Why Planning and Forecasting Are More Important During Ocean Shipping Supply Chain Disruptions

It's no secret that the COVID-19 pandemic caused widespread disruptions to global supply chains. These disruptions impacted all industries, with many businesses being forced to adjust their operations—or shut them down altogether.

One of the most affected industries has been global supply chains, specifically those focused on ocean shipping.

The container shipping industry already faced pre-pandemic challenges, such as overcapacity and low rates. But the pandemic exacerbated these issues, leading to even more challenges for businesses that rely on ocean shipping to move their goods.

For businesses to overcome these challenges, it is more important than ever to have a well-defined planning and forecasting strategy in place.

The State of Global Container Shipping

Today's economic landscape is complex, to say the least. And the container shipping industry is no exception.

In recent years, the container shipping industry has been plagued by container shortages, backlogs, and delays. These conditions have created a ripple effect regarding warehouse storage capacity, labor pools, and other critical areas of logistics and transportation.

While there has been some bounceback since the early days of the pandemic, the container shipping industry still faces significant challenges.

These challenges include:

  • Decreases in global trade
  • Increased container costs
  • Unpredictable freight rates
  • Longer lead times and delays

Reliability of container shipping suffered greatly, with businesses being forced to contend with canceled sailings, longer transit times, and other unexpected delays. These challenges led to increased costs and decreased profits for many businesses that rely on ocean shipping.

What makes things even more challenging is that there is no clear end in sight for the backlog that was generated in early 2020.

This backlog is expected to continue well into the next few years.

And industries are on their toes to ensure that they will have the resources necessary to weather any future storms in global shipping.

Planning and Forecasting Solutions

As the container shipping industry continues to face challenges, businesses that rely on ocean shipping must adjust their operations accordingly. One of the best ways to do this is by investing in planning and forecasting solutions.

Forecasting allows businesses to anticipate future trends and challenges, allowing them to make necessary adjustments to their operations.

This is especially important in today's climate, where the future of global shipping is unpredictable.

Benefits of Forecasting for Ocean Shipping

More Time and Less Stress

Abrupt changes and crises can happen quickly. Virtually every business needs to be adaptable. But with logistics and many moving parts in the supply chain, any disruption has a ripple effect that can impact every aspect of an organization.

Forecasting future trends allows businesses more time to react and make necessary changes.

This extra time can be the difference between keeping your business running or shutting down operations. It also allows you to maximize internal resources and avoid last-minute scrambling.

When you can anticipate problems, you can take steps to prevent them or at least mitigate their impact.

Getting ahead of problems instead of reacting to them can lead to less stress for you and your team. This is because you don't have to react constantly to unexpected challenges.

Better Customer Satisfaction

If you can anticipate customer trends, you can adjust your operations accordingly and take advantage of strategies like tactical sourcing. For example, you can stock more of the products your customers demand or change your shipping routes to accommodate their needs.

You can also reduce revenue losses by avoiding stockouts and delays while building stronger relationships with your partners.

Customers are the lifeblood of any business. It's essential to keep them happy.

Investing in forecasting minimizes the chances of disruptions to your supply chain that could lead to delays or errors. As a result, you’ll avoid tarnishing the customer experience and diminishing customer satisfaction for your business.

Improved Cost Efficiency

Forecasting ensures you don’t purchase too much or too little inventory, maximizing your resources. It also allows you to streamline your ordering process, consolidate container shipments, and optimize your shipping routes to make your shipping more efficient overall.

These cost-saving measures can have a significant impact on your bottom line.

Improving Your Forecasting for Ocean Shipping (3 Ways)

There can be a great deal of uncertainty when acquiring your products overseas.

Forecasting is essential to help reduce the risk of disruptions to your business. However, you can do a few things to improve your demand planning when navigating longer lead times.

1. Allow More Lead Time

When procuring from overseas, it's important to have a solid understanding of all of the potential risks and challenges that could impact your supply chain and cause delays.

This includes everything from supplier reliability to geopolitical risks.

Once you've identified these risks, you should evaluate the best and worst-case scenarios for each. And you should calculate the total amount of time you'll need to procure your products in these scenarios.

Depending on the risk, you may need to adjust your lead time accordingly to get deliveries out on time.

As a general rule (based on recent supply chain disruptions), you should allow a generous buffer on top of your typical lead time.

This is especially true if you're dealing with materials or supply shortages.

In the end, this will help to ensure that you have the products you need when you need them, even if there are delays along the way.

2. Be Aware of Peak Periods

There are certain times of the year when global shipping is more likely to face disruption. These peak periods typically coincide with major holidays, such as Chinese New Year or Christmas.

If you're planning on shipping during these periods, it's important to be aware of the risks and plan accordingly. This could mean placing your orders earlier than usual or working with a freight forwarder that has experience shipping during peak periods.

In addition, it's important to be aware of any regional holidays that could impact your shipments.

For example, in South America, many countries have a long holiday period in December and January. If you ship to this region during this time, you may need to adjust your lead time to account for the increased risk of delays and higher shipping volume.

3. Leverage Data and Technology

Several data and technology tools can help you improve your forecasting. This includes everything from market intelligence platforms to intermodal solutions that track your shipments in real-time.

Utilizing these tools can help you better understand the global shipping market and make more informed decisions about your supply chain. Many of these tools offer features that can help you automate your forecasting process.

This can save you time and resources that could be better spent on other areas of your business.

It's also important to stay informed about the latest disruptions in the market. This could be anything from a hurricane that impacts port operations to a strike that delays shipments.

By being aware of these disruptions, you can adjust your forecast accordingly and avoid any potential disruptions to your business.

Improve Your Forecasting and Demand Planning Processes

Forecasting is an essential process for businesses that rely on overseas suppliers. Thankfully, there you have ways to reduce risk and costs to your organization:

  • Allowing more lead time
  • Being aware of peak periods
  • Leveraging data and technology tools
  • Improving your forecasting and demand planning processes

By following the abovementioned strategies, you can reduce the risk of disruptions to your supply chain. This will empower your business to better serve customers without using up resources.

Author Bio: David is CEO of DB Schenker USA, a 150 year old leading global freight forwarder and 3PL provider. David Buss is responsible for all P&L aspects in the United States, which is made up of over 7,000 employees located throughout 39 forwarding locations and 55 logistics centers.