In the classic 1996 film, “A Toy Hero”, Arnold Schwarzenegger plays a father desperate to find, on Christmas Eve, a toy that is sold out. It is possible to identify with the regret of those who left to shop at the last minute, but it is unlikely that a retail logistics professional has the same problem.To ensure inventory, it is necessary to start meticulous planning in advance of up to twelve months.
Usually, retailers start buying the items of Black Friday and Christmas in September, when also increases the flow of transport. Most of the goods are shipped by sea between august and october, and the other, more urgent or unexpectedly popular products, is embarked in the air mode from mid-September.
This year, however, everything indicates that the high season of sea freight is occurring two months earlier than usual. There is already an anticipation of sea shipments for several reasons: greater storage capacity at the tips, an unexpected and brief drop in the value of freight and the attempt to avoid possible disruptions in transport due to labor negotiations in East Coast ports and the risk of increased Chinese tariffs after the November elections. Another factor that contributes to this is the continuous problems of capacity on ships, caused by threats to carriers transiting the Red Sea and congestion in ports in Asia.
In addition to these global challenges, Brazil also faces particular issues that affect logistics, especially during high season. One of the main factors is chronic congestion in the main ports of the country, such as Santos and Paranagua. This congestion can lead to delays in the movement of goods, which can generate an increase in the waiting time of ships. With high season arriving earlier, these problems worsen, as the increase in the volume of shipments further increases the pressure on port infrastructure. To mitigate these challenges, it is crucial that Brazilian retailers plan ahead and consider the possibility of redirecting their cargo to less overloaded ports or even invest in certain transportation options that can be intermodal transportation.
The air transport market is also starting to get overwhelmed with e-commerce volumes leaving the Asia-Pacific region, which complicates planning for those who are late to replenish their stocks for the holidays.
What to do to help the retailer who missed this movement of anticipation of high season shipments? In the past, it would be more difficult to serve these customers. But since the pandemic, the supply chain industry has adapted to deal with disruptions in commercial flows. It is likely that logistics providers implement contingency plans and make use of creative solutions to bring the goods to the place where they will be purchased. Examples of this include redirecting cargo through different ports and mixing modes of transport (such as maritime and air & air & to avoid high-risk areas or bottlenecks.
Another advantage is that technology has advanced and more logistics providers can offer visibility into the flow of cargo and events, allowing for real-time reactions. The combination of AI and data analysis is revolutionizing the calculation of ship arrival time, considering a wider range of variables, from weather conditions to vehicle performance, to provide more accurate forecasts that support planning. This particularly favors those retailers that make their own data available to their suppliers. Working with partners that offer an end-to-end logistics solution and that have advanced technology can allow adaptations to replenish inventories more easily.
Ultimately, the retailer may have to allocate budget for premium freight. For the most in-demand products and high-value goods, the risk of out-of-stock must be minimized by using transport options that offer more capacity and fast transit times. Intermodal services, for example, can offer significant reductions in the path and, in some cases, already have guaranteed space reserved with air and sea carriers. The LCL (cargo smaller than the container), although more expensive than full containers, often has priority with sea carriers.
Perhaps the most reassuring news of all is that although the peak season has arrived earlier in 2024, the supply chain is better positioned than ever to deal with the unexpected.There is still opportunity to act and ensure that products are available to customers. In this scenario, the key to success will be the ability to quickly adapt and explore new solutions. Whoever manages to maintain a flexible and strategic approach, making the most of the technology and available resources, will be better prepared to overcome difficulties and meet demand. By meeting these challenges with creativity and resilience, they will not only meet customer expectations, but also strengthen their position in the market for the future.
