The recent prediction by respected Hong-Kong based trading and distribution business Li & Fung of increased seasonality, with the observation that “retailers are now placing orders with shorter lead-times and pushing deliveries closer to their seasons”, marks an interesting development for the global supply chain, particularly if it is accompanied by increased order volumes. As a key supplier to well-known brands including Toys R Us, Wal-Mart and Abercrombie & Fitch, the company’s forecasts are seen as a barometer for Western retail trends.
The prediction came as part of Li & Fung’s interim results announcement alongside the company’s expectation that demand will escalate towards the end of the calendar year, with a more pronounced pre-holiday period peak-season than seen in recent years for developed European economies and the US. Yet this poses questions about the ability of the global supply chain, which has by necessity streamlined the availability of scheduled cargo services in recent years due to low or volatile demand, to cope with a potential increased spike in peak season demand.
Of course, even the thought of peak season is usually enough to send shudders down the spines of freight forwarders, logistics services providers (LSPs), shippers and retailers alike. However, this year has the potential to be a real nightmare before Christmas if retailers are late in placing orders for goods that will feature as part of their high-profile seasonal ranges, expecting their sourcing and logistics partners to be able to deliver to extremely tight schedules with competition for limited freight transport space high. Whilst near-shore and onshore sourcing is a growing trend, most retailers are still reliant on suppliers in Asia to fulfill the bulk of their orders.
If this peak season prediction becomes a reality, shippers will be reliant both on freight forwarders’ relationships with ocean, air and road carriers and their multimodal capabilities and ability to switch routes and lanes to meet the required shipment dates. LSPs will likely be called upon to provide urgent packaging/finishing services close to the final destinations of goods in order to allow for greater flexibility in production and shipping schedules.
This is good news for the global supply chain, where margins have been increasingly stretched, and a buoyant peak season stands to help raise rates above the lows of recent times. Yet good visibility of shipment data and sharing of data with supply chain partners, delivered by freight forwarding, transport management (TMS) and warehouse management (WMS) provided by Kewill and other supply chain software specialists, will be essential to ensuring crucial deadlines are met and peak season chaos avoided.
Despite being an emotive term, chaos really is on the cards where end-to-end shipment data cannot be accurately tracked and forwarders/LSPs alerted to issues which may cause goods to be delayed. Now much more so than pre-recession, with ocean and air carriers operating reduced capacities, particularly on certain routes, the option of booking late notice container space or stumping up the extra cost for a shorter air freight passage will may disappear in many cases. Many LSPs simply do not have spare trucks and warehouses to cope with unscheduled arrivals at ports any more.
The global supply chain really must act quickly and cohesively to plan for a successful peak season in 2013.
Source: City A.M.
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