While 90% of international trade travels by sea, ocean freight still has a visibility problem. Supply chain, logistics, and procurement leaders struggle to build a more resilient and agile global supply chain. That requires gaining real-time insight into all modes of transportation, including sea freight. From manufacturers to retailers, obtaining better ocean visibility will play a critical role in digital transformation initiatives and efforts to build true end-to-end supply chain visibility.
In this article, we explore why addressing the ocean gap has become more essential than ever before. To guide and inform this discussion, you’ll find input from leading industry experts, including:
- Ed Feitzinger, Former VP of Global Logistics, Amazon
- Rodrigo Carsalade Martins, Global Logistics Operations Manager, British American Tobacco
- Chris Mazza, SVP Customer Experience & Business Development, ClearMetal
Their expertise will allow readers to take a deeper dive into topics such as:
- The quality of data from traditional logistics software
- Issues that poor visibility creates for ocean shippers
- The latest generation of ocean-visibility software
Cleaning Up the Ocean Data
The Next Generation of Ocean-Visibility Solutions
About 90% of international trade moves by the ocean.1 However, among all transportation modes, ocean freight has traditionally delivered the least in terms of shipment visibility. As shippers pursue better agility within their supply chains, it’s becoming more critical than ever before to gain visibility into shipments as they move.
Container ships carry thousands of 20-foot units (TEUs) and 40-foot units (FEUs) per ship and can take up to a month to reach their destination. A single container might hold hundreds or thousands of products or contain critical raw materials needed to keep production moving. Without a reliable view of when those products or materials will arrive, downstream on-time delivery (OTD) rates begin to plummet and production schedules grind to a halt.
Given the amount of time and the volume of containers per ship, the number of opportunities for something to go wrong in an ocean shipment vastly exceeds that of other modes. The sheer complexity of these situations has often made ocean freight difficult to reliably track. While most ocean carriers have portals containing shipment data, this information is often outdated — or worse, outright incorrect.
Building more resilient global supply chains requires gaining real-time insight into all modes of transportation, including sea freight. From manufacturers to retailers, obtaining better ocean visibility will play a critical role in digital transformation initiatives and efforts to build true end-to-end supply chain visibility.
Cleaning Up the Ocean Data
While shippers can use control towers to gather information about their ocean shipments, the data itself is often inconsistent. Data comes from numerous sources, including the carriers themselves, automatic identification systems, port and terminal operators, and the suppliers that shipped the initial cargo. Other factors can play into accurate arrival predictions as well, such as historical carrier performance, weather, congested ports, natural disasters, global political issues, and more.
“Poor data means poor visibility. That’s what the industry struggles with today. Everybody is trying to collect data in many different ways. They go to multiple websites, they set up brittle EDI integrations, and they’re trying to figure out the real picture. They’re not just trying to find better data. What they’re searching for is true visibility.” – Chris Mazza, SVP Customer Experience & Business Development, ClearMetal
When all this disparate data is pooled together, however, it tends to create the opposite of true visibility by painting a confusing and often contradictory picture of actual cargo status. This makes the data difficult to incorporate into planning, production, or distribution schedules.
About 62% of ocean shippers rate the overall quality of their current ocean-logistics data as average, below average, or poor, according to “Identifying Current Challenges in Ocean Container Shipping,” a survey of more than 200 ocean-shipper respondents from Supply Chain Dive and ClearMetal.
“If you were a director of logistics and you were buying ocean within your budget and mostly on-time, it probably never used to get above your boss or your boss’s boss. With all the challenges of the last year, this is now becoming a CEO issue. People are missing sales, so having 62% satisfaction with your data creates huge gaps when your CEO wants to know when the situation is going to be resolved, when product is going to be on the shelf and when you’re going to get the sales you expected.” – Ed Feitzinger, Former Vice President of Global Logistics, Amazon
Turning this muddy pool into usable data requires advanced artificial intelligence (AI) and machine learning (ML) capabilities. Unfortunately, many of the technology solutions on the market that claim to apply AI and ML can only do so in a limited capacity.
“Every salesperson that calls me talks about ML and AI, and I’ve always found that frustrating because it’s usually just a lot of jargon,” Feitzinger said. “But ocean freight is a great space for these technologies, where they can really clean up the data, find out where the problems are, and make sure it stays clean over a period of time.”
The current bar for ocean visibility is set relatively low, leaving many shippers to believe that this average data quality is as good as it gets. Sixty-one percent of ocean-shipper respondents also reported that the overall ocean visibility provided by their current logistics technologies ranks as average or below.
Even with approximately 34% of shippers reporting above average or excellent visibility from their current logistics technology, more than 79% reported less than 75% of OTD ratings. This finding suggests that even some of the shippers who consider their visibility above-average or better still 2actually lack accurate enough data to push up OTD rates.
Fortunately, recent technological advances in ocean visibility have made it possible to shore up this critical link in the supply chain.
The Next Generation of Ocean-Visibility Solutions
While the supply chain has its eye on a post-pandemic world, many of the problems COVID-19 caused continue to plague shippers. About 34%of survey respondents reported occasional stockouts, while 23% reported them somewhat frequently, and an additional 8% said stockouts happened very frequently.
“No one anticipated the volume of freight that would come in the second half of 2020,” Mazza said. “As we see many of the economies emerging out of the pandemic, we see an increase in volume that continues to accelerate. What that means is that ships are not getting loaded, and when companies wish to make more bookings, the ocean carriers can’t easily issue those bookings. There’s also the problem of container shortages. Even if you’re fortunate enough to get a booking, can you get a container to actually put your cargo in? That all leads back to the core fundamental problem, which is basic visibility. It was a struggle before, and the pandemic exacerbated it.”
Unreliable visibility is also expensive for some shippers. Our survey identified a small percentage of large shippers that pay more than $1 million annually in detention and demurrage fees, while nearly 19% pay $100,000 to $499,000, and another 27% pay $10,000 to $99,999. The latest generation of solutions for ocean-freight visibility can apply functional ML and AI to dirty data pools to sort out the inconsistencies and allow shippers to better predict when their containers will arrive.
“Let’s say I’m expecting something to arrive at my factory three days from now. My control tower goes to the carrier website, and it’s confirmed. Then, three days later, where’s my container? It doesn’t show up, and we dig around and find the information on the website is not accurate and I have to wait two more weeks. I have to trigger all my contingencies to make sure my factory doesn’t stop and my product gets to market. This lack of visibility makes you reactive.” – Rodrigo Carsalade Martins, Global Logistics Operations Manager, British American Tobacco
A more advanced visibility solution can help address numerous other problems identified in our survey as well, such as transportation and lead-time planning, inventory management, carrier performance management, and more. This capability helps to significantly reduce problems, such as stockouts, without carrying excess buffer stock that drives up warehousing costs. It also helps address demurrage fees from containers that the shipper didn’t even know were on the dock.
Better visibility goes beyond simply knowing where all your containers exist like dots on a map. But what’s more important than knowing where your containers are is knowing where they aren’t. “I don’t care about the 99% of containers that are on time,” Martins said. “A track-and-trace tool that shows you everything on
the water is fine. But show me where I have a problem. If it’s on track, I don’t need to waste my time. I care more about the small percentage of exceptions that are going to disrupt my operation and hurt the customer experience that I’m building. That’s what I need to know before my phone rings so I can do something before it actually impacts my supply chain.”
When shippers can identify missing shipments, late shipments, and other exceptions early, that allows them extra precious days or weeks to retool their existing plans and production schedules to avoid unexpected interruptions, downtime, or stockouts.
When sourcing an ocean-visibility tool that can help you address these problems, look for features such as:
- Functional AI and ML. Many visibility solutions claim to have artificial intelligence and machine learning, but not all solutions are made equal. Don’t be afraid to question a potential provider about their technology’s actual AI/ML capabilities.
- Demonstrable return on investment. A good ocean-visibility solution should pay for itself over time by allowing you to save on excess logistics costs via reduced demurrage and detention fees, less buffer stock, reduced excess inventory, improved on-time delivery, and fewer instances of rushed airfreight or other emergency contingencies.
- Real-time visibility into ocean shipments. Your ocean-visibility solution should not only show you where your containers are but also identify problem areas early so they can be addressed cost-effectively, ultimately reducing your overall supply chain risk.
- Empowerment for planners. Your production and supply chain planners need reliable data about incoming goods and materials to develop usable plans, help them manage by exception, and improve the productivity of personnel.
- A continuous delivery experience. Smooth operations from initial sourcing through final delivery create an ideal experience for your end customer. Fixing the traditional visibility gap for ocean freight will help to improve the overall delivery experience.
- Augmentation of existing capabilities. Finding a provider to deliver reliable ocean visibility will fuel improved results from your control tower, transportation management system, business intelligence software, and more.
Keep in mind that there is no magic bullet that offers complete end-to-end visibility. Instead, it’s crucial to find solutions in each transportation segment that will integrate seamlessly to provide the complete visibility your organization needs to build a more agile and resilient supply chain.