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Commentary: How are freight professionals adjusting to COVID-19?

(Photo credit: Jim Allen/FreightWaves)

The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates. 

On April 9, FreightWaves ran Commentary: Can supply chain tech startups survive COVID-19?, followed on April 23 by Commentary: How supply chain startups are surviving COVID-19.

For most people who focus on supply chain, innovation and technology, a related and perhaps even more salient question is the question about how professionals in traditional supply chain sectors are adjusting to SARS-CoV-2 and COVID-19.

That is the subject of this commentary.

Last month, Ocean Insights and Shipping and Freight Resource partnered to conduct a survey of more than 300 shipping and freight professionals around the world in order to get a sense of how COVID-19 is affecting perceptions and attitudes about the current and future tactical or strategic choices incumbents might make.

(Photo credit: Jim Allen/FreightWaves)

Defining the problem impact, preparedness and recovery

According to Ocean Insights and Shipping and Freight Resource, “The survey was answered by carriers, logistics providers, freight forwarders/NVOs, consultants, shippers/BCOs (95.7%) and other (4.3%) industry professionals across job levels –  C-level, director/top management, middle management and operations.”

In terms of the impact COVID-19 has had on supply chain and freight operations:

  • Only 1% of respondents maintain that their operations have not been impacted by COVID-19.
  • 59% say their operations have been significantly affected by the pandemic.

Operations were affected by:

  • Volume declines – 71%
  • Transit delays – 61%
  • Delays from port to customer – 49%
  • Capacity shortages – 39%

In regard to communications with their shipping and supply chain partners, 51% indicated that they are receiving real-time, ongoing communications with their supply chain counterparties.

On the question of their preparedness for the supply chain disruptions caused by COVID-19:

  • 42% say they were not prepared at all or that they were completely unprepared (35% and 7% respectively)
  • 54% say they were somewhat prepared

 In regard to the adaptability of their own operations:

  •  37% experienced a partial supply chain shutdown with significant freight delays
  • 35% had a few glitches and experienced freight shipment delays of a few days
  • 14% say their supply chain operations were able to adapt with no problem
  • 8% said they had to endure a complete shutdown of their supply chain operations
(Photo credit: Jim Allen/FreightWaves)

 In regard to the adaptability of their partners’ operations:

  • 9% say their partners were fully unprepared
  • 31% say their partners were not prepared
  • 56% say their partners were somewhat prepared

On the question of recovery from the supply chain disruptions caused by COVID-19:

  • 29% do not plan to change their strategy
  • 30% say they may change their strategy
  • 42% say they will change their strategy

In regard to the investments they plan to make as part of their recovery efforts:

  • 67% say they will invest in technology
  • 33% will invest in their employees
  • 26% will acquire new assets
  • 13% will engage in mergers and acquisitions of other businesses
  • 12% will do something else not specified above

On whether they expect to recover from the supply chain disruptions caused by COVID-19:

  • 19% expect a fast recovery
  • 37% expect a moderate recovery
  • 44% expect a slow recovery
  • 2% do not expect to recover
(Photo credit: Jim Allen/FreightWaves)

Adding a bit more context and background

I asked Josh Brazil (JB), Chief Operating Officer of Ocean Insights for a bit of context regarding the survey.

BLA: Where is Ocean Insights based? How long has Ocean Insights been in business? What does Ocean Insights do?

JB: Ocean Insights is headquartered in Rostock, Germany. Founded in 2012, with offices in Europe and Asia, Ocean Insights is a leading ocean supply chain visibility provider that supplies real-time tracking data and performance analysis to freight forwarders and large shippers from a broad range of industries, including automotive manufacturing, retail, commodity trading and chemicals.

More than 6.5% of all global containerized ocean shipments are processed by Ocean Insights’ smart algorithms that allow for highly precise and purely data-driven monitoring of container movements and exceptions or identification of data patterns and trends in the shipping industry.

Customers can access the data either through Ocean Insight’s web interface or a powerful API that allows for an integration into most Transport Management Systems, providing real-time status and location information of ocean shipments with 60 shipping lines, independent of the booking channel. Ocean Insights is also a leading supplier of the freight market’s most complete sailing schedule database.

BLA: What have you been experiencing in 2020, and especially since COVID-19 became a global issue – say in late February, with relation to your potential customers? Is this very different from your experience before COVID-19? What are you hearing from your existing customers?

JB: Following the onset of the crisis our system picked up the immense amount of blank sailings that were occurring. Of course this created a minefield for planning departments everywhere. We decided to publicly release an updated list of blank sailings for free and we got great response from the market on this data set.

For example one reaction we got from a leading chemical company was: “The blank sailing list gives confidence in doing your planning. You can judge where the bottlenecks are and will be and until when they can be expected. The procurement department takes this information to  operations for better planning of the shipment departures. The idea is to measure what the impact will be and how it can be minimized. Therefore, it helps us to optimize our export by shipping more or fewer containers in a specific week or to ship at an earlier or later stage. On the import side, warehouses and supply chain teams can be proactive and optimize stock management. We tried to compile the blank sailing data on our own on an Excel file. However, your list is a lot more accurate and reliable.”

While the crisis unfolded we found that larger companies began fast-tracking our container visibility integration projects knowing that visibility was extremely crucial at this point. At the same time, we saw a decline in smaller companies that tended to pause their integration plans while they weathered the storm – likely due to capacity reasons.

Nonetheless, we are hearing that visibility remains a top priority for many shippers and freight forwarders and despite a holding pattern, many plan to move forward with increased digitization strategies following the crisis.

(Photo credit: Jim Allen/FreightWaves)

Wrapping things up

One thread that I found as I read through some of the additional comments and responses that people who responded to the survey provided is that there’s a greater willingness to consider new software tools and products to facilitate the work that shipping and freight professionals have to get done as part of their day-to-day responsibilities.

How soon they will explore such new products seems to have a high correlation to how much work they anticipate they have to get done as part of the recovery from COVID-19. This supports what I am learning from my conversations with the founders of early-stage supply chain technology startups, reflected in the April 9 and April 23 commentaries I referred to at the beginning.

The immediate focus has to be on recovery, and surviving the current disruption. Once that’s accomplished, there will be time to plan for the future and my advice to startup founders is to position themselves as trusted partners in the survival and recovery process.

If you are a team working on innovations that you believe have the potential to refashion global supply chain operations in shipping and freight, we’d love to tell your story in FreightWaves. I am easy to reach on LinkedIn and Twitter. Alternatively, you can reach out to any member of the editorial team at FreightWaves at [email protected]

Brian Aoaeh

Brian Laung Aoaeh writes about the reinvention of global supply chains, from the perspective of an early-stage technology venture capitalist. He is the co-founder of REFASHIOND Ventures, an early stage venture capital fund that is being built to invest in startups creating innovations to refashion global supply chain networks. He is also the co-founder of The Worldwide Supply Chain Federation (The New York Supply Chain Meetup). His background covers the gamut from scientific research, data and statistical analysis, corporate development and investing for a single-family office, and then building an early stage venture fund from scratch - immediately prior to REFASHIOND. Brian holds an MBA in General Management, with a specialization in Financial Instruments and Markets, from NYU’s Stern School of Business. He also holds a Bachelor’s Degree in Mathematics & Physics from Connecticut College. Brian is a charter holding member of the CFA Institute. He is also an adjunct professor of operations management in the Department of Technology Management and Innovation at the New York University School of Engineering.