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  • September 23, 2020

    Procurement of freight rates post-COVID

    One of the biggest challenges faced by supply chain professionals around the world, in light of the ongoing pandemic is its adverse effect on global freight rates. Owing to the fluctuations in supply and demand, securing reasonable freight rates has become even more difficult than before.   At the peak of the impact of coronavirus, there was an overhang of supply, i.e. excessive supply combined with very low demand. Logistics analysts predicted that both spot and contract rates would fall by a large margin in the first quarter of 2020, which is exactly what happened. Things got better with the logistics industry adapting to COVID-19’s precautionary measures, and as a result, spot pricing and contract pricing gradually started increasing and stabilised. While such uncertainty and fluctuations are common in the industry, it is always advisable to stay on top of your game and build a network that can weather through any adversity. With the right technology at hand, building supply chain resilience has become easier than ever before. Instead of relying on manual efforts for rate negotiations and paperwork for documentation, it is time to start adopting digital solutions for rate procurement where all the information is consolidated on a single platform. How extensive was the impact of COVID on rate procurement? The logistics and supply chain industry were initially hard hit due to the pandemic with the government imposing stringent measures, resulting in reduced transportation and labour. With no workers and no modes of transport to ship cargo, a huge scarcity ensued, which led to freight rates shooting up by 15-20%. Even with automated loading and unloading of cargo, workers are essential to perform some functions. Transport companies’ associations predict that new demand for freight will remain low going forward, as industrial output is anticipated to be muted and warehouses...
  • Measuring, analyzing and optimizing your business operations is just as important or perhaps, even more, important in the logistics industry. To stay relevant in the market it is imperative that you keep a close eye on any and every opportunity to improve. This is where key performance indicators (KPIs) come into play. Identifying and making use of suitable KPIs and benchmarks for measuring performance will help you answer difficult questions such as is your supply chain performance satisfactory, can the carrier performance be better and more.  With quantifiable and relevant KPIs you can identify the right carriers for your supply chain operations. This also allows you to identify opportunities to reduce costs, make data-driven decisions and run a tighter ship, in general. What are Key Performance Indicators? A KPI is used to measure and track business activity against a static and predetermined benchmark. Logistics managers use KPIs or metrics to visualize and optimize logistics processes in a timely manner. KPIs are especially important while tracking performance fluctuations in any operation and help you adopt a proactive approach when dealing with it. Instead of taking on a plethora of metrics to track, spend a little time and select the most relevant KPIs for your supply chain that are not very granular in nature but do track all the vital aspects of your supply chain performance. Let’s take a closer look at some of the KPIs that can prove to be useful while tracking your carrier performance. 5 important KPIs to keep in mind There are numerous metrics that can be used to measure your supply chain performance and creating a carrier performance scorecard should be one of them. On-time pickups and deliveries If you are paying for on-time pickup, departure and delivery, then that is exactly what you should get. Any...
  • With the current pandemic exposing the fragility of the global supply chains, it has become more imperative than ever to adopt a system that enables real-time container tracking. Investing in automated monitoring equipment for tracking exactly where your containers are has become as important as shipping those same containers. At the Digital Container Summit that was held recently, Wolfgang Lehmacher, an evangelist in the field of logistics and supply chain said, “The companies that had more visibility, that had better tools, did much better in this situation. Because they knew where their suppliers were. They knew where their goods were. They knew when goods were turned away at the border and stored somewhere. Because they had that real-time information that told them that something was going wrong. Then they could work on the solutions.” Visibility is the key to avoid major disruptions in the supply chain. With technology at our fingertips, it has become possible to track precise locations of all your containers as and when updated. Container tracking is a necessity that cannot be ignored. The undeniable impact of the pandemic on container tracking The severity of the coronavirus on the shipping and logistics industry has resulted in a serious decline in international trade. With most of the logistics providers scaling down their operations drastically, the container shipping industry has been operating at a minimal pace. As per the statistics released by Alphaliner, 30% to 60% outbound shipping capacity that has been withdrawn in Asia-Europe marine routines has severely disrupted trade activities. With the government imposing strict measures on reducing workforces and shutting down warehouses, there has been severe congestion at the ports. Failure to pick up cargo or containers being misplaced due to warehouses being chock full are some issues that freight operators have had to deal with....
  • If you are active in the world of international trade, there is no avoiding the incoterms. The freight industry is governed by a voluntary yet authoritative set of rules known as the Incoterms. Anybody working in this industry will have come across this term at some point, but there is some ambiguity surrounding these rules.  While this term is used like a household name in the shipping industry, not many are aware of the comprehensiveness of Incoterms. Understanding the exact implications of incoterms on global supply chains is important for importers, exporters and any company undertaking international trade alike. Getting Incoterms wrong can prove to be a very costly mistake to make, especially with them being updated every 10 years. Incoterms 2020 explained The International Chamber of Commerce (ICC) originally created and published Incoterms in 1936 to do away with differences in trading practices and legalities between traders around the world. The International Commercial Terms (Incoterms) are a set of standards that determine the responsibilities of buyers and sellers for the delivery of goods by all modes of transport. In simpler terms, the incoterms are the terms that both buyers and sellers agree upon when undertaking international or domestic trade. The areas that incoterms touch upon are: The roles of buyers and sellers and what they have to do The costs buyers and sellers are responsible for Incoterms are revised every 10 years by the ICC and it is advisable to adhere to the latest version for lesser misunderstandings i.e. incoterms 2020. They standardize many aspects of international trade and shipping. Why are Incoterms 2020 crucial to international trade? To avoid unnecessary complications during the shipment process, Incoterms serve as the holy grail for importers/exporters alike to refer to and maintain uniformity in operations. Incoterms 2020 are universally accepted and...
  • Freight audit and payment may not be the first things that come to your mind when you analyse your expenses. However, they play a major part in running up unnecessary costs for your business. More and more companies are heeding the implications of a very important question, “Why should you reconcile your freight invoices?”  Until and unless you are regularly checking your invoices for rate changes, missed/delayed payments and other undetected errors like shipment delays or penalties, these changes are missed and often cost your business tens of thousands of dollars. What is a freight invoice? As defined by Merriam-Webster, a freight invoice is rendered by a carrier to a consignee of freight and contains an identifying description of the freight, the name of the shipper, the point of origin of the shipment, its weight, and the number of charges.  Freight invoice management is the bane of any logistics manager, purely based on the fact that it can go either way. On some days, everything goes smoothly while on most other days, claims and invoices just do not match. Identifying the freight invoice errors and taking proactive steps to get to the bottom of it can save you a lot of money in the long run. GoComet’s innovative invoice matching solution is built-in with the ability to time-stamp actions and remarks on each freight invoice. Your auditing process is improved vastly whilst freeing your logistics team from time-consuming audit requests. It is also wired to reject duplicate invoices and double-checks for discrepancies in the final invoices through Intelligent Optical Character Recognition (iOCR) software. Common freight invoice errors that are costing you quite a lot  An estimated 5-6% of invoices are calculated incorrectly as depicted by the Global Trade Magazine, which is why it is always advisable to match the details...
  • Digital transformation in the field of Accounts Payable has been tough to carry out, given that invoice operations are inherently complex and place a lot of dependency on human effort. As with any other technology, this is just another hill to climb in the right direction.  Reducing the burden on manual labour, minimising errors, identifying fraudulent claims and avoiding duplicate/missed invoice payments are some of the advantages of automated invoicing. Studies suggest that up to 60% of invoices do not match the final quotations, which leads to further delays in payments. The time has come to automate and digitise your freight invoice processing and profit from it. Automated freight invoice processing Automated freight invoice processing involves matching invoices with the original quotation and sending them for payment with zero human help.  Automated systems instantly notify the vendor in case of any discrepancies found in the invoices, saving a significant amount of time as a manual follow up is not required.  GoComet’s innovative software solution – The invoice reconciliation module, makes it possible to auto-approve invoices, reject duplicate invoices and improve the auditing process. It provides a unified dashboard where the vendors can upload their invoices, and from there on, the entire process is automated.  The module guarantees accurate matching with the help of Optical Character Recognition (OCR) technology. The adoption of a smart solution hence helps streamline existing processes and maximise the efficiency of operations. Why is it essential to move away from manual invoice matching? Not only is invoice matching a painful process but also a tedious one. It is document-intensive and takes up a lot of manual resources to get the work done. In a traditional scenario, invoice processing involves the following steps: While Accounts Payable (AP) teams handle invoice processing, there are times when invoices are sent...
  • Logistics plays a fundamental role in the efficiency of every company. While a strategic logistics plan takes care of the selling and buying of goods, a key component that could throw a potential spanner in the works is an unhealthy relationship with the various stakeholders of your supply chain network.  Relationships matter. With variables at every stage of the supply chain, carrier, consignor-consignee and freight forwarder relationships form the foundation of a strong and long-term commitment. Good relations are critical to building a resilient supply chain, which, in turn, is crucial to a company’s success and profitability. A bi-directional relationship will lead to reduced shipping costs, improved transit times and lesser misunderstandings. There are a few pointers to keep in mind that will help you build a brilliant relationship with all the stakeholders involved. How to cement relations with your freight forwarders? Envisage and plan for the unexpected Ups and downs in any business are to be expected and more so in the logistics industry. Planning in collaboration with your freight forwarding company for such an event that could damage your shipments or impact your business, is necessary. While they may not be responsible, you do require their help in mitigating the damage. Maintain a consistent shipping schedule Consistency in your shipments allows the freight forwarders to offer better quotes as well as handle your shipments better. Maintaining transparency and providing easy access to all your shipping information makes the job of the freight forwarder easier and more efficient. Avoid accepting shipments at the eleventh hour Last minute bookings are a sure-fire way to trouble. Freight forwarders have a hard-enough time arranging transport in advance, let alone at the very end. Delays in transit and higher shipment costs will be incurred unnecessarily. How can you better your relations with carriers?...
  • Unexpected disruptions in supply chains around the world have led the industry to be more cautious, especially in the post lockdown phase that we are currently entering. Newer technologies and better approaches to existing solutions are required to gain a competitive edge in the market. One of the major ingredients of competent decision-making is a bulletproof strategy, which is why it is expected of every business to look ahead and take note of the current digital and other advancements in the supply chain. Not only will this approach make your supply chain more resilient, but also keeps you well-equipped to tackle any unanticipated disruptions head-on. Here are some of the emerging trends in the supply chain industry: Supply chain digitization The amount of disruption in the global business space makes it necessary for the logistics industry to respond intelligently, provide greater visibility of operations and send out live notifications of processes. This calls for the digitization of the supply chain at the earliest and it is no longer optional. From paperless systems to automated billing and minimal human intervention, an advanced digital environment is the only way forward for modelling the modern supply chain networks. Transform your supply chains digitally to demolish silos, enhance responsiveness, create transparency and increase your market share as a supplier. Modernize supply chains through digitization and provide an answer to all your challenges in one go. Big data, IoT and AI integrated supply chain Gartner predicts that by 2023, at least 50% of the global companies will be using AI, advanced analytics and IoT in supply chain operations. Adopting IoT frameworks in your supply chain leads to better monitoring, real-time tracking of shipments/deliveries, automated inventory and most importantly, supply chain transparency. Owing to the rapid growth in IoT, digitization of the supply chain and easy...
  • With the market being as volatile as it is, unforeseen disruptions at every stage in the supply chain have become a common occurrence,  emphasising the need to build resilient and agile networks that facilitate quick response and minimise risks.  Due to the ongoing pandemic,  heavy restrictions on transport and labour have thrown a huge spanner in the works, with missing production parts, missed handoffs and delays in meeting deadlines. Such events only drive home the fact that supply chain resilience is crucial to the continuity and profitability of every business now more than ever. While there is room for improvement across multiple tiers of the supply chain, one major aspect to take care of is the visibility of shipments in real-time. Shipment tracking is interlinked with several tiers of the supply chain.  If you achieve end-to-end visibility of all your shipments, you will be able to gain control over a crucial aspect of your supply chain management.  Here’s how an inefficient shipment tracking system invites more trouble during a crisis situation: • Transportation delays One of the most common disruptions is the delay in the Estimated Time of Arrivals (ETAs) of the shipments. This could be due to a number of factors such as overbooking and rolling, customs, unusual traffic and the like. Answering the question of “Where is my cargo?” becomes almost impossible with no way to anticipate these circumstances.  The next best thing would be the dynamic visibility of the containers. If timely updates can be sent to the client of the exact location and ETA, the client will be able to make due arrangements for the arrival with no major issues. • Keeping the customer in the dark The problem lies in the shippers blindly relying on their carriers to provide freight visibility. The schedules prepared by...
  • Often, the terms green and sustainable seem like synonyms of each other but are most definitely not. While going green looks at only the environmental aspect of it, being sustainable is equivalent to taking into account the social, economical and environmental impact of that particular product or organisation. In this day and age, the traditional way of managing a supply chain doesn’t cut it anymore. Supply chain management plays an integral role in your company’s success. With increasing pressure from customers and activists alike, the onus falls on the organisations to run green as well as a sustainable supply chain.  Green supply chain management (GSCM) and sustainable supply chain management (SSCM) have several overlapping elements but they are not the same thing. To do away with any ambiguity, there are a few key features to keep in mind that set them apart. What does Green Supply Chain Management entail? Bringing the eco-friendly aspect of operations into a traditional supply chain is the main objective of green supply chain management. Right from product design, raw material sourcing, manufacturing processes to end-of-life product management, GSCM integrates environmental processes throughout the supply chain. This serves to mitigate the environmental impact of not only the supply chain but also the entire organisation. One commonly asked question is, “Can a container company possibly be green?” This is where GSCM steps in and says yes, it is possible. The eco-friendlier a supply chain becomes, the greater reach the company gets. Customers want to go into business with organisations that care about reducing their carbon footprint. With GSCM, reduction of waste generation, reuse of raw materials, less greenhouse gas emissions, all become doable goals. The definition of Sustainable Supply Chain Management Sustainable supply chain management is a much broader concept than that of GSCM, and takes into...