Freight Insights

Goodbye Supply Chain, Hello Demand Chain

Goodbye supply chain, hello demand chain

One of our favorite blogs, Supply Chain Shaman, written by Lora Cecere, posted a must-read for anyone in the demand chain. Yes, demand chain. Bear with me for a second. Lora starts by saying that:

Supply chain leaders are fluent in the language of supply. They don’t know the language of demand. To become demand driven (or market driven), they need to learn how to speak a new language.

While we tend to look things from a 3PLs perspective, we agree that this is critical. When you are all about providing a service, closing the knowledge gap between customer expectations and your service is key. Lora mentions demand latency (“the latency of demand signal due to demand translation of a customer purchase through the supply chain to an order for a trading partner“).

At Freightos, we are firm believers in narrowing the communications gap as quickly as possible. Let’s take a look at Panamax vessels – ships with 3,000+ TEU capacity that have a beam of less than 32.3 meters. There are about 900 ships that match this critera but demand for them has plummeted. In 2013, 50 of these ships were laid up and 66 were sold for demolition. Of the 66 ships, 21 were under 18 years old. This will get worse before it gets better; the Pamana Canal’s expansion will enable larger ships to make the Pacific Ocean-Atlantic Ocean connection, likely leading to more ships being mothballed.

Comparison photo of Panamax and Post-Panamax shipsTimes are changing. Photo from Popular Mechanic’s article on the Panama Expansion. Read the full article here.

Granted, there were changes here that couldn’t be anticipated. Global shipping took a hit and the Panama Canal’s expansion wasn’t so clear from the get go. Throw some monstrous 16,000+ TEU ships into the equation and suddenly Panamax ships become deadweights.

There is no magic powder that lets service providers anticipate demand. Big data, correctly harnessed, can provide great forecasting. Experience smart analysis of market trends are also critical. But the best possible way anyone can deal with uncertainty is by keeping an open channel of communication with your customers, who in turn are one step closer to their customers. Each iteration provides more information. Every bit of information provides better predictive power.

Hundreds of years ago, diplomacy was conducted by emissaries. It still it…but global leaders can communicate directly today by email, cellphone and even selfies.

Obama takes a selfieIf Obama can take selfies, you can also use better technology to communicate with your shippers, right? Photo via AFP.

Global shipping has embraced technology, shifting over to Microsoft Excel rates, emailed spot quotes and faxes across freight networks. The next generation of freight will need to cut down on the demand latency ever further, bypassing fax machines and emails for constant connections. Always-on retail shopping changed how consumers operate. Always-on B2B networking is the natural progression for the freight world, letting retailors, shippers and carriers interact instantly, driving demand instantly without introducing unnecessary delays.