OceanX: India Shining + freight rate horror stories = crumbs of comfort
Optimism or realism?
The benefits of real-time visibility (RTV) are obvious, but achieving anything like complete visibility has been notoriously difficult. Ti, in partnership with project44, conducted an online survey to assess the critical factors for shippers when evaluating and selecting carriers. The results below continue to illustrate this point – the complexity of modern supply chains has increased the demand for order, inventory, and shipment visibility, while at the same time ensuring it has become more challenging to implement.
RTV throughout the life of a shipment is a top-three criteria for shippers when selecting a carrier, and more important than factors such as ‘customer service’, ‘safety record’, ’geographical coverage’ and ‘sustainability’. As such, RTV is considered a critical service differentiator by shippers, and an offer carriers must supply. The findings suggest that carriers unable to provide shippers with RTV throughout the life of a shipment may find themselves at a competitive disadvantage in the future, as more and more customers are adding RTV as a base requirement to their tenders.
Supply chain risks and disruptions
‘Closures & congestion’ and ‘capacity shortages’ have been identified as major causes of supply chain disruption in the past six months. The results underscore how important it is for carriers to implement RTV solutions. It highlights that for shippers, timely and accurate representations of real-world challenges create value that RTV-enabled carriers can provide.
Driver shortages across the industry are at the core of supply chain challenges, limiting asset utilisation and capacity. Respondents affirmed this sentiment, with the majority of shippers selecting ‘driver shortages’ as the most important issue currently affecting transportation operations. While there is no silver bullet for the current labour shortages, RTV maximises the efficiency of existing resources through a reduction in manual processes. It also helps customers measure carriers’ performance and create proactive feedback loops to drive continuous improvements.
77% of shippers said that the lack of end-to-end RTV has caused disruption to their supply chain in the last six months.
The average on-time performance (OTP) of carriers currently stands at 82.9%. OTP among the surveyed retailers was higher than that of manufacturers and stood at 84.4% compared to an OTP of 81.6%. Shippers chose an average of 71.7% on time rate as the level of delivery performance that would make them look for a new carrier.
In a post-pandemic, tech-enabled supply chain environment, it is critical that carriers maintain and can demonstrate a high level of OTP. Those that can have the opportunity to partner with shippers, committed to making their supply chain more resilient against future shocks.
Demand for RTV
More than 98% of shippers said that RTV is an important part of their tendering process and more than half consider RTV to be a pre-requisite for a carrier to be eligible to tender for their business. Shippers that use air freight carriers appear to attach greater importance, with 68.4% of them stating that RTV is a pre-requisite for an air carrier to be eligible to tender for their business. Overall, the results highlight that shippers increasingly demand RTV from their carrier partners.
Even though the majority of shippers view RTV as a pre-requisite for a carrier to be eligible to tender for their business, only a small proportion of shippers actually have full visibility into their operations. Only 20.2% of the surveyed shippers operate a fully transparent supply network— one with RTV ‘across all modes and regions’. However, the supply chain disruptions over the last two years make it apparent that having a partial view of transportation movements is not enough. The supply chains of the future will be characterised by full transparency and increased resilience. This will enable supply chain networks to better manage issues and the resulting uncertainties, as well as to create and capture the value of deeper and more efficient carrier-shipper partnerships. A large proportion of the surveyed shippers appear to be aware of this and have, as a result, expressed willingness to implement RTV across all modes and regions in the next five years. The results show carriers must develop the capability to operate in a connected RTV environment.
Further reinforcing the finding that the industry has low levels of RTV, only 20.2% of shippers stated that their carriers provide ‘real-time visibility into their partner operations’. The implication is that these shippers don’t have visibility over multimodal trans-shipment services. This limits their ability to improve their operations and respond more quickly to changing dynamics. Nowadays, logistics companies must operate in a much more networked and collaborative world. Carriers of all sizes must integrate with a variety of different systems and services across the operating spectrum to achieve visibility across the extended supply chain.
The way forward
The Covid-19 pandemic uncovered vulnerabilities and a lack of resilience in global supply chains, with businesses being forced to operate under uncertain conditions and struggling to identify the most appropriate course of action. As a result, the importance of RTV in the logistics industry has increased, with the majority of shippers realising that visibility is no longer a nice-to-have, but a must-have. The fact that the provision of RTV is one of the top three criteria when choosing transportation partners shows that the ability to provide RTV has become a key service criteria shippers demand from carriers.
In light of the increasing demand for RTV from shippers, moving forward, those carriers that have the capabilities to operate a fully transparent global supply network will stand out from the competition and win new business, but also improve existing customer relationships.
This article was written and sponsored by project44.