Data is hardly ever static. If an organization is using the most up-to-date data, that information is always changing. Much like the movement of goods along the supply chain, where an issue in one part of the world could have an impact on the entire global chain, if one aspect of data changes, it can affect all other calculations an organization makes.
With all eyes on shipping at this time of year, there is some movement in the industry that could have an impact on the decisions being made during peak shipping season. Here’s how data informs all of these decisions, whether it’s those made by the shipping companies themselves, or the organizations relying on those companies to get their products to consumers.
Predictive analytics informing air freight
One area of shipping that companies are monitoring closely is air freight. Most companies, in fact, have been watching the changes in air freight for months. Cargo ships have been avoiding the Suez Canal after attacks on ships in the Red Sea, instead traveling around Africa, adding as much as three weeks of travel time, depending on the destination.
That fact, combined with an increase in e-commerce from China, a major indicator of the air freight market, means more companies are choosing air shipping over ocean shipping. The summer was busier than normal, a good indication that the peak shipping season could be even busier. Demand is up, and rates have increased compared to this time last year.
This is where analytics comes into play for companies. There is good data to fuel digital twin modeling, since companies needed to find ways to combat Suez Canal delays in 2021, when a container ship blocked traffic there. Due to the Red Sea conflict, companies have likely been using that predictive data to inform their decisions throughout the year.
Changing delivery habits
Ground shipping sees its data change often as well. A company like UPS uses certain metrics to guide decisions around driver efficiency. In recent years, the rise of e-commerce has meant more deliveries to homes, including homes in rural areas. Deliveries to those rural areas are costlier for companies like UPS to serve in comparison to more densely populated urban areas.
Since late 2023, UPS has reduced the number of days it delivers to some rural communities. By consolidating deliveries in certain areas, it has added an additional day in transit for some packages, but the company says depending on how the program goes they may change the rural areas affected by the program. By slowing some delivery speeds, UPS hopes to be able to make its drivers more efficient.
Another metric that affects ground shipping is diesel fuel prices. Companies like UPS and FedEx tend to adjust their fuel surcharges weekly, based on the U.S. Energy Information Administration’s average on-highway diesel fuel price. This is another calculation that organizations using the shipping companies have to make. Sometimes they are able to secure lower shipping rates or exemptions from changes to the surcharges that make the ground shipping options more affordable.
For its part, FedEx announced that it is expanding its e-commerce fulfillment to include artificial intelligence and robotics. New warehouses will feature autonomous fulfillment systems to sort through and pack products. According to a statement released by the company, with more than 130 warehouse and fulfillment operations in North America and 475 million returns processed annually, FedEx Supply Chain is helping brands consolidate functions, increase agility, and accelerate click-to-door speed to maximize value throughout their supply chain.
How the data affects decision-making
The news about UPS might cause some rural organizations to rely more heavily on the United States Postal Service, but that organization has its own cost-cutting plans. The USPS has proposed an adjustment to mail delivery times in an effort to operate more efficiently. The proposal would increase the speed of mail for customers closer to regional hubs, which means rural customers could see slowdowns. The organization maintained all mail and packages would be delivered within its existing service standards.
Businesses have an overwhelming number of decisions to make. With shipping alone, companies that make decisions around their own supply chains have to consider all of the potential changes those shipping companies might make. This is where organizations need a reliable analytics solution that can help them make informed decisions using the most up-to-date information from the industry.
The right analytics solution can provide the same data shipping companies are using to make decisions around items like fuel surcharges and turn a reactive decision into a proactive one. While world events can be unpredictable, data can help a company make decisions about how events, when they happen, could impact their processes. And constant oversight of shipping through real-time updates can help provide the information that will keep you and your customers informed. With so many variables that affect so many different aspects of the supply chain, analytics is the tool you need to make sure you can stay ahead of the competition.
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