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Asia-Europe rollovers are back

It appears that ocean carriers are again playing fast and loose with delivery dates for cargo.  There’s a telling remark by an NVOCC source: “You might be able to book at that rate, but you have absolutely no idea when you are going to get the boxes shipped.”

Carriers still have not got the message that most shippers want their cargo when it was promised.  There might be a few that can stand a long delay, but the trend in inventory over the last 20 years has been toward rightsizing inventory by factoring in its logistics.  You can’t do that well if there is substantial variation in lead times. The formula for overall variation of inventory— measured by variance (square of standard deviation)— weights variance of lead time by the demand, but variance of demand by the lead time.

Looking at the formula, a mathematical truth deducible simply from the definition of variance and the assumption of independence of demand and lead time distributions, shows that often lead time variation has an outsized effect.

Ocean carriers can’t control the demand, but they can control the lead time. But it seems that they ought to spend more time thinking about how to help keep the customer’s overall variation low, rather than only dealing with what they alone can control.

Time to get on the supply chain thinking boat!  It left the dock years ago!

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 via Asia-Europe carriers leave boxes on quays as they eye better-paid cargo – The Loadstar

One response to “Asia-Europe rollovers are back

  1. Pingback: Asia-Europe rollovers are back

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