Many of the retailers and importers, exporters worldwide are struggling with container shortages for their shipments. As in most industries, labor is scarce at the ports due to the pandemic –unexpected absence due to infections, delays in getting the staff vaccinated in time. Lockdowns in several countries have made the circulation and return of containers have come to a standstill.
One of the factors contributing to the container shortages is the Suez Canal blockage. The weeklong blockage due to the cargo freighter jammed the waterway affected the shipping and delivery of the goods that resulted in container shortages. Though there are near 200 million containers, no new containers are being manufactured, and most of the needed containers are full, lying, and waiting in one location rather than being unloaded and sent to another location to be re-used.
Without a doubt, container shortages are at crisis levels with an impact that’s both far-reaching and potentially devastating for the supply chain.
Impact:
Such consequences include
- Inventory build-up in warehouses of suppliers leading to slow down in production.
- Loss of sales to retailers and importers due to goods not able to reach the stores in season.
- Higher container and freight costs to retailers, importers, exporters due to last minute rush.
- Possibility of escalated costs of existing products due to rise in freight costs and consumer stock piling.
- Momentary supply shortages of goods.
- Scarcity of high-demand goods in the longer term.
All the above situations demand careful planning at the factory level and seamless follow-up at the retailers and importers to ensure the shipment meets the delivery dates as on the PO. This demands proactive countermeasures to tackle the crisis.
Remedial measures for Logistic arrangements:
- Book with freight forwarding. Do not wait for the “open” rush to book containers. Instead, book including freight forwarders
- Escalate your requirement to the key team.
- Prioritize: Any special orders or deliveries to avoid any delays.
- Sending containers to multiple suppliers. Diversifying available containers across multiple suppliers allows to utilize the containers in their full capacity.
Remedial measures for Planning/Supply Chain:
- Authenticate: In times of crisis, reliability means everything. Have an onsite team or a Third Party to inspect and authenticate the ready goods.
- Be in regular communication with your supply chain partners: Hold a weekly meeting between suppliers and Buyer teams to review adherence to PO due dates.
- Manage POs diligently. Staying on top of everything means daily PO management – a best practice even without a crisis.
- Here are some tips to make sure of meeting your PO ex-factory dates:
- Get production status in time from your suppliers / prepare a production-plan
- Make sure with your suppliers to have production monitoring done on regular basis so that you are sure of when your shipment is about to come in.
- Book in a During Production or an Inline Inspection to know the exact status of your goods.
- Schedule a Pre shipment inspection, at least 10 days before your required ex -factory date.
- Ask and inform suppliers to make container bookings well in advance (preferably over a month before) so that you can have enough time for shipment.
- Have atleast 2 to 3 forwarders who can help you get containers in time for shipments.
- Rank container loading by priority. Critical orders to be given priority based on client’s need.
- Keep a buffer to account for any potential delays. Good forwarders include an additional two-week safety stock buffer to account for any transportation delays.
- Alignment of lead times with forwarders. Updating lead times in forwarders system allow to match new and extended transit times with projected ones.
- Plan your sales. Upgraded forecasting software to predict anticipated sales more accurately, thereby, predicting shipping more accurately.
Do not let crisis lead to inaction or panic.
The key is to empower yourself by creating a workable plan of action and executing it with precision.
Current updates from India:
Further, the Government of India has also geared up to handle the rise in exports from India
India under the leadership of Hon’ble Prime Minister Modi has started the manufacture of containers in the Bhavnagar district, of Gujarat, as an initiative aimed at attaining self-reliance in container production.
Phase-I of the fourth container terminal at Jawaharlal Nehru Port costing INR 4719 crores has been inaugurated by Hon’ble Prime Minister Narendra Modi. With this terminal becoming operational, the JNPT will nearly double its container handling capacity.
This new facility will add a capacity of 24 lakh containers per year in Phase I and after completion of phase II in 2022, the capacity of JNPT will be close to 100 lakh containers per year.
With new vessels entering the market towards the end of 2021, many key forwarding companies predict the situation to get better.
Content Credits: Ms. Jiny Rajan – Customer Service Manager, RSJ Inspection Service Limited.
