The 2:00 Minute Warning

Last week I moderated a webcast with our friends from CSCMP's Center of Excellence and the National Industrial Transportation League (NITL) about what’s going on in the Red Sea, how it could impact supply chains and things that shippers should be doing to protect their supply chains.

Based on all the great feedback, the attendees found a ton of value in the insights shared by Peter Tirschwell from the Journal of Commerce, Ron Marotta from Yusen Logistics and John Janson from SanMar. After hearing from one attendee that it was like drinking water from a fire hose, we went ahead and prepared a list of the Top Ten Takeaways from the webcast. Let me know if you’d like a copy of that list.

For those of you who are too busy or distracted to read this list, here are two quick tips for you: First, make sure you stress test your supply chain and identify the “never out” inventory items your company needs to have in order to run your business. Second, use scenario planning to address how you are going to keep those parts in stock if the situation in the Red Sea blows up in the next couple of months.

Hate to be so drastic, but one thing that came through loud and clear is that while the current hype about the Red Sea has exceeded the current severity, shippers may be getting lulled into a sense of complacency since the ocean carriers have adapted to the situation and are still delivering freight. Granted, transit times are 12 – 15 days longer, plus labor, fuel and insurance costs are much higher, and rates have just about doubled or gone up even more - but goods are still flowing.

But as our resources shared, things could change on a dime as the situation is prolonged. One errant missile, or turbulent waters during the winter months in the Southern Hemisphere and Cape of Good Hope could be a game changer.  And that’s why we spent some time talking about how to protect your supply chain as things change in the Red Sea.

As we noted on our Top Ten list, it is more important than ever that shippers have a strong and reliable chain of communication with their carriers and forwarders since your carriers may be making decisions on a day to day basis to protect their vessels and the safety of their crews. This could have an impact on your rates and when you’ll receive the containers you are expecting. And it could also result in the carriers being able to make “on the ground” changes to accommodate your requests. For example, Ron Marotta noted that some shippers have asked that portions of their freight be diverted from ocean freight to air, or to mix and match transportation modes in order to keep their critical parts and inventory flowing.

Finally, John Janson from SanMar, one of the top ocean shippers in the U.S., shared that ocean shippers need to consider diversifying and not “keeping their eggs in one basket". In SanMar’s case, while they still rely heavily on their contracted carriers, they have increased the number of NVOCCs they are using to assure capacity in remote places. This has enabled SanMar to keep their freight flowing on schedule.

Overall, the one question that drew strong interest was: "How do you protect supply chains in times like these?" Our resources responded that since the Red Sea is a "fluid situation", shippers and carriers will have to stay updated and be flexible because there could be increased turmoil in the Red Sea over the next couple of months that could turn this situation into a much greater challenge.

They also noted that now more than ever, shippers need great data that's easily accessible in order to manage their supply chain well. This is music to our ears because at TranzAct our services such as freight audit and payment or Constellation TMS can provide you with vital information to manage your logistics activities. We also offer outstanding supply chain consulting and other services to help shippers manage their spend.

If you'd like to get in touch, simply send us an email or schedule a time to meet. Last but not least, if you weren't able to sign up for the webinar in time or would like to watch it again, you can view the recording here.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

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