Topics and trends

Uncertainty remains playing a major role in supply chains across the globe. During the last few weeks many headlines brought up the high level of inventory some retail companies were struggling to deal with it. During this topic of the month, we will bring to you a perspective of what is happening, the bullwhip effect on the supply chain and ways to minimize or surpass some of the uncertainties.

Maersk warehousing and distribution

What’s happening in the market:

Retailers are overstocked with inventory; reporting an increase of 40% of catalogue compared to what they had last year.

Demand has slowly recovered, specially, for products like groceries, beauty and cosmetics, household essentials and seasonal categories such as summer or back to school. However, shelves and warehouses are packed with typically pandemic goods that retailers need to get rid of. As new products are coming, retailers need to make room for them and therefore they are coming up with strategies to cancel orders, mark down unwanted items and being aggressive to get rid of all the overstock, which has a negative impact in their margins. Big US retailers have already announced that profits will take a short-term hit as they try to keep their inventory levels in line with market demand.

Another cause of high inventory levels comes with the change in customer habits that we are experiencing. As normality is recovered, so does social life and services in detriment of house and home office products. Spending in restaurants and bars raised nearly 20% in March, according to the Commerce Department of USA, hitting a record of $8.6 trillion.

What is the bullwhip effect

These past years the world has seen that adaptability is crucial and the supply chain it is not the exception. Sellers had witnessed demand shifts, inventory blows, changes in shoppers’ habits, all this in a disproportionate manner and making the supply chain a resilient world. That is now called the bullwhip effect and it is more common in the industry, causing big holdups.

Logistics had been trying to keep on answering to the demand disruptions and businesses have faced revenue loss from out-of-stock items and reduced margins from discount on overstocked articles.

This bullwhip comes from the sudden demand spikes and dips. A lot of stakeholders are involved in supply chain which opens opportunities for irregular reactions to demand changes. Inefficiencies, miscommunication, and delays between the multiple stakeholders make these disruptions, leading at the same time to more reactions in trying to get the supply chain stable.
Past port suspensions and factories closing made retailers to advance their purchases to have enough inventory. Some of this inventory still piles up in warehouses. Some alternatives to minimize the bullwhip effect are:

  • Investigate and learn why the demand shifts happen and their context,
  • try to reduce the complexity in the supply chain seeking for a better communication to enable fluent and nonstop responses.
  • Understand and improve inventory’s visibility.
  • Diminish lead times, automation and localization are two key solutions to make inventory flow at warehouses.

These actions won’t eliminate the bullwhip effect but will minimize it. It is impossible to predict a changing in customers’ behavior, and its impact on the market . The motivation is to try to make warehouses more efficient, agile and the most profitable as possible.

In this topsy-turvy supply chain world efficiency is mandatory. If you want to know how Maersk solutions can help your business to surpass this scenario get in touch with us here.

Ocean updates

Ocean update
Trade lane Comments Demand trend
Trade lane
WCSA to Asia
Comments
No major changes compared to June; copper exports remain strong; fishmeal season did not fully start, yet
Demand trend
Stable
Trade lane
Asia to WCSA
Comments
While volume continues to recover from locked-down locations, the market is expecting a strong demand into Q3 with rates increases for spot cargoes. The long-term segment is also improving hence vessels are sailing full into LAM across carriers. Only remaining risk is the Zero-Tolerance Covid policy in China, risking to resume closures upon any new identified cases.
Demand trend
Increasing
Trade lane
Europe to WCSA
Comments
Volumes have remained stable on the higher side and are expected to last as is until European summer holidays impact in August. Thanks to this strong demand, the market has been able to recover largely from Ukraine/Russia conflict volume impact, yet only needed to consider North Europe ports contingencies effect on loadings and reliability.
Demand trend
Stable
Trade lane
WCA to WCSA
Comments
Changes in consumption trends in the US market have resulted in a stronger push for the short-term market; current demand is still healthy, so the outlook is positive from both India and Middle East Americas.
Demand trend
Stable
Trade lane
Asia to ECSA
Comments
Volume is almost fully recovered after lockdowns were eased, market demand for Q3 has already started strong and with rates increases on the spot market. The long-term segment is also improving hence vessels are sailing full with some carriers putting additional capacity in place. As potential risk, China is still under Zero-Tolerance covid policy, so closures upon new identified cases can be expected.
Demand trend
Increasing
Trade lane
Europe to ECSA
Comments
The Mediterranean market continues strong and steady with only potential risk being the summer holidays effect on August loadings. North Europe is under pressure from operational contingencies in the ports plus shortage on items imported from Ukraine/Russia affecting industrial sectors.
Demand trend
Stable
Trade lane
WCA to ECSA
Comments
After some weeks of slowdown, demand is improving, and the short-term market is more dynamic. Available space resulting from demand shifting in the US will enable the market to do more on the spot basis while keeping the long-term contracts as well.
Demand trend
Stable
Trade lane
East Coast to Asia
Comments
Protein continues to drive the demand pattern upwards in the reefer segment.
Cotton crop is expected to gradually ramp up from August onwards.
Demand trend
Stable
Trade lane
East Coast to Europe
Comments
In general terms, there is a stable demand for main Dry commodities into European countries such as coffee, paper and grains. Reefer wise, citrus exports are heading towards the peak season now in July.
A combination of ongoing port congestion at the main hubs with certain strike actions are posing additional challenges to the schedule reliability.
Demand trend
Stable
Major ports status

Main port status

Key ports across our global network remain stressed mainly due to shortage of labor (COVID contamination) and weather impact.

  • In Northern Europe, situation in Rotterdam has deteriorated and with experienced waiting time of 4 - 5 days due to busy line-up and yard congestions same as Bremerhaven from 3-4 days.
  • In Asia, the situation in Ningbo has improved this month reducing the waiting time from 2 - 3 days.
  • In Latin America the situation related weather disruption is impacting Chile and winter is around the corner however no big impact on the line up, we can see an improvement compared to last month, for Itapoa and Buenos Aires due to high yard utilization vessels arriving out of window, has a waiting time of more than 24 hrs.
  • In North America, West Coast the situation has improved but still high experienced waiting time. Long Beach has reduced its waiting time to 8 days due to yard congestion, same as Los Angeles from 22 days and Oakland with 5 - 10 days due to labor shortage. For the Canadian ports, Vancouver has deteriorated, and we can reach up to 40 days of waiting time, however in Prince Rupert situation has improved with 2 days of waiting time. For the North America East Coast, situation in Savannah has deteriorated due to delays from different services, reaching waiting time of 10 - 12 days, same as Houston due to labor restrictions and draft issues we are facing an impact of more than 7 days of waiting time, Northfolk, North Charleston and Charleston waiting time has improved to decrease of export volume and high empty evacuations done having waiting time of 1 day.
Area Less than 1 day 1 – 3 days More than 3 days
Area
Latin America
Less than 1 day
SSA/ Manzanillo, Lazaro Cardenas, Veracruz, Altamira, Moin, hubs (Balboa, MIT, PSA, Cristobal and Cartagena), Buenaventura, Callao, Guayaquil, Valparaiso, San Antonio (Chile), Santos, Paranagua, Itajai, Montevideo.
1 – 3 days
Itapoa, Buenos Aires
More than 3 days
Area
Rest of the world
Less than 1 day
Vietnam, Singapore, and Malaysia, Norfolk, Charleston, North Charleston, Jacksonville, Port Everglades, Tampa
1 – 3 days
Philadelphia, Seattle, Miami, Freeport, Newark APMT, Baltimore, New Orleans, Mobile, Antwerp, London, Hamburg, Qingdao, Hong Kong, Busan, Ningbo, Yantian, Shanghai, Tauranga, Prince Rupert (*)
More than 3 days
Rotterdam, Bremerhaven, (*), Vancouver, Long Beach, Los Angeles, Savannah, Oakland, , Newark PNCT, Houston (*)
Landside update

Landside updates

Caribbean Sea Area: Situation in Costa Rica with TICA (customs system) was fixed and operations are back to normal. Capacity wise we don’t foresee any challenges in coming weeks in most of our countries and we are ready to help our customers. Fuel price instability is impacting the pricing which could change more often. In Colombia we are preparing new setup with availability for Store Door booking. this will be activated by end of Q3.

Air update

Air updates

Middle America Area

  • Fuel increases continue with most airlines.
  • Flights from Mexico to China are being re-establishing with new capacity with airlines such as Cathay.
  • Good space availability for direct flight Mexico – France.
  • Limited space out of Nicaragua to US for CAO flights.

Highlights

Retail and supply chain sustainability

Retail and supply chain sustainability: a differentiating factor

Sustainability in retail encompasses a complete process, from product manufacture to store distribution. Due to their habits and mindsets, contemporary consumers expect more from the products they choose to purchase, and they are willing to pay a higher price to ensure that said product supports a sustainable cause.

Want to know how retail can benefit from this phenomenon? Find out here.

FMCG supply chain

Ease sustainability into your FMCG supply chain

Most FMCG brands that are serious about their sustainability goals, held back by their apprehensions over the visibility, speed and flexibility of their existing supply chains.

Explore solutions that help implement sustainability initiatives without disrupting the key needs of fast-moving businesses, here.

Please reach out to us if you have further questions about solutions for your supply chain. We are here to help you!

Anything you need, we’re here to help

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