The supply chain crisis of 2021 has affected all stakeholders involved in global commerce. Cargo owners large and small have been relentlessly focused on how to get shipments through the gridlock, into warehouses, and delivered to customers. Transportation providers have been ruthlessly focused on making up for lost time. Traditional media outlets have been given a primer on international logistics, and the inventory-to-sales ratio has become a household term.
In 2022, supply chain resiliency will be at the top of the agenda of all corporate strategy sessions. What does resiliency mean, though? Firms might already spread manufacturing sourcing among multiple different geographic regions, procure ocean and air freight from multiple carriers and forwarders, deliberately utilize multiple different ports of entry, and act honestly and transparently with their international cargo suppliers.
Over the past year, however, this kind of supply chain resiliency has achieved nothing but lost profits. So where does this leave shippers?
Much talk has focused on language contained in ocean service contracts and whether it is “binding” or simply represents an agreement “in spirit.” But supply chain resiliency begins with business partners being real partners. Specifically, this dynamic is paramount between cargo owners and ocean container carriers.
If contract language includes defined volume commitments at the weekly level and the corresponding penalties for each partner’s deficiencies, why shouldn’t that contract be binding and enforceable? Why does it take a shipper cash deposit to make a contract enforceable?
Resiliency begins with partnerships. If these partnerships merely adhere to the “spirit” of the contract, then simple market dynamics surely will continue to disrupt the global economy. If ocean cargo is so commoditized that partnerships devolve into a circus market driven by a lack of logical consideration, real solutions will continue to be elusive.