In the world of shipping, the perfect storm has reached the shores of businesses across the globe.
The evolution of eCommerce sales, weather anomalies, a global pandemic, and a battle for the 21st Century Silk Road have now converged to influence how we prioritize getting goods from point A to point B.
To minimize damage and disruption, decision-makers are rethinking their entire supply chain strategy. To help you overcome these challenges, National Logistics Network (NLN), a leading full-service logistics provider, discusses the details of the current supply chain crisis and underscores why a relationship based on trust with a 3PL provider is the right solution for your supply chain needs.
The Never-Ending Supply Chain Crisis
While many business owners are quick to point to the Covid-19 pandemic as the culprit for the supply chain crisis, it’s not alone—albeit the main one. Yes, manufacturers and their suppliers continue to battle restrictions surrounding Covid-19, but they also continue to face:
- Increased eCommerce Sales / Changing Consumer Demands
- Intermittent Plant and Port Closures
- Labor and Material Shortages
- Unexpected Shipping Delays (e.g., Suez Canal)
- Weather (e.g., Floods, Fires, Polar Vortex, Typhoons)
- Global Politics and the battle for the 21st Century Silk Road
Recent port closures and rapidly shifting consumer demands due to the spreading virus certainty rocked supply chains, but they also uncovered a few potential weak points of just-in-time (JIT) inventory management (e.g., less “safety stock,” less resilient to emergency situations). However, even with the weaknesses in JIT methods, it’s critical to remember the supply chain was contending with challenges on other fronts.
Conversely, some experts believe that JIT is not at fault at all. In fact, there is evidence that it contributed to quality control, improved supply chain flexibility, reduced financial liability for businesses, and decreased environmental waste.
Regardless of your take on JIT, it’s clear there is a severe supply and demand issue brewing. With less ocean containers, trucks, rail cars, chassis, driver capacity, and the cost of oil spiking, shipping costs have in turn skyrocketed. According to the MIT Sloan Management Review and American Shipper, the cost to ship a container from Asia to the U.S.'s East Coast climbed from around $1,400 per container to roughly $20,000. Importers that built their businesses around $1,400 shipping rates are hemorrhaging money during these market conditions.
What's more, these global shipping issues aren't going away anytime soon. According to the Drewery World Container Index, it won’t be until the end of 2022 that we see some semblance of normalcy. And, with new strains of Covid-19 spreading rapidly, this forecast is likely to change.
The Industries Hit Hardest
Supply-chain disruptions and their severity and frequency differ by sector. According to data from the U.S. Census Bureau and Whitehouse.gov, supply chain issues were pervasive in the manufacturing, construction, and retail sectors. Data also shows that shortages are holding back business activity and growth.
How Can an Asset-Based 3PL Logistics Company Help?
From mom-and-pop shops and grassroots manufacturers to big box stores and international corporations, the supply chain crisis has impacted just about every product-based business across the globe. Accordingly, whether you’ve had issues with transportation, inventory, or warehousing, know that there is a solution: a 3PL provider.
More specifically, you should consider reaching out to an asset-based 3PL. Asset-based 3PLs own the physical assets they use to store, distribute, and ship goods. That means that they typically own their own distribution centers, warehouses, and vehicles or a combination thereof.
In contrast, a non-asset based 3PL doesn't own the physical assets to store and move goods. Instead, they contract with other companies to get materials and products from point A to point B.
Put simply: Non-asset based 3PLs handle freight transportation arrangement aka logistics, not the physical transportation, storage, or delivery.
An asset-based 3PL can do it all.
In an already complex supply chain, it’s crucial to eliminate extra variables. To do so, consider contracting with an asset-based 3PL. Not only are they more reliable, but they also offer various advantages:
1. Additional Expertise
The complexities of the supply chain are seemingly endless. Even with an in-house logistics team, staying on top of new laws, rules, and regulations can be challenging. Furthermore, keeping up with new handling, packaging, inventory, transportation, and every other aspect of the supply chain, is often too much for companies. But if you partner with a reputable 3PL provider, you can ensure your team follows current industry best practices and innovations.
2. Extended Networks and More Resources
During the supply chain crisis, many companies’ networks have become unreliable. Between shipping delays and rapidly changing consumer demands, it’s essential to build out your network so that you’re ready to pivot at any time. A 3PL can help you leverage connections in the supply chain to improve efficiency and reduce costs.
3. Better Technology
Upgrading hardware and software is expensive. But with a 3PL provider, you can take advantage of their constantly upgraded technology. For example, they'll have cutting-edge transportation management systems (TMS), real-time order tracking, and route/consolidation optimization software. This technology will make your business more resilient to supply chain bottlenecks.
4. Improved Scalability
3PL providers tailor their services to your precise needs. Therefore, as your business grows, they’ll modify their offerings. Even if you downsized during the pandemic, 3PLs allow you to outsource as few or as many logistics functions as you need. However, to thrive in the age of the Covid-19 pandemic, it’s more than likely that companies will need to scale quickly to stay competitive in the wake of ever-increasing eCommerce volumes.
Streamlining Your Supply Chain During the Crisis
We know it's a turbulent time, but a 3PL provider is an excellent option for companies dealing with unreliable logistics and transportation. At NLN, we have an extensive network, advanced tracking technology, and a team of seasoned experts who offer white-glove customer service during the whole fulfillment process. Our logistics team is available 24/7, 365 days a year.
We’ll build your company a more agile, resilient, and stable supply chain, all while managing costs. To learn more about our services, please reach out today by visiting our contact page.