundreds of dollars to the total transportation cost.

Shippers want more free storage days and the container shipping lines say (off-the-record) that they’re willing to be flexible on detention if they receive compensatory freight rates.

The container shipping lines claim that their problems have been amplified because their operational and administration costs increased significantly during the pandemic, and while freight rates have been dropping, the carriers’ per-unit costs have increased. On the eastbound transpacific trade-lane the lines claim units costs are up by >40% due to vessel backlogs and inland bottlenecks that add delays and costs to the supply chain, rising prices for bunker and diesel fuel, and administrative costs.

Detention charges normally kick in after four or five days and the daily costs for chassis, which the lines lease from intermodal equipment providers, vary depending upon the contractual relationship they have with the equipment lessor. Other costs are more nebulous, such as the potential revenue that is lost when the equipment sits idle at a warehouse for days or weeks.

Carriers tend to be more bullish about demurrage charges, which are levied by the terminals when inbound loaded containers are left on the docks after their free days.

Transatlantic

The number of blank sailings from Europe to the U.S. has been minimal despite demand and rates softening and capacity is set to increase as MSC and Maersk are adding more vessels in the Mediterranean loops in the next few weeks.

Falling volumes has assisted the easing of congestion in U.S. East Coast (USEC) and U.S. West Coast (USWC) ports, with equipment availability getting better as congestion eases.

Low empty stacks at inland depots are becoming established in some areas, but we still recommend equipment pick-up from the Port of Loading if possible and early shipment booking.

From the U.S. to Europe there is plenty of USEC capacity available, but services from Gulf and USWC ports remain tight and the market is stable. Gulf Coast to Europe services continue to have medium to high utilisation levels, though this is softening with the reintroduction of capacity.

ILWU

During the nine-month-long impasse in negotiations, between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) dockworkers have engaged in unofficial actions at ports in Southern California, Northern California, and the Pacific Northwest that, although limited in scope and duration, have nonetheless caused disruptions in cargo handling.

Shippers will continue to route cargo away from the West Coast, until the PMA and ILWU reach a contract settlement.

Since last Autumn, Los Angeles-Long Beach and the Northwest Seaport Alliance of Seattle and Tacoma have registered year-over-year declines in imports from Asia, while imports through major East and Gulf coast ports have increased.

Air

Capacity from Asia continues to outstrip demand, which export demand from the U.S. remains steady to all markets, with airports running at a normal pace.

Capacity is opening up further, especially into Europe and rates remain stable week over week.

We negotiate long-term and FAK contracts with shipping lines across all three alliances to secure space and rates, so that we can provide the best alternatives and options, whatever the situation.

We have avoided huge detention and demurrage costs over the last few years for our customers, through slick entry to and from the USA markets and utilising our own facilities, or partner container yards, to limit the impact.

To learn how we can support your trade with the United States, or to learn more about our ocean and air solutions, please EMAIL our Chief Commercial Officer, Andy Smith.