The role of tank container logistics in supply chain resilience

Tank container logistics solutions can come in handy during uncertain times. Supply chain resilience became a significant discussion point in 2021 during the Suez Canal obstruction with the grounded Ever Given when container vessel capacity and equipment were already tight with port congestions, low sailing frequencies, container shortages, and elevated freight.

That event plus the pandemic stressed the strained global supply chain and highlighted the need for supply chain resilient business models. Nevertheless, 2021 saw a significant boost in the tank container market, with the global tank container fleet reaching 736,935 units by January 1, 2022, according to International Tank Container Organisation (ITCO).

The shipping industry made record profits in 2021 against soaring freight rates. With increasing delays and empty containers sitting in the wrong places globally, shippers have absorbed higher shipping and logistics costs.

Container carriers have been keeping supply aligned with demand through blank sailings by cancelling complete routes or leaving out ports from their schedule.

According to Drewry’s Weekly analysis of 29 April 2022, for Transpacific, Transatlantic, and Asia-North Europe & Med, 56 cancelled sailings were announced between weeks 18 and 22, out of 728 scheduled sailings, representing a cancellation rate of eight percent.

During the same period, owners had planned 59 percent of the blank sailings for the Transpacific Eastbound and West Coast trade. Other common causes of delays include weather, labour shortages, port congestion, hinterland delays, and pandemic-related lockdowns.

The implications of vessel and cargo delays and poor schedule reliability are multiple and affect both the commercial and operational features of the businesses of all stakeholders in the supply chain. They can include an increase in TCO, delayed sales and manufacturing, money tied up in inventory buffers and lower cash flows, increased risk of damage, and lower asset turnover.

Supply chain resilience is a company’s ability to navigate unexpected supply chain disruptions with its existing capabilities. It is the ability to react to problems and recover from them without a significant impact on operations and customer timelines.

The pandemic and Suez Canal blockage served as a crucial wake-up call for many supply chain leaders as it exposed their unpreparedness to disruptions.

Tank container logistics can play a crucial role in a business continuity plan that deals with supply chain disruptions. It is critical to gain the ability to recover quickly without impacting customer delivery timelines, conserve multiple sourcing options and develop supply chain agility.

During the last 12 months, tank container logistics came in handy for some shippers to solve supply chain disruptions. Elevated container freight levels pushed some cargoes from drums to tank containers to maximise the quantity per shipment. COVID-19-related restrictions also resulted in many chemical parcel tanker owners avoiding congested Chinese ports or postponing their sailings. Therefore, several chemical parcel tanker charterers shifted from parcel tankers to tank container transport to move their products.

The capability to efficiently switch between transport modes and promptly find logistics solutions is crucial. Preparation and experience are required!

A responsive supply chain typically must be developed around people, processes, and technology. Supply chain experts need to guide a company to navigate challenging business conditions and stay ahead of market trends. Organisations need process reinforcements to optimise forecasting, inventory management, supplier relationships, sourcing, and market awareness. Finally, technology is required to enhance and improve these processes.

To improve supply chain resilience, you need to stay ahead and constantly be aware of market trends and supply chain developments. If you don’t know where to start, you can use an external supply chain consultant such as ener8 to create a resilient supply chain.

For more information visit www.ener8.com