Executive Summary – A Clear View of Supply Chain: Visibility Benchmark Study

   For years, American Shipper has gauged the international transportation market on its attitudes toward supply chain visibility, but the issue has always been tangential to broader disciplines that we have examined.
   At some point, it became incumbent upon us to delve deeper into visibility as its own discipline because supply chain visibility has clearly moved from the realm of luxury to necessity for most multinational shippers. Chalk it up to the way parcel companies provide detailed visibility milestones for even the smallest and lowest of value packages. Or to the sheer volume of sensors, tracking devices, GPS signals, and other data feeds now available.
   The market expects to have visibility into the movement of its goods, and it expects that visibility to be complete, accurate, and real time. And if we’re talking true supply chain visibility, those expectations can extend upstream, from before goods have even become freight, and downstream from the distribution center to a store shelf or customer.
   This report is based on responses to a 22-question survey from 229 shippers and logistics services providers (characterized in this report as 3PLs for simplicity’s sake). Respondents were polled from Aug. 8 through Sept. 26, 2016, and asked about their perspectives on supply chain visibility from a strategic and technological basis.

Shipper Strategy. Visibility is not seen by shippers as a means to reduce freight costs, and this is important. Visibility is most often seen as a way to build a company’s supply chain agility. That is, a way to understand when something is about to go wrong in order to pivot. That might mean shifting to a new route, use of a different mode, or instigating a replacement shipment. A quarter of respondents said visibility’s biggest benefit is the reduction of risk to their supply chains.
   In terms of what visibility milestones are important to shippers, nearly two thirds of respondents track five or more visibility milestones, but 72 percent say no more than five milestones are critical. That means shippers are tracking a lot of uncritical milestones.
   What’s more, in terms of container visibility, respondents identified three key milestones: the point at which the vessel departs the origin port, when arrives at the destination port, and when the container is discharged from the arrival terminal.
   In terms of how shippers define visibility, the percentage of respondents this year who defined visibility as purely track and trace more than halved from when we asked this question in 2013, while the percentage of respondents who believe business intelligence and analytics were part of visibility increased more than tenfold. Almost three-quarters of respondents now define visibility as at least giving them an end-to-end view of their supply chains.

State of The Market. There really is no one visibility platform that predominates. Only 11 percent of respondents use a visibility tool tied to their TMS, while fewer than one in five respondents are using a standalone tool from a software provider. If anything, the most common method of visibility is the use of carriers’ track and trace tools.
   This benchmark study confirms what American Shipper has heard anecdotally for years, that for shippers and 3PLs alike, container terminals are largely black holes of information, while drayage and rail can also be problematic.

The 3PL View. Shippers now expect 3PLs to give them visibility (if they want it), and the scope of what they expect grows daily. Yet two-thirds of 3PLs have moderate to no understanding of what it costs them to provide visibility, while the vast majority of 3PLs have to bundle visibility into a larger basket of services to their customers.
   To emphasize this point, most 3PLs don’t have a total cost picture of what it cost to provide visibility, while few can even price that service separately as a line item. This creates huge cost uncertainty for logistics providers, and as visibility expectations grow, it seems plausible to think cost uncertainty will grow along with it.