The Supply Chain Blues
Theres no getting away from the Big Issue. Port congestion, in many parts of the world, is becoming endemic, but how did we get caught out and whats to be done about it? Ben Hackett, in a new column for PS on page 18, points to the absence of a coordinated action plan within the industry to prepare for the advent of the bigger containerships, let alone the China factor and double-digit trade growth. Significantly, he goes on to suggest that much of the problem lies in the lack of planning between stack and gate.
Amongst others, it is the shipper who must decide how best to deal with the dilemma. Congestion can spell disaster for his carefully choreographed supply chain. Goods just don’t arrive when and where they’re supposed to. So not only do today’s sophisticated logisticians have to confront the spectre of terrorism disrupting the flow of goods, they must also factor in delays caused by congestion.
Lines can and do adjust their schedules to avoid the congested or less important or convenient ports on their routes, but what can the shipper do? In the short to medium term he can review his stock control policies. In the immediate aftermath of 9/11 shippers began questioning the wisdom of JIT inventory. The Inventory is Evil mantra didn’t ring quite so true in a suddenly unpredictable world. Now, congestion would seem to further challenge that precept. To ‘just-in-time’ might be added ‘with-something-up-my-sleeve’. For sure there’s a role here for the port to play. Landside logistics is something we’ll be looking at in the new year. Of course the shipper, as a further measure, can also select other less congested but nearby ports and either truck, rail, or feeder his cargo to final destination – at a price.
Longer term he can look to sourcing his goods closer to home. Not everything has to come from China, goes this argument. For the US there’s nearby Mexico and Latin America. For western Europe, there’s eastern Europe, the Former Soviet Union, Turkey or North Africa.
Whether the ports industry is to blame for this current plague of congestion is a moot point. You could argue that with the kind of lengthy planning and consultation process that port operators in countries like the UK have to endure, it would take a bold visionary indeed to forecast such demand.
You could also argue that the planners, whether in government or the private sector, should have seen this coming. As Ben Hackett says, we all knew that China’s membership of the WTO would trigger a trade bonanza.
Perhaps the culprit is less obvious. Perhaps we are all victims. The price we pay for embracing free market economics, market liberalisation, shareholder value above everything and the kind of accountancy principles that demand JIT inventory control, worthy though they may seem, is that the whole process of trade and transport becomes so highlytuned and sensitive that the slightest blip threatens to derail the supply chain train.
We cannot expect to liberalise the industry with one hand then blame it with the other for not speculatively building spare capacity, just in case. Market forces rule OK – or not?
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