The constant stream of blanked sailings is predictably disrupting many supply chains and networks. Shippers are not getting the message, and it’s costing them extra, unplanned expense. That will percolate down to their customers as well, both in reliability and costs.
And shippers are complaining. No wonder!! The carriers are bringing it on. They are not considering ultimate customer needs.
Anyone wanting to create a disruption in maritime and hinterland supply chains will pay attention and try to do something about this.
It appears that ocean carriers are again playing fast and loose with delivery dates for cargo. There’s a telling remark by an NVOCC source: “You might be able to book at that rate, but you have absolutely no idea when you are going to get the boxes shipped.”
Carriers still have not got the message that most shippers want their cargo when it was promised. There might be a few that can stand a long delay, but the trend in inventory over the last 20 years has been toward rightsizing inventory by factoring in its logistics. You can’t do that well if there is substantial variation in lead times. The formula for overall variation of inventory— measured by variance (square of standard deviation)— weights variance of lead time by the demand, but variance of demand by the lead time.
Looking at the formula, a mathematical truth deducible simply from the definition of variance and the assumption of independence of demand and lead time distributions, shows that often lead time variation has an outsized effect.
Ocean carriers can’t control the demand, but they can control the lead time. But it seems that they ought to spend more time thinking about how to help keep the customer’s overall variation low, rather than only dealing with what they alone can control.
Time to get on the supply chain thinking boat! It left the dock years ago!
It’s clear that Maersk is making bets as a venture capitalist on young firms with unique value propositions. They have made an investment, via Maersk Growth, in ZigZag, a London-based firm.
I had never heard of ZigZag before. They offer a SaaS (Software as a service) that allows manufacturers and retailers to manage returns in a one-stop manner. Their services include hard logistics assets like access to warehouses and sortation centers and access to carriers, as well as just the software.
The story indicates some of what they do. We all know that returns are a unique type of operation, whose nature differs with the type of industry. HP has been doing it for many years in the printer division. But I was interested to find out that there is a lot of interest among clothing manufacturers or retailers.
Apparently people buy clothes, use them for a while, and then return them, even for no refund. There is also a temptation for retailers to get rid of stale inventory by simply throwing it in a landfill, a sustainability issue. Easy returns offers an opportunity for a firm that can handle these problems efficiently and in a sustainable manner. (I presume there might be an incentive to cheat; but certainly a specialist could do a better job because it’s their core business).
I doubt that ZigZag will be merged with Maersk. However, the bet makes sense when you understand that a lot of what Maersk carries is clothing manufactures from the Far East. If ZigZag can help these clients it could make a difference in the clients’ bottom line, and Maersk would be able to say they helped with the supply chain problems.