Companies across the globe have been impacted by a myriad of major supply chain disruptions. This is especially true for companies navigating the lingering Suez Canal and Panama Canal issues.
Shippers that have historically utilized the Suez Canal have had to extend their routes, bypassing the canal and sailing around the Cape of Good Hope in order to avoid getting caught in attacks due to unrest in the Middle East. This shift has added significant time to the average voyage.
“Approximately 14 days of sailing time is being added to shipments that normally move from the Suez to the East Coast, making the process itself more expensive,” said Chris Jones, executive vice president of industry and services at Descartes. “Because shipments take longer to complete, companies are experiencing greater lead-time variability.”
Companies that normally move cargo through the Panama Canal continue to face drought conditions. Over the past couple of years, the wet season has not been able to replenish the lakes that feed the Panama Canal lock. These conditions have required the canal to cut back on the number of ships that can pass through it by one-third on any given day, leading to bottlenecks and delays.
At the same time, U.S. container import volumes are increasing year over year, exacerbating the situation at both canals.
“February 2024 U.S. container import volumes decreased 6% from January 2024 to 2,137,724 twenty-foot equivalent units (TEUs). Versus February 2023, TEU volume was higher by 23.3%, and up 19.5% from pre-pandemic February 2019,” according to the most recent Descartes Global Shipping report.
February’s 23% year-over-year jump is likely elevated by both the positioning of Chinese New Year in 2024 versus 2023, as well as the fact that 2024 is a leap year. To account for this elevation, Descartes analyzed TEU volume for the first 15 days in February of both years. That data analysis showed a 13.3% jump. While lower, this increase is still significant.
Longer routes and bottlenecks are expected to have a larger ripple effect on the supply chain as a whole as volumes continue to tick up and disruptions show no sign of abating.
Naturally, shippers are looking for ways to move their products effectively while mitigating the impacts of these disruptions. To do that, they will need to employ an end-to-end shipment visibility solution. The right visibility solutions allow companies to keep an eye on what is happening in real time while simultaneously visualizing future solutions.
“End-to-end visibility is critical when lead times get extended,” said Mike Hane, director of product marketing, transportation management at Descartes. “Knowing the exact progress of a shipment allows companies to make more informed and better decisions about how they serve their customers and manage extended inventory. Improved visibility also helps you avoid incurring additional logistics costs like demurrage and detention.”
In addition to cutting unnecessary downtime, end-to-end visibility enables companies to revisit their shipping processes — from shifting inventory strategies to exploring alternate suppliers. In the long term, this level of visibility also helps companies weigh the pros and cons of more permanent changes like nearshoring.
Embracing alternative routes — sailing to the West Coast and then loading goods onto a truck or train, for example — as well as alternative suppliers is one of the most effective ways shippers can make their supply chains more nimble in the immediate future. Doing this, however, requires top-notch visibility and guidance.
“Alternate trade lanes are a big deal, and we have solutions to identify suppliers moving through alternative trade lanes,” Jones said. “While this could mean more cost on the front end, it could also mean greater availability. As we all painfully learned during the pandemic, if you don’t have the product, you can’t sell it.”
In the final analysis, shippers are most concerned with servicing their customers. Technologies like visibility tools provide the best — and often only — path toward that goal in 2024. For those hesitant to deploy visibility solutions, now is the time to stop waiting.
“We don’t think this is going to end anytime soon,” Hane said. “There will always be disruptions. Visibility helps pinpoint the things you can control, reducing the impact of disruptions to operations. Furthermore, as companies analyze their supply chains, understanding and including risk into strategies is going to be a bigger part of the equation.”
Click here to learn more about Descartes.
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