New Articles

Preparing for Rough Waters: How to Handle Freight Lost in a Vessel Accident

vessel accident february

Preparing for Rough Waters: How to Handle Freight Lost in a Vessel Accident

Maritime insurance executives estimate that 3,000 containers have been lost at sea over the past few months alone. Compared to the 1,382 containers on average lost per year between 2008-2019 as reported by The World Shipping Council, that’s a big jump. What’s the reason for it?

As you may have expected, there’s not a simple, all-encompassing answer, instead, there are multiple variables at work. The good news is, there are steps you can take to help prepare for any delays or disruptions that result from a vessel accident. As a platform that works with the many different vessel operators to move our customers’ goods, we share some key things to know.

Why are vessel accidents increasing?

There are more containers on the water than ever

Over the years, vessels have increased in size and capacity. As such, they move more containers and can stack them higher. Add in the high demand for ocean service over the past few months and a decrease in blank sailings that would typically remove capacity, there are more vessels and containers out on the water.

Poor weather and high stacks of containers don’t mix

While vessels generally avoid storms, going through a relatively bad weather cell can happen. Ocean vessels are designed to roll in motion with the waves, however powerful waves caused by bad weather combined with high stacks of containers can change this rolling motion. In these situations, vessels undergo a synchronous and parametric rolling, which often causes vessels to tip at angles that displace higher stacked containers.

What are carriers doing about vessel accidents?

Ocean carriers are looking for ways to optimize how they block and brace containers to minimize accidents – including continued rigor around weight distributions, misdeclarations, improper packing and storage planning. There is also research being done into how technology can help sense container movement, allowing for faster reactions.

How to prepare for a vessel accident

Until your freight has been involved in a vessel accident, you may not be aware of the process or overall impact on your supply chain. Although vessel accidents are unplanned and usually unpredictable, there are steps you can take before you ship so you’re not scrambling when you get the news your freight was involved in an accident. Here’s what you need to know.

Have a backup plan to deal with delays

For starters, even if your freight is not lost at sea, you’re still likely to experience significant delays. For example, a recent maritime accident in December 2020 resulted in freight being held in Japan. In this case, each container (that was not damaged or lost at sea) needs to be unloaded and transshipped to another vessel for transportation. Access to the unimpacted containers can also take a while as the unloading and inspection of damaged containers might need to take place first.

Consider purchasing maritime insurance

One of the avenues to help protect your company financially is through maritime insurance. Cargo insurance is not a requirement, but as events like vessel accidents are usually outside of the carriers’ liability, insurance can provide added protection for your freight. With a cargo insurance policy, you are covered for unexpected losses.

Develop a resilient supply chain strategy

Unfortunately, insurance only applies to the value of lost freight. It cannot help you overcome delays, transload freight, or expedite new orders to realign inventory levels and ensure adequate stock is where it’s needed most. That’s where supply chain resiliency comes in. Rather than wait until you’re impacted by a vessel accident, now is the time to develop a plan that helps you minimize the impact to your business and allows you to continue serving customers.

Rely on a provider with a global suite of services

We recently had a customer impacted by a vessel accident. While their freight was not damaged, it was delayed. Unfortunately, equipment shortages and capacity constraints almost prevented the replacement stock from arriving on time. Through quick communications with our local team in South Asia and thanks to our extensive relationships with global carriers, we successfully secured the space and containers they needed.

But that was only the first hurdle. The original destination port had high congestion and vessel dwell times, so our team shifted to a different port and was able to keep an additional 20 days off the transit time. A transportation provider with reliable service and a global network is the best way to get the careful coordination and market insights these types of situations require.

You can prepare for the unexpected

Developments in technology and changes to freight blocking and bracing will never offer full protection from vessel accidents. Think about the vulnerabilities your supply chain could face in the wake of a vessel accident now to help you minimize the impact to your business in the future.

Ready to drive smarter solutions to prepare your supply chain for a vessel accident? Connect with our global network of experts.

cargo ECS charter

Air Cargo Trends in a Pandemic World

Previous predications in pharmaceutical transportation trends, highlighting declining air passenger numbers and air freight demand increasing, have been pandemic propelled. Coronavirus continues causing worldwide disruption, as it is anticipated its industry impact will continue throughout 2021 and beyond.

Pandemic Response – Preighters Take Off

Pre-pandemic passenger numbers were already on the downturn, however, the COVID-19 crisis significantly accelerated that trend.

The crisis capacity crunch came as passenger flights plummeted and the ensuing scramble to transport pandemic payloads saw the deployment of hundreds of passenger planes as freighters, known as preighters, take off.

Pioneering Portuguese charter operator Hi Fly led this trend and was the first to convert an A380 for freight, taking out the majority of seats to provide more cargo capacity.

Despite the sector seeing the grounding of hundreds of passenger planes, earlier than had been initially forecast, which led to a reduction in the availability of cargo space in the bellies of these passenger aircraft, we’ve seen more planes undergo conversions to freighters.

The preighters prevalence looks set to continue throughout 2021 and beyond. Although the air cargo industry faces continuing challenges, IATA predicts an anticipated 25% rise in freight tonne-kilometers this year.

Boeing projects growth in the global freighter fleet with the number of cargo aircraft in service forecast to increase more than 60% over the next two decades, resulting in 3,260 operational aircraft by 2039. (1)

However, the ongoing drastic downturn in travel means the loss of a lot of capacity in passenger aircraft and while freighter aircraft are still present and working hard, fleet growth takes time, so there will be a slower response to replacing some of the capacity lost from the passenger side of the industry.

Some of the 747s which have comparatively low hours on their airframes will undoubtedly become 747 converted freighters and will be flying as freighters just to try to backfill some of that loss in capacity from the passenger numbers.

Large Widebody Aircraft – Grounded or Retired

Before COVID-19, it was predicted airlines would start cutting flights from schedules, mothball larger aircraft, decline production options, and look to utilize smaller, more efficient aircraft in the future for environmental and economical reasons. All of those decisions have been massively accelerated.

The forecast to park some of the larger, widebody aircraft has been brought forward significantly, due to the COVID-19 crisis.

The ongoing impact of the pandemic has meant the majority of all 747 freighter aircraft have or are being retired. The A380, which Airbus had previously announced it would stop deliveries of in 2021, has also been retired across the board by numerous airlines, except Emirates.

Increasingly airlines are globally grounding their A380s in favor of more modern, smaller jets, which can fly more efficiently than their four-engine aviation counterparts.

With far fewer passengers flying in a pandemic world, the travel downturn has ramped up decisions to park planes, some permanently, further impacting the already dwindling resource of global air freight capacity.

What we will continue to see is a lot more interest in leaner aircraft, like the A220, the Canadian Bombardier aircraft Airbus produced in North America.

Sea Change in Modes of Transport

There will be ongoing developments in the sea freight sector, which has an estimated 17 million TEUs (Twenty-foot Equivalent Unit) serviceable globally, of which six million containers are routinely turning and carrying freight.

Put in perspective, at its lowest level of trading during the onset of coronavirus, there were 135,000 TEUs a month traveling from China to the US. However during peak months, when the US retail sector’s stocking up for Thanksgiving and Christmas, this increases to 900,000 TEUs a month. This equates to 8% of the global free flow of sea containers just crossing the Pacific from China to the States.

Any delays will see a huge build-up of sea containers, which lead to availability issues, and rate rises, as seen during the pandemic when China stopped producing. What we saw with the initial emergence of COVID-19, China stopped producing, so wasn’t pushing out those sea containers so there were availability problems in the rest of the world because all the sea containers were piling up in China.

When China returned to approximately 98% of its production output in April other countries were then in lockdown, with some like the US, holding containers for two weeks in ports to quarantine them, compounded by shorthanded workforces operating in the docks.

As sea containers started to pile up in their markets and with exports to China impacted, shipping lines cut sailings from schedules, which saw sea freight prices spike by up to 50%.

Uncertainty in sea freight and air freight availability saw pharma companies initially ship everything they could, by any mode of transport available, to get it out to the markets.

Following months of disruption passenger airlines eventually started flying passenger aircraft with cargo in the lower decks and loose load cargo on the upper decks.

We are now back in the situation where that backhaul from the US and Europe, following seasonal shipments for Christmas retail demands, China now has availability issues again with reduced sailings, so there will not be any kind of normal flows until March 2021, at the very earliest.  However as the UK is currently back in another national lockdown, with all non-essential retail effectively closed and production affected, and if this trend spreads further into Europe and possibly the US, then that will further affect the backhaul. So whereas I was hoping things might be back to some kind of normality in March, I am now inclined to add another quarter to that. So, I now think there will be exacerbated sea freight and sea container availability issues throughout the first half of 2021.

Given the sea freight situation, we will continue to see the utilization of air freight to transport pandemic payloads. When it comes to economics, without the passengers on the main deck it is a much more expensive operational option, however pharma customers are prepared to pay those premiums to move their product.

The volumetric efficiency of air craft is critical at the moment because it is such a scarce resource we need to ensure the best use is made of it.  With air freight capacity a dwindling resource, it is even more important to have the very efficient packing density of temperature-controlled products on such limited air freight resources.

Vaccines vs. Virus – Rapid Response

As the development of successful COVID-19 vaccines continues at a rapid rate, the world’s first approved vaccines are already being administered as part of ongoing mass vaccination programs worldwide.

Temperature-controlled packaging manufacturers continue to play a pivotal part in the global deployment of these approved vital vaccines, including those developed by Pfizer/BioNTech, Oxford University/AstraZeneca, and Moderna.

As COVID-19 vaccines fall into different families of technology, some have frozen and deep-frozen temperature requirements, leading to a scramble to qualify existing solutions for shipping at those specific lower temperatures.

In a rapid response to the logistical cold chain challenges involved in the deployment of these potentially life-saving vaccines, we have adapted our shippers to meet those temperature requirements, as have other providers in the market.

There has been an impetus for innovation to support these temperatures in volume. Suppliers stepped up to meet the vaccine temperature requirements by adapting existing shipping solutions and the capacity is there, so I don’t anticipate it will be an issue going forward.

The focus is reverted back to the capacities in the transport modes and given the nature of these drugs people are paying whatever it costs to ship them, with rates rising sharply from $2.5 a kilo to $23; however, that’s starting to calm down.

Beyond all of the current vaccines being approved, there will be the need to provide boosters. It is going to create a recurring step up in the volume of vaccines being shipped, alongside the flu vaccines being transported and other pharmaceutical payloads every year.

There will not be a continuous crisis, it will be a continuing trend of smaller aircraft, with reduced airfreight capacities, moving that pharma product at temperatures that sea freight cannot do. It really can only fly.

However, there’s not going to be a modal shift from air to sea because sea cannot meet the temperature requirements necessary for these shipments. You get a displacement, whereby COVID-19 shipments, whether vaccines, test kits, and reagents or some of the therapies which help with recuperation, like Remdesivir, are flying at almost any cost on a dwindling resource.

The pharmaceuticals which have more normal temperature shipping requirements, like 2 – 8C degrees or 15 – 25C degrees, get displaced and in that situation, when the air freight rates get so high, sea freight would normally be seen as a shipping solution.

However, with all of the sea freight challenges, coupled with the fact that their transportation rates have also doubled, there has been some displacement but not as much as pharma companies would have liked, which is what has kept pushing the prices up in the region of the $23 a kilo figure for air freight we had seen previously in the market.

Sea freight will improve in the first six months of 2021 so some of that displacement can take place more efficiently. But aircraft will still be full of COVID-19 related products.

2021 will see the industry learning to operate in the new norm with everyone getting used to that new norm. Next year we might start to see some improvements and efficiencies but I think this year is about adjusting our planning, our capacities, and our operations around this spike in demand and the gradually improving capacity picture. Almost like wearing in a new pair of shoes.

_________________________________________________________________

Dominic Hyde is Vice President Crēdo™ On Demand at Pelican BioThermal

calculated risk

The Right Time to Take a Calculated Risk Could Be Right Now

When it comes to risk-taking in supply chain, transportation and logistics categories, the process often begins by identifying a problem or opportunity. You may be facing a major turnaround and wonder how to address it with a calculated risk, one where you apply current-state knowledge and determine how a change might affect the quality of process and performance.

Despite the ongoing pandemic, the best time to take a calculated risk may be right now.

Ralph Waldo Emerson once said, “Don’t be too timid and squeamish about your actions. All life is an experiment. The more experiments you make the better.”

Let’s examine risk management through the lens of a lean operations consultant. To begin, consider how the “new normal” affected the lean supply chain. Pandemic and disruption of foreign production is driving many manufacturing organizations to take the following steps.

-Explore re-shoring of sourcing for raw materials, product components and finished goods.

-Invest more C-Suite time toward solving issues within the network.

-Bring production closer to the manufacturing base to improve geographical access and mitigate risks associated with an overseas failure.

Meanwhile, lean-focused supply chain experts are charged with examining internal processes and accommodating supply chain shortfalls. Expert perspective is integral to both the continuous improvement of in-house activities and the network adjustments that come with the re-shoring of supply production.

Just as COVID-19 disrupted manufacturing networks, it created new challenges for keeping lean supply chain teams engaged. Workforce reductions and remote operating environments create hurdles for maintaining the close awareness required to identify wasteful activity and efficiency improvement opportunities.

A lean perspective in a pandemic supports supply chain corrections with turnaround timelines that do not need to be limited by social distancing and remote environments. An expert partner can help identify and execute the most effective supply network strategy, freeing up leadership to focus more time and energy on strategically advancing the business.

Critically, that partner enables you to pursue calculated risks that achieve improvement. Here are a few reasons why now may be the perfect time to pursue some of those risks.

New Manufacturing Normal

We are hearing common refrains among manufacturers across diverse industries. As seen in the examples below, the observations are similar regardless of the supply chain network.

-Manufacturing is moving toward re-shoring to reduce supply chain disruption and distance.

-Constant supply chain focus is necessary to eliminate current and future disruptions.

-Supply chain failure is the No. 1 reason a company is having issues in start-up or restart activities.

-Adjusting product mix and production set-up is a struggle.

-Lean training and learning is difficult outside the facility “Gemba,” or “where the truth can be found.”

Some companies furloughed, slowed down, or even cut back their lean teams to reduce costs. This leads to significant organizational impact, often requiring executive attention to resolve emerging network problems. Losing the process visibility provided by these experts can result in costly misalignment across an already stressed network. This loss can challenge future supply chain adjustments.

Inventory Management Problem Solving  

Inventory management drives the biggest questions manufacturers encounter as they reset to serve a new normal. Common inventory problems in our assessments of manufacturers include:

-Too much inventory, not balanced or not accurate.

-Too much of the wrong inventory for the manufacturing product family mix.

-Not enough of the correct inventory to manufacture replacement parts and service clients.

-Parts inventories not adjusted after major equipment repairs.

-Single sourcing from Asia, Europe, etc.

Losing the visibility of a supply chain expert can quickly affect your transportation cost, especially in a volatile environment following a significant disruption.

Broader Effects of Lean Team Reductions

Because of the required temporary resource reduction, we can’t rely on tacit knowledge. Therefore we have to make calculated risks. Organizations that scaled back their lean team as a reaction to COVID-19 report common experiences, such as these collective cost-control repercussions:

-Quick loss of awareness to inbound ocean transportation and ensuing TL freight moves.

-Lack of preparation for spikes in air freight costs for production and parts inventory.

-Increased costs (i.e. detention fees) due to misaligned lead times and production planning.

-Capacity reduction for problem solving.

In the “old normal” environment, lean resources maintained process awareness required to exert continuous improvement. These resources also facilitated ongoing training and a perspective for applicable global practices. Losing access these resources – usually provided on-site – impedes the ability to evolve processes.

Calculated Risk Guidelines

Because of required temporary resource reduction, an organization may not be able to rely on tacit knowledge, so a calculated risk may be required. Here are 12 guidelines that will help you decide whether a risk is worth the reward.

1. Treat people like people. For some managers, there is a risk in engaging people in a conversation. Think about it, people need to talk to people. One shipping manager wanted to accomplish 100 percent on-time complete shipments. By taking a risk — talking to employees — this shipping manager met his goal. He learned the changes needed and achieved “buy in.” Create leadership time with associates to listen objectively. When people feel like they are valued contributors on the team, they become true ambassadors.

2. It’s okay to make decisions without 100% of the information. There is generally a lack of robust, easily obtainable data related to every single order. This includes carrier data, sales data, product costs, fulfillment costs and other metrics. To make this information work and support profitability, data must accumulate and consolidate to track trends, pinpoint winning/losing SKUs and single out areas where a company is exhibiting margin compression and possibly losses. Assembling an internal IT team to build a platform is expensive. It monopolizes employees’ time which could be focused on alternative and more profitable endeavors. A logistics partner can help, but not all partners bring the level of expertise and technology required in today’s evolving business environment.

3. Understand your true fulfillment cost. This is key to the kind of risk you might take. Plan for every part. When COVID-19 emerged and your single-sourced supply was overseas, how did the organization react and why? What was the dual sourcing strategic and tactical plan? When did you last compare the cost of buying in the United States to a foreign vendor? What are the fulfillment costs from SKU inception to customers—warehousing, transportation, packaging, delivery, returns and tracking—until product delivery? Without knowing total fulfillment cost of a U.S. supplier, the true landed cost is just a guess.

4. Strive to make your customers happy. The booming e-commerce marketplace is opening doors to new growth opportunities. To achieve success in these uncertain times, organizations must remain nimble enough to shift a supply chain network and adjust processes to meet fluctuating demand. Shrewd executives who prioritize supply chain performance are positioning their companies to control costs and exceed customer expectations. Post-pandemic planning offers organizations a new opportunity to assess potential risks and plan alternative responses. Proper contingency planning today positions organizations for growth and profitability tomorrow. It allows for establishing and maintaining customer service at the highest levels while controlling costs.

5. Create a plan that considers risk and incorporates this risk management checklist:

-Identify all potential risks.

-Measure frequency and severity of each risk.

-Determine what accepting the risk looks like. Why is this move a benefit?

-Identify and brainstorm solutions to achieve the desired outcome.

-Implement the best scenario.

-Monitor, measure and verbally report on the results that drive change.

If an organization develops a risk culture, it becomes more resilient and adaptable. A risk management approach to planning works in our “new normal.”

6. Take a calculated risk on training. Look at the business as the proverbial lemonade stand. Let’s say the goal is to produce higher throughput. How can this be accomplished? Training will open a team’s eyes to new solutions and applicable case studies. If the struggle is “getting out of the sand box,” consider serious team training. Solve problems together. Learn from each other. Share experiences. People are hungry to do something different and better. Training can show everyone the way.

7. Measure what you want to change and calculate the universal risk. Does the organization have the correct tracking system? Consider a review and update of the order-to-cash business process and begin to identify problems. It’s not always inexpensive to do this. Take a lean journey with a consultant. Recently, a $250,000 consultant’s fee saved a company over $8 million because the consultant worked with management and ameliorated the risk that the company’s team was assigned to solve. Sometimes multi-million-dollar problems can only be solved by a consultant because the corporate team is too close to the problem.

8. Expect some changes to produce no measurable ROI. Does the company have an environment where your employees can speak for the president? Do they know the values your organization cherishes? Why is it a great place to work and a perfect supplier for your customers? Sometimes leadership needs to spend time with employees to communicate the business case of sincerity, understand messaging response and exhibit love for your brand. But it takes a commitment—and time. Start with a good elevator speech.

9. Your controller knows the pain points. While your CFO watches assets, liabilities and cash flows, the controller knows your pain points. To target problem areas fast, start with the CFO for balance sheet items and the controller for day-to-day problems. Involve the controller in meetings that affect the supply chain and welcome new ideas to the team. The insight may identify opportunities otherwise overlooked.

10. Fix the easy “waste” first. Sometimes the simple changes, which come with little risk, can make a big difference. Eliminate these waste areas immediately.

-Reduce the number of people who double-check orders. Ask why?

-End process and systems redundancy of employees repeating the same tasks.

-Send emails on a need-to-know basis and reduce FYI copies.

-Identify work-arounds to change the basic system. Ask why, set a plan and eliminate them!

11. Change the corporate operating discipline. When a company decides to take risk, leaders need to create a system to support a calculated risk. It must be acceptable to take risk. This is the climate and messaging required. Engage an outside consultant to make this happen. Your team may have 50 great ideas to solve a problem. Now the job is to determine which solution has the greatest return for the least risk. A consultant is a neutral party with expertise to separate fact from emotion.

12. Learn from the big guys. There is a reason why lean operations personnel study Toyota, General Motors and Honda production systems. Their systems work! They study the true fulfillment costs for each part and SKU. They learned that dual- and even triple-sourcing is the answer, not a single source. They know U.S. suppliers can be cost-competitive with overseas options. Research how these companies approach risk, improve quality and incentivize employees.

Conclusion

It is paramount to understand that calculated risks produce better results at companies that build a culture that accepts risk. To know where to take a risk, you need to identify where processes and systems are falling down.

It is OK to fail. The smaller the problem scope, the smaller the risk. If you solve many small problems, the cumulative savings add up. Think of this as a compounding mutual fund in which you invest and monitor growth.

Remember that problems are not solved by vice presidents or directors. Problems are solved by the collaborative efforts of a team whose members are receptive to every valued voice.

Schedule a lean supply chain consultation today to begin to establish efficient processes that control cost and improve service. These experts have the knowledge, tools and expertise to help your organization take the risk out of risk-taking.

logistics

Logistics Challenges and Opportunities In the Post Covid-19 World

The world had a good business run in 2019. March 2020 happened – when Corona ravaged globally erasing all the gains the economy had achieved. Lockdowns were affected in many countries, which significantly impacted businesses ability to carry out operations effectively, China – the world’s largest outsourcing hub, got locked down, crippling the majority of industries that relied on China’s cheap workforce to produce goods.

Ports and airlines were closed, effectively halting major transport of cargo, which impacted businesses negatively. People panicked and hid away in their homes, resulting in the closure of many businesses such as restaurants, entertainment joints, and theme parks that relied on people going out. Most businesses retrenched a lot of workers resulting in the economy performing poorly since most people had nothing to spend.

Governments all around the world started by limiting air and sea travel to avoid carriers of the disease entering and spreading further infections in their territories. This proved detrimental to airports and seaports since the majority of their revenue depended on ferrying people. Further, packages from China were suspected to carry the virus so sea freight was strictly halted. This led to air cargo taking on the mantle of transporting goods all over the world. Airports are now using this channel to recuperate profits lost during the Covid-19 onslaught. However, even as air freight becomes popular, the demand is too high the airplanes are having trouble fulfilling demand.

The biggest problem business faced when Covid-19 hit was supply chain disruption. This affected large businesses whose supply chain might run through different regions or countries. Most affected were companies that used China’s manufacturers to make their products. Most businesses lost suppliers due to various reasons caused by Coronavirus leading to them starting the search for new suppliers which obviously disrupted business operations. Suppliers resorted to collaboration with the few available other suppliers to satisfy the demand to mitigate this disruption.

Most businesses have now realized how vulnerable their supply chains are and are already looking to diversify, move from China, and find new suppliers close to home. Also, logistics companies have seen the unprecedented business from these companies who want greater visibility of their supply chain to avoid future disruptions.

Technology has been a major savior for companies during this period. Warehousing companies are now using robots to help them package and move packages in place of workers that are not available due to Covid-19. Embracing IoT to help monitor machines and packages remotely, robotics to provide labor around the factories, and AI to help in forecasting, analysis, and management of different processes in business has helped companies survive the pandemic. Logistics companies will have to know how to assist companies leverage technology to achieve an edge in the industry.

Another big transformation globally is the shift in focus to selling directly to customers. Businesses are finding it easier and more advantageous to sell directly to customers rather than using the normal distribution chains traditionally once relied upon. Modern technology; robotics, Saas software, ERP systems, and AI have made manufacturing simpler, easier, and more efficient. This shift is beneficial for both customers and manufacturers. Customers can now get new goods straight from factories very cheaply due to the elimination of the distribution chain bottleneck that added fees on products. Also, these businesses will enjoy more profits while having more control over their brand. They can now manage their brand visibility and have relationships with customers which will allow them to get feedback.

Online shopping practically exploded during the first months after Corona hit – March, June, and July. This is due to a major shift in consumer habits precipitated by a necessity to stay indoors for health security and a need to shop easily. Online demand was so high that most businesses could not fulfill this demand. Now every company worth its salt is working on its online presence and on how to effectively sell online including doing online marketing and having online content to attract shoppers.

Due to massive changes in every area of business operations, businesses will now need to optimize their operations. This is to ensure they are efficient in performing business activities. An example is the growth of online shopping which means a lot of deliveries are going to be made. However, delivery drivers are in short supply which means a business needs to optimize that operation to make sure there are enough drivers to fulfill customers’ demands.

Efficiency conscious companies are relying on sensors to make sure their operations run smoothly. Packages are now getting trackers so that they can be monitored from factory/warehouse to customer’s drop point. This is to ensure the package arrives safe and did not get tampered with along the way. Data from these sensors are being used to make delivery better and analyze package delivery times.

Effective business operations in many businesses now are due to Saas platforms that offer businesses of all kinds, large and small access to logistics that are agile, flexible, and can be used remotely in the same organization by multiple workers. Also, AI is helping by providing forecasts and analyses of markets to provide businesses with insights that can help them tweak or adjust operations in case of a market shift. For example, Amazon now knows demand will peak during black Friday and adjust operations in anticipation of these events.

The best thing that has happened during this pandemic is the adoption of last-mile contactless delivery. Businesses are making sure that packages reach their customers safely, without any contact so as to mitigate the spread of the virus and make sure packages arrive in perfect condition. Logistics companies will have to ensure most packages are delivered safely for the customer.

Also, logistics companies will now have to offer companies with digital solutions to manage customers and customer relationships.

Most companies now realize that in order to reduce shocks in business operations, supply and distribution chains will have to change. The best solution is to shorten supply chains, bring them closer to home and shorten delivery times.

Covid-19 presents a lot of opportunities in helping businesses recover from the pandemic and streamline operations to recoup losses made.

affreightment

Contract Of Affreightment: How to Know Your Obligations

Shipowners and charterers must make themselves aware of the contract of affreightment. This post details what a contract of affreightment is and the obligations this contract mandates. 

What is a Contract of Affreightment? 

A Contract of Affreightment is a legal agreement between the shipowner and the charterer. The shipowner agrees to transport a specific amount of cargo for a specific period for the charterer. In this agreement, the charterer is responsible to make payments whether the goods are ready to be moved or not.   

A Contract of affreightment is important when considering ship chartering. The terms of the contract express the liabilities, rights, and obligations agreed between the charterer and shipowner. Some obligations include: 

-When the agent of the charterer should be given notice by the master 

-When the vessel can be loaded and discharged from the port 

-When the bills of lading will be issued 

-How to pay the demurrage 

-Who will be held responsible for potential negligence by the stevedores and crew?  

Apart from these, there are other obligations in a contract:   

The Seaworthiness of the ship 

Every contract that is signed between the shipowner and charterer comes with an understanding that the ship must be seaworthy. The ship must be able to withstand the dangers that it will face during the sea journey. There are also certain other terms detailed in the contract. These would include the sufficiency of fuel, efficiency of the crew, and others that are vital for transporting goods. The ship should meet the charter requirements sufficiently to serve the purpose for which it has been agreed.  In every aspect, the ship should be ready to complete the service delivery.  

Staying on the agreed route – no deviation 

The shipowner commits to sticking to the route ( and not to deviate) agreed in the contract of the carriage. Deviation from the agreed route is not considered to be a reasonable switch from the pre-decided route mentioned in the contract. Deviation in the route can only be highlighted out by a party reviewing the contract. If no particular route is mentioned in the contract then the direct route between the port of loading and unloading is considered to be the proper route. However, the ship can choose to deviate to another path if the agreed path exposes it to some danger to the ship or its cargo. It may be acceptable if it is necessary to prevent damage to the ship, crew, or cargo.     

No shipping dangerous goods 

It is dangerous to ship certain goods without notifying the carrier. The shipper should not do it unilaterally. Some commodities may not only be dangerous during the beginning of the transport but later in the form of leaks or fumes. If the shipper fails to notify the carrier about the dangerous commodities or hides them for some reason, the shipper will be responsible for any accidents or damages that occur to the ship or cargo. 

The obligation of reasonable dispatch 

The shipowner or the carrier must be capable to perform the dispatch duties effectively. If the terms in the contract do not mention a specific time frame the dispatch should be done within a reasonable period. This would be based on the shipowner’s expectations. If the carrier violates this obligation the charterer may claim damages. The charterer will not be able to claim any damage if the delay is caused due to natural factors like storms, rain, or something else beyond their control.  

Nominating a safer port 

If the charterer (voyage or time) can nominate the port of their choice, it should be a safe one. It is the responsibility of the charterer to nominate a port that is safe for the charter service and to ensure that it remains safe for the period of the contract. The safe period will include the time the ship reaches the port till the time of its departure. The ship must be able to leave the port safely once the loading or unloading is completed.  

Frustration 

Frustration occurs when the contract cannot be completed without one party being at fault, for example, if the chartered ship is damaged or the charterer is lost. It reflects an incapability to perform the contract. Delay in transport also falls under frustration as it precludes achieving the objectives. The party alleging the delay must prove the frustration. They must satisfy the court and prove that the contract remains useless or stands as illegal due to its failure to perform.   

Summary 

When chartering a ship for a time or voyage charter, ensure that it is protected throughout the contract period. The charterer charters the ship from the shipowner by having an agreement in the form of a Contract of Affreightment. Such an agreement brings certain obligations which need to be aware of.      

SCPA

SCPA Completes 2020 with New December Record

It should come as no surprise to learn that South Carolina Ports Authority (SCPA) managed to finish 2020 with record numbers, considering the year is notorious for the insurmountable disruption felt by the international and domestic trade arenas. SCPA proved once again that when it comes to breaking new records, there’s no time like the present – even in the middle of a pandemic.

“The pandemic created unprecedented challenges to supply chains around the world,” SC Ports President and CEO Jim Newsome said. “I am immensely proud of our port employees and all those working in the maritime and logistics community for showing up every day during a pandemic to keep supply chains fluid. Their dedication ensures that food products, medical supplies, manufacturing parts and retail goods are efficiently delivered. We are grateful to them, and we look forward to a brighter 2021.”

The ports’ Wando Welch and North Charleston terminals saw an increase of 11.6 percent thanks to the 209,606 twenty-foot equivalent container units (TEUs) handled in December. Cargo boxes of all sizes were also moved at record numbers. The port confirmed 116,685 pier containers in December (including the aforementioned cargo boxes) at an increase of 10.3 percent.

SCPA cited the vehicles as the most significant in terms of volume. A total of 21,228 vehicles were handled in December alone. This total set a new overall monthly record for the port and represents a whopping 29.2 percent increase.

The rail side of operations saw robust numbers throughout December as well with a  total of 16,463 rail moves recorded between Inland Port Greer (13,523) and Inland Port Dillon (2,940). Although Inland Port Dillon’s rail moves were confirmed to be down by 2.9 percent, Inland Port Greer saw an increase of 26 percent in rail moves compared to last year.

So far for FY2021, SCPA has handled more than 1.2 million TEUs, moved 135,747 vehicles across the docks at Columbus Street Terminal, and continued efforts for the Charleston Harbor Deepening Project and Hugh K. Leatherman Terminal.

port

AMAZINGLY, PORT SUCCESS STORIES CAME IN SEPTEMBER DESPITE THE GLOBAL PANDEMIC AND ECONOMIC UNCERTAINTY

We have pursued an amazing amount of infrastructure in a short period of time. In 2021, we will have the deepest harbor on the East Coast.

Large retail stores are reopening, merchants are stocking up for the winter holidays and the increased use of e-commerce appears to be an enduring trend picked up by consumers during the recent stay-at-home orders.

It’s a tossup which is more impressive: that several U.S. ports experienced strong (and in some cases record-breaking) growth during the third quarter of 2020, or that these gains came in the middle of a global pandemic and economic uncertainty.

 

Consider the examples that follow.

GEORGIA PORTS AUTHORITY

In August, the Port of Savannah moved more containers over its docks, more cargo through its rail yards and more trade in and out of its inland terminals than at any other point in its 75-year history.

Let’s let that sink in, shall we?

Indeed, August 2020 saw the Georgia Ports Authority (GPA) move 441,600 twenty-foot equivalent container units (TEUs), an increase of 1 percent or 3,850 TEUs compared to August 2019, in which the previous record was set.

The GPA also set a record this past August for intermodal cargo, handling 49,402 containers (approximately 89,000 TEUs) by rail. And more containers moved through the GPA’s Appalachian Regional Port in August than ever before at 3,420 lifts, an increase of 1,679 or 96 percent.

“The numbers cement Savannah’s position as one of the key hub ports in global trade,” says GPA Board Chairman Will McKnight. “The combination of big ship efficiency, our landside infrastructure and the soon-to-be-completed harbor deepening make Georgia the logical choice for American farms and factories competing in the global marketplace. The Port of Savannah stands ready to support the nation’s exporters as our economy regains momentum.”

Yes, Savannah stands ready—although not on its heels. Consider this: After setting those all-time records in August, the port in September welcomed the CMA CGM Brazil, the largest ship to ever call the U.S. East Coast with a capacity of 15,072 TEUs.

“As the largest ship ever to call the East Coast moves 5,600 TEUs on and off the largest single container terminal in North America, it is clear that our efforts to expand capacity and reach are taking hold,” said GPA Executive Director Griff Lynch said shortly after the CMA CGM Brazil docked

“Frankly, we weren’t expecting to experience record volumes during this pandemic, but thanks to our employees, the ILA and all of our partners who pulled together and our customers who believe in us, this announcement is possible today.”

While it had the microphone, the GPA seized the opportunity to make another pro-growth announcement: The Savannah Harbor Expansion Project, which will deepen the river to 47 feet at low tide, is now 75 percent complete. 

“The sight of this colossal ship makes perfectly clear the benefits America will gain from the Savannah Harbor deepening,” said Col. Daniel H. Hibner, commander of the U.S. Army Corps of Engineers Savannah District. “The Savannah Harbor Expansion Project, now nearly complete, will boost the economy at a critical time and will have broad impacts for Georgia, South Carolina and throughout the Southeast.”

SOUTH CAROLINA PORTS AUTHORITY

Sure, you can read on about the recent success of the South Carolina Ports Authority (SC Ports). Or, you can take the GPA information above and replace “August” with “September” and “Savannah” with “Charleston.”

First, SC Ports’ September volumes reflected the strongest year-over-year activity since the pandemic hit, showing a continued recovery and strength in containers, vehicles and inland port moves.

The Wando Welch and North Charleston container ports handled 195,101 TEUs, a record September for SC Ports and a slight increase year-over-year. The Port of Charleston’s Columbus Street Terminal handled 21,702 vehicles during the same month, which was less than 2 percent down from the previous year. But fiscal-year-to-date, vehicle volumes are up 25 percent.

Meanwhile, inland Port Greer had 12,994 rail moves in September, up 4 percent year-over-year, while inland Port Dillon’s 3,108 rail moves that same month was up a whopping 27 percent over September 2019. The inland ports’ combined 16,102 rail moves in September represented an 8 percent jump from a year ago.

“September volumes outperformed expectations as we see an uptick in cargo flowing through our marine terminals and inland ports,” says SC Ports President and CEO Jim Newsome said. “We will continue to operate well-run terminals, as we have throughout the pandemic.” 

And, they will continue to push the envelope.

“We remain highly focused on capturing more retail goods and e-commerce cargo, such as with Walmart’s new 3 million-square-foot distribution center Dorchester County,” Newsome said.

Like Savannah, the Port of Charleston also saw a record fall with the call in September by the CMA CGM Brazil. “The ability to seamlessly handle the CMA CGM Brazil highlights SC Ports’ deep harbor and modern capabilities,” Newsome said.

If that sounds similar to what came out with CMA CGM Brazil’s Savannah call, prepare for more déjà vu all over again: SC Ports also revealed its Charleston Harbor Deepening Project is on schedule to achieve a 52-foot depth in 2021.

“We have pursued an amazing amount of infrastructure in a short period of time,” Newsome observed. “In 2021, we will have the deepest harbor on the East Coast.”

PORT OF LONG BEACH 

The Port of Long Beach accomplished a pair of records in September by achieving its busiest month ever and the most active quarter in its 109-year history.

Trade was up 12.5 percent in September compared to the same period in 2019. Dockworkers and terminal operators moved 795,580 cargo container units and broke the “best month” record; the previous single-month record of 753,081 TEUs was only set this past July, surpassing by nearly 42,500 TEUs.

The port processed 2,274,271 TEUs between July 1 and Sept. 30, a 14.1 percent increase from the third quarter of 2019. It was also the port’s busiest quarter on record, topping the previous record set during the third quarter of 2017 by nearly 160,000 TEUs.

“Large retail stores are reopening, merchants are stocking up for the winter holidays and the increased use of e-commerce appears to be an enduring trend picked up by consumers during the recent stay-at-home orders,” said Mario Cordero, the port’s executive director. “Still, we must move ahead with caution during the remaining months of 2020 because the national economy continues to be heavily impacted by the COVID-19 pandemic.”

“These numbers reflect a continuation of the secure, speedy and reliable service we provide at the Port of Long Beach during this difficult time in our country,” added Long Beach Harbor Commission President Frank Colonna. “Delivering top-notch customer service and maintaining the health of our workforce remains our top priority.”

The port saw 92 containerships call in September, 19 of which were unscheduled vessels that made up for voyages canceled earlier this year.

PORT MANATEE 

Port Manatee’s dynamic containerized cargo trade continues to swell at a record pace, surging nearly 55 percent in the just-ended fiscal year, according to figures reported on Oct. 13 by the closest U.S. deepwater seaport to the expanded Panama Canal.           

In the fiscal year ended Sept. 30, an all-time-high 88,466 TEUs crossed Port Manatee docks, up 54.6 percent from the preceding 12-month period, when the port saw moves of 57,239 TEUs. That figure was up 49.2 percent over fiscal 2018, when 38,361 TEUs moved through the Palmetto, Florida, port.

“With container throughput more than doubling over the course of just two years, Port Manatee is increasingly fulfilling regional consumer demands for goods ranging from fresh produce to appliances,” said Carlos Buqueras, Port Manatee’s executive director. “As our dockside container yard expansion project advances toward mid-2021 completion, Port Manatee is positioning to continue to efficiently handle rapidly growing cargo volumes.”

The container yard expansion is adding 9.3 acres to the existing 10-acre paved facility adjoining Port Manatee’s Berth 12 and 14 docks.  

While the COVID-19 pandemic and related impacts did not slow Port Manatee’s container upsurge–including a 24.9 percent rise in containerized cargo tons to 668,672–some other cargo sectors were negatively affected at the fiscal year’s end. 

The port’s total cargo tonnage for fiscal 2020 of 9,327,183 was down 7.5 percent from the record 10,081,743 tons in fiscal 2019, with liquid bulk tonnage slipping 8.6 percent, to 5,957,157, and dry bulk tonnage falling 16.7 percent, to 1,866,383. Led by increased volumes of lumber and scrap metal, Port Manatee’s general cargo throughput was up 9.3 percent, to 531,019 tons.          

Priscilla Whisenant Trace, chairwoman of the Manatee County Port Authority, said she is encouraged by the port’s latest cargo numbers, realized amid the implementation of enhanced health and safety measures.

“We commend the men and women who are maintaining essential operations at Port Manatee, serving consumers of Southwest Florida and beyond,” she said. “Sustained growth of Port Manatee’s container trade is a testament to the success of our diverse strategy, with key infrastructure investments poised to facilitate even greater cargo activity and deliver still more positive socioeconomic impacts throughout our region.” 

PORT OF BUFFALO

“Exploding” is how Port Director Patricia C. Schreiber describes the Port of Buffalo’s 2020 navigation season, which through early September had welcomed 15 vessels with more scheduled to arrive.

“Projects that we’ve been working on for years have finally come to fruition,” Schreiber says in a press statement. “We’ve expanded the realm of everybody’s projects here by offering as much as we can whether it’s transloading, warehousing, rail or dock-side service, and even long-term storage.”

A diverse mix of commodities at the forefront of the Port of Buffalo’s busy season include wind turbines, salt, and sugar. The port’s sugar business began in the fall of 2019 when Schreiber worked to attract a new terminal customer.

“We were able to develop this new partnership because we’re a one-stop-shop with certified weigh scales and the ability to bring in material via vessel and out by either train or truck,” notes Schreiber. “We were and continue to be responsible for offloading bags of sugar from the vessel, stacking them into our warehouse, and scaling our customer’s trucks for shipping.” 

You might say Buffalo’s taste for sugar has . . . wait for it . . . 

“This year, our customer decided that they were only going to ship organic sugar,” Schreiber revealed. “So, we created a custom solution on their behalf. To handle the organic sugar shipments, we decided to certify the Port of Buffalo as an organic port.”

The Port of Buffalo is a proud member of the Great Lakes-St. Lawrence Seaway System, a marine highway that extends 2,300 miles from the Atlantic Ocean to the Great Lakes. About 143.5 million metric tons of cargo are moved across the system on an annual basis, supporting more than 237,868 jobs and $35 billion in economic activity.

Like its partner facilities within the system, the Port of Buffalo is seeing international shipments of wind energy components taking off. Explaining that the process to bid on wind turbines actually began two years ago, Schreiber says “our hard work paid off. This year, we’ve been handling multiple shipments of wind turbines. To us, that means a full dock for the season.”

port

AS GLOBAL PORT OPERATIONS NORMALIZE TO PRE-PANDEMIC LEVELS, LET’S LOOK AT 2020 AND THE FUTURE OF SHIPPING

Global transportation in 2020 has been defined by supply chain disruptions. The year started off under the impact of the China trade wars and quickly devolved into full-scale disruption with the onset and reaction to the COVID-19 global pandemic. 

As an international freight forwarder serving over 150 countries, Suddath has been on the front lines helping customers navigate these challenges to keep their supply chains moving. Since July, we have continued to see a positive shift in the volume numbers, with port activity beginning to recover to pre-COVID-19 levels. That leaves many wondering if our industry is nearing a post-pandemic era, and what that world will look like.

Supply Chain Disruptors

To understand where we are going, we start by looking back at the beginning of the year. The industry was still feeling the full impact of the increased complexity and protection policies over global trade. Most notably, the trade war between China and the U.S. 

When the COVID-19 pandemic spread through China, where the origins were traced to Wuhan, China’s economy and manufacturing plants went nearly silent for more than six weeks, with little goods produced or shipped to ports around the world. 

According to a China Economic Update Report by the Asia Perspective management consulting firm, China’s Gross Domestic Product (GDP) fell 6.8 percent from January to March 2020, and its exports fell by 11.4 percent in the first quarter of 2020. According to the same report, during this time period, imports to China from around the world also fell by 0.7 percent. The country’s GDP had a slight recovery from April to June, with a 3.2 percent, however it was still well below pre-COVID-19 numbers. 

These declines in volume forced ocean carriers to reduce their capacity, often through the use of blank sailings or scheduled sailing that were canceled by an ocean carrier, so a vessel bypasses certain ports or even cancels full vessel rotations. Seatrade Marine News reported a total of 435 blank sailings by container lines through April 2020, as carriers continued to match capacity with decreased demand. In the U.S., we have witnessed similar results, such as the ports in South Carolina reporting 72 blank sailings between January and July with a corresponding overall decline in port volume for the year. 

Ocean carriers continue to utilize blank sailings as they try to match volume with capacity. Equipment shortages are plaguing the industry as empty containers dwell in places they are not needed and are in short supply where they are needed, such as China and the Far East. Container repositioning, or moving empty containers to new locations, is among the supply chain disruptions of blank sailings because the empties simply do not get repositioned as efficiently as they would during normal operating periods. 

Looking Up

While it is clear these supply chain disruptors still have a far-reaching impact, there are indications from the global economy that we may be headed in a better direction. Most U.S. ports had seen double-digit reductions in overall port activity from the onset of COVID-19 through June. However, things took a turn for the better in July. 

The Port of Los Angeles reported that September volumes were 13.3 percent up from the same month in 2019; in addition, the port reported the best quarter in its 114-year history. 

This recent surge in port volumes is making it more difficult for truckers to get appointments to move containers into and out of the port in the allotted time frame. South Carolina ports experienced a similar trend, with September year-over-year activity the strongest since the pandemic onset, and vehicle movements through the port show continued recovery. 

There are several factors that have contributed to this uptick in activity, including: 

-Most of the world’s manufacturers are back to business, leading to an increase in production around the globe

-The U.S. government lifted some travel restrictions for military families, with conditions, which has spurred movement around the globe

-A global decrease in blank sailing, particularly to and from Far East ports, which were bypassed earlier this year, but have become active again

The recent spike in activity bodes well for the global economy as we continue to move through the COVID-19 era. Per McKinsey & Company and Deloitte Insights, U.S. consumer demand seems high with optimism and retail sales recovering, which appears to be driving the surge in recent activity. 

The future is still very much in question as several ocean carriers are still forecasting some, albeit fewer, blank sailings in the coming months, but the seven-day Golden Week festival shut down factories across China in early October and caused blank sailings to surge temporarily. 

With the recent changes toward the better, the question becomes: Will the global economy remain strong as we continue into the next stage of the COVID-19 era, or will there be new spikes that cause another global economic slowdown, potentially worse than the last? 

It appears ocean carriers have adapted to the supply chain disruptions and are working to smooth the supply chain as numbers return to normal. While we have heard similar sentiments from other forwarding companies recently, this alone is not enough to declare us in the clear of challenges posed by COVID-19, but it is promising information.

The Future of Shipping

The future of the trade industry in the post-pandemic era is impossible to predict, however, we continue to see ports invest in development and technology to be poised to handle the growing demands of the future. 

Sustainability through technology has been a driving factor for the industry for years, and it shows no signs of slowing down. Ports are incorporating alternative power as well as investing in practices that increase sustainability and decrease their footprint to be more attractive to partners. Organizations are looking for 3PLs, ports, and steamship lines that follow sustainability best practices, use clean energy such as solar and wind, and recycle ships properly. 

With the future of COVID-19 impacts unclear, the shipping industry has more incentive than ever to focus on and invest in smart technologies that continually strengthen supply chains. 

_____________________________________________________________________

Bob Fruchterman is senior vice president, International Logistics, at Suddath, where he is responsible for all international transportation and logistics including import, export, ocean and air. He also specializes in managing commercial projects in the energy, mining and construction fields around the world.

Mr. Fruchterman has more than 35 years’ experience in the international transportation and logistics industry. He has managed everything from large U.S. government-financed projects in the former Soviet Union to shipping equipment and supplies to the Middle East in support of Operation Enduring Freedom and Operation Iraqi Freedom. He graduated from the University of Richmond with a degree in Economics.

containers global trade strike

Despite Shortage, Containers Rotting in Depots?

Container availability across China is still at a record low, while US ports are overwhelmed by a surge of shipping containers from Asia, full of products retailers are eager to get on shelves for the holidays.

Due to the fastest increase in demand after months full of blank sailings, container availability for 40HCs is only at 0.05 CAx points compared to 0.63 at the same time last year, according to the Container Availability Index. 

Although the US East Coast is usually a surplus location of equipment (last year’s CAx value for 40DC was 0.7), the container availability dropped to 0.43 indicating actually fewer containers than needed. 

Containers spend 45 days on average in depot 

The average and median time of containers (in days) between “empty in depot” and “empty dispatched” | Source: Research Project FraunhoferCML & Container xChange

Although containers are very much in need, they still spend on average 45 days empty at depots according to a research project by FraunhoferCML and Container xChange.

Especially in regions with low container availability such as China and the US, the average is comparably high with 61 and 66 days compared to the global average of 45 days.

The high standard deviation of 85 days in North America and 129 days across Asia indicates many cases where containers spend far more days inside depots than the average suggests. 

Compared to the Middle East (21 days on average) and Europe (23 days on average) it takes more than 30 extra days to move containers out of the depots and make money with them. 

holiday

Holiday Shipping Deadlines – Ensuring Your Goods Reach the Buyer in Time

The four weeks between Thanksgiving and Christmas represent the busiest retail days of the year. Online shopping experiences an even sharper increase in traffic during the holiday period and provides an important source of revenue for most eCommerce businesses. However, despite the enthusiasm for online retail, many customers are concerned about whether their goods will arrive in time to place under the Christmas tree.

Failure to deliver products on time and in perfect condition can harm brand trust, resulting in lost customers. To ensure a positive customer experience and maintain their customer base, online sellers need to prepare a solid shipping plan to put products in their customers’ hands by holiday deadlines.

For a smooth holiday season, you need to streamline order fulfillment, invest in protective shipping materials, including air pillow packaging, and develop positive relationships with your carriers. Here are a few tips for ensuring your goods reach your buyers in time for the holidays.

Develop a Shipping Plan

Developing a shipping plan is essential to a smooth holiday season. Customers have higher expectations about when and in what condition they receive their goods during the holidays. Supply chain scheduling with deadlines may seem challenging, but taking all factors into account can make your shipping process more efficient.

-Contact all the major carriers you use to determine their last-date shipping deadlines.

-Make sure you are familiar with your supplier chains’ shipping times and obtain estimated landed shipping costs for easier budgeting.

-Plan for delivery delays and communicate estimated shipping times to your customers to help you meet their expectations. This could include marketing emails or pop-ups on your site, indicating a countdown until the cut-off date. Effectively communicating the cut-off date can also create a sense of urgency for customers, prompting them to buy more products.

-Assess the 4 KPIs for packaging and label issues; this can help you evaluate your business strategies to keep your shipping operation running smoothly.

-Consider outsourcing to a third-party logistics (3PL) company to manage warehousing, picking and fulfillment and liaising with carriers. Outsourcing these logistical aspects to your business frees up resources to divert into customer service.

Planning helps you gain insight into projected shipping delays and estimated deadlines, enabling you to notify your customers about the final day to order goods so they can receive them by Christmas.

Offer Expedited Shipping Options

You also need to consider the shipping times you offer to your customers. Online retail giants like Amazon and eBay offer expedited and same-day shipping, changing the expectations of online shoppers worldwide. Major companies who ship billions of dollars of merchandise annually have much greater flexibility of funds when it comes to waiving consumers’ shipping, so consumers have become accustomed to free shipping.

Large companies that offer fast shipping options force small businesses to do the same to remain competitive and ensure their customers receive their goods promptly and in good condition. But, during the holiday rush, small businesses may feel like offering fast shipping is cost-prohibitive. Here are a few ways you can offer expedited shipping without breaking your budget.

Be Selective with Your Shipping Providers

The most effective shipping method for your goods depends on the types of products you sell. For small packages, parcels and gift cards, UPS, FedEx, and the United States Postal Service are the best choices, as they can provide the fastest shipping times at a more affordable rate. However, for large shipments, fragile items, artwork, furniture, appliances, and bulky or oddly shaped items, the right option is consolidated freight or white glove carriers.

Set a Minimum Purchase Threshold

One way to meet this demand is by having a set order amount that meets your free shipping threshold. This also works to your advantage—the consumer who wants to buy your product may purchase more items to meet your free shipping threshold.

Consider Free Shipping

A recent study by global tech company Pitney Bowes showed that up to 75 percent of online consumers preferred free shipping with a slightly longer delivery time.

To make this a viable option for your business, consider incorporating some freight cost into the product’s price and adjusting your estimated purchase cut-off deadlines to allow for additional delivery time.

Assess Your Inventory

Determine how many products you currently have, how long it typically takes for products to get to customers and your company’s past sales history, especially around the holidays. These factors will tell you what your inventory should look like for the current holiday season and, ultimately, determine the number of supplies you will need to ship your packages.

Stock Up on Essential Shipping Supplies

The shipping supplies you need will depend on the sizes, weights and fragility of your products. Be sure to get a good selection of boxes for the types of products being shipped. Determine the sizes and amount of boxes you’ll use, depending on your inventory and your sales forecast.

Consider the types of products you’re shipping to determine what kind of packaging material to use. If you are shipping fragile products, you’ll need a large supply of protective packaging, such as air pillows, to safeguard the products during shipping. Customers prefer environmentally conscious business practices, so finding air pillow packaging that is compostable or biodegradable is an appealing bonus to many consumers.

The tape to seal the packages is essential for sealing your packaging to prevent spillage, tampering, or theft. Brown shipping tape is activated with water, and it is company logo-printable and tamper-evident. It’s a little more expensive than the more commonly used heavy-duty plastic tape, but anything imprinted with your company’s name can make an impression on consumers and build your brand.

The Takeaway

Christmas is the busiest time of the year, and customers expect their products to be delivered in time to put under the tree. Small businesses can stand out from the competition by ensuring they meet holiday shipping deadlines, but in order to do so, they need a strong fulfillment and shipping plan to help streamline their operation through the festive season.

____________________________________________________________

Cory Levins is the Director of Business Development for Air Sea Containers