Let's talk about trust. Every activity and every partnership in a global supply chain is geared toward not only completing the tasks at hand but also building trust along the way. For example, beneficial cargo owners (BCOs) count on third-party logistics partners for many things, but providing accurate shipping container delivery estimates is among the most important.
The truth is, consistency and trust in global logistics have vanished in recent years. The global pandemic was the catalyst for implosions throughout global supply chains. E-commerce volumes saw a decade of growth in just three quarters of 2020, and the continuing demand for online shopping and deliveries is leading to unprecedented lengthy delays at the Port of Los Angeles/Long Beach and other major ports around the world. If that weren't enough, disruptions are always lurking nearby. Consider the Suez Canal blockage in early 2021, which cost $400 million per hour in lost trade.
Businesses of all sizes need to rebuild trust in their global supply chain, and that starts with gaining a deeper level of end-to-end visibility into ocean freight movements. Only then will 3PLs be able to answer the question, "Where is my shipment and when will it arrive?" with confidence.
Importance of Providing Container Delivery Estimates
The 3PL/BCO relationship is often rife with complexities and minutiae but what it really boils down to is trust. Trust that the 3PL is going to move the BCO's ocean freight, provide visibility into what's moving and where every step of the way, get it to the intended destination on time and at the most competitive rate, all while controlling costs. Any one or all of those goals is much harder to achieve without proactive, real time shipping container delivery estimates.
Let's face it, no BCO wants to wake up at the crack of dawn to this sobering thought: "I literally don't know if I'm going to have zero or seven containers show up to our warehouse." Accurate shipping container delivery estimates, with updates delivered in real time, will provide a BCO with more lead time, the knowledge of when their imports will arrive, and the confidence needed to plan accordingly.
A 3PL partner must be able to deliver accurate ETAs consistently and communicate updates in real time when things change. Those who provide that level of transparency will build immense trust that will keep BCOs/shippers happy and coming back for more as their businesses grow and scale globally. That kind of stellar reputation spreads quickly throughout the industry and there's a good chance that you'll soon be talking to some of your competitors' customers who want that same level of reliable service.
Challenges Abound without Trust & Real-Time Visibility
In his bestselling book The SPEED of Trust: The One Thing that Changes Everything, author Stephen M.R. Covey wrote: "Trust always affects two outcomes - speed and cost. When trust goes down, speed will also go down and costs will go up." So when there's no trust that a 3PL partner can provide an accurate shipping container delivery estimate or an update in real time, shippers face a host of problems that include:
- Trouble placing bookings with ocean carriers or finding capacity on vessels.
- An inability to provide real-time visibility into the location and condition of a container shipment. This often forces their customers to seek other options.
- Freight does not show up or is late. When the OTIF rate plummets, it puts any preferred shipper status in jeopardy, and you can make bank on the fact that empty store shelves will surely lead to unhappy customers.
To make matters even worse, without real-time visibility and insights, you will have no answers when stakeholders ask, "Where is my container and when will it arrive?" And, just as Covey alluded to, this inability to trust - in this case, due to a lack of visibility into shipping container status - will increase a BCO's costs in many ways:
- More gymnastics will be needed to provide buffer stock - According to ShipBob, "Inventory forecasting requires extensive planning to ensure your business is prepared to consistently meet demand while staying conscious of not ordering too much (which can increase the costs of storing excess inventory and eventually cut into profits)."
- Warehouse inefficiency - Not knowing for certain when a shipping container will arrive can have a far-reaching ripple effect in the warehouse. Visibility is needed to track key performance indicators such as receiving efficiency, picking accuracy, carrying cost of inventory, and more. Downtime is a profit-killer in many ways.
- "Lost" products and substantial fines - Real-time visibility data regarding shipping container delivery status plays a big part in negotiating with partners at the point of delivery to mitigate disruptions and delays. A simple heads-up that a delay is likely could prompt a reconfiguring of the prescribed delivery window, thereby preserving a load of perishable goods and avoiding OTIF violations and fines, which can add up to thousands or tens of thousands of dollars each month.
- Transportation audibles can be costly â€“ If the ship cannot get containers to their destination on time, you may have to consider alternative modes of transportation. In general, airfreight will move products faster but is much more costly than ocean freight. Rail, on the other hand, is cheaper but will take much longer. This puts perishable products at risk, as well as your reputation for delivering on time and in full.
- Greater Trade finance interest / costs - A trade finance partner who has already paid a supplier's invoice expects the BCO/shipper to pay back that amount once the goods have been delivered and sold. Obviously, any delay in shipping container delivery is going to incur an interest penalty with the trade financier.
What if 3PLs Can't Offer Accurate Container Delivery Estimates?
When 3PLs are unable to provide shipping container delivery estimates, it's fairly common for them to face questions like "Where is my container?", "When will it arrive?" and "What will these delays cost me?" By not looking for new ways to enhance their service offerings and provide a clear differentiation from their competitors, 3PLs risk the chance of their customers going elsewhere.
Making less money is never a good option for 3PLs that are already operating on razor-thin margins. They're feeling immense pressure from all sides to execute with precision and deliver real-time status updates every step of the way. It's tough to do that when visibility is lacking. If they cannot see, they cannot predict. And if they cannot predict, they cannot adapt easily when disruptions occur. In a sense, the supply chain is out of control. Customer satisfaction will most certainly suffer, as will morale of their own staff. When that happens, 3PLs incur increased employee turnover and the costs associated with recruiting and training new staff. It's no wonder logistics professionals are losing sleep at night.
But here's a little secret: They should have to spend so much of their time manually tracking down information when responding to customer support requests. They should be able to tell a BCO, shipper or manufacturer exactly where their shipments are at any given time. They expect that, thanks to the Amazon Effect.
The 3PL service provider should be the first to know when there's an exception with a shipping container delivery; they should not be in a position where they hear about it from the customer or BCO. There are some steps 3PL partners can put into place to help ensure they can always answer customer questions about where, why, and when in relation to a container delivery.
8 Best Practices for 3PLs to Improve Shipping Container Delivery Estimates
Third-party logistics providers can take control and gain the visibility they need to provide shipping container delivery estimates and other crucial information to shareholders through the use of application programming interface (API) technology. Here are some best practices to follow:
- Integrate an API subscription to receive real-time updates on containerized freight.
- Provide clean, standardized data across carriers globally, including shipping milestone events (either completion or estimation).
- Facilitate a data pull or push into partners' and customer' interfaces - whether it's their own WMS, TMS or other technology platform, it's best to provide data to them in an environment where they are most comfortable.
- Provide instant-on access to pre-mapped data sources once the API key has been issued. With an API, there is no extensive setup that is common with EDI technology.
- Provide access to more specific, insightful, standardized events (50+) built and designed to go into whatever application you are using.
- Ensure the data has been enriched and supplemented through multiple sources. This moves the data beyond just port to port and into the realm of door to door by adding vessel tracking, terminal visibility, rail and air. This paves the way for more machine learning, which will lead to better predictive ETAs and performance analysis.
- Optimize the data to reflect the ideal data payload.
- Help people make build or buy decisions. In this age of digital transformation, it's imperative companies embrace technology to gain a competitive advantage in their supply chain. Building an API can be a cost-effective, robust solution.
When 3PLs Can Offer Container Delivery Estimates...
Remember Covey's premise in The SPEED of Trust, that when trust goes down, speed will also go down and costs will go up? Well, the flipside is that when "trust goes up, speed goes up and costs go down." That, too, holds true in the supply chain. For instance, when a 3PL partner can leverage API technology to easily provide shipping container delivery estimates and real-time status updates to BCOs and shippers, this has the following positive impacts to the 3PL's business:
- Increased visibility helps you respond and adjust to disruptions you have no control over
- Costs go down
- Personnel productivity increases
- Enhances customer experiences
- Increase revenue and upsell opportunities
- Increases customer acquisition
- Increases bookings/customer usage, stickiness, customer retention, and brand loyalty
In summary, you will be a 3PL that is now digitally-enabled to provide the latest information and insights to all stakeholders so they can make informed decisions. You are that empowered, knowledgeable single pane of truth that can provide the strategic guidance and the hands-on expertise needed to successfully navigate the often turbulent waters of ocean freight movement in the global marketplace. You will be a trusted partner that is very much in demand.
VIZION APIs: Driving Real-Time Visibility & Building Trust
Reliability is key to building trust in partnerships that drive collaboration, growth, and scalability in the global supply chain. BCOs and shippers rely on 3PL partners to provide accurate shipping container delivery estimates and real-time updates. By following the best practices listed above, logistics professionals can leverage VIZION's simple-to-use API to get cleansed and standardized data regarding shipping container status and a host of other insights. You could say we're saving the global supply chain one trusted relationship at a time. Let us show you more. Book a demo of our ocean freight tracking API today.