Supply chain insights and transparency are essential for safe, everyday functionality. Maintaining clear and concise freight visibility across all modes and all loads is vital to maintaining cost control. Real-time transportation visibility essentially means keeping continuous access to current and up-to-the-minute information that allows shippers to monitor goods and know their exact location at any given time. A reliable supply chain helps shippers plan for the unexpected, avoid compounding disruption when delays, such as rolled cargo, occur, and ensure a positive customer experience.
It’s also prudent to realize that the customer can be another retailer, a downstream distribution center, or an end-user expecting a larger load. Regardless, a failure to manage operations with shipment visibility on every level will lead to problems and additional delays. Further, a lack of visibility means managing only when issues reach a point of critical mass—resulting in higher costs, greater risk for returns, and a tarnished brand reputation.
Logistics visibility and planning are the keys to keeping profits high and costs low, especially as recovery efforts continue across the supply chain. The simple reality is that disruption is the new normal.
There’s an ongoing risk of additional COVID-19 variants, and the e-commerce boom is continuing. According to Shopify, global e-commerce sales will amass $5.5 trillion worldwide in 2022. And by 2025, e-commerce sales will make up 23.6% of the total share of retail sales. That’s a massive infusion of demand within the global logistics landscape. Failure to start tracking every movement and not applying that data to stay ahead of the curve will lead to additional risks and losses. Unfortunately, the problem is more rampant than meets the eye.
Statistics presented by Zippia show that less than 6% of companies say they have complete shipment visibility through all modes, including ocean visibility, and nearly 70% of companies do not have real-time supply chain visibility. These numbers are positively dismal for those hoping to compete in the global supply chain market currently valued at around $15.85 billion, with an expected CAGR of 11.2% from now to 2027.
Together, these facts make it easy to understand why increasing access to and using a real-time visibility platform is critical to the industry. Let’s take a closer look at how supply chain visibility works, its impact on landed transportation spending, including accessorials, and how shippers can better manage all loads from origin through delivery more effectively.
What Is Freight Visibility?
Freight visibility is a relatively simple concept; it is the tracking and monitoring of freight, shipments, inventory, and cargo in transit. The goal is to improve and strengthen the supply chain by making data readily available to shippers and customers. Yet, visibility without context makes it almost as bad as not using any logistics visibility platform. Unfortunately, many organizations still struggle with traditional means of data collection, including manual entry into Excel sheets, an inability to apply visibility to make strategic decisions, and a lack of connectivity to share information in real time.
Increased logistics visibility can more easily rectify disruptions by finding the best solution quickly and easily. This is especially important when considering the potential impacts of poor visibility on total transportation spending. For example, reducing dwell time, improving container tracking, and lowering freight risks also come with improving supply chain visibility. Still, visibility for the sake of visibility is ultimately useless. If shippers and BCOs cannot apply the information to make meaningful improvements in operations, nothing will change.
Improving supply chain insights and visibility in logistics is essential for continued growth and recovery in the shipping and transportation industry. Poor visibility in the supply chain leads to disruptions and can cause significant losses. According to data aggregated and published by Finances Online, a lack of real-time supply chain visibility can lead to disruptions in terms of finances (62%), logistics (54%), and reputation (54%). Supply chain internal visibility issues are caused by things such as mergers and acquisitions (66%), extreme weather (41%), and business sales (33%).
The top causes of poor logistics visibility in the U.S. are unplanned IT outages (68%), adverse weather (62%), loss of talent (51%), cyber-attacks (50%), and fire (44%). And all of this culminated in the distressing reveal that nearly 30% of companies don’t analyze the cause or source of supply chain visibility disruptions and simply work to fix the issue and never work to prevent it from occurring again. The only way to improve visibility in logistics and shipping services is to keep up with the latest tools and technology, including visibility software, and apply it to real-time situations.
Here’s another concern. Many usually view ocean freight visibility as the unable-to-manage aspect of actual transportation due to the actual vessel location being isolated to only the carrier’s knowledge base. But all carriers publish updates to their sailing schedules, and all vessels must report Automatic Identification System (AIS) data to the U.S. Coast Guard. The Bureau of Ocean Energy Management (BOEM), the National Oceanic and Atmospheric Administration (NOAA), and the Coast Guard Navigation Center work together to track vessel location, speed, length, and draft to provide more insight.
However, this data is insufficient for planning downstream movements on its own. Further, suppose a shipper cannot easily see this information within existing systems. In that case, real-time supply chain visibility will inevitably break down, meaning freight may arrive at a port well before a shipper realizes that the ETA has changed.
Also, ocean freight visibility is very much unlike typical OTR transportation. There is not a set road that each vessel takes, and there is not an exact time of when the ship will arrive at the destination when it sets sail. Things can and do go wrong, and even if the ship is in tip-top shape, Mother Nature may have other plans. Yet, shippers that do not continuously consider these factors will likely face higher detention, demurrage, and per diem rates upon shipping berth.
The Risk of Accessorials Due to Poor Freight Visibility
There’s always going to be a massive interest in reducing the top “D’s” of ocean freight. Ultimately, poor freight and shipment visibility will lead to excessive fees and higher expenses for shippers. Typically known as accessorials, these charges can add up much quicker than the usual accessorial costs associated with inland or OTR transport.
Without supply chain visibility at its best, higher D’s of logistics—detention, demurrage, and per diem expenses, are likely to become the norm. But what are these fees really?
Shippers incur detention fees when they use equipment—namely containers, forklifts, or other pieces—past the allotted time. No matter the cause for the logistics visibility issues and delays, detention charges apply daily for as long as the equipment remains checked out. Furthermore, detention can get a bit complicated and confused with demurrage charges. Demurrage fees are associated with laden containers inside a port; detention fees apply to equipment and activities outside the port. However, it’s best to also consider how demurrage charges relate to downstream planning.
Demurrage charges occur when shippers cannot fully unload and pick up a container at a port on time. Many port terminal operators do have a set amount of free time for which shippers can plan their drayage or linehaul moves. But, with the added demand in the industry, free time is at a premium, meaning port authorities are more likely to assess demurrage charges faster than they would have historically. As a result, shippers have even less time to plan those inland moves and ensure they have access to trucking capacity to move the loads.
Now imagine if shippers could not only track their freight from within their existing systems from an integrated logistics visibility platform but predict its arrival, consider the impact on downstream moves, and plan those moves before the vessel arrives. In this instance, demurrage risk declines, and that also results in yet another reduced risk of costs—per diem charges.
A third “D” fee associated with ocean freight is a specialized type of detention fee—per diem fees. Per diem charges are essentially detention fees where a fixed rate is charged every day for every container that remains in use by a shipper. However, per diem can be applied to both containers and the chassis in use. If either is not returned to the port on time, per diem fees apply. A lack of real-time supply chain visibility makes it more likely that delays will occur and per diem fees will stack up.
All three of these fees are directly and at times dramatically impacted by a lack of supply chain visibility and related disruptions. Supply chain software and infrastructure can help improve responsiveness to difficulties with shipping management.
There is also another “D” of logistics that can occur and result in higher transportation spend—dwell time charges. Dwell time is assessed by carriers when a truck waits too long to unload or complete the unloading of goods at an inland distribution center, warehouse, or another facility. Most carriers may offer a two- or three-hour free-time allotment for loading/unloading. But if that process takes too long, the carrier begins to lose money. As a result, the dwell time surcharge comes into play to help pay for the wasted time. Carriers may also charge these fees if waiting at a rail ramp or performing other functions that result in idle drivers.
A keen focus on solid and accurate visibility in supply chain operations is essential to avoid high costs and accessorial fees. But how does limited visibility impact the customer experience and downstream movements?
The Impacts of Limited Container and Ocean Freight Visibility
There are many ways that poor logistics visibility impacts the entire supply chain. Obviously, poor real-time supply chain visibility is directly associated with significantly higher logistics expenses and spending. Less than stellar visibility in logistics management, track and trace options, and supply chain operations often result in problems with the decision-making process. In turn, management is often busy putting out fires and figuring out how to solve the latest crises. Without supply chain visibility, when issues arise, they are usually not caught early on and don't even begin to get noticed until they have become a significant disruption and have negatively impacted the supply chain.
Limited container and ocean freight visibility can also harm the customer experience.
For example, poor visibility in logistics and insights into shipping and delivery logistics may cause issues only to become known when the customer reports no one ever delivered their order. Or cases with loading and unloading might be made known until major problems with container shortages and availability arise. Many managers do not clearly understand logistics visibility and transparency in the supply chain. They don't know things are wrong until customers start raising concerns and asking for solutions. Additionally, without full, real-time visibility in logistics, shippers are more likely to see their customers abandon the proverbial ship and move to a competitor.
Worse still, a lack of visibility doesn’t only lead to the “D” costs above, but it can lead to the mismanagement of existing needs. In such cases, management makes a decision that goes directly against what’s truly happening and results in higher expenses. That may include additional charges or fines from US Customs and Border Protection, refusal to admit imports for entry to the US, and more.
The costs begin to spiral out of control radically, leading to massive increases in headaches in managing operations. Over time, team members burn out, and the relentless push for reactive management leads to higher employee turnover. It’s a self-propagating cycle that worsens daily when an organization lacks real-time supply chain visibility.
Fortunately, the solution to these fee increases and additional expenses related to container shipment visibility is to find a configurable solution and real-time visibility platform that can generate absolute transparency into all operations and help shippers stay informed and ready for what’s next.
How Shippers and BCOs Can Boost Logistics Visibility
Shippers have a vested interest in reducing the costs and effects of poor visibility. Yet with abysmal adoption rates, it can be challenging for shippers to identify how to increase visibility. That’s especially true for those that continue operating with siloed, legacy platforms. Fortunately, the following steps will help shippers improve shipment visibility and boost operations throughout the global supply chain.
- Integrate your existing and new systems to create a single data stream via an API. This singular, centralized view of all activities is imperative to improving visibility and avoiding the pitfalls of “overlooking” the shipment status within a specific system. For instance, tracking a container in a carrier-specific system does work, but that limits the ability to see all containers to those shipped by that carrier in question. As a result, shippers might spend extra resources trying to access multiple carrier systems to learn the status of their loads.
- Incorporate your proof of delivery, bill of lading, or other documentation with your tech stack. Today’s supply chains are evolving and moving toward a digital-native environment. That includes using digital documentation and storage capabilities to ensure all parties have access to the required paperwork. This is also vital to streamlining customs processing and avoiding delays in handling imports or exports. It also helps to ensure compliance with all long-term record-keeping for the importer or exporter of record too.
- Analyze the supply chain network and look for issues related to visibility in logistics to see weaknesses. Any strategy for improving the supply chain must include the application of analytics. Analytics provide insight into the health of the transportation network and carrier performance. Such information can help shippers identify trends among unique carriers, such as those that tend to arrive later or are more likely to roll cargo before sailing. Of course, this degree of visibility into performance also depends on real-time supply chain visibility into each carrier activity.
- Automate notifications to manage by exception. Shippers have ample responsibilities and shouldn’t have to spend time sorting through an endless array of emails that only provide the usual status report. Instead of trying to micromanage everything, shippers need the ability to manage and intervene on shipments that are subject to delays, risks, or other problems. In other words, they need to manage by exception. Automated notifications go a long way toward enabling management by exception. Additionally, such notifications give rise to enhanced terminal visibility, helping shippers know when freight is available for pickup, any holds currently placed on a shipment, the total fees associated with the shipment, and the last free day for short-term storage. Again, this plays back into avoiding the “D’s” of accessorials in global container and ocean transportation costs.
Despite using these four steps, there will always be instances where the plan goes awry. Responding to these disruptions is also part of the day-to-day processes for supply chain management and shippers. Despite unprecedented recovery efforts following the global pandemic, shippers must remain focused on improving and leveraging absolute logistics visibility and ocean visibility to know precisely when and where each load is and what’s next. Furthermore, there is additional evidence that many commodities will continue to experience demand hikes going forward, especially with the ongoing uncertainty of the pandemic.
As highlighted by Markets and Markets, “COVID-19 caused major disruptions in supply chains and working conditions, along with spikes in demand for specific items. For example, in the United States, while the sales of clothing retailers dropped by 89.3%, in April 2020 year-on-year, the sales of grocery stores increased by 13.2%.” The key to these and other potential barriers starts with the application of technology and the use of real-time logistics visibility platform to track in-transit loads, regardless of mode, location, or ETA.
Choose VIZION API to Reap the Rewards of Better OTR and Ocean Freight Visibility
As the life-blood of any company, supply chain transportation lines work to keep the entire country, and even the world as a whole, running as smoothly and efficiently as possible. Yet, many shippers are stuck in the past and only intervene when problems grow so severe that they impact the bottom line or cause customer upset. Rather than continuing this antiquated process and experiencing continued stress, shippers can work to improve visibility and reap its rewards. The key is finding the right system that can bring everything together, enable scalability through enhanced functions, avoid potential delays, and ensure everyone is on the same page and able to collaborate to avoid problems. That’s the simple reality of better shipment visibility through integrated systems and world-class technology. VIZION API is the service provider of choice that can make all that possible and beyond. It’s time to finally gain absolute transparency into every load, every vessel, and every container movement. Contact VIZION API to learn more about how your team can tap visibility and avoid the problems of lackluster visibility today.