Shippers and NVOCCs may have a mental picture of what impacts their shipping schedules each year. But there’s something helpful about having a color-coded graphic version to look at, and to use with clients when planning their cargo transit.
This is what drove C.H. Robinson to develop their own proprietary risk calendar recently. A high-level customer wanted additional information on what disruptions to expect throughout the year, to share with their internal teams.
“There are specific points in the calendar year when we run into situations where we need to be thinking in advance,” said Vince Santinello, ocean business development and route manager for C.H. Robinson. Chinese New Year is a good example for ocean freight transit. The dates change every year, but the company has to educate their team and clients about what will occur and when they need to start planning shipping dates.
They use the calendar as an education tool with customers, as talking points. “It’s a means to facilitate discussion and give visual indications of what clients can expect, to help them be proactive instead of reactive,” said Sri Laxmana, the company’s director of ocean services. It’s a way to talk about the need for booking space in advance, and possible shifts that can happen due to known and potential disruptors. “Most of our customers know about these disruptors already, but we still have to talk to them about it. At the end of the day, we don’t want any disruption to their supply chain,” he said.
They stress forecasting with customers, looking at least three months in advance. “It’s imperative to see what’s coming down the road and adjust to it,” Santinello said. The calendar also invites discussions about various risk mitigation strategies. For example, does the shipper have warehouses evenly distributed across the country, in case of unpredictable weather, or is there a reliance on one area? The calendar helps clients adapt to the ever-changing landscape.
How to develop your own risk calendar
Using C.H. Robinson’s ocean freight calendar as an example, a shipper should break down risks into categories: known, historical and potential future disruptors.
Sometimes it’s hard to separate the calendar per transportation mode. “There’s a reason it’s called a supply chain. It’s interconnected,” said Laxmana. While ocean vessels are the largest transportation mode that can move products from one place to another, they still need to the move the products to inland locations.
To create a guide for shippers, Supply Chain Dive asked C.H. Robinson to walk us through their process in creating a risk calendar:
Depending on the shipping ports or transportation hubs a company typically uses, there may be distinct predictable disruptors each year. For ocean freight, a few that C.H. Robinson includes are Chinese New Year, contract negotiating season, a build up to peak season and then peak season. For other modes, that might be different, though there will be overlap. Peak season exists for all modes, but timing may shift.
Historical disruptors like a carrier bankruptcy, economic recession, port labor disruptions and a polar vortex can affect (directly or indirectly) other transportation modes as well.
“The polar vortex affected the availability of trucks in the Chicagoland area,” Santinello said. While these types of disruptors are unpredictable, looking at how they’ve been handled in the past helps with future planning.
“We know, for example, that the West Coast labor union contract was extended to July 2022. When that time is approaching, we’ll discuss with our shippers any potential routing adjustments to make in advance,” Santinello said. That might mean shipping to Canada instead of West Coast terminals, or sending cargo on larger vessels through the Panama Canal. “It’s using what has happened in the past and what we predict may happen in the future, to make sure we’re not disrupting our customers’ supply chain.”
There are specific points in the calendar year when we run into situations where we need to be thinking in advance
Ocean Business Development and Route Manager, C.H. Robinson
Natural disasters, as we’ve seen recently with Hurricanes Harvey and Irma, require daily communication with carriers and local colleagues, who can provide local intel on port status or roads, for example. If situations get worse, “we make sure we’re looking at other options,” Santinello said. That may mean switching ports or trucking routes. “Our customers just want to know what’s going on and we’re presenting them with every possible solution.”
Not all potential disruptors have an immediate impact, and may allow time to rework shipping plans.
Take carrier mergers, for example. When an announcement is made about a merger, the carrier sets out an implementation process with a continued information flow. The merge doesn’t happen overnight, and the carriers want to retain business and make sure customers are booking.
The downside is that carrier mergers and acquisitions have ramped up in recent years, and shippers now have fewer options than before. Carrier consolidation can cause routing adjustments, directly impacting a shipper’s business, like needing a different inland rail route, for example.
C.H. Robinson’s calendar uses color coding to show the risk level of disruptions during that month.
For example, a green month indicates ocean vessel space is usually available, and thus a lower risk to the shipper. A yellow month indicates a tightening market where a shipper may want to book further ahead as a precaution for its most critical cargo. Red is, of course, a tight market with limited availability.
For this calendar, that risk is both Chinese New Year and the three months of the traditional peak period. During those latter months leading up to the holiday season, shippers are trying to get products into the stores, and with vessel space tight, shippers need to book two to three weeks in advance to be guaranteed the needed space.
To develop the calendar, C.H. Robinson used a cross-functional team. That included an account manager on the customer side, and from the company, participation from the strategic sales team, marketing team (for a presentable format) and the management team.