Redefining Resilience: Seizing Business Opportunities Amid Supply Chain Challenges

If Logistics Services Providers (LSPs) and shippers thought 2024 was going to be smooth sailing, the dual impact of the ongoing Panama Canal congestion and Red Sea shipping attacks has been a rude awakening with severe delays in container transportation, higher costs of ocean freight, and unpredictable departure and arrival times. 

For two months now, carriers have found themselves in the crosshairs of an international conflict that’s forced them to put crew safety at the top of the agenda, a topic that traditionally didn’t require much effort to navigate but which is now serving as a major distraction from their core logistics business. 

Mere footnotes in the pre-pandemic period of Goldilocks-like stability, extreme weather-related events, geopolitical instability, cyber attacks and labor disputes have quickly emerged as the Four Horsemen of the Apocalypse that are keeping Chief Supply Chain Officers up at night. A world of constant disruptions, however, need not be all doom and gloom, and companies that embrace new and novel ways to better prepare for and respond to what’s around the corner will ultimately be the ones who win the battle for supply chain supremacy. 

Dealing with Disruption

In the Red Sea case, the additional costs of longer routes, priority premiums, and waiting times are already being recharged by ocean carriers and freight forwarders to shippers, who in turn are passing those costs along to consumers and there is not much to be done about it (much to the chagrin of Jerome Powell who has made substantial progress tamping down inflation, the Fed’s perennial bogeyman). And while carriers have come to rely on the U.S.-led international coalition to deal with the Houthi rebels causing havoc in the Red Sea, the downstream supply chain consequences of the uncertainties and delays can be addressed, and for savvy operators, there is a way to respond to the pressure and gain clarity amidst the chaos. 

Converting Crisis into Catalyst 

From supply chain planning to last mile delivery, every link in the chain has an opportunity to build more resilience and agility into their operations with a view to ensuring they follow the Churchillian adage to “never let a good crisis go to waste.” 

Shippers using the latest global supply chain visibility and control tower capabilities can create transparency of the status and outlook of their shipments in transit. Knowing what orders and products are in each container, businesses can take risk mitigation actions to minimize the negative impact from disruptions. Leading manufacturers waiting for certain components to arrive can proactively change their production sequencing to work on other models so there’s no idle downtime or lost revenue. Innovative wholesalers using the latest order and transportation management techniques can take advantage of opportunities to split, consolidate, and merge orders in transit to optimally reroute affected shipments, as well as provide accurate updates of expected delivery dates to their customers. Digitized retailers can update their marketing promotion plans to account for any disruptions, shifting delayed products to a later campaign so they don’t cause a spike in demand that they’re unprepared to deal with.

Facing the Future

Additionally, as de-risking efforts like reshoring and nearshoring to diversify suppliers and distribution strategies gather steam, bringing factories closer to customers to minimize lead times, there’s a real opportunity for LSPs to proactively adjust their services and routes to accommodate material shifts in global trade flows. With an eye to the future, proactive LSPs are using this moment to reassess the viability of their existing network, logistics services, and distribution strategies and are beginning to offer customers a more holistic approach to managing and optimizing logistics, considering total cost of ownership and factoring in elements like tariffs, transportation, product lead times, brand risk, emissions, etc. as part of their overall supply chain decisions. 

Economic, political, and climate disruptions have become the new constant, whether we like it or not. In tackling these lasting issues, businesses need to make a transformation from the “traditional improvisation approach” with cascaded processes and manual interventions, to a “new digital technique” of concurrent supply chain orchestration across planning and execution. Companies that are best able to get ahead, and quickly and flexibly adapt to continuous disruptions, will achieve consistently high supply chain performance and create a better customer experience, providing them with a competitive edge to grow their business faster.

Martin Verwijmeren is Managing Director, Industry Practices at Kinaxis.