Stable, Ripple Less Supply Chains

As the end of the Chinese New Year celebrations approach, Andy Simpson, Head of Supply Chain & Business Development reflects on 2021.

I have just returned from my weekly Saturday trip to the Lake District.

They say, ‘home is where the heart is’ and for me the fells and lakes as well as a good coffee and cake are good for my soul! My father was a Forest Ranger in Cumbria and I literally grew up there.

Reconnecting with this beautiful part of the world helps me in my work and this last year has been nothing short of a blur. Mainly of both extreme highs and lows but overall, I smile from the inside with a sense of unmitigated achievement.

A personal passion of mine is the ‘WarrantFamily’ approach to customer service which has grown stronger and more intimate.

It has resulted in a real bond of trust between my team and our clients which is the primary reason for our success despite the chaotic world in which we operate.

We have encountered many challenges during the year, and I am delighted we achieved what we set out to do, which was to provide a stable, ripple less supply chain to our clients.

The primary strategy was simple, EXECUTE…… upstream and extend the forwarding objective to include due date and/or latest ship date then work back, downstream adapt, focus and promote our niche, final mile solution.

In between, we had to communicate, control the narrative and execute the hell out of everything so our clients could service their clients with confidence.

EFFECT OF ASIA AND INDIAN SUB-CONTINENT CONTAINER SHORTAGES

My last Linkedin article went into great depth on how the pandemic created an imbalance of unladen containers. Whilst there has been improvement, re-positioning an equilibrium has not yet been achieved.

General importers may not be aware of a local forwarding activity called EIR – Equipment Interchange Receipt. It is a process where shippers print a barcode from a carrier’s system to enable them to collect an unladen container.

As a process it was always something that just happened and needed no further mention but last year that changed.

Bookings showing released, only to not show when the EIR system opened. To this day, it is the primary reason for not fulfilling a booking with carriers.

It has resulted in a huge increase in hours worked from all sides to co-ordinate best outcomes. Even with best practice and good intentions it remains and still is very difficult.

The repatriation of unladen containers is a complex subject matter and not for today’s article but it’s a subject that creates debate and continues to be an emotive for many.

SOUTH CHINA MANIFESTING ETB

Estimated time of Berthing (ETB) in South China is another issue causing huge shipper problems, for which we have great sympathy. Costs cannot be recovered unless the consignee compensates them. The problem is difficult to articulate…

• Vessels are experiencing berthing delays in North, Eastern and Central China prior to arriving at their South China calls which means they are already behind schedule.
• The reason for no declared Estimated Time of Berthing (ETB) is Port Congestion because vessels are not hitting their proposed slots.
• This results in containers having to be loaded without any vessel confirmed Container Yard (Port) open, so both storage costs and extra transport costs are inevitable. Laden containers cannot in-gate without attracting expensive port demurrage.

ETA EROSION

ETA erosion has been an issue for a significant length of time and will show no change in 2022.

It is one of the main supply chain reasons for a consignee’s failure to forecast their own stock levels, in order to meet wholesale or consumer demand (B2B or B2C).

Warrant Group’s primary goal is to ensure these floating ETAs are accurately set when changed within each client’s portal. We don’t use humans for tracking but rely on EDI connectivity with Marine Traffic.

Origin port congestion once again plays a large part in why ETA erosion is so prevalent, in particular, feeder ports connecting with mother vessels. Mother ports are operating with a significant number of weeks delay, which can alter transit times beyond belief, thus impacting best supply chain practice and making accurate forecasting virtually impossible.

The location of sourcing channels now plays a large part in the vulnerability and risk of supply chains as milestones to success. Mother vessel location, degree of congestion, intensity of blank and omission, container availability and carrier performance are now considered variable and directly contributing to those risk factors.

Of the three Alliances, ETA erosion can be anywhere between an average mean of 9-18 days respectively, in addition to the published schedule and this should be built into lead time modelling.

TRANSIT TIME

Transit times, in general, have all increased as port rotations change frequently, lay-overs become “a thing” berthing turnarounds fluctuate and mother port congestion continues. We have great sympathy for carrier planning teams.   

The key for Warrant Group was to track historic data by loop and use best practise to “hedge” transit time/ETA and provide clients with what they needed, armoured with reasoned and logical data from technology-based applications.

Alongside ETA erosion, the transit time saga will not disappear during 2022 but how you deal with it, is very important.

SUEZ INCIDENT

During Q1 2021 we all witnessed the Ever-Given Suez incident. If ever carrier planning teams needed a further obstacle to overcome, this was the ‘mother of all’ incidents.

Improving transits, stabilising port calls, meeting berthing slots and reducing blanks and omissions all went up in smoke, literally overnight.

From a forwarding perspective “in transit” just meant “in transit” nothing more; the ramifications of the Ever-Given incident took its toll for months afterwards.

BLANKS AND OMISSIONS

Carriers fixated on returning to schedule saw the birth of the blank and omission programme during 2021, something that negatively impacted booming supply chains as space became the biggest talking point instead of rates for once.

Trying to fit a square peg into a round hole became a forwarding challenge as healthy order books bottlenecked, unallocated.

Generally speaking, it forced forwarders into what we at Warrant eloquently termed “Sea Priority Go” or FAK to ensure the non-omitting or non-blanking alliance took each blanking alliance slots, to which, inevitably led to rising rate levels.

Warrant Group secured “SPG” slots under contractual terms rather than operating in an open market, something we steadfastly refused to do.

Still with us in Q1 2022 but as overstocking is now relevant, the impact of blanks and omissions on a global supply chain has unquestionably weakened.

YANTIAN CLOSURE

During Q2 2021 Yantian port closed for a month due to COVID related issues and severe congestion.

The impact of the closure of the fourth busiest port in the world and the subsequent pressure it put on its substitute feeder ports of Nansha and Shekou was a testing time for everyone.

RATES

The whole subject matter of rate in 2021, is too complex, wide and varied for this report but it is important to note that rates where categorised into two camps:

• Contract – with longer validity and set slots
• Sea Priority Go – with monthly validity and [generally speaking, not for Warrant] with no slots.

We made the conscious decision to arbitrate our exact position on rate levels, slot availability and category so all our clients clearly understood the inner workings of the forwarding fraternity.

An unorthodox move to some, I accept, but if you don’t have trust with your client, you have nothing, and I will always believe in this philosophy.

Everyone got a contract slice of the cake, and everyone took a piece of the Sea Priority Go cake. With this intelligent blended proposition, average rate levels became ‘acceptable’ to all, even in this chaotic world we live in. It was tracked and quantifiable with fairness at the heart of the solution.

TWO-TIERED INDUSTRY RATES

Personally speaking, the two-tiered rate system will be in play for 2022 to meet peak demand primary because space to the UK from Asia has diminished as Northern Europe has increased.

CONTAINER DRIVER SHORTAGE

Another well publicised subject matter but one that has had catastrophic effects on product flowing through to market.

The first available delivery days were becoming more than actual transit times from CHINA-UK and with the detrimental situation of demurrage charges being applied for not being able to deliver.

I have great sympathy for UK PLC as around 88% of imports are considered within the “carrier haulage” business model but not Warrant.

From day one, we have operated only within a merchant haulage bubble and during 2021 we strengthened our haulage providers and agreed solus contracts with others to protect future growth.

Honestly, we didn’t hit our normal KPI of 95% on time first time but the result during the worst of times was still exceptional.

Our clients also appreciated the bubble too, as networking conversations became popular and the realisation of ‘how the other half live’ was acknowledged.

We will continue to invest in our haulage partners and cement our position as one of the leading final-mile forwarding providers of choice.

RAILHEAD CONGESTION

For an in-house rail/road operator the situation of railhead congestion full stop was fraught with complex alterations and stress points with haulage providers.

We are proud to say we work with all rail operators, across all rail legs in and out in varying degrees and a traditional railhead will offer value added services such as laden and unladen long term storage.

The knock-on effect of port congestion filtered through to these operating hubs as importers, forwarders and carriers all contributed to a reduced working footprint which periodically meant hauliers queuing at railheads for several hours just to pick up laden containers for delivery.

In some isolated cases, hauliers actually refused to go to railheads which caused intermittent headaches for those of us operating an in-house service.

Rail head providers have rightly “levelled up” for 2022 reducing free time to promote improved turnaround times, an example of just one of their initiatives.

PORT CONGESTION

I articulated in a previous article about how and why ports became congested but, nevertheless it is a situation that was ongoing in 2021.

Vessel re-directions to other ports was the main cause of havoc but for a merchant haulage operation, this added internal stress points, although the client view was terrific value add. We control the operation, we manage the operation, we don’t rely on carriers to deliver containers, we adapted, brilliantly.

On port congestion in general, when both major UK ports are at critical status and vehicle booking systems not performing, haulage ex-port [when you have a choice and Warrant has a choice] is simply not attractive when your only focus is providing an exceptional level of customer service even when in unchartered territory.

Mike Coates and I made a very conscious decision in 2021 to stop all port deliveries and rail everything even when it did not make sense to do so.

We planned rail routes that didn’t complement delivery locations, something I look back on now with a wry smile knowing it was a crazy decision and a very costly one BUT it maintained every client’s delivery agenda and I have to thank our haulage partners for their fabulous execution when they must have been scratching their heads! 

On a final note, in general terms as ports struggle with easing congestion solutions combined with the impact of driver shortages, the general market will undoubtably suffer. Warrant shunt from port to railhead and bypass the ‘outside world’ – a real differentiator for an independent forwarder.

THANK YOU FOR YOUR INTEREST IN WARRANT GROUP

During 2021 it became evident we were receiving extraordinary numbers of enquiries for which we replied with the same message ‘thank you for your interest in Warrant Group we will be in touch during 2022’.

Overselling your service, greed or moving towards a transactional model never entered my head. The only thing that mattered was servicing our loyal client base which were all booming in the pandemic.

There is a time for growth and 2021 was not that year – my team and I worked beyond hard, notching up hours that were eyebrow raising. Customer satisfaction – it’s what we do and why we do it.

To the potential clients that got in touch, we will be contacting you throughout 2022 and I hope that you can take a leap of faith with us and become part of the WarrantFamily.

TOLL ON TEAM

I acknowledge the extraordinary levels to which my team went beyond during 2021 – some of the most unreal situations imaginable.

I don’t use the words Customer Service Experience lightly; I never have, it’s not something that should ever be taken for granted, you have to work at it, and you have to strive to continuously improve even when you feel at your lowest.

I am proud beyond words to be working with each and every team member at Warrant. They earned their spurs in 2021, truly earned them; we all came through it and look towards 2022 as our growth year.

Right people grow business, right people keep business, right people make things happen.

FINAL THOUGHTS

Final thoughts on 2021 as I embark on a month-long annual break to recharge…. on a personal note, some days were the toughest but making a difference is the best professional feeling in the world.

I am hugely confident in our 2022 outlook and with that, see you all in March ’22 with more updates.

Andy Simpson, Head of Suppy Chain & Business Development