Topic of the month
Uncertainty remains playing a major role in supply chains across the globe. During the last few weeks many headlines brought up the high level of inventory some retail companies were struggling to deal with it. During this topic of the month, we will bring to you a perspective of what is happening, the bullwhip effect on the supply chain and ways to minimize or surpass some of the uncertainties.
What’s happening in the market:
Retailers are overstocked with inventory; reporting an increase of 40% of catalogue compared to what they had last year.
Demand has slowly recovered, specially, for products like groceries, beauty and cosmetics, household essentials and seasonal categories such as summer or back to school. However, shelves and warehouses are packed with typically pandemic goods that retailers need to get rid of. As new products are coming, retailers need to make room for them and therefore they are coming up with strategies to cancel orders, mark down unwanted items and being aggressive to get rid of all the overstock, which has a negative impact in their margins. Big US retailers have already announced that profits will take a short-term hit as they try to keep their inventory levels in line with market demand.
Another cause of high inventory levels comes with the change in customer habits that we are experiencing. As normality is recovered, so does social life and services in detriment of house and home office products. Spending in restaurants and bars raised nearly 20% in March, according to the Commerce Department of USA, hitting a record of $8.6 trillion.
What is the bullwhip effect
These past years the world has seen that adaptability is crucial and the supply chain it is not the exception. Sellers had witnessed demand shifts, inventory blows, changes in shoppers’ habits, all this in a disproportionate manner and making the supply chain a resilient world. That is now called the bullwhip effect and it is more common in the industry, causing big holdups.
Logistics had been trying to keep on answering to the demand disruptions and businesses have faced revenue loss from out-of-stock items and reduced margins from discount on overstocked articles.
This bullwhip comes from the sudden demand spikes and dips. A lot of stakeholders are involved in supply chain which opens opportunities for irregular reactions to demand changes. Inefficiencies, miscommunication, and delays between the multiple stakeholders make these disruptions, leading at the same time to more reactions in trying to get the supply chain stable.
Past port suspensions and factories closing made retailers to advance their purchases to have enough inventory. Some of this inventory still piles up in warehouses. Some alternatives to minimize the bullwhip effect are:
- Investigate and learn why the demand shifts happen and their context,
- try to reduce the complexity in the supply chain seeking for a better communication to enable fluent and nonstop responses.
- Understand and improve inventory’s visibility.
- Diminish lead times, automation and localization are two key solutions to make inventory flow at warehouses.
These actions won’t eliminate the bullwhip effect but will minimize it. It is impossible to predict a changing in customers’ behavior, and its impact on the market. The motivation is to try to make warehouses more efficient, agile and the most profitable as possible.
In this topsy-turvy supply chain world efficiency is mandatory. If you want to know how Sealand solutions can help your business to surpass this scenario get in touch with us here.
Ocean Updates
| TRADE LANE | COMMENTS | DEMAND TREND |
|---|---|---|
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TRADE LANE
West Coast to Intra-Americas
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COMMENTS
Peru Feeder resumed the Pisco call in wk29 and reefer volume has been increasing. We are reviewing scenarios to have coverage for the peak reefer season in Paita (Q4). CLX is now open for spot ex Chile central zone.
|
DEMAND TREND
Medium
|
|
TRADE LANE
North America to Intra-Americas
|
COMMENTS
Bonita Express is operational from Mobile to Honduras and Guatemala. Reach out to your salesperson to explore opportunities and pricing.
|
DEMAND TREND
High
|
|
TRADE LANE
Intra-Americas to Caribbean (Pacific)
|
COMMENTS
We changed preferred routes to the Guayaquil Feeder to improve utilization. New draft restriction in Caldera will impact intake of WCCA2 service, we are changing routings to the WCCA and we will prioritize the reefers on the WCCA2.
|
DEMAND TREND
Medium
|
|
TRADE LANE
West Coast to North America
|
COMMENTS
WCCA3 with space available. WCCA4 utilization has been improving next SB call from Oakland expect to be full, in the NB we still have open space, and we should keep looking for new opportunities.
|
DEMAND TREND
Medium
|
|
TRADE LANE
Intra-America to Caribbean
|
COMMENTS
We are monitoring the civil unrest in Haiti. The port remains operational and additional security has been added
|
DEMAND TREND
Medium
|
|
TRADE LANE
Central America to North America
|
COMMENTS
Alternative solutions to the Gulf with our Bonita Express service is available now. Please reach out to your salesperson to review opportunities to the U.S.
|
DEMAND TREND
High
|
Main port status - North America
| PORT | COMMENTS |
|---|---|
|
PORT
Newark
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COMMENTS
APMT: Congestion and delays on the berthing, waiting time 1-3 days. Lack of empty rail cars has increased rail import dwell. 3 more days needed on Berth 98 in week 33. All dependent on weather.
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|
PORT
Philadelphia
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COMMENTS
Berth 4 is out of service. Berth 5, south of construction, is only 600’ (500’ usable by cranes). Any time one of the 900’ LOA or greater vessels in the north berth, we can only fit the one vessel.
|
|
PORT
North Charleston
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COMMENTS
0-1 day of waiting time. Berthing scheme remains same: US Flag vessels + on time vessels from AGAS will be given priority. Empty XL will be given priority 0-72 hrs. Vessels that have matching import and export figures may be given priority.
|
|
PORT
Houston
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COMMENTS
1 to 4 days waiting time expected. Labor restrictions in Houston are limiting total number of gangs per shift to 16 during the week with 12 still on the weekend. This is allocated based on arrival time to Pilot Station and move count on the vessel. BPT cranes down: 207-back up TBD, 211-back up TBD. BCT cranes down: 305-back up 8/8, 310-back up 8/5, 3-back up 9/15.
|
|
PORT
Long Beach-Los Angeles
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COMMENTS
Long Beach-ITS-No waiting time for our vessels to berth/work. Los Angeles: Waiting time to catch gangs average 4 days for most of last week with zero cuts reported. The terminal has been forced to convert yard space to tackle the high rail volume. They continue to prioritize local imports vs. rail imports during cargo operations. BNSF – Lack of the needed labor to cover the current eastbound/westbound demand. The training of new staff is underway and is expected to be completed by the end of August. Vessels updates: Vessel's loitering/drifting/slow steaming heading to San Pedro Bay:74 (POLA: 40; POLB: 34).
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PORT
Oakland
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COMMENTS
Port of Oakland has fully resumed operations after truckers protesting a gig-work law blocked access for five days and disrupted the flow of goods. Terminals restarted operations over the weekend and cargo is now moving normally, the port said in a statement. Cranes allocation are limited to 2 per vessel. US flag vessels have berthing priority. Vessels are being idle between 2-6 shifts during cargo operations due to the limited yard space. Port Stays are being extended between 1-3 days.
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Main port status - Latin America
| PORT | COMMENTS |
|---|---|
|
PORT
Caldera, Costa Rica
|
COMMENTS
Trucker Strike in early July affected terminals and vessel operation. Strike was resolved.
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|
PORT
Peru
|
COMMENTS
Trucker Strike in early July affected terminals and vessel operation. Strike was resolved.
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|
PORT
Chile
|
COMMENTS
Swells and high winds affecting all ports in Chile. Seeing some vessels delays in arrivals and departures.
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Monthly Highlights
Agents of change for environmental awareness and education!
Our Sealand colleagues volunteered with partner ASVO at Guayabo National Monument, and they brought the children of partner Lifting Hands with them!
Read more information here.
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