It’s being called the freight recession of 2023. Freight volumes imported into the U.S. are at a low and not expected to recover for the rest of the year. In response, ocean carriers are employing strategies that affect shippers’ supply chain operations, leading to increased costs, including demurrage and detention charges. Shippers must now navigate these challenges to reduce the impact on their bottom line.
This article explores three tools that can help shippers avoid demurrage and detention charges, optimize their operations, and manage their supply chain data effectively. Shippers can have a better outlook for their supply chains despite challenges they may face, with the help of optimization tools.
Shippers Pay a High Price for Low Volumes
Shippers in the global supply chain are bearing the brunt of low volumes while ocean carriers implement cost-cutting measures. Ocean carriers attempt to maintain profitability by adopting strategies such as blank sailings, slow steaming, and canceled routes. Blank sailings, for example, allow them to eliminate sailings to ports where demand is weak, or they can cancel the sailing entirely. Also helping ocean carriers reduce costs, slow steaming is when vessels reduce their speed to save on fuel. According to Refinitiv, the average fleet speed of containerships has decreased by 10% from 2021 to 2023, decreasing fuel costs. However, these strategies have ripple effects on shippers, including increased transit times, missed delivery deadlines, and the side effect of increased demurrage and detention charges.
As Ocean Carriers Pass the Check, Shippers Search for Solutions
The global shipping industry has faced numerous challenges and obstacles in the last several years, from the COVID-19 pandemic to supply chain disruptions and equipment shortages. The laws of supply and demand rule the economy, including shipping industries, thus causing ebbs and flows. Ultimately, a decreased supply of sailings causes supply chain delays and increased costs for shippers, leaving them to search for solutions to optimize and avoid added costs.
Here are three approaches that shippers can use to counter the challenges they face.
End-to-End Container Tracking
End-to-end container tracking offers complete event data, including intermodal from vessel to rail. When a significant portion of ocean import shipments is moved by train to inland facilities, shippers need to have visibility on their containers to effectively manage these operations. It is not uncommon for shippers to experience an information gap, having no meaningful data on their Last Free Day or availability events. By covering this lack of information with end-to-end tracking, shippers can decrease their detention and demurrage charges by moving and returning containers on time.
Scalable Analytics
Scalable analytics is another tool that can help shippers manage their supply chain data effectively. Shippers can identify trends, optimize routes, and streamline operations with in-depth real-time data analysis. Analytics can also help shippers make more data-driven decisions and reduce costs by identifying areas for improvement. It’s not enough to simply have access to data; shippers also need the tools to turn it into action.
Visibility Beyond the Blue Dot
Visibility beyond just the blue dot—meaning the location on a map—is another tool that can help shippers optimize their operations and avoid demurrage and detention charges. Visibility allows shippers to track their containers in real time, with detailed updates on their location and even the option of monitoring conditions such as temperature and humidity. Port and terminal events can also be monitored automatically, giving shippers real-time, accurate information about vessel arrivals, departures, and delays, instead of waiting on updates from the vessel. This visibility can help shippers make more informed decisions about their operations and avoid costly charges.
End-to-end container tracking, scalable analytics, and visibility beyond the blue dot are just three examples of tools shippers can use to improve operational efficiency. Shippers can reduce costs and gain an edge in staying ahead of their competition.
Optimizing Shippers' Supply Chain Operations in 2023
Ocean carriers' strategies to mitigate low volumes have resulted in shippers bearing the cost. Blank sailings, slow steaming, and canceled routes can increase demurrage and detention charges for shippers. Taking advantage of tools end-to-end container tracking, scalable analytics, and visibility beyond the blue dot, offered by VIZION API, shippers can optimize their operations and avoid unnecessary charges. Learn more about how visibility can help your supply chain by reaching out to us today to schedule a demo.
