2021 is a tremendously challenging year for the international transport & logistics industry. The COVID pandemic has transformed the way of managing the supply chain. What is the current situation, and will it improve soon? What approach should the international traders adopt towards their supply chain planning?

To answer these questions, Loïc Benattar, Vice President Asia-Pacific of the Bansard International Group, has been invited by the French Chamber of Commerce of Singapore (FCCS) to share his views in their magazine FOCUS Special Supply chain, issue 76. Find back below the full content of the interview. 

ADAPTING TO A NEW WAY OF MANAGING THE SUPPLY CHAIN

To assess the impact of Covid-19 on the global supply chain, you can imagine the drama of telling your kids that their favorite toys are out of stock and that they won’t be able to get them before Christmas. How have we reached this point in 2021?

How did this happen?
In March 2020, we talked about falling demand and the fact that China would no longer be an option for the companies to source the majority of their products. The general worry about the uncertainty of the global economy left a very bad outlook to the shipping lines on the future of their business model. And they did not anticipate the very fast increase in exports to the US, Australia and the UK, before being followed by the rest of the world.

In November 2020, we could measure this surprising impact with a year-on-year increase of 20% in exports from China to the rest of the world. The supply chain was unable to absorb this demand, and shipping lines had not anticipated such challenges, especially the management of their empty container fleets, stuck everywhere but in Asia. Shipping lines did not complain logically, as quarter after quarter they announced off-the-charts profits. Demand is strong, and the offer remains limited, a situation leading to skyrocketing prices. Sea freight costs for all long-haul markets are 7 to 10 times higher than before the crisis, with no real alternative. Indeed, the air freight solution has been very limited and very expensive with the drastic reduction of the flights offered. Other modes like rail do not offer enough capacity and are facing congestions as well.

What is the current situation, and will it improve soon?
Imagine paying ten times the normal price for a new phone and not knowing when you will receive it. Then, there is no after-sales service once it comes, and eventually, it is not matching your order's size and color. “But it can make a phone call right?” This is the nightmare all the supply chain Directors in the world have been facing since the middle of last year. 

How long will it last? 
Demand is not decreasing, the backlog is there and the shortage of empty containers is still an unsolved problem. The offer, flexible and easy to reduce in a short time, is controlled by very few players that have no logical interest in strategizing to bring prices back to where they used to be. The first new vessels deliveries are scheduled not before the end of 2022. Without a major reversal of consumption worldwide, the offer will still not answer the demand.
In terms of service, long delays and traffic congestion are occurring in all the major ports worldwide, increasing by 30 to 60% the time to do a single rotation for a vessel. Last but not least, any glitch has major consequences: the Suez Canal crisis, Vietnam lockdown, the closing of South China port or Ningbo terminals due to a spike in Covid cases, and surely more to come. 

How has Covid affected our way of working at Bansard?
For our operation team globally, it has been a very challenging time: working from home during lockdowns, fighting for each container (one shipment takes 5 to 6 more times than before), providing accurate and correct information to our clients in each part of the World, to allow them to take the right, quick and efficient decisions: to sum up to be as agile partner as could be. This has not been easy and is requiring full dedication and teamwork from our teams worldwide. We owe them a lot, and our customers have been very thankful, despite the unavoidable disruptions to their supply chain. We have also benefited from our digitalization strategy, boosted, as for many, by the outbreak of the pandemic. Today we see how necessary it is to provide full online solutions to our clients, with live tracking and smart and fast decision tools. In addition to facilitating the communication and processes between the different actors of the supply chain, these digital tools provide real-time support, becoming essential for our customers in their decision-making process.

What approach should the international traders adopt towards their supply chain planning?
Forget the easy container shipping at low prices for at least 1-2 years. The ones that will succeed in this crisis will be the companies that will quickly adapt to the new situation. Anticipating delays, price spikes, and choosing the right logistics partners are, in my opinion, the best way to fight against the impact of Covid on the supply chain.
As freight forwarders and supply chain professionals, our team’s approach has evolved constantly to face the new challenges appearing day after day. Many have realized the limits of their current partners. My advice in this new world of logistics is to choose the right partner based on the following criteria: 
1) Delivers tailor-made solutions. Each importer, each industry has its own challenges and parameters. Understanding them is key to providing an adequate solution.
2) A fast, flexible, and efficient partner. You can’t afford a long chain of commands blocking any local initiatives to help solve the issues when they happen. You need a solution right here right now and to speak to the decision-makers quickly.
3) Strong local presence and knowledge. This allows immediate awareness of the difficulties and opportunities arising (container availability, change of rotation, closure of terminals, etc.)
4) Out-of-the-box thinking, for example, anticipating all the scenarios of containers types being available with the client, bringing the cargo next to the port to grab the first opportunity of the available empty container until the last minute.
5) Global solutions. Such as chartering vessels, renting equipment, negotiating with shipping lines everywhere short medium and long-term contracts.

Let’s hope that shipping lines, with perhaps some involvement from the authorities, will help to end soon this crisis. But don’t expect this to be a Christmas present, as the forecasts point towards a status quo until the middle of 2022. 

  Interview answered by Loïc BENATTAR,

  Vice-President APAC of Bansard International

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