Supply Chain weekly wrap-up: 3/4/16 – 3/10/16

Mega container ships = trouble makers?

Back in the beginning of February we asked the question “How big is too big” when it comes to container ships. This question was raised after reports out of Hamburg, Germany detailed the running aground of a mega ship just outside one of Europe’s busiest ports. This week, accusations surfaced regarding the impact of these ships on overall supply chain management costs. Certain container lines have been accused of hiking costs in an effort to realize economies of scale through the deployment of these mega container ships.

Compared to 2006, the maximum size of today’s container ships have doubled. These larger vessels have resulted in lower costs for carriers, but higher costs for others along the transportation chain. For example, ordering a new crane (two berths) at ports to handle the larger loads of mega ships costs approximately $110 million, and an order placed today could take up to 2 years to receive. Furthermore, expansion of existing ports to handle the arrival of these large ships can take up to 10 years. A mega ship, in contrast, takes just two years to build, hence the rapid expansion of their presence along shipping lines.

To read more on the far-reaching impact of these mega ships on the logistics industry, click here.

Are these problems keeping you up at night?

A report was released this week based on recent research conducted by APICS and Michigan State University. The study was titled “Supply Chain Issues: What’s Keeping Supply Chain Managers up at Night?” Leading industry executives were asked to identify some of their top challenges with respect to future plans and current operations. The researchers were able to identify six common issues, the first of which is capacity/resource availability. Capacity maximization through the replacement of old machines and the adoption of new technologies to improve efficiency were the top aspects regarding this point. Second on the list is the issue of supply chain industry talent. The current concern of supply chain executives is not necessarily finding talented individuals, but rather retaining and properly developing new hires. The third most common issue noted in the report is dealing with complexity, more specifically in the field of product management. Growing product complexity and an exploding number of SKUs due to an increase in product offerings are highlighted in this issue.

Threats, compliance as well as cost and purchasing issues completed the list of challenges that are keeping supply chain decision makers up at night.

Read more about this report here.

More drone tests – This time at sea

Earlier this week, Maersk Tankers claimed it successfully completed the first drone delivery to a ship at sea. The company is currently exploring the technology to tap into potential supply chain cost saving measures. The experiment took place near Kalundborg, Denmark, however the ground-launch could not be executed as planned due to weather conditions. A tug boat was used as a launching pad instead. Maersk used the drone to deliver a small package to one of its ships out on open waters. The drone released the package 5 meters above the deck.

Maersk hopes to be able to use drones to deliver spare parts and critical medicine, and therefore reduce the number of required barge deliveries. Barge deliveries currently cost the company $3,000 – $9,000 per year, per ship, and with over 100 ships in operation, significant cost savings are at stake. Aside from parcel delivery, Maersk is also looking into using drones for ship inspection purposes and other areas of operation.

To read more about Maersk’s drone plans, click here.

Have a great weekend!