How to conquer ocean container visibility challenges

Sep 6, 2022
Supply Chain
Innovation
New Category
Table of Contents

With over 80% of world trade taking place across oceans, the container shipping market is the bedrock of global supply chains. Our dependence on it continues to grow, with the global container shipping market predicted to reach US$10.93 billion in 2025, up from US$7.9 billion in 2021. At the same time, ocean container freight costs have skyrocketed, due to the frequency and scale of disruptive global events. Haver Analytics reports that the cost of shipping a container increased seven-fold in the 18 months following March 2020.

In the short term, capacity constraints (and rising costs) caused by ship and container shortages, port congestion and personnel shortages, cannot be overcome quickly, nor easily. Instead, companies must find ways to use technology and new operational strategies to fare better during these turbulent times. Better operational visibility data for containers has become critical for enabling smarter, more efficient ways to manage container transportation.

Visibility’s role in overcoming ocean freight challenges

Shippers face a number of challenges when shipping ocean containers, which are made worse by extreme variability in the global ocean container sector, caused by economic fluctuations related to the Covid pandemic, conflicts, geopolitical tensions, and other external events. These repercussions can be felt worldwide, causing rapid changes in capacity and demand, logjams at major ports, and performance issues at ocean terminals.

Moreover, there’s been an extreme rise in the cost of ocean and related intermodal container freight rates and their associated costs. This has partly been caused by a nearly 20% increase in overall global shipments, at a time when containers are in short supply and bottlenecks continue to choke major ports. Bottom line is there’s more freight to move but less capacity to move it.

The overall knock on effect of this ‘perfect storm’ is that shippers are, for the most part, less efficient. Business challenges related to ocean container visibility are impacting the efficiency and overall effectiveness of global supply chains in relation to international container shipments, affecting their ability to operate as efficiently as desired and to provide the best service to their customers.

So what are the key business challenges for ocean freight shippers and where does improved container visibility factor into overcoming them?

High detention & demurrage costs

Shippers and consignees are charged by their ocean carrier vendors for each container held at the ocean terminal or at a delivery site beyond the pre-agreed free time. Port congestion due to a shortage of drivers, lack of accurate information on when containers are ready to be picked up, and inefficiently operated warehouses can all play a big role. Getting accurate visibility of container statuses and ETAs allows drivers to better plan their pick-up appointments and reduce these costs.

Poor customer experience

Many industries rely on the steady flow of products, raw materials, parts or components to keep their customers happy. If customers don’t know where their deliveries are, and when they’re going to arrive, there is more room for a bad customer experience. This becomes an even more bitter pill for customers to swallow when ocean freight costs are sky high. Leveraging container visibility to keep customers informed throughout phases of delivery, especially during transshipments and delays, helps foster customer loyalty, impacting NPS, reputation and repeat business (avoiding the higher cost of customer acquisition), as well as profits by avoiding missed sales.

Long lead times

When goods are manufactured in a number of different countries, then sold in other parts of the world, it’s common for goods to be shipped in ocean containers with relatively long transit times. Reduced lead times often deliver material operations and financial cost savings. Although lead times have tended to be calculated manually, new container visibility solutions make it possible to calculate these automatically, and obtain dynamic updates in real-time, enabling faster decision making for greater operational agility.

High buffer stock levels

Most retailers try to maintain the ideal balance of ‘buffer stock’ broadly based on supply chain lead times aligned with customer demands. Optimized buffer stock levels can deliver financial and operational cost savings and increase customer satisfaction by ensuring goods are available when a customer wishes to buy. Better container visibility of incoming inventory and a clear understanding of the ocean carrier’s performance can help reduce warehousing costs, and working capital associated with excessive buffer stock inventory.

Ocean carrier selection

Many shippers use a variety of ocean carriers. The performance of each ocean carrier is dynamic and varies over time, as do fees associated with ocean transportation. However, ocean carriers offering the “right” performance and the “right” freight rates can save shippers materially on ocean container fees and provide a better service. Ocean container visibility platforms can offer more accurate information on transit-times, free-time and carrier reliability, improving carrier selection and, in turn, minimizing freight spend and poor OTIF performance.

Expedited shipments

Almost all shippers with a global supply chain wish to optimize freight spend by shipping most goods via ocean and avoiding air shipments. However, due to unforeseen situations or an overall lack of confidence in ocean carrier shipment forecasts and data, retailers and other sectors are often “forced” to ship via air. With better predictions of the actual time of arrival at the port of final destination, often expedited air shipments could be avoided resulting in material cost savings.

Low personnel productivity

Organizations tend to have significant teams of personnel doing large amounts of detective work when tracing their shipments. This involves searching ocean carrier, freight forwarder, ship tracking and ocean terminal systems online for data, which are then manually collated and put into emails and spreadsheets for distribution. When you multiply the number of people required to do this manual work in each warehouse, each day, it can become very significant. Container visibility solutions eliminate this manual work, using an array of data integrations with various carrier, customer, satellite/AIS systems, and other 3rd party systems, to aggregate and display data dynamically. In addition, thanks to some very sophisticated AI/ML algorithms, milestone data and ETA predictions are not only more readily available, they’re also significantly more accurate and reliable. In turn, dwell times at sites can be reduced thanks to these improved predictions and better personnel planning.

Poor sustainability and carbon emissions performance

Despite being a lower contributor of emissions on a grams per tonne-km basis (otherwise referred to as having a lower ‘emission intensity’) compared to road or air transport, the ocean shipping industry is still a significant contributor of CO2 emissions globally (at around 3%). Improvement requires the ability to measure emissions. However, accurately measuring carbon emissions for ocean freight is difficult. For example, missing transshipment info or lack of precise vessel route data leads to inaccurate measurement. Ocean container visibility platforms make it possible to measure CO2 emissions accurately, across all upstream and downstream transport and distribution activities, to offer a more comprehensive insight into carbon emissions per transport segment, or even across a shipment’s entire end-to-end journey.

There is a clear path to ROI when investing in an ocean container visibility platform.

The benefits from better collaboration and data sharing across your supply chain ecosystem offer substantial value. But how can ROI be accelerated and maximized?

Only consider vendors you can trust, with extensive deployment experience

Make sure you work with a trusted vendor with extensive experience and a highly focused and supportive project approach, like Shippeo. As well as offering the highest data quality and reliability in the industry, Shippeo’s approach to ocean container visibility is best-in-class, providing full, holistic support to ensure rapid and smooth integration. With Shippeo, you can start quickly, and get a live data feed in as little as one week. Our Solution Consulting team collaborates with you to assess the value of real- time visibility for your organization and understand how best to use Shippeo visibility to drive value. The Project Management and Integration teams helps you through the setup and implementation process to quickly deliver value to you and your customers. The Customer Success and Support Team foster and improve the value created
by real-time visibility, via 24/7 support and quarterly business reviews.

Weigh up the pros and cons of implementing an ocean visibility solution

When considering how ocean visibility could be leveraged in your supply chain organization in the context of larger supply chain digitalization initiatives, it’s worth engaging with providers early on. If the decision is to move forward, make sure you engage fully with the providers who you know are capable. Get familiar with best practices and differences between providers when it comes to data engines and quality, implementation approach, a unified user experience, and multimodal capabilities beyond ocean for true end-to-end shipment visibility.

Start the conversation with one of our visibility experts today.

How to conquer ocean container visibility challenges
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How to conquer ocean container visibility challenges
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How to conquer ocean container visibility challenges
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