As a supply chain specialist, you are without a doubt following along with events in the Middle East. The conflict in Gaza and Israel has spilled over into the world’s busiest shipping lanes, making travel hazardous for vessels trying to pass through the Suez Canal to transit between Asia and Europe.
This unpredictable conflict has left many shippers scrambling to secure alternate transport and figure out how to ensure they have enough inventory on hand for their customers. In this blog we’re going to look into the impacts of the Red Sea conflict and how you can become better prepared by using automated digital solutions, like yard management, in your own operations.
Iran-backed Houthi rebels fighting the Yemeni government have taken aim at ships they claim are linked to Israel passing through the Bab al-Mandab strait, an unavoidable chokepoint at the south end of the Red Sea enroute to or from the Suez Canal.
As a result, the world’s major shipping lines have largely diverted their vessels away from the Red Sea and Suez Canal. Consequence, about 17 percent of global container volumes are now travelling the long way, around the Cape of Good Hope at the southern tip of Africa. The new path adds a week or two of travel time for containers being shipped from Asia to Europe this way.
As you would expect, the longer route also comes with disadvantages. The longer sailing time means considerably larger costs for the liner companies, with extra fuel potentially adding up to US$2 million to costs, not to mention the additional expenses of wages, food and maintenance with the longer transit times.
Of course, they pass these costs along to shippers, and that’s not the end of it. As travel times increase, the container imbalance between Europe and Asia grows, further throwing off schedules and adding to costs and delays.
We’ve seen this happen before. In 2021 the Suez Canal was closed thanks to the Ever Given containership getting wedged sideways across the waterway. At that time, it was estimated that $9.6 billion in shipping was being held up every day of the week-long blockage.
As a shipper importing or exporting goods anywhere by containership, this scenario is cause for concern. Unpredictable events such as the sudden attacks in the Red Sea throw careful planning into disarray. It only took a few days for liner companies to react, throwing global supply chains into panic mode as goods in transit were rerouted, delayed and container prices soared.
How do you proof your operations against such disruptions? Building alternatives into your transport options is one way. Hedging by bringing supply closer to home is another.
A possibly easier gambit is to manage your inventory better, building a cushion so that if a disruption occurs you will have some safety stock on hand. Unlike strategies that involve nearshoring or searching out alternate transport routes, keeping safety stock requires space, a bit of cash flow to procure the extra inventory, and a means of keeping it organized.
If, like most warehousing organizations, your space is at its limit, you may have considered using your yard as backup storage space. Keeping trailers of inventory on the lot is an effective and relatively inexpensive way to hold inventory without needing to buy or lease more warehouse space.
Keeping it organized is made simple with the use of an automated yard management system (YMS) like C3 Yard. A YMS keeps track of every piece of equipment, what’s in it, and where it is located in your yard.
Because it’s automated, it takes the guesswork out of finding specific assets. When you want the trailer that has a specific item in it, you’ll know where it is. There is no more searching the yard, trying to figure out where that unit got parked. Your shunt divers will be happy and productive.
C3 Yard integrates seamlessly with your other enterprise systems like WMS and transport management so you can focus on what’s important: maximizing assets and optimizing your operation. It is secure and cloud-based and our team is responsive and will work closely with you to ensure the system meets all your specific needs.
In the volatile global environment we are dealing with, having the ability to manage your inventory and assets automatically and seamlessly becomes a huge tactical advantage. C3 Yard is a vital tool that will make your operations more efficient.
For a demo or consultation just get in touch and we’ll show you how C3 Yard can help your business.