All those news clips about large container ships waiting offshore for a berth to unload only tell half the story. There are just as many logistics concerns for the U.S. export market, which hit a two-year high in July and is expected to grow over the next three years.
The import market grabs most of the headlines each time a new record-breaking number of ships are backlogged, forcing retailers to wait to get goods on their shelves. Exporters face their own challenges, some as a result of the import bottlenecks. As many as two-thirds of containers are empty when they leave California ports for Asia to reload on imported goods, leaving exporters to compete for fewer containers and fewer vessels sailing to their critical markets across the globe.
According to an informal survey by the Agriculture Transportation Coalition, these transit issues have cost agricultural exporters 22% of sales. The National Milk Producers Federation claims “continually rolled bookings, unprecedented shipping rates, product deterioration, and high detention and demurrage fees have cost American dairy exporters nearly $1 billion” through July.
The troubles of exporters go beyond products waiting for an empty container. The American Trucking Associations says their driver shortage is at an all-time high. There are too few chassis to move containers at ports and not enough optimization in managing those containers to find ones that are available. Carriers are declining bookings because they are prioritizing moving the empty containers back to Asia so they can be reloaded and service import demand.
Now, with the Ocean Shipping Reform Act of 2021, exporters may gain new federal support in ensuring they get a fair shake at ports. While the outcome of that legislation is yet to be determined, there are still steps that shippers and logistics service providers can take to ease the pain.
As much as this is a logistical problem, it’s a data problem, too. Supply chains are far more vast than the planning, financing, and execution that take place within a single enterprise. Shippers rely on a multitude of suppliers, carriers, logistics service providers and other companies to take an idea from inception to end customer. However, each individual company that represents a step along the way is focused on its own business.
Individual dray companies, for example, work on a one-to-one basis with their customers. Because they’re trying to provide the best-possible service to their most valuable customers, these dray companies aren’t necessarily looking across all their customers or locations to try and pool resources, improve efficiency and eliminate bottlenecks.
Each stakeholder in the complicated supply chain has their own vested interest and financial motives, trying to optimize their own piece of the puzzle rather than simplify the broader picture. In many cases, it might not be financially lucrative to look beyond their own operation and it’s hard to blame a small business that is trying to keep itself afloat.
Naturally, these physical boundaries between trading partners also manifest themselves in the form of walled-off data that’s often only accessible through old-fashioned communications like an email, spreadsheet or PDF.
How data sharing can help
So why have other sectors made strides in recovery from the pandemic while the supply chain seemingly continues to struggle? It all comes back to the disconnected nature of the supply network and the ongoing inability (or unwillingness) to digitalize, share, and ingest key information at speed.
Resistance to change is the number one reason why the industry still relies on PDFs and printouts to deliver information. Those formats are safe, comfortable, and easy to use. They also limit the amount of information that passes down to other parties. Stakeholders throughout the supply chain traditionally balked at digital formats for fear of the unknown. They don’t want to risk joining a networked platform, sharing too much with competitors or the possibility of a data breach.
We’ve reached a point where data sharing is necessary to get things back on track, and exporters have to drive that change. Especially as the demand imbalance continues and millions of containers remain unavailable – the only way to manage constraints is to keep information flowing and ensure that all parties are pulling in the same direction to secure space for critical shipments.
Exporters need to drive their partners to share information and collaborate digitally, enabling multi-party transactions and the ability to analyze and measure operational performance. They need to establish a platform where all relevant export information—bookings, arrival and departure times, status updates, etc.—can come together and allow relevant parties to see the data they need and act on it.
Digital data unlocks new tools
Most supply chains and organizations are underutilizing technology. It’s not for a lack of available tools. Technology costs money and takes time to implement. However, by digitizing shipping information, providers can also get jobs done more quickly and reallocate that extra time to bringing on more business.
When you automate processes and digitalize information scattered across multiple documents, you are able to eliminate the need to rekey information into multiple systems while improving your workforce’s accuracy and speed. More importantly, it allows you to more quickly understand where and how to allocate containers and ensure that processes flow from stakeholder to stakeholder. It gives you an advantage when it comes to securing space on a vessel – instead of chasing information, you are able to act with intention.
Digitizing information allows for more visibility of the big picture operation and makes it easier for all stakeholders to operate based on one set of information. Most logistics operations in the supply chain are still done manually, with speed held back by emails and spreadsheets that get lost in a chaotic exchange of communications. By consolidating and sharing digital data, stakeholders can modernize their operations, match demand to carrier supply, and accelerate and optimize the execution of processes.
While every sector was thrown off by the pandemic, the supply chain was uniquely unprepared for the meteoric increase in demand and is still grappling with a mismatched and unclear exchange of information. Digitizing and sharing data can solve the issues that have plagued the supply chain and will better prepare the sector for the next unforeseen circumstance that turns a once organized industry upside down.
