Three Global Supply Chain Trends to Know About

Supply chain resilience, sustainability and technology enabled visibility have emerged as leading trends for exporters as they navigate global supply chain disruption. The COVID-19 pandemic has pressure-tested export supply chains, driving a renewed focus to adapt and think differently to deliver for customers.

While Kotahi’s planning and optimisation capability and backbone network partners has meant we have been able to keep our exporters competitive on the world stage, technological advancements will provide opportunities for improved information on cargo movements, enabling a better customer experience.

A focus on supply chain resilience: The importance of strong partnerships

Kotahi’s customers have benefited from products arriving in export markets more reliably than most supply chains, and this has been a key differentiator for both our customers and sometimes their customers. New Zealand exporters compete on the global stage for ocean freight capacity to move products reliably around the world.

Reliability starts with shipping schedule performance.

Through working with our partner Maersk, we’ve seen an investment in extra vessels targeted to key services coming to New Zealand, effectively factoring in the impact of port delays to better maintain schedule performance. This led to a material shift in reliability of services in our shipping solutions and increased confidence in availability of planned capacity. This benefit is derived from our long-term partnership with Maersk and has been key to our supply chain resilience. We are yet to see this being delivered by other Australasian services.

Now more than ever, customers in-market need confidence in their supply chain partnerships to keep product moving, particularly those in challenging locations subject to shipping lines losing significant capacity for exporting. Some services coming to New Zealand will lose at least 30 per cent of normal capacity available due to disruption through the 2022 calendar year, and with no plans to backfill capacity, this may have a significant impact on the ability of exporters in New Zealand to get their product to customers. With the confidence of a strong backbone in place, we’ve been able to focus attention on difficult locations with some success, noting it’s not always possible in the current environment.

Using strong network partnerships to build additional capacity on key services, enables Fonterra to deliver cargo to customers more reliably than most. Alongside higher levels of cross-enterprise planning with Fonterra and our partners like Maersk, we have been able to identify challenges early and take action, which has benefited everyone in Fonterra’s supply chain.

Agile supply chains are more important than ever: Why digital supply chains and visibility are key

The ability to pivot quickly and navigate supply chain network opportunities is now a leading trend amongst exporters as unforeseen shocks such as the Ukraine/Russia conflict and Shanghai Port closure, put additional pressure on a system that is already under strain. To keep products moving to in-market customers, quick decisions, and timely and accurate information is key.

COVID-19 has driven exporters to accelerate their digital transformation with the use of AI technologies to help make predictive and prescriptive decisions. An example is responding to a change in customer demand and easily adjusting supply plans or easier and faster access to their cargo movements through tracking technology2.

We’ve seen ongoing investment by technology companies, shipping lines and logistics players to improve data quality and how it is shared to exporters. While digitising the supply chain has seen a number of improvements in the last five years, we have seen rapid change and increase in pace since COVID-19.

Technology now allows predicted estimated time of arrival, which in a world of supply chain disruption and shipping schedule disruption is highly valuable to exporters and their customers in market, for planning and inventory management purposes.

Kotahi is working closely with Fonterra and market leading data providers to access more complete and timelier event and milestone data.

We have also found technology solutions to target unique New Zealand supply chain challenges for matching containers to the correct order during the bulk container release process, that scale exporters like Fonterra need to be efficient.

This month Fonterra have commenced a pilot of the capability that will enable their customers to have greater visibility of their cargo through the delivery process.

The pilot is in its early stages and we look forward to releasing it in stages over the next year. This will have a significant impact for exporters in market customers, as end-to-end cargo visibility is more important than ever during this time of significant supply chain disruption.

Sustainability remains front of mind

While global supply chain disruption has influenced a number of trends that the industry will target moving forward, the strong focus on progressing with carbon reduction initiatives continues.

Kotahi shipping partners like Maersk and CMA CGM Group are committed to decarbonising their supply chains, with a target to achieve net zero emissions by 2050, a sustainability goal they take seriously³.

CMA CGM Group is supporting the production of biomethane already in use commercially, and Maersk has accelerated its plans for container shipping powered by carbon-neutral fuels, now expecting the first vessel in late 2023, seven years ahead of its original plan4.

Through conscious scaling to more efficient bigger vessels coming to New Zealand, Kotahi has helped Fonterra reduce their carbon emissions by 16 per cent over the last six years¹.

Fonterra will also benefit from Kotahi’s access to carbon reducing / carbon zero shipping options through our carrier partners, should they be required, as part of an accelerated journey towards a low/zero carbon supply chain.

Three key takeaways

Fonterra and Kotahi are well prepared for ongoing supply chain disruption and will continue to deliver for customers. Below are three key takeaways:

The views expressed above are the opinion of the author, not those of Fonterra, and Fonterra is not responsible for any decisions taken in reliance on the same.