Of the issues supply chain managers and logistics directors have to keep track of, managing the capacity risk in supply chain networks is among the most challenging. Keeping up with best practices for shipping and logistics is vital during this time of market volatility. With the continued growth of cloud computing and e-commerce shipping demands, monitoring shipping and growth statistics and shipping trends is critical. This allows shippers to enable maximum scalability and flexibility throughout the network.
Maintaining optimized visibility into supply chain logistics remains vital for continued recovery and further growth in the industry today. According to Logistics Management, “ The introduction of cloud computing—a supply chain management (SCM) sector that’s growing by 14.3% a year and expected to reach $7.03 billion by 2023—has made software solutions accessible to a broader swath of companies.” This push towards automation and digitization allows shippers to better scale and adapt to changes in market trends and customer demands.
1. Driver Retention Is a Top Priority Affecting Capacity Risk in Supply Chain Management
The driver shortage is one of the most pressing issues shippers face when managing supply chain risks. Shippers want to have access to drivers who will complete pick-ups and drop-offs efficiently, and drivers want enhanced supply chain visibility to know what’s happening in real-time and when to arrive in drayage transport. The COVID-19 pandemic created a stark disproportionate cutoff between the supply and demand of goods. This, of course, powerfully affected local and global supply chains and brought the myriad of capacity risks in supply chain management to the forefront of the industry’s attention. Keeping drivers happy and establishing lasting partnerships must be a top priority for shippers looking to reduce rolled cargo risks.
2. A Localized Distribution Model Requires Maximum Supply Chain Visibility
Supply chain managers must use available supply chain technology to forecast inventory and improve end-to-end visibility. Today, supply chain tech gives drivers, shippers, freight brokers, and customers access to real-time data and keeps everyone on the same page. Reducing capacity risk in supply chains impacts even giants like Amazon, who have improved distribution models to handle container drayage fees and deliveries to improve customer order satisfaction. Many distributors are also setting up localized warehouses at Port of Savannah and other major ports. The goal is to house goods temporarily while awaiting long-hauls to different warehouses and avoid detention and demurrage fees and reduce risks in that regard.
3. Shipping Drayage Depends on Accuracy in Forecasts and Needs
Many of the issues that plague shippers relate to poor visibility into supply chain logistics. Drayage services move port containers and pallets from port to warehouse and along final-mile delivery routes. Shippers need to make sure there are enough drivers to pick up and carry loads and adequate space in warehouses to avoid cargo sitting at ports. Better management of capacity risk in supply chain logistics relies on accurately forecasting trends and monitoring supply chain status in real-time. Knowing about potential order delays and disruptions makes it easier for shippers and drivers alike to adjust accordingly and ensure smooth delivery despite dwell time and other issues.
4. Crowdsourcing Is a Newer Way to Find Drivers, Lessen Fleet Management Burden
Efficient management of fleets of multiple drivers can help supply chain directors maintain a digital supply chain that is unified and optimized for maximum efficiency. There is no on-hand driver pool to pull from for rush orders and specialty capacity loads, so supply chain visibility is essential. Overcoming capacity challenges often entails working with multiple fleets, in-house drivers, and third-party providers- including crowdsourced drivers. Using on-demand driver access can help eliminate maintenance costs and give owner-operators a whole new way to tap into available shipment loads. Most truckers in the US are owner-operators, so outsourcing drivers can help them manage capacity risk in supply chain networks.
5. Future Demand Spikes Will Happen Outside of Seasonal Expectations
Consumers continue to drive market trends as they now have more choices than ever before. Shifting consumer focus and needs continues to drive demand spikes in the new landscape that supply chain managers are finding themselves in today. Many examples of capacity risks in supply chain networks are brought on by the growing popularity of e-commerce and the purchasing shifts that are continuing across virtually all markets. Most shippers can plan and prepare for seasonal peaks, but the biggest challenge of dealing with shipping drayage services is maintaining high delivery standards outside of the seasonal expectations. Improved visibility and supply chain KPI monitoring will make in-season and off-season shipping much more manageable.
6. E-Commerce Growth Will Put Pressure on Shippers to Move Cargo From Ports Faster
The global pandemic’s unprecedented pressure on the world’s supply chain manifested in many powerful and disruptive ways. Because of widespread shutdowns and capacity issues, e-commerce growth across most industries and markets registered to the tune of six years of development in the first few months of pandemic-fueled shutdowns. With the expansion of e-commerce shipping demand, the need for more drayage trucking capacity and warehouse availability is easy to see in real-time. Overcoming this drayage and capacity risk in the supply chain requires an innovative approach to managing drayage capacity and moving cargo faster along routes. Supply chain insight and visibility make this planning process more manageable.
7. More Surcharges Are Coming for Drayage
In response to the rising costs associated with capacity risks in supply chain management, port drayage services are starting to incur additional fees and surcharges on containers and cargo. The hope is that this will help avoid wasted berth time and decrease the time containers and pallets sit unclaimed at the docks. Sustainable solutions are also becoming popular as markets shift towards more eco-friendly and renewable processes. Customers’ demands change, and supply chain visibility means listening to customer demands. The winds of change are blowing, and shippers must be ready, or they may end up paying increased fees and surcharges for failure to comply with new regulations and guidelines shortly.
8. Cyber Security Is Mission-Critical and a Core Driver of Supply Chain Visibility Tech
One of the most recent issues related to overall capacity risk in supply chain network management was the Colonial Pipeline cyberattack in 2021. Visibility within the supply chain is critical for real-time monitoring of systems and predictive analysis of strengths and weaknesses within the network. Poor visibility means an inability to recognize when cyber-attacks or vulnerabilities exist regarding shipping drayage and other loads. Also, more visibility can help isolate issues and know where the exposure originated and what to do, thus improving predictive maintenance and logistical planning. Port drayage tech and tools can keep things moving smoothly to avoid costly mistakes and issues.
9. Carrier Network Diversity Is Increasing
Today's types of carriers available within the market are increasing like never before, thus giving shoppers more options from which to choose. Shippers want more flexible, agile, and diverse networks filled with drivers who can meet specific and niche needs when they arise during freight transportation. Additionally, shippers need more access to cost control options that can help offset container drayage fees and similar expenses. Improved diversity and visibility, and scalability can provide all of this and more. Tapping into broader talent pools and implementing faster turnaround times for bids and RFP and contract negotiations can help offset many capacity risks in supply chain networks today.
10. The Customer Experience Is King, and Visibility Is His Regent
Ultimately, customers are the most critical of the supply chain logistics puzzle. Whether they are retail customers or B2B retailers, their experience matters, and a failure to have freight delivered on time can amount to an increase in fines and capacity risk in supply chains. In a 2018 report by McKinsey & Company, “Kroger fines suppliers $500 for each order that is delivered more than two days late, for example, while Walmart charges suppliers 3 percent of the purchase price for every order delivered early, late or incomplete. And both retailers have also narrowed the delivery window for full truckloads from four days to one or two.” Visibility into supply chain logistics helps prevent the loss of customers and higher operating costs.
Enhance Supply Chain Visibility in Drayage by Knowing the Trends and Prioritizing Your Network’s Strategic Goals With Port City Logistics.
More and more shippers are offering tracking and real-time status reports for nearly every aspect of the shipping journey. However, there is one area where the capacity risk in the supply chain is highest and can cause significant downstream issues–drayage capacity management. Shippers who can adapt and scale as needed to maintain on-time deliveries are better poised for continued growth and success in the year ahead.
These trends and more are shaping the future of the shipping and transportation industry and are changing the markets in powerful and unexpected ways. Overcoming issues related to drayage shipping and growing container drayage fee and expense rates relies on improved visibility throughout the entire supply chain network. Contact Port City Logistics today to learn more about improving visibility into supply chain logistics.