- October 12, 2021
- Posted by: svm
- Category: Innovation
By Capt. Vijay Minocha
There’s a mare’s nest that needs straightening out in the large network of ports, container vessels and intermodal operators responsible for transporting goods around the world, and pandemic complications are only making things worse. With less than 90 days until Christmas, it could be rough going for retailers and holiday shoppers this season.
At the time of writing, laden container vessels are waiting as much as 10-15 days to berth along the West Coast of the U.S., while vessels in Asia are facing massive port congestion. The industry is in crisis mode, and it’s clear to see why – the COVID-19 pandemic, international container shortages, union strikes, inadequate port infrastructure and mega-vessels, and increased maritime incidents are exacerbating the already massive challenges of port congestion and thinly-stretched capacity.
What does this mean for retailers and consumers? Biesterfeld of C.H. Robinson told CNN Business recently, “The chances of your vessel arriving on time are about 40%, when it was 80% this time last year.”
Playing the waiting game
Lars Jensen, CEO of container consultancy Vespucci Maritime, shared recently on his LinkedIn post what he believes the subsequent knock-on effect on supply chains will be.
It is clear we should expect further blank sailings out of Asia in October as these vessels are not going to be able to make it back to meet their scheduled departures,” Jensen wrote.
You can expect delays after unloading, too. “Disruptions continue at every node in the supply chain,” said Gene Seroka, executive director at the Port of Los Angeles, in an operational update yesterday. Containers are waiting for nearly a week on Port of Los Angeles docks for truck collection, 8.5 days for warehouse space or to be returned empty to the port, and up to nearly 12 days to be moved by train.
Retailers and consumers prepare now
Retailers are making necessary adjustments in anticipation of delays in delivery. “Name almost anything and it seems like there’s a shortage of it somewhere,” said Biesterfeld of C.H. Robinson to CNN Business. “Retailers are struggling to replenish inventory as fast as they’re selling, let alone prepare for holiday demand.”
Ed Desmond, the executive vice president of the Toy Association, said recently, “Get out and buy toys now. If you see toys you think the kids are going to want for Christmas, pick them up now and tuck them away to make sure you have them. Right now, stores have a pretty healthy supply. We just don’t know what’s going to happen when we get down the road closer to Christmas.”
In fact, in a bid to ensure there will be products on shelves this holiday season, some manufacturers are increasing the number of ocean carriers it works with. IKEA has even gone so far as buying their own containers and chartering vessels in a bid to offer consumers their much-loved furniture over Christmas.
For consumers, the effects of the supply chain crunch will likely be felt in wallets. This is as retailers hike prices to offset rising freight and commodities costs. Shoppers should also brace for extended delivery times and may need to have contingency plans for gifts as backup.
“As we’ve been forecasting for months, shoppers are going to see some bare shelves at the holidays,” said Biesterfeld. “And if you buy most of your presents online, get it done early. Delivery time may be four to six weeks.”
We’ve seen the signs from afar
This crisis of supply, demand, and capacity shortage has been coming for about a year. Whilst a large portion of this is due to the major effects of the pandemic on shipping, there are other events that are equally to blame for the unprecedented amount of congestion.
For one, there is the spike in demand from consumers which is placing tremendous strain on existing supply chain infrastructures. Søren Toft, the CEO of Mediterranean Shipping Company (MSC), highlighted the extensive growth in US demand at London International Shipping Week recently. With a 33% increase in imports from Asia into the US in the first seven months of the year, MSC has been transporting 12 months’ worth of goods compressed in an eight-month timeframe. Toft told delegates: “Supply chains are not built for such massive changes.”
At Solverminds, we have extensive experience and expertise using the power of artificial intelligence (AI) and data science to help solve some of the lining industry’s greatest challenges.
As such, we’ve recently launched the best and latest AI-powered technology in fleet and service optimization: OptiFleet. This elegant, easy, fast-acting solution quietly gets to work on untangling these enormous, complex problems faced by liner shipping companies this season.
The simplicity of the user-facing part of the platform belies the complexity of the AI-powered algorithms underneath. It factors in every service detail, like port rotation, distance between each port leg, vessel speed on each leg, terminal productivity, port stay, total sea time, maneuvering time, and service frequency, as well as each of the vessels’ details, such as fuel consumption at speed, charter hire costs, port costs, canal costs, insurance and maintenance, vessel max and eco speed, and bunker cost. More than that, port capacity, port constraints, and cargo routing criteria are used to quickly identify optimal port pair allocation by container type, weight, and contribution, as well as quantity of TEUs and weight for each port pair, preferred customer and commodity with equipment type, quantity of empties repositioning between surplus to deficit, to ensure maximum vessel utilization.
OptiFleet removes human error, admin delays, and inflexible schedules. It uses AI to plan, analyze and optimize fleet and service schedules with a single goal: lower costs and increased profit margins. It can also issue a fleet and service schedule that maximizes profitability by vessel or by service. In short, OptiFleet allows liner organizations to create reliable schedules and manage multiple vessels and cargoes, while maximizing contribution. Graphically displayed, it is easier for decision-makers to understand the financial, commercial, operational, and empty plan outputs. More than that, it efficiently smooths out global empty surplus imbalances, which leads to greater operational efficiencies and profitability.
It’s as simple as one – two – three, with OptiFleet!
AI cuts through the madness
Disruption planning is probably one of the most value-adding features of the Optimizer as it gives planners the ability to easily create revised schedules in the event of vessel and port disruptions. Flexible and agile planning is possible, backed by data-driven forecasts and clarity. Most importantly, the Optimizer reduces operational costs, and schedules the most affordable selection with the highest revenue per ton mile for each vessel.
Established in 2003, Solverminds is a leading next-gen global technology company with a vision to empower businesses with innovations re-imagined. It’s exceptional domain expertise and cutting-edge technology solutions offer a complete range of best-in-class products for liner operations management, ship management, agency management, and advanced analytics.
While Solverminds technological focus is on delivering reliable, resilient, and robust solutions that embrace Artificial Intelligence (AI), Machine Learning (ML), Predictive Analytics, and Big Data, it’s strategic focus remains on quality & customer-centric approach, research & developments, and thought leadership.
Solverminds is a smart and sophisticated technology provider of a wide range of solutions & services that enfolds integrated and bespoke ERP, global consulting, cloud system, and advanced analytics. They help their customers ascend the ridges of the extremely competitive current world by automating their business processes while offering actionable insights, predictive outcomes, and optimized solutions to make informed decisions.