The global freight market in 2019 presented unprecedented challenges for logistics companies. Trade tensions, port strikes, geopolitical instability, and unpredictable peak seasons disrupted shipping schedules and forecasts. As blank sailings became more frequent and port congestion intensified, many businesses saw their profit margins erode due to delayed shipments and rising costs.
Part 1: Mitigating Blank Sailing Risks
Blank sailings—when carriers skip scheduled port calls—reached record levels in 2019 as shipping lines adjusted capacity to maintain rates. This strategy creates dual challenges for shippers: potential delays and unexpected rate hikes.
Key Strategies:
- Partner with reliable logistics providers: Establish relationships with freight forwarders that maintain strong carrier connections and demonstrate low delay rates.
- Book early: Secure capacity well in advance to avoid premium pricing and ensure space availability.
- Develop contingency plans: Work with partners offering multimodal solutions, including air freight alternatives when ocean capacity tightens.
Part 2: Navigating Port Congestion
Fourth quarter congestion, exacerbated by weather events and infrastructure limitations, often leads to detention and demurrage charges that most carriers and insurers won't cover.
Proactive Measures:
- Monitor regulatory changes: Stay informed about new environmental or security policies that may impact port operations.
- Review insurance coverage: Verify whether policies include protection against port-related fees during disruptions.
- Optimize processes: Implement pre-clearance procedures and efficient loading techniques to minimize dock time.
Part 3: Reducing Supply Chain Vulnerabilities
With significant inventory constantly in transit, businesses face substantial exposure to potential losses from single incidents.
Risk Management Approaches:
- Diversify shipments: Spread cargo across multiple vessels to minimize concentrated risk.
- Invest in comprehensive insurance: Protect against damage or loss when cargo consolidation isn't feasible.
- Leverage data analytics: Identify high-risk ports and adjust routing accordingly.
Part 4: Exploring Alternative Shipping Methods
Container shortages and congestion require creative solutions beyond traditional full container load (FCL) ocean shipping.
Flexible Options:
- Less than container load (LCL): Provides cost-effective alternatives during equipment shortages.
- Air freight: Delivers time-sensitive cargo despite higher costs.
- Intermodal solutions: Combines ocean and land transport for route flexibility.
Part 5: Preparing for Inevitable Disruptions
With 90% of global trade moving by sea, cargo damage or loss remains an unavoidable risk factor requiring proper insurance safeguards.
Insurance Best Practices:
- Secure appropriate coverage: Ensure policies account for cargo value, freight costs, and ancillary expenses.
- Understand policy terms: Carefully review coverage limits, deductibles, and claims procedures.
- File timely claims: Submit documentation promptly when incidents occur to facilitate compensation.
Part 6: Future Outlook and Strategic Planning
The implementation of IMO 2020 sulfur regulations introduces new complexities for 2020, requiring shippers to develop adaptable supply chain strategies.
Forward-Looking Approaches:
- Build flexible networks: Design supply chains capable of adjusting to regulatory and market changes.
- Strengthen partnerships: Collaborate with logistics providers offering expertise in regulatory compliance.
- Continuous optimization: Regularly assess and improve shipping processes to maintain efficiency.
In today's volatile freight environment, businesses that implement proactive risk management, maintain operational flexibility, and secure appropriate protections will be best positioned to safeguard their profit margins while navigating market uncertainties.