Accurately forecasting and maintaining adequate inventory levels is an extremely challenging priority for businesses. Any hint of a disruption within the supply chain can have a negative impact, affecting one’s financial outlook, brand identity, and customer satisfaction. Earlier this year, in my article, “Could the Peak Season Debacle Have Been Avoided?” I discussed the need for businesses to be prepared for any potential risks that may arise and the steps necessary to take to manage customer expectations, prevent delays in delivery and minimize unexpected costs. As we enter the 2014 peak retail season, have shippers and carriers learned from last year’s obstacles? 

    The on-going contract negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association have magnified the importance of dynamic and strategic planning. US West Coast ports play a critical role in global trade, handling an estimated 44% of U.S. import and export container cargo traffic. While promises of no work stoppages have been made, both sides appear to be holding firm on their core objectives. As of late July the two sides had not reached a new agreement, however there have been minimal disruptions. Especially when compared to contentious contract negotiations in 2002 and 2008.

    The great news is that many businesses have been prepared and imported goods early. West coast container shipments at the Ports of Los Angeles and Long Beach spiked in April and to a lesser degree in May. Shipper contingency plans have shifted volumes to other ports, especially East Coast U.S. ports such as Charleston, Savannah and Northwestern ports which extend beyond U.S boundaries. In May 2014, Canada’s Port Metro Vancouver noted a 14.5% year-over-year increase in containers after a 2.7% rise in April. Global economic forecasts have not eased the pressure as estimates from the National Retail Federation and Hackett Associates suggest imports into the U.S. ports may hit a five-year high in July 2014 of 1.5 million containers, a 4.3% increase from last year.
    How prepared are businesses for the rest of this year with the upcoming back-to-school and the holiday seasons? There are certainly plenty of questions that need to be addressed by shippers as they determine how best to maintain consistent inventory levels and prepare for potential changes not only at the ports but across their entire networks. 

    While no solution is fool-proof, having a flexible and adaptable supply chain plan strategy that eases complex decisions during critical times is essential. Here are five important guidelines shippers should be following as they enter peak season:

    1. Don’t put all of your eggs in one basket
    – Shippers need to have backup carriers in place that are receiving volumes – even if it’s only 5% to 10% of your total volume

    2. Open lines of communication
    – You need to understand your providers’ peak operating plans and they need to know yours – consider having them agree to specific service levels during peak as part of your contracting process

    3. Closely monitor carrier service levels
    – Shippers should always measure their provider service levels but especially during peak times – it’s critical to be pro-active rather than re-active

    4. Understand the calendar
    – Last year many shippers and carriers did not properly plan for a shortened time frame between Thanksgiving and Christmas – 2014 is tight as well with exactly four weeks between holidays

    5. Set reasonable expectations
    – While carrier service levels were a major problem last year many of the shipping breakdowns were self-inflicted – make sure your operational plans are aligned to meet the commitments you are making to your customers

    Addressing these five areas won’t solve all of the potential issues however they will set a firm foundation and help ensure a successful peak season!