Transportation Optimization: The Key to Weathering Droughts, Disasters and Other Disruptions
Global supply chains face many risks and disruptions, but increasingly those disruptions seem to be related to droughts, storms and other weather-related phenomena. We all recognize that the world’s supply chains need to operate in a sustainable manner and minimize their environmental impacts — but recent events have brought this closer to home than ever.
Drought conditions at the Panama Canal are not a good match for its high water demands; it takes at least 50 million gallons of water, with some sources citing much more, to move a single ship through the 51-mile waterway. Under normal operating conditions, the Panama Canal handles 36 to 38 ships per day. Low rainfall levels this year have severely impacted 40% of global ship traffic that relies on the canal. Traffic has been dramatically reduced due to restrictions that are expected to last for the next 10 months. Wait times to cross the canal have increased from 2.5 days to 9 days, creating devastating delays, new product introductions and working capital challenges for many shippers. How desperate are shippers becoming? In a recent earnings call, energy company Avance Gas admitted to paying $2.4 million to win an auction and get to the front of the line.
What’s happening at the Panama Canal is far from an isolated event. The Mississippi River has reached historically low water levels, endangering fresh water supplies in Louisiana but also raising concerns about its long-term viability as a shipping route.
This year, the U.S. has experienced a record-setting 23 significant weather and climate disasters — each causing at least $1 billion in damage. From Tropical Storm Hilary, which dumped over a foot of rain on California in August, to Hurricane Idalia, which came aground in Florida 10 days later with windspeeds of 125 miles per hour, these disasters wreaked havoc with ports, transportation routes and carefully laid logistics plans.
While we collectively watch these events unfold, as logistics professionals we need to consider two different aspects of weather-related disruptions: In the short term, what can shippers do to anticipate, and mitigate, the effects of these events? And, over the longer term, what can companies do to maximize their sustainability and minimize these events, to the greatest extent possible, in the future?
While the outlook might seem bleak, there is good news: Today’s advanced transportation management tools, enabled by artificial intelligence (AI) and machine learning (ML), are built to answer both these questions, helping companies navigate the very real effects of weather.
Mitigating Weather Disruptions in the Short Term, via Logistics Optimization
Not every shipper has the resources available to win a multimillion-dollar auction and move past weather-related supply chain roadblocks. But most companies do end up paying in other ways.
As companies scramble to change to a new route, carrier or transport mode at the last minute, they often pay higher-than-expected fees. Other organizations build in higher levels of safety stock to compensate for events like the Panama Canal slowdown. For those companies that choose to wait patiently in line, their costs might include eventual markdowns when seasonal products, perishables or trendy items arrive late.
Today’s intelligent Transportation Management System (TMS) solutions help to minimize costs, and maximize service, by building agility and resilience into the supply chain from the ground up. Network modeling capabilities help create a logistics framework that makes foundational business sense, while also delivering flexibility. For example, products might be stored closer to the end consumer using micro-fulfillment centers or similar facilities, minimizing travel miles, shipping charges and the potential for roadblocks. Carrier networks might be expanded to include additional modes, and multiple levels of suppliers in each mode, to ensure there are plenty of shipping options when the unexpected occurs.
But that’s just the beginning. Route optimization capabilities in the TMS might suggest using the Suez Canal or the Cape of Good Hope to span east-to-west logistics. Load Building capabilities ensure that every truck, ship and container is optimized for space and cost when both are at a premium.
Certainly, one of the most important actions companies can take is leveraging control tower and risk management capabilities to anticipate events like the Panama Canal drought at the earliest possible opportunity. By understanding exactly where risks lie, organizations can be ready to minimize their effects. Imagine the edge achieved by shippers who saw the Panama Canal slowdown coming in advance, when rainfall was down by at least 75% in February through April of this year.
From the first mile to the last, logistics optimization capabilities are helping manufacturers, retailers, wholesale distributors, and logistics service providers navigate disruptions, including those caused by weather. By combining data science with the power of AI and ML, today’s advanced TMS solutions are a powerful force in supporting consistent cost and service outcomes in the face of the unexpected.
Minimizing These Disruptions in the Long Term, via Increased Sustainability
Today’s logistics industry stakeholders don’t just view weather-related events as a short-term logistics problem they need to work around. Instead, with 60% of total global emissions coming from supply chain related activities, companies are recognizing, measuring and reducing their own environmental impacts, to minimize these disruptions over the longer term. Modern TMS systems are designed to support that effort as well.
Across the end-to-end supply chain, the TMS can be guided by AI and ML to make sustainable choices that balance cost and service with lower energy usage, reduced emissions, decreased waste production, and other green outcomes. As companies optimize loads and routes, minimize the number of trucks on the road, and increase their use of shared transportation modes, they’re typically achieving cost, efficiency and sustainability benefits. That’s the beauty of transportation optimization in today’s age of sophisticated AI and ML.
One of the key sustainability benefits of advanced TMS can be summed up in one word: visibility. As they optimize processes, TMS solutions are also creating granular, near real-time visibility from the first mile to the last. The data they provide is invaluable in monitoring and measuring sustainability metrics such as miles traveled, energy used and waste produced. By enabling an accurate, up-to-date perspective on real-world environmental impacts, TMS solutions help companies understand, and continuously improve, their sustainability performance. Many Blue Yonder customers tell us they can’t imagine collecting that granular level of real-time sustainability data on their own, and they’re grateful that the TMS automatically delivers it.
Finally, TMS solutions support the automation of many paper-based manual processes. By transitioning to digital workflows and touchless transactions, companies can not only reduce waste, but also make processes faster, more accurate and more efficient. One great example is Blue Yonder’s new Yard Management solution, which capitalizes on cameras, vision systems and image recognition capabilities to automatically read and track yard assets, without human intervention. This new solution minimizes paperwork, but it also speeds the paths of trucks through the yard, minimizing fuel usage and idling emissions.
Transportation Optimization: A Key Asset in Battling Climate Change
Working to minimize the future occurrence of weather disasters isn’t just the right thing to do. It’s the smart thing to do, as witnessed by the Panama Canal slowdown and other recent weather-related events. Protecting our waterways and other natural resources helps ensure that supply chains can continue to do their important daily work of delivering products to where they’re needed most, driving abundance and creating social benefits. We also need to get there sustainably.
Learn more how Blue Yonder’s Transportation Management System (TMS) can help you navigate disruptions.