As the global maritime supply chain continues to grapple with a season of disruptions, shippers and logistics professionals around the globe are struggling to build effective resilience strategies to mitigate the consequences of a volatile logistics industry.
While much attention has been paid to the ongoing disruptions in the Red Sea, little has been said about the cascading effects of this historic disruption upon portside operations. Drayage, the process of transporting containers by truck from a vessel to another mode of transportation or final destination, is especially vulnerable to disruptions stemming from the conflict in the Red Sea.
In this article, we’re diving into the cascading consequences of the Red Sea disruption on port operations. Drayage, a key link in the global supply chain, stands to be significantly impacted by this disruption. As the crisis in the Red Sea continues to unfold, shippers are leveraging container tracking software to maintain effective operations despite historic headwinds.
Red Sea Recap: What’s Happening in the Red Sea?
Following the onset of the Israel-Hamas war, Yemen-based Houthi rebels began a series of attacks on vessels traversing the Red Sea. The attacks, orchestrated as a show of support for Hamas from the Houthis, were designed to effectively shutter what is arguably the most important trade route in the world, connecting Asian and European markets via the Suez Canal.
Despite significant support from the U.S. Navy, major carriers, facing continued Houthi attacks, have chosen to halt shipping operations in the Red Sea. “The situation is constantly evolving and remains highly volatile, and all available intelligence at hand confirms that the security risk continues to be at a significantly elevated level,” wrote Maersk in a Jan. 5 press release. “We have therefore decided that all Maersk vessels due to transit the Red Sea / Gulf of Aden will be diverted south around the Cape of Good Hope for the foreseeable future.
As carriers continue to divert vessels around the Cape of Good Hope, shippers are seeing delays of roughly 7-14 days on most shipments, leaving many transportation professionals scrambling to compensate for missing capacity and skyrocketing container rates.
- Between the weeks of Jan. 7 and Jan 14., Asia to Northern Europe rates increased by 176% to $4,391 per FEU.
- Asia to the U.S. West Coast grew 60% to $2,713 per FEU, according to a Supply Chain Dive article.
As the toll of the crisis on the global supply chain continues to grow, its effect on port operations is beginning to become clear. On Jan 18, Maersk advised shippers of port congestion stemming from the crisis, pleading with them to pick up shipments early. “Winter weather conditions as well as the Red Sea contingencies are expected to affect operations across Europe and Hub terminals,” the carrier wrote to shippers, according to Reuters. “This is leading to increased yard density across terminals, and customers are kindly asked to pick up their units as soon as possible after discharge to support fluidity.”
The Red Sea Crisis & Container Drayage
Ports, the vital linchpins of the global supply chain, are likely to see significant increases in congestion as carriers and shippers jockey for positions aboard rerouted vessels. As vessels contend with the ongoing conflict in the Red Sea, many are choosing to reroute around the southern tip of Africa at the Cape of Good Hope. This rerouting adds an average of 7–14 days to a vessel's journey and drastically reduces overall efficiency.
This inefficiency has a cascading effect on portside operations: “When ships do not arrive at their berths on time, containers and goods fill the ports waiting for onward shipment,” writes The Atlantic Council. “By rerouting or anchoring vessels, not only are supply chains slowed, but the availability of transport options from ports is disrupted. Rerouted ships can overwhelm alternative ports, leading to back-ups at berths and clogged passage in/out of the ports.”
As the crisis in the Red Sea continues to escalate, let’s dive into some of the specific consequences shippers can expect to see in their drayage operations.
- Shippers face a greater likelihood of incurring port fees as the crisis continues to cause congestion at ports around the globe. As operations slow and become more congested, shippers can expect all aspects of moving containers from port to become more difficult. Drayage truckers will likely see greater service demand and port operators will struggle to find available berths for much-delayed vessels. These compounding factors will inevitably lead to increased port fees, including demurrage and detention, levied against shippers.
- Operational visibility will suffer in the face of the crisis. With ports struggling to compensate for an influx of delayed vessels and freight, shippers will likely see the quality of information coming from ports suffer. Without operational visibility over drayage operations, shippers will struggle to communicate with transportation partners, further complicating the already challenging intermodal transportation process.
- Shippers will struggle to adapt to a new ‘new normal.’ Despite the hopes of many in the global transportation industry, industry experts are advising shippers to prepare for an extended disruption stemming from the Red Sea. According to reporting from CNBC, Honour Lane Shipping is advising customers to expect disruptions to continue into the third quarter of 2023, which begins in July. This outlook means that, for shippers, the disruption’s effects upon container drayage are less a flash-in-the-pan and more a new ‘new normal.’
In the face of a historic disruption in the Red Sea, shippers are increasingly turning to technology to mitigate the cascading effects of the crisis upon container drayage.
Facing Fallout From the Red Sea Crisis, Shippers Turn to Ocean Container Tracking for Drayage Visibility
In the wake of the escalating crisis in the Red Sea, shippers are confronted with unprecedented challenges that demand agile and informed decision-making. The impact of diversions and potential disruptions underscores the crucial need for heightened visibility in drayage operations. In this context, advanced technologies, particularly ocean container tracking, emerge as vital tools for shippers striving to navigate these turbulent waters.
True End-to-End Visibility
At the heart of effective drayage management lies true end-to-end visibility. Shippers need a comprehensive view across their logistics operations, from the moment cargo sets sail to its final destination. Ocean container tracking with integrated drayage visibility offers real-time insights into the location and status of containers. This bird's-eye view empowers shippers with the information they need to proactively respond to disruptions and optimize routes.
In times of crisis, timely information is paramount. Automated notifications play a pivotal role in ensuring that shippers stay ahead of potential disruptions. With the ability to set up customized alerts, shippers are instantly informed of exceptions, be it changes in vessel schedules, last free day (LFD) updates, blank sailings, or demurrage and detention scenarios. These automated alerts act as a proactive early warning system, allowing for swift and strategic decision-making.
The seamless integration of systems is the backbone of a resilient and responsive supply chain. API integration becomes especially crucial in times of crisis, facilitating the exchange of real-time data between different platforms. Shippers leveraging integrated drayage visibility with robust API integration capabilities can harmonize their logistics operations beyond the port. This not only streamlines communication but also enhances overall operational efficiency, offering a strategic advantage in mitigating the challenges posed by the Red Sea crisis.
For Tech-Enabled Resilience in Times of Crisis, Shippers Turn to OpenTrack
Facing historic challenges, shippers are turning to technology as a means of mitigating the rapidly expanding consequences of the crisis in the Red Sea. By leveraging drayage visibility software from OpenTrack, shippers gain access to an invaluable suite of ocean container visibility software assets:
- End-to-End Visibility provides shippers with unparalleled insight into all aspects of their supply chain, from initial loading to empty returns.
- API Integration ensures that shippers can seamlessly integrate OpenTrack’s industry-leading container tracking software into their existing tech stack.
- Automated Notifications give shippers an unprecedented advantage in crisis navigation, offering the ability to navigate disruptions proactively.
Book a demo with OpenTrack today and see how industry-leading container visibility can transform your supply chain in a challenging logistics landscape.