As the global supply chain has witnessed over the last few years, disruptions, both expected and unexpected, can have an overwhelming impact on each sector of the supply chain. Some disruptions only affect certain pieces of the supply chain, while others cause issues across the board. Let’s take a look at some of the major types of disruptions the industry may experience and explore ways shippers can mitigate such challenges.
Forces of Nature
Natural disasters may be felt from an international standpoint, but those that take place within the United States are certainly from coast to coast. Not only are they somewhat unpredictable in terms of potential damage to be caused, but they also come in varying forms that can dismantle transportation resources in the blink of an eye. For example, exactly sixteen years after one of the country’s most devastating hurricanes in history, Hurricane Katrina made landfall in Louisiana, Hurricane Ida arrived with sustained winds of 150 miles per hour. This type of natural disaster brings intense flooding and powerful winds over a short period of time, which often results in loss of power, limited access to roadways and other infrastructure obstacles. With hurricanes and similar disruptions, such as floods, tornados and wildfires, the supply chain must stay aware of where and how they will affect various regions to both prepare, adapt and react in a safe and efficient manner in order to minimize disruptions to supply chain operations.
Cyber Attacks
Cybersecurity is an important investment within the supply chain, no matter which sector a company falls under. As an industry with the vulnerability of global interdependence, one cyber attack against a single organization can cause delays beyond that organization’s home base. From a partner’s misstep to an internal employee clicking on an unsecure email link, the smallest mistake can introduce the largest problems. In 2014, Target experienced a major breach when a partner was hacked through a phishing scheme, resulting in a loss of $148 million for the retail giant. Keeping a security system and team in place to monitor and combat attacks is an optimal approach, and many companies that may not have previously felt the urge to execute such tactics are finding it imperative to keep their finances, information, partners, and teammates safe.
Pandemics
While much less common than natural disasters and cyber attacks, one of the most obvious global disasters that can occur is one we have all experienced as of late. Over the last two years, the current global pandemic has seen highs and lows with the fluctuation of shipping delays, port congestion, lack of supplies, employee shortages and more. The list goes on, and the impact continues. The effects of pandemics, such as COVID-19, or public health crises at a more regional level have the ability to hinder movement of freight at each stage, from production to delivery. If one stage experiences a delay, the rest will likely follow suit. In addition to extended wait times for transportation and missed production deadlines as a result of the COVID-19 pandemic in particular, shipping prices continue to rise as supply and demand remain out of sync, which will certainly translate beyond this calendar year.
Current Disruptions
The current market is absorbing the impact of multiple global disruptions at one time. To date, the industry has witnessed heightened port congestion and transportation disruptions, in addition to hurricane season and the pandemic. Two of China’s major ports – Port of Yantian and Port of Ningbo – have been unable to operate at full capacity due to various reasons, including employees testing positive for COVID-19, increased waiting times for ships to be loaded and unloaded, and a heavy backlog that remains a strong obstacle for teams to rebound anytime soon. Recently, Port Yantian was operating at 70% capacity with the hopes of a slow but steady return to normal. In August 2021, Port Ningbo experienced the temporary shutdown of a critical terminal due to a single COVID-19 case, with that terminal accounting for roughly 25% of container cargo through the port.
Helpful Tips for Shippers
Through the eyes of a shipper, it’s important to learn how to mitigate the cost of disruptions, considering some are avoidable while others are not. Tips to consider when looking to increase resiliency include:
Stay proactive
Thoughtfully build up inventory in advance of fulfillment to avoid lack of supply in the future.
Operational audit
Conduct an audit to locate current or looming shipping vulnerabilities that may cause a disruption down the road. Prepare contingency plans well in advance of possible disruptions based on audit insights.
Identify plans B and C
Identify backup suppliers to counteract shortages with a primary supplier that may occur on short notice.
Secure a reputable partner
Explore a partnership with a third-party logistics expert to gain enhanced visibility. 3PLs have a wide network of carriers with a diverse equipment options that allow shippers to mitigate disruptions.
Determine all shipping options
Explore alternative modes of shipping your freight in a tight market. If you have time-sensitive cargo to that needs to travel over the ocean, then air freight might be a possible option for you. Looking at alternative methods of shipping your freight helps with shipping challenges as well as providing cost-saving options.
Additionally, instilling characteristics and practices that encompass agility and adaptability, market awareness and enhanced communication promote overall operational effectiveness and efficiency.
From the threat of COVID-19 to the product and employee shortages that have followed, the current market is up and down depending on the day. While the lack of stability is intimidating, the industry has learned a lot from the major disruptions, from where to improve policies and procedures to how diversifying a business model can save money and time ahead of future disruptions. As members of the supply chain, shippers and their partners now understand more than ever that preparing for the unexpected and improving performance and technology benefits the work of today and the results of tomorrow.
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