Posted On August 30, 2021
The transportation and shipping industry has never been so tumultuous. Labor and material shortages caused by the pandemic have led to a backlog in global shipping services, and capacity (both domestically and around the world) is difficult to find. Carriers have issued rate increases in response to the heightened demand, meaning companies are facing drastically increased supply chain costs. And there’s another hurdle coming in the not-so-distant future: the holiday season is fast approaching.
Here’s where getting creative with your logistics solutions comes in. For every global shipping solutions challenge, shippers need to be prepared to pivot. Unfortunately, there’s no silver bullet or one company who has all the answers. But some extra creativity, a deep understanding of the field and a strong partnership with a freight forwarder can go a long way. Keep reading to see our team’s suggestions for how your company can navigate global shipping solutions and come out on top.
Challenge: There’s more demand than supply for global shipping solutions and capacity is super tight.
Increased demand for foreign-made goods and industry-wide labor shortages have led to a squeeze in global shipping solutions, especially capacity on ocean vessels. A couple of years ago, a company might have paid $5,000 to ship a container load of products via ocean from Asia to the United States. Today, that same company might pay $20,000 for that same container—or more. And even then, finding a steamship with the space to do so can be tricky.
A better solution might be to ship less products more often. For example, if your company previously ordered a full container shipment once a month, you might have an easier time finding capacity for two less-than-container-load shipments each month. This solution will typically cost more but consider it the price of reliability. For many companies, the confidence that they’ll have access to the goods and materials they need, when they need them, is worth the higher price.
Challenge: Your imports are getting backlogged at ports.
Ok, so you’ve maneuvered capacity issues and found a global shipping solutions provider to transport your shipment to the U.S. But labor shortages mean there are fewer dock employees helping to direct traffic and unload containers. The results: boats waiting at ports for days while your product sits there, unobtainable, and not doing your business any good.
Luckily, there are a couple alternative shipping solutions. First, consider using other, less-backlogged ports, and then transporting the shipments via land from there. Another option: Research alternative sourcing. As international transportation continues to rise in cost, more and more companies are turning to reshoring and nearshoring for their goods or raw materials.
There’s extra legwork required in these shipping solutions, but there’s a payoff. The added costs of sourcing materials in the U.S. or Mexico, for example, can be counterbalanced by the lower shipping costs—not to mention the decreased transit times.
Challenge: Moving containers inland is restricted.
For decades, the United States and Asia have had an imbalance of trade—countries like China export more goods to the U.S. than we send back. So, containers that come here filled with items are often sent back empty. That imbalance has only increased in recent months. As a result, some rail carriers have restricted container shipping to promote a quick return of the containers back to Asia.
Shippers still need to get their goods inland, however. While you could pay exorbitant fees to keep them in the container for the next leg of their journey, there’s a better option. At the port, transload the container load onto a truck, emptying the container and freeing it up for an immediate return trip. Just remember—the more products are handled the more likely they are to be damaged; adequate packaging is key.
Challenge: You’re facing raw materials shortages, or the costs are trending upward.
Price increases and materials shortages are a natural part of manufacturing and trade. The pandemic only amplified the frequency, making more companies realize the value of having consistent, reliable access to the raw materials and products they need.
Incorporating warehousing into your global shipping solutions can help ensure you always have the necessary supplies on hand. The larger initial investment saves money later: By purchasing extra raw materials or goods, and storing them in strategically located warehouses, you can avoid dealing with shortages or price increases later.
The freight forwarding partner you work with should be able to help you determine the best locations to set up warehousing. And this solution comes with a bonus: Strategic storage and distribution locations can lower delivery costs and lead to more on-time shipments.
Challenge: TL and LTL carriers are restricting shipping services for some clients, terminals and zip codes.
It’s not only international carriers that are facing capacity issues. Domestic truckload and less-than-truckload carriers are, too. And to address the backlog, many domestic carriers are restricting service areas, increasing rates and limiting new business to help address these capacity challenges.
Whether you’ve already been impacted by these changes or you’re preparing for the worst, it’s important to utilize diverse logistics options. Forming relationships with various carriers (carriers that also provide diverse shipping modes) means you’ll have backup options when you’re in a pinch. Of course, you can try to find those carriers and build the relationships on your own, but we recommend partnering with a freight forwarder you can trust. The right logistics provider will be able to both evaluate your company’s challenges and find solutions to them, as well as connect you with an array of global shipping solutions—all while keeping your budget in mind.
Challenge: The holiday season is coming, and you’re worried about keeping up with demand amidst industry turmoil.
Peak season is just around the corner, and in B2C industries, maintaining fast shipping and good customer service is important for many businesses’ survival. Unfortunately, the market isn’t predicted to return to pre-pandemic norms until well after the holidays. Communicating with customers about shipping expectations early on is vital.
Be upfront about service levels and what a customer should expect when placing an order. Promote early ordering and warn about the consequences of waiting to submit an order until just days before the holiday. Two-day shipping might be considered standard in 2021, but this holiday season, it will be rare.
If you don’t have visibility into your supply chain or the ability to provide transportation updates to customers, now is the time to invest in technology. A transportation management system will help the people on your sales and customer service teams save time when searching for the status of a shipment, and provide a better experience to customers.
If you need support in finding alternative global shipping solutions, Flat World is ready to help. We provide freight forwarding for companies around the globe and can help you tap into a diverse shipping network. Contact us to get started.