How to Locate a Contingency Port
Shippers and consignees on the u.s. west coast are well aware of the challenges they face when capacity is squeezed and time parameters are tight. As a result, many have begun managing their supply lines from point of origin, controlling the inbound shipment process to increase visibility farther back in the supply chain, then harnessing that information to manage shipment variability and exceptions as they occur.
But as much due diligence and supply chain tinkering as any one business can do may never prepare it for the types of exceptions and supply chain bottlenecks that occur when port workers, hurricanes, or terrorists strike. What do you do? Where do you go? How will you create, then execute, a workaround strategy to ensure shipments get to their intended destination without undue time and cost?
Commodity type, carrier preference, offshore networks, intermodal requirements, volume, and capacity inevitably dictate what ports shippers and consignees move product through. In this regard, high-traffic West and East Coast facilities are where businesses will migrate to for the foreseeable future. But that doesnπt mean stateside shippers and consignees canπt or shouldnπt be eyeing alternative ports and developing working relationships with terminals and carriers, so that when problems occur they have additional support and flexibility to create alternative plans for rerouting shipments or scaling volume.
The trend toward diversifying inbound volumes and ports of entry has raised the value of smaller, less-congested harbors that can help accommodate backlog cargo or serve as an alternative when supply chain disruptions happen. Identifying potential contingency ports demands businesses think upstream and downstream about how they can most efficiently and economically match supply to demand.
Businesses that have yet to seriously consider a contingency port strategy may be inclined to do so sooner rather than later—West Coast port operators and the International Longshore and Warehouse Union will be negotiating a new contract in 2008.
4 STEPS IN THE RIGHT DIRECTION
FORECAST DEMAND: The best defense is often predicated by an offensive approach. Companies actively engaged and working with offshore vendors to monitor and control shipments into the United States have a leg up when considering contingency options. Upstream visibility enables businesses to identify potential disruptions before they snowball, then communicate appropriate fixes to circumvent the problem.
Strategically managing inventory in motion also gives shippers and consignees greater flexibility to perhaps consider rerouting a shipment through an alternative port farther removed from inland DCs. Reliably knowing the lead time, and matching that up with an alternative inland distribution network, may prove more reliable and economical than flowing cargo through a closer, albeit more congested port.
CONSIDER YOUR INLAND TRANSPORTATION NEEDS: How do you ship your product inland? By rail, road, water, air, or a combination? Can you leverage intermodal to open additional capacity and reduce costs? See if the ports are well connected to these transport modes and what carriers serve the market. Determine your needs, then evaluate ports accordingly.
EXPLORE YOUR PORT OPTIONS: Check if the port has the ability to expand and the manpower to execute your logistics needs. Also consider the portπs freight handling options and costs, and whether there have been labor disputes in the past. Can the equipment already in place easily be used to handle your products? What will it cost? If equipment is not in place, will the port allow you to use the necessary equipment? At what cost?
Also, if you are considering an alternative port in Mexico or Canada, identify how customs handling requirements and documentation will change.
WORK WITH CARRIERS Ocean carriers are aware of the challenges facing shippers and routinely explore and adapt port rotations and sailing frequencies to align service offerings with market demands. Finding out what your carrier is thinking may open up a new avenue and port for importing your goods.