Navigating Ocean Shipping in 2018 and Beyond

By its nature, ocean shipping is time-consuming: Average travel times from Asia to the U.S. range from two to four weeks, and documentations, customs, handling, and inland shipping can add up to 40 additional days. While many businesses plan their lead times with those schedules in mind, it’s the all-too-common unforeseen delays that throw shipping programs into chaos.

According to a report by SeaIntel Maritime Analysis, carrier on-time reliability plummeted 8.4 percentage points to 74.5 percent in 2017, with none of the top 18 carriers improving their 2016 performance. Carriers also often fail to inform shippers about delays [1], forcing businesses and brokers alike to monitor container status closely in attempts to minimize impacts to their own supply chains. Add in the fact that ocean shipping is inherently complex – Accenture estimated that the typical international shipment requires more than 20 documents – and the potential for errors and delays multiplies significantly.

Prepare for a Bumpy Ride

Driven largely by the ELD mandate that went into effect April 1, the trucking capacity crunch is creating additional slowdowns in ocean shipping this year. A shortage of trucks is forcing some ships to sit at port waiting for drivers and delaying docking for others. In response, some ocean carriers are charging as much as $300 per container fees [2] to offset the rising cost of moving goods on land once they reach port.

Ocean shipping volumes are also on the rise, clocking in 5 percent higher in December 2017 compared with the previous year, according to the World Trade Organization. While overcapacity on super-sized ships has kept rates steady, many ports can’t handle the new generation of massive ocean liners [3], making it more difficult to source capacity in some areas and creating congestion in ports that can receive these vessels. Factor in growing demand and ongoing trucking delays, and shippers could be in for a bumpy ride with ocean timelines and rates.

The 4PL Approach

So how can businesses keep their goods moving smoothly amid constantly changing ocean shipping conditions? Many are turning to the fourth-party-logistics (4PL) model, which puts control of all logistics information in the hands of one partner to improve visibility, information accessibility and responsiveness when things don’t go as planned.

By establishing a consolidated, technology-based supply chain with a trusted partner, businesses can:

  • Understand actual lead times (and plan accordingly). With ocean carrier timelines often less than reliable, a platform that houses all shipment information, regardless of carrier, can help you calculate historical averages accurately.
  • Resolve issues faster. Rather than relying on a carrier to tell you there’s an issue, a platform built on your business rules will alert you to missed deadlines immediately so you can make alternate arrangements if needed.
  • Negotiate more effectively. As ocean shippers add surcharges or stop door deliveries [4] in response to the trucking crunch, an experienced partner can leverage its industry relationships to minimize the pinch on your bottom line. A supply chain provider can also help you explore ways to optimize rates and capacity in the long term, such as attaining beneficial cargo owner status.

Ocean shipping is the linchpin of the logistics mix for many global businesses. With the right supply chain support, organizations can ride the waves that 2018 is likely to bring without compromising their budgets or customer satisfaction.

[1] “Shippers, forwarders adjust to sharp decline in trans-Atlantic reliability,” Journal of Commerce
[2] “Ocean carriers levy emergency surface fees, restrict door delivery,” Journal of Commerce
[3] “Onslaught of mega-ships to test US East and West Coast ports,” Journal of Commerce
[4] “Ocean carriers levy emergency surface fees, restrict door delivery,” Journal of Commerce