Diversified Shipping and Supply Chain Resiliency

Creating resilient supply chains is a top priority for supply chain professionals the world over. With so many variables in every stage of the supply chain, and so many outside factors contributing to the success or failure of each step, mitigating risk is key in creating sturdy and reliable supply chains.

Shipping poses particularly challenging dilemmas. For products to be moved across seas, a litany of obstacles may be encountered. While the major supply chain effects of the coronavirus pandemic have subsided, the number of supply chain weak points that were exposed remain fresh in our minds. Importers struggled to source shipping containers, as logjams at ports in New Zealand, South America, or Sub-Saharan Africa resulted in container shortages in China, where products and materials ready to be shipped sat waiting indefinitely. Securing passage on ships also proved near impossible for many importers, especially smaller outfits relative to their multinational competitors. Even once an importer could confirm their cargo would be safely stowed aboard a vessel bound across the Pacific, for example, they often had to pay exorbitant prices given the surge in demand and limited availability of carriers. When finally reaching their destination, delays at ports including Los Angeles and Long Beach continued to impede the flow of goods. Workers stricken by illness, at either the port of departure or arrival, incapable of loading and unloading cargo led to further delays.

While the pandemic exacerbated these issues and laid them particularly bare, it’s not as though they didn’t already and don’t continue to exist. Concerns over labor availability at ports remain at the forefront of logistics managers’ minds, with dockworker strikes looming or in little more than tentative states of resolution. More erratic and severe weather patterns resulting from climate change have led to increasingly powerful storms and floods, disrupting shipping routes and impacting ports, especially those in warmer climates that are under threat of hurricanes for nearly half the year. Missed port calls and delayed arrivals at just one or two important locations can create an impact felt across the global supply chain. And even though the major carrier price hikes of the pandemic have mostly waned, seasonal surges in price can still be felt.

So what can be done about all these issues, many of which are uncontrollable and entirely out of our hands? How can we mitigate risk in the face of so much unpredictability and uncertainty? The answer lies in cultivating options, to be prepared and flexible regardless of the situation that arises.

Adaptability comes in multiple forms regarding shipping. The first can be achieved by creating greater carrier variety, and putting effort into building relationships with multiple carriers to be able to maintain optionality. While investing your time and resources into just one carrier will likely result in savings in the short-term, as larger bulk orders with a single carrier typically net better prices, it’s important to not tie your company’s shipping fates to just one mast. By developing relationships with multiple carriers, you can utilize the goodwill garnered to better face adversity, regardless of where it comes from. Should another global shipping price surge occur, being able to speak frankly with carriers with whom you’ve already developed relationships of trust will help you weather that storm. The short-term savings you previously missed out on would be fully recouped, if not exceeded, in the long-term savings here. If a dockworkers strike majorly affects one carrier’s operations, you can pivot to another you’ve built up a relationship with while experiencing a reduced impact on your bottom line. A situation that would’ve been disastrous is made tolerable by cultivating flexibility. The same goes for severe weather and other major climate change disruptions. If one carrier’s fleet is damaged by a storm, delayed by rough seas, or their port of origin is rendered incapacitated by a natural disaster, you can once again shift to another carrier you’ve established a working relationship with. In these scenarios, having a preexisting relationship with alternate carriers saves you both time and money, by moving your company to the front of the line as others who are less prepared scramble to identify an alternate carrier, and lessening the likelihood of getting caught up in a bidding war by already having established contract terms. By cultivating multiple realistic and reliable options, your company can face shipping dilemmas with confidence and poise instead of getting caught up in the frantic dash for available space that we’ve seen in recent years.

Cultivating options isn’t just about developing relationships with different carrier companies, but different types of carrier companies. Let’s consider a potential dockworkers strike as our example. Many dockworkers unions, particularly in the United States, operate as coalitions that can see entire seaboards shut down as a result of one voting action. In this case, it’s very possible that seafaring shipments, regardless of the carrier, will face significant delays that could pose a serious threat to your company. In a situation like this, the importance of alternative shipping methods becomes abundantly clear. Air freight, in particular, would likely be the most effective workaround for the duration of such a strike. By utilizing air freight to some degree, even to a minor extent, before facing a dilemma such as this, your company can develop a strong enough relationship to see you through a seaboard-wide shutdown. Again, the preexisting relationship you build by spending more in the short-term, given the higher cost of air freight compared to maritime trade, by importing or exporting some of your products through the air will pay dividends in the long run. Being proactive and forward-thinking is always important when creating more resilient supply chains, and doing so in regards to shipping is especially useful.

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