For transport companies, sustainability is rapidly gaining priority. However, there is still a big difference between saying they will be investing and effectively doing so. While many shippers say they think sustainability is important, logistics providers do little or nothing about it. And there is still little demand for CO2 data. Obviously, the divergence between Sharply falling container transport prices are reversing the balance of power between shippers and shipping companies. Whereas for two years or more shippers had to pay hefty sums for the storage and transport of sea freight, falling prices are causing existing contracts to be reconsidered en masse. At the same time, it also provides fresh momentum for further optimizing transport flows.
RA changing balance of power
For two years, the market for container transport was overstretched. The demand for containers was so high that shipping lines could charge hefty rates for goods storage and transport. Guaranteed delivery was almost impossible. Companies often had to wait weeks longer than contractually agreed – if there was room on a ship to transport the goods at all.
We are now seeing a turnaround. Stagnating economic growth, partly due to the Covid pandemic and the war in Ukraine, has reduced demand for consumer goods. The dominance of shipping lines over shippers has changed. Whereas limited supply forced shippers to pay large sums for their transport, there is now more freedom of choice. This also provides an opportunity for making smarter choices to improve your transport flows. Choices that must be based on data.
Optimizing your transport flows
In a market where shippers could count themselves lucky if their container was shipped, there has been insufficient focus on the right data and smart data analysis. However, it only makes sense to analyze your data if you can use it to make changes. And due to the power of the shipping lines, these changes were virtually impossible. Now that the balance of power has shifted and shippers have become rather more flexible, data analysis is worth the effort. Integrating all your logistics processes in one control tower provides plenty of opportunities to optimize your transport flows.
For example, in terms of transport type. Where a shipper was more inclined to opt for air or rail freight due to high container prices, it may now consider entering into new contracts with shipping lines to make savings and transport larger volumes in one go. Consider, too, the option of consolidating shipments. Now that shipping lines have more space, it can be more economical and efficient to adjust your shipment volumes accordingly.
You can also rethink your stock management. In the overstretched market of the past two years, uncertain delivery times meant that a shipper could not take the risk of delayed stock replenishment. Now that shipping lines have more availability, there is more choice and the supply chain is becoming more predictable. For example, measuring data on the duration of shipments gives shippers more information with which to improve their stock planning. In some sectors, storing goods is very expensive. Optimizing transport times and improving stock planning accordingly can therefore save millions.
The time has come for shippers to start looking critically at their transport data and make smarter choices to improve the supply chain based on new insights. A good transport management system (TMS) gives you the right data and allows you to increase your grasp of transport flows. Download our white paper and read more about the steps you can take.
Elmer Spruijt, VP Transport Management at Descartes
INDUSTRY WHITEPAPER
2023 Global Transportation Management Benchmark Report
Descartes conducts annual benchmark research among global transportation professionals. The 2023 study reveals that higher (fuel) costs and a shortage of drivers pose challenges, while investments in visibility present opportunities.
