Maersk CEO: Port bottlenecks won't improve anytime soon
Vincent Clerc is CEO of A.P. Moller-Maersk Ocean & Logistics. The opinions expressed in this commentary are his own.
Almost everything you buy has traveled along some of the millions of miles of networks that make up the world’s supply chains. Most of the time, the logistics involved in making this possible are invisible and kept behind the scenes. But these days, supply chains are front and center as companies cope with a pandemic-induced shift in consumer behavior from experiences to goods that has left supply chains strained.
A lot of attention has focused on ports and other infrastructure, as well as shortages of trucks and labor. Those are important bottlenecks that need further investments to be fixed, but they are symptomatic of a deeper problem.
What the global supply chain really suffers from — and what is behind most of the problems today — is a lack of technology. The current technology being used has left companies and supply chain providers with little cargo visibility, a lack of supply chain integration, and hardly any ability to anticipate and alleviate problems. Giving the supply chain its own “cloud moment,” where it is completely rethought and upgraded, will improve life, not just for businesses but also for their customers.
Global supply chains have long been complex, modular and siloed networks that focused on keeping up with capacity demands and optimizing for cost, efficiency and scale. They are designed to work in a certain way and can withstand known challenges, but when tested by unexpected events like a pandemic, they are incredibly fragile. They are built for a world in balance. And when imbalances occur, which unfortunately is often the case, they are simply not resilient enough to withstand disruptions and delays. The pandemic has accelerated and magnified the challenges that already existed.
Today, logistics professionals across all types of companies need to work through a myriad of different suppliers, platforms, systems and solutions to source and ship products to customers. Just think about the ecommerce growth we are currently seeing, and what that means for companies. A clothing company that was used to distributing merchandise to their stores in the past now has to be able to ship directly to customers across the globe or to one of their retail locations for same-day pickup, and then also prepare for the possible returns of orders.
Here’s how technology can help to ease these challenges.
Automakers are a perfect example of how certain industries could simplify their operations and reduce redundancies. The world produced almost 80 million cars last year, and a typical car consists of as many as 30,000 individual parts — from the screws to the windshield. And to add to the complexity, each car company has invested heavily into building its own version of a supply chain to maintain and manage its operations.
Instead, these companies should be tapping into a global infrastructure solution that could meet their needs. It’s not so different from the cloud revolution a decade ago where companies realized that it was not good business to invest in building their own cloud, but rather partner with the global cloud providers that had the necessary scale.
Supply chains are still operated in a very siloed, manual way. A single container can require up to 100 document exchanges per trip, which can add to shipping costs.
Digitizing these interactions by creating a platform or infrastructure where they can be more easily processed will ensure that goods move more effectively through customs and across borders, and comply with regulations.
One of my biggest global customers recently told me, ‘I just don’t know where my stuff is right now.’ That’s not an infrastructure problem — that’s a data visibility problem.
The movement of goods is subject to many handovers, which can create structural weaknesses in the supply chain. Like in a relay race, they represent an opportunity for failure, mistakes or delays. To get to better outcomes, companies are leveraging digitization to integrate data, products and services, which will give them greater visibility.
One of the biggest supply chain issues in the world is food loss, and ensuring a connected, reliable cold chain to keep food fresh and cool. At Maersk, we’re moving over half a million containers of fruit and vegetables every year. This requires refrigerated containers and cold storage facilities to keep the produce at a perfect temperature to avoid food loss.
By combining our tracking abilities with internet-enabled sensor devices, we’ve made it possible for our customers who are transporting bananas to monitor, adjust and get automatic alerts on the condition of their produce — including temperature, humidity and CO2 levels — from an app on their phone. The result is that bananas can travel farther and arrive in perfect condition so they will be ripe by the time you put them in your fruit bowl.
There is so much to be optimistic about integrating data, systems and technologies and applying them to tomorrow’s challenges. This will allow us to better connect and simplify the world’s supply chains, which will make life easier and more affordable for both companies and consumers.
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