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What is break bulk cargo

Breakbulk is a type of shipping process that is used frequently in the transport sector of the services industry. It is used for transporting goods that can’t be shipped into the average containers, breakbulk usually contains drums, barrels, bags, boxes, various kinds of instruments and devices, as well as crates and uneven containers. These items are easy to handle and are loaded on the ship with ease.

Breakbulk covers a vast array of goods, items such as steel beams, paper reels, steel slabs, manufacturing machinery, construction material, vehicles, and all the heavy materials are considered as breakbulk. For a long time, the traditional process of shipping that is;to simply put the cargo into containers and boxes that’ll make it easy to ship, has been quite successful. But regardless of its success, it still has numerous limitations, that provides breakbulk a breakthrough, especially in recent years in which, this process is being used more often.

A huge reason for its rise is the shift in the manufacturing, construction, and transportation industry. With industry revolutionization at its peak, it makes the shipment of heavy machinery and diverse equipment (that is difficult to put into containers or boxes), will be more than ever.

In terms of volume, almost half of the world’s cargo is shipped and received as breakbulk. And it is expected to maintain these numbers, as the experts don’t foresee any drastic changes in the industry, anytime soon.

ADVANTAGES OF BREAKBULK CARGO

Now that we’ve grasped the concept of breakbulk, let’s move towards its significance and benefits in the shipping industry;

CHEAP TRANSPORTATION:

One of the biggest advantages of breakbulk is that the cargo is moved on wheels rather than boats and ships. This saves a lot of resources and revenue; goods are shipped as a whole which is much easier as compared to small containers and boxes which requires a lot of time and meticulous planning.

EQUIPMENT AND CARGO TOO HEAVY OR DIFFICULT TO MOVE:

The most significant feature is that we can easily load, unload and ship the items that are problematic and complex to breakdown.Shipping big products or goods that are uneasy to divide into smaller parts has always been an issue, so the only way to solve it is to find a way to the shipped item as it is.

Strong barges are used to rollon and rolloff most of the shipments. Other than that, the vessel carrying breakbulk has the capability and the tools (such as high-strength cranes) to load and unload all the items that are either too heavy to lift for the containerized shipping or goods that are unusual and can only be shipped in their original state without any altercations.

 

SAVES TIME AND SIMPLE PROCEDURE

Breakbulk is a cheap way of moving goods, other than saving shipping costs, it also saves the time of loading and unloading, as most of the items are rolled off and don’t need to be detached or broken down into parts.

IT DOESN’T REQUIRE THE LATEST DEVELOPMENTS ON THE PORT

It can be easily loaded and unloaded on ports that are underdeveloped because it doesn’t require the latest technology advancements. The tools required to unload products are already mounted on the ships.

LESS HECTIC

Breakbulk is simple, it doesn’t need the items to be separated, and shipped in different containers. All the hefty and difficult items are simply lifted by cranes and loaded and unloaded from ships, making the process less hectic.

WHAT’S THE FUTURE FOR BREAKBULK?

Although Breakbulk has many advantages and benefits, it also has some downsides, rolling down containers and items can require a lot of manpower, but other than that; using old methods can sometimes risk the safety of items, as it doesn’t have the standard packaging.

But despite ups and downs, the breakbulk method is here to stay … at least for a while. It’ll remain in use unless all the ports around the world are equipped with the latest technology and machinery and it’s not happening any time soon. So the combination of both containerization and Breakbulk will remain in effect!

 

 

 

 

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Why supply chain needs better cybersecurity

A supply chain can vary significantly from one another. A company that manufactures electronic devices has a different supply chain than one that manufactures sports goods. So, the definition of what is supply chain security can not be explained under one set of rules and recommendations.

In general, supply chain security involves protecting a supply chain against any physical threats or risks. It also considers the regulations set by local and international governments for the integrity of supply chains.

We noticed that many companies showed little to no interest in cybersecurity in the past. Companies did all in their might to protect their supply chains from physical threats, such as sabotage, theft, and terrorism. Factories would be visited by independent auditors, regulators, and corporations who do background checks on employees. Cargo would be documented, secured, and examined before and after shipping to prevent fraud or theft.

Physical attacks are still avoided by tracing shipments and rechecking regulatory documents. Vendors are also told to obtain shipments specified by quality criteria, and a company may employ multiple vendors to ensure a nondisturbed supply of commodities.

What Are We Neglecting?

While we don’t discourage anyone from paying much heed to physical supply chain security, we do not encourage them to focus on physical security alone. The recent supply chain attacks in covid-19 are an excellent example of the need for excellent cyberdefense in today’s world. Just as the cyber pandemic began spreading in 2020, the global supply chain started feeling the strain, which will continue into 2022. Millions of people started to use internet shopping as their primary, if not sole, method of acquiring items, resulting in a surge in transportation demand.

The computer components supply chain is an excellent example of this. The computer chip deficit is one of the worst situations in the present supply chain problem due to work-at-home situations, internet games and entertainment, and public demand.

The market forces for specific components were never higher for both manufacturers and buyers. Computer lovers are now enrolling in year-long waiting lists for graphics chips, while automakers report losses in millions owing to chip scarcity.

5 Ways How You Can Ensure Better Cybersecurity

Risk Assessment:

It’s critical to understand where your new suppliers stand on cybersecurity before entering into supplier partnerships. What kind of safeguards do you and they have in place? What procedures and policies are in place to maintain data security? You want to know that sensitive client information will be kept safe in any data you share with your suppliers. You should secure all your partners, but those who play a critical role in your supply chain will be at higher risk and require greater caution.

Train Your Staff:

The most common cause of cyber attacks is still human error. As a result, it’s one of the most critical issues to address. While you should constantly strive to create a cyber security-aware culture inside your organization, this practice should also be supported throughout the supply chain. A good method to do so is sharing resources with vendors to educate their personnel about cyber threats.

Take Necessary Security Steps:

A supplier policy can effectively encourage an open relationship with your suppliers and set clear expectations between you. You can devote parts to cybersecurity and data protection in such a document, laying out what level of security your vendors should be able to demonstrate. Asking your suppliers to align themselves with an existing set of cybersecurity standards and certifications is one of the simplest ways to do this.

Be Cautious:

Small firms must evaluate the security of their suppliers and maintain a high level of cybersecurity to persuade more significant partners that they are not a security concern. Many firms, particularly in the public sector, are now demanding their suppliers meet specific security criteria before gaining contracts with them.

Transfer Data Safely:

Data must be transferred through secure channels and kept secure at all times in the supply chain. Because hackers are most likely to intercept data as it moves from one location to another, maintaining adequate security during this process is critical. Encrypting data before it is transferred is an excellent approach to reduce this risk.

Companies should also ensure that they have a thorough picture of the various types of data in their supply chain and where it all resides. Internal data (together with backup systems) and data that your suppliers have access to are included.

Conclusion:

Managing cyber threats in the supply chain doesn’t have to be difficult, but it is critical to accept responsibility for your own risk and adhere to standardized cybersecurity standards. Understanding all partners’ security processes, rules, and solutions is in everyone’s best interest. These actions lower risk throughout the supply chain and show clients, partners, and stakeholders that their secrets are secure with you.

 

 

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Artificial intelligence and machine learning in supply chain

Artificial Intelligence has radically changed the landscape of the entire world, AI has revolutionized business procedures. Tasks that used to take days, a lot of manpower, and critical thinking are now done in no time with the use of Artificial Intelligence. Machine learning is a part of Artificial Intelligence, that emphasizes the learning of complex algorithms, patterns, and software in the automated mode without requiring any prior programming.

Machine learning processes the information and performs precise data analysis that is used for accurate estimation, predictions, pattern behaviors. This information is vital and used to understand the market and improvise the procedures in areas where required. It uses algorithms and is best suited for calculating and organizing big data. Machine Learning (ML) is the most appropriate tool for detecting irregularities, picking up trends, and processing insights. These qualities make Machine Learning a perfect tool for the supply chain.      

The world is moving faster than ever before, and the supply chain process is getting more difficult as well as more complex. Even small errors can cause huge hurdles in the way of the supply chain. In these circumstances, the margin for error is little to none, and continuous production is a must requirement. To ensure seamless production and logistics AI is used. It comes in handy in predicting almost all the outcomes of specific situations, and that information is utilized during decision-making. AI is exceptional at reducing machine downtime and increasing productivity, hence making it even more valuable for businesses in this modern digital era.

Since we have already discussed how AI and machine learning works, we can now dive into the specifics and explain how it has or will help the supply chain and enhance the operations.

INVENTORY MANAGEMENT

Accurate inventory management is essential for running seamless operations, keeping the track of the items in and out of the warehouse could be a difficult task. There are numerous stages of inventory management such as processing, pick up, packaging, etc. This could complicate things, and drag the process, wasting a lot of time. Along with saving time, correct inventory management can save over and understock, and inaccurate order shipments that decrease the return rate and increase customer satisfaction.

The high-functioning ability of AI tools makes them stand out when it comes to processing huge chunks of data which is highly useful in inventory management. Quick processing of data along with precise algorithms helps in predicting consumer behavior, and knowing your customer’s requirement is the biggest commodity in business right now. 

MORE SECURE THAN EVER!

The automation and continuous learning process of AI and machine learning-based gadgets ensure a secure environment for warehouse workers as well as preserve the materials for longer periods. Machine Learning can be proactively used in informing the management about possible loopholes in warehouse and system loopholes. It can also perform maintenance tasks through tracking and resolving repeated errors and mishaps.  

TIMELY DELIVERIES

AI and Machine Learning based systems can assist in making the processes quicker, more secure, precise, and independent of workers and manpower. These changes help in ensuring secure and timely deliveries along with fulfilling maximum customer requirements. The automatic systems don’t require any programming, that expedites all the procedures compared to conventional warehouse operations. Removing these loopholes helps in achieving maximum efficiency with minimum resources.     

SMART DECISION-MAKING

Supply chain management software and tools operating on AI and Machine Learning play a significant role in decision-making and policymaking. The accurate predictions, learning market trends, estimating customer behavior, advanced inventory management, and multiple factors that have a major impact on the businesses are related to AI and are brought to consideration during decision-making, and all of them are related to AI.   

CONCLUSION

The use of AI and ML in the supply chain has opened a diverse set of possibilities for future operations and business models. We’re watching more and more companies every day switching to AI-based systems, the use of data processing and application of algorithms has radically shifted the paradigm of the supply chain, and considering its success, it’ll only continue to grow and control the market.

 

 

 

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Transportation challenges to the supply chain

Few activities in your supply chain have a significant impact on your business, like your transportation selection. Delivery techniques ensure that deliveries to and from your business go smoothly and reach their recipients on time.

Because transportation is crucial to your company’s performance, it’s critical to incorporate it in the overall supply chain management system. Transportation is regarded as one of the three essential components(procurement, manufacturing, and transportation) of supply chain management because of its importance. Effective transportation management is usually a distinguishing factor among different companies that have smooth procurement and management systems.

What Are The Key Challenges?

Cost Management:

The most expensive cost in logistics is shipping and transportation. In 2018, businesses in the United States spent more than $1.45 trillion on transportation. Because it is the most significant overhead for most firms (even remote ones), it does not appear to be going away anytime soon.

On the plus side, we can start to make progress by using data analysis to optimize shipping routes. It is possible to save money by quickly coordinating incoming orders, meeting dock timings, and forecasting traffic conditions – not to mention the brands that logistics companies work with will have satisfied customers.

Rise In Fuel Prices:

When the price of gasoline rises, customers’ moods deteriorate, flight tickets rise, and, of course, the logistics industry suffers greatly. As a result, significant delays in the supply chain are unavoidable as judgments about which trucks to fill must be made. There’s no denying that this has a considerable influence on logistical costs as fuel prices rise. Though it appears that the logistics business is fighting an uphill struggle, technology is once again on our side. It’s possible to stretch a logistics budget much further by combining shipments and using data to make intelligent route optimization decisions. Remember, if you cut your miles, you’ll cut your fuel usage. That’s a win for the environment as well!

Tough Government Regulations:

Because of unforeseeable events such as Covid-19 and Brexit, the need for governments to digitally transform has been thrust upon us all. It is impossible to implement solutions without the “go ahead” from authorities due to lengthy processes and bureaucratic rules anymore. As we have all experienced the epidemic in all of its manifestations, one thing has become evident: we need to use technology to become more adaptable.

A genius suggestion would be placing antiquated processes with automated solutions such as Map & Guide and Route Optimisers, which allow planners to find potential for route improvement at the touch of a button.

Cyberattacks:

Businesses must keep up with technological advancements in order to sustain their identity and success. With the recent development of vehicle technology (like automation and internet-connected gadgets), the industry is more vulnerable to new threats, such as hacker cyberattacks; thus, drivers must utilize the most up-to-date security measures and software.

In a recent conversation with the Vice President Logistics at 3Gtm, a leading transportation company, we found out that there is not much shortage of drivers. Mr. JP Wiggins said that we have more drivers now than we ever had. However, the issue lies in the lack of connectivity these drivers feel. He mentioned that a driver’s job is a tough one because of long days away from home and much more. Hence, not everyone can be a driver.

Younger drivers may enter the industry, according to Wiggins, if employers provide them with high-tech trucks. “Make them feel linked with a part of the technological revolution.” This is a crucial consideration for the next generation of drivers. “They require a sense of belonging as well as empowerment.” He suggests going after Uber and Lyft employees.

Conclusion:

In a nutshell, like all other challenges, we can easily solve transportation challenges by using technology in the right direction.

 

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The importance of supply chain talent

As businesses outgrow the traditional techniques of acquiring raw material, processing it, and delivering the products across the globe, the importance of the supply chain has significantly increased. In the olden times, the supply chain wasn’t a term people would ponder upon, let alone study it on a professional degree level.

Times have changed now, and supply chain jobs are one of the most significant roles in today’s market. However, is there a shortage of supply chain jobs? Or are we experiencing a lack of talent?

According to Harvard Business, the supply chain operations employ roughly 44 million people. The supply chain in the United States is undeniably crucial to the country’s economy. Technology in plants, fulfillment centers, procurement, production management, and upkeep removes employment as the industry becomes increasingly computerized. However, total hiring increases, and senior executives believe identifying and recruiting the best talent is more complex than ever.

Below are three main reasons why we are having difficulty locating qualified candidates;

Impact of the Pandemic:

For years, the supply chain business has evolved due to technological advancements and automation. However, due to the disruption brought by the COVID-19 pandemic, supply chain adoption is rapidly expanding. During the pandemic, 49% of supply chain executives invested in digital techniques to make their businesses more flexible and responsive.

Higher competitive situations, escalating customer service standards, and supply chain disruptions are all issues in the global economy. The supply chain is becoming more computerized to satisfy the industry’s changing expectations. The supply chain industry is at the forefront of new advances aimed at increasing efficiency. As the sector grows, robotics and technology have enhanced efficiency and potential.

Misconception Regarding The Term:

The supply chain profession has a bad reputation. Many individuals are confused about what the word “supply chain” means. A simpler explanation would be; the amount of work that runs a product’s manufacturing, transportation, and storage. Even though technology innovation is a fundamental driver in the supply chain business, younger professionals see themselves trapped in a dull, unfulfilling work with no room for progress. This is one of the many reasons why the youth shows little to no interest in enrolling in436t a supply chain management degree. Hence, companies have to provide workshops and training to selected individuals later on.

One explanation for this is that corporations aren’t putting forth the same public relations effort to promote the supply chain as they do other business sections. The simple truth is that workers of both generations are unaware of the opportunities, remuneration, and professional progress that a supply chain career may provide.

More Opportunities, Lesser Qualifications:

One significant difficulty in talent shortage is the quantity of talent and expertise required from each employee. Today, every company’s ideal employee possesses tactical and operational knowledge and analytical abilities. This combination is challenging to locate, according to many businesses. Leadership, strategic thinking, innovation, and high-level analytic and technological talents are all required in the present and future. The increased demand for workers with specific skills has highlighted the talent gap.

There are more positions than the talent available to fill them. In addition, as the industry evolves, talent needs to alter. Today’s climate necessitates that specific professions such as procurement involve knowledge of concerns such as commerce, taxation, and customs, as well as corporate social responsibility management. All supply chain components have become much more complex, necessitating the dynamic and adaptive behavior of those who operate in the business. Long hours and international travel are required in this job.

By now you must have a prominent idea about the importance of supply chain talent and the lack of it in today’s market. So, if you belong to Gen Z and are looking for a way to excel in your professional career, invest in the supply chain management degree as much as possible. 

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How are brands maintaining their identity in the age of Amazon

How Are Brands Maintaining Their Identity In The Age Of Amazon?

E-commerce sales have expanded at a rate of 19 percent per year on average over the last decade, significantly faster than offline retail. While traditional shops struggle to stay afloat, forward-thinking online merchants have sparked a wave of innovation that boosts the dynamic economy of e-commerce.

Due to these numbers, brands often find it hard to maintain their separate identity. While the popular, stronger brands can spend loads of money on online marketing to keep their consumers connected directly, new businesses indeed suffer. A new company with a product that can come in handy for a majority often finds it hard to market it correctly. This is why we usually find products being sold by third-party sellers on Amazon and several other E-commerce markets. It is safe to say that in today’s world, if you are not on Amazon (or any different E-commerce market), there are greater chances that your products are listed there – without you having any idea about it!

The Risks Of Poor Customer Relationships and How To Mitigate Them:

While companies are still making a wholesale margin on diverted units sold on Amazon, they are getting additional money in exchange for a more difficult branding and consumer connection problem.

The proliferation of third-party and unauthorized sellers on Amazon and other marketplaces, the brand’s image is being tarnished by subpar product content.

Low-grade product listings, pixelated product images taken on a smartphone, or basic product descriptions that don’t entice customers to click the “Purchase Now” button are other ways to kill any brand’s image.

Businesses must consider Amazon as part of their overall channel strategy and distribution activities. You must ensure that your brand message is consistent across all channels — to the extent that you have control over who represents you — and, in the end, aim to maintain price stability across channels.

It is a poor situation when you find out customers prefer to acquire your items through particular channels because the products are cheaper or because there is more price erosion in those channels. Hence, your company faces a new, bigger issue.

You don’t want to direct them to specific channels, usually eCommerce channels. All of your stable relationships with retailers are being harmed since consumers are aware that they can acquire the same goods for 5% or 10% less via an internet channel.

How Can You Maintain Your Identity in E-Commerce Markets?

Protecting your brand on Amazon necessitates improved channel governance, branding, and content control, as well as measures to ensure your brand receives a fair share of voice across all channels.

Say “NO,” When Necessary!

The more you learn to say “no,” the more you’ll finish up with a consistent price and product availability, and everything will flow smoothly. Remember that only you can decide when you want to end a partnership with a reseller, what “sales strategy” isn’t good for your brand, and much more. Once that decision is made, it is best if you are confident enough to say “no”.

Develop Your Reseller Policy:

A minimum advertised policy (MAP) is used by many manufacturers, although it is only helpful with authorized resellers. It does nothing to prevent unlicensed resellers from selling things online, resulting in further price erosion. To prevent this, firms should adopt an online reseller policy, which is a legal document that outlines what authorized resellers may and cannot do while selling your items.

Resellers may be required to submit Amazon vendor data or feedback data under this policy. An internet reseller policy can also help you avoid the first-sale doctrine, allowing unlicensed sellers to sell products without a brand’s consent under current federal case law.

Keep An Eye On Internal Processes:

Brands must modify their internal operations in addition to these legal tools. Among the process enhancements that you could make are:

  • You must create systems to ensure that your salespeople only sell to a pre-approved list of resellers.
  • It would help if you used diverse salespeople to examine the volume and character of sales in a single channel.
  • Having distributors disclose information on who they have sold to and what quantities. This could help you comprehend better what’s going on on that side of the ledger.

This approach should also entail evaluating how products move through the supply chain using RFID tags or serial numbers. That’s all crucial information for determining how this product wound up on the shelf being sold by an unlicensed seller.

 

 

 

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Commodity crisis_ Toyota to raise prices by up to 4% from April

A Leading Automotive Company Announces Price Hikes

Toyota Kirloskar Motor (TKM), an automotive company, announced on Saturday that starting from April 1, 2022, it will hike up the pricing of its vehicles by up to 4%. The manufacturer claims that the increase is due to growing input costs, especially raw material costs.

In a statement, TKM stated, “As a devoted and customer-centric firm, TKM has made all intentional measures to minimize the impact of increased prices on consumers.” BMW India announced on Friday that prices throughout its range of models will highly increase by up to 3.5 percent starting from April 1.

The price rise will be implemented to adapt procurement and transportation costs, as well as the effects of the present geopolitical environment and exchange rates, according to the company. Mercedes-Benz India, another premium carmaker, has already announced an increase in the price of its whole model range, effective April 1.

According to Mercedes-Benz India, the upcoming price adjustment will be in the range of 3% across the full model range. According to the corporation, persistent increases in input prices, as well as increased logistical charges, have put tremendous pressure on the company’s total costs.

Will These High Prices Persist?

Owing to the COVID-19 outbreak, a scarcity of computer chips, and some other supply-chain issues, auto manufacturing declined dramatically between 2020 and 2021. As a result, there are more than enough pent-up consumer demands and industrial fleets in 2022 and 2023 to absorb increased output.

Auto manufacturers can probably construct an extra 2.6 million to 3.2 million vehicles this year compared to 2021, but forecasts say it won’t be enough to put supply back on course with demand.  In other words, price hikes are likely to remain throughout this year, and maybe into next year, as demand continues to surpass supply.

 

 

 

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STB poised to decide reciprocal switching rules as shippers, railroads remain at odds

High rates and issues related to services in the rail industry have been affecting masses. Now, the Federal regulators are looking forward to adopting a reciprocal switching rule. The Board Chairman Surface Transportation, Marty Oberman, suspects that this change might be an effective way to address concerns without going for large regulations.

Board members, shippers and railroads together discussed the merits of a 2016 proposal in march in a two-day federal hearing. According to the proposal, railroads must establish a system for shippers to access nearby carriers when they are deprived of any other efficient option. Shippers believe that reciprocal switching will boost the competition between companies in the united industry. As a result, carriers would be burdened to ask for lower rates and provide better services. However, the Railroads argued against the rule saying it would worsen the existing issue. They believe that the rule will give rise to more delayed shipments because the operations will face unwanted hurdles.

Oberman is open to limiting which carriers would be authorized for reciprocal switching based on considerations like geography. Nonetheless, he recognised that the law may help to boost competition and resolve shipper problems. He discussed that he has witnessed a downturn trend in the industry’s quality and quantity of service over the recent years. He added that one of the ways to combat this downfall was to enhance the geographical competition.

Shippers complain about decline in quality of service

In previous years, shippers have reported about service issues such as missing switches, significant delays, and inconsistent service. Service difficulties can cause productivity disruptions for companies who have no true economic substitute to railroad.

As per the previous STB Chairman Dan Elliott, representing the Private Railcar Food and Beverage Association, a Kraft Heinz factory in North Florida covered by only one Class I carrier had to shut down at least once for a full week owing to freight rail service issues.

“Despite requesting the railroad to enhance the quality several times, no actions were taken for betterment of the current situation. These dire consequences have worsened over the time. If we had employed the reciprocal switching method to combat this situation, we could have prevented the Kraft Heinz plant from being unoperational right now. Through reciprocal switching, using a nearby Class I railroad can solve the issue easily,” Elliot said.

These interruptions have resulted in higher fees and shipper expenses, and many companies have paid extra to transfer shipments to the trucking spot market facing rail constraints. Elliot further discussed how a company calculated that they were losing at least $200,000 per day due to unpredictable switching and postponed deliveries of rail cars.

Several shippers do have reciprocal switching privileges, mainly as part of pre-existing contracts with railways formed following a merger. A chemical company LyondellBasell avoided service disruptions at several occasions by using their reciprocal switching agreement with the U.S. rail carrier. A lawyer from Thompson Hine, Jeff Mereno, said while representing a partnership of several shipper groups, “the benefits of reciprocal switching are very obvious. The chemical company LyondellBasell was allowed access to competitive service alternatives across their four franchises while they used capital investments to add 2200 storage and transport freight spots.”

Shipping companies can also request the STB for reciprocal switching access if they can show that a railroad has been involved in anti-competitive behavior. Still, many shippers believe the expectations are unrealistic and point out that the organization has never granted such a request.

Railroads Claim That Problems Will Increase

Railroads argue that reciprocal switching would only worsen existing service problems, injecting unnecessary complexity into their operations that could lead to even more delays.

Reciprocal switching could make it harder for railroads to manage their networks and could cause new delays, railroads say. Union Pacific said the reciprocal switching it currently performs adds an additional 48 to 96 hours of delays, as cars have to traverse a terminal twice.

Railroads claim that reciprocal switching would exacerbate existing service issues. In their opinion, reciprocal switching will make it more difficult to operate their networks and generate significant delays. Union Pacific claims that the reciprocal switching will add an extra 48 to 96 hours of delay since cars must pass through each terminal twice.

 

 

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Facing production constraints, Hershey turns to SKU rationalization

Food and beverage manufacturers’ production challenges have clearly worsened, as the industry is facing rising expenses to manufacture and deliver items. This situation is also due to labor shortages and bottlenecks, all of which add to supply chain limitations. According to the Consumer Price Index from the United States Bureau of Labor Statistics, food costs have risen 7.4% since last year.

Besides, the unpredictability of the weather has resulted in a scarcity of significant crops. In addition, the sudden Russia Ukraine war has also forced major CPGs to suspend business operations.

Earlier in the pandemic, food and beverage manufacturers typically utilized the tactic of limiting SKUs. While the method’s popularity has waned over time, its efficiency and productivity remain unchallenged. Particularly as inflation and supply chain limitations mount.

Several corporations, including Hershey, are rethinking their product lines. As omicron cases surged earlier in January, Hershey saw a greater absence of employees and tightened productivity at their facilities and those of their vendors. Despite their efforts to expand their manpower and capacity, these challenges may hinder Hershey’s ability to replenish stocks.

As a result, Hershey is addressing omicron-related issues by rationalizing SKUs and using double- and triple-facing SKUs to place two and three of the same product on shelves. The chocolate and confectionery business has now focused on their most popular goods rather than those that aren’t performing well. That is what they call the SKU rationalization method.

Despite providing less variety, Hershey’s approach, according to Steve Voskuil, senior VP and CFO, has expanded shelf space while enabling capacity and lowering complexities.

“As a result of the COVID-19 epidemic, brands and producers are conducting more SKU counts. This is because of evolving customer needs, supply chain interruptions, and economic turmoil as a consequence of rising unemployment and inflation,” Tierney Wilson, January Digital’s SVP of client strategies and consultancy, commented.

“The quest of growth could often lead organizations to produce or release an excessive number of goods in their inventories for the primary intention of innovation,” Wilson added. “However, if there is not a thorough internal mechanism in place for assessing SKU’ effect on top and bottom-line revenues, these anticipated innovations may result in unfavorable business outcomes.”

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As operations in shanghai halt, the concerns for the global supply chain continue to rise

Ever since the pandemic started, China was one of the first countries that recovered from the damages and seem to stabilize the situation before everyone else. But unfortunately, the situation in the last few months has drastically changed in China, especially in Shanghai.

After implementing a successful strategy of “Zero-Covid”, China finds itself once again in a challenging state. China’s metropolitan city Shanghai is facing a massive lockdown that creates huge uncertainty in the supply chain.

During this month, the number of cases has risen to 26,000 a day! that’s a huge number considering the previous situation in China which was quite a under control. Resources are now reporting that some areas of the city are starting to open despite the increasing number of cases, but the city at large remains under lockdown.

The closure of Shanghai has brought major disruption tothe supply chain, the costs are continuously on the rise and transportation of goods has become extremely difficult, and all the trucking operations are almost on hold. The disruption in supplies in the factories is slowing down the workflow, and as the numbers increase, the experts and analysts are getting more and more concerned about the persistence of the global supply chain. 

INCREASING PROBLEMS IN THE SUPPLY CHAIN

As the covid is spreading in Shanghai, it is getting more difficult for truck drivers to maneuver through the city. More checkpoints are being positioned verifying the covid-tests of the drivers and they need to get tested every 24 hours which is really frantic. Conducting these many tests without proper logistics is turning out to be more chaotic. 

Head of Network Operations at Flexport, Derek Bushaw stated that “Trucking is the lifeblood of the first and last mile”, he further added that“The first mile for the factories is that inbound delivery of components, and whether those are imported or domestically sourced, that’s still a challenge because it depends on trucking.”

There’s been a huge decline in the efficiency of shipping companies in the past month, the efficiency has dropped to over 30%because of the deficiency of trucking transport and logistics, which is detrimental to the global supply chain. The hindrances within the city of Shanghai are forcing a lot of cargo companies to end their operations and leave the city.

To sustain the production, Shanghai has implemented a “closed-loop system” which means that the workers spend all day in the factories and never leave the place. It is working so far but experts predict that they’ll eventuallyrun out of supplies and they’ll have to open up the city for imports and supplies.

Massive manufacturing plants such as Apple’s supplier Pegatron have announced that it has paused their operations in Shanghai due to harsh Covid-19 restrictions. Well, it is expected that the restrictions will ease up by the end of this month. Experts believe that if the disruptions continue till the end of this month, we’ll see a major increase in the price of commodities. 

INSTABILITY IS THE BIGGEST THREAT

The biggest question here is that what guarantees the prevention of another lockdown? And if we’re being honest there’s no certain answer. Head of APAC Strategy at FAO Global, Cameron Johnson said that regardless of the future operations, the current lockdown will cause the product prices to rise at least 4-5 percent. 

Alongside Shanghai, the neighboring city of Kunshan is also facing strict lockdowns and restrictions, which is also damaging the total output and productivity of several factories. Similar to Shanghai, Kunshan is home to gigantic automotive and electronic suppliers that provide supplies to companies such as Apple and Tesla. So, the consequences will be worldwide and drastic.

Jena Santoro (Manager of intelligence solutions for the Americas at Everstream Analytics) believes that this is just the starting of this outbreak, she further added that this situation will only elevate regardless of the lockdown, and it’ll most likely be the next big covid-19 situation.

CONCLUSION

The biggest issue here is that the future is uncertain, and planners can’t formulate a strategy. We can only wait and hope that the situation gets better and clearer as time progresses because otherwise, it doesn’t look that good for the production houses in Shanghai and Kunshan.