Ocean carriers blanking voyages despite global supply chains are disrupted
Recently, we have seen substantial disruptions in the global supply chains. It can be safely assumed that these are still repercussions of the lock-down periods across the globe due to Covid19. As 85+ percent of the global trade is being transported on ocean, we can witness severe issues in ports and terminals worldwide. US west coast ports such as Los Angeles or Long Beach having dozens of vessels queueing for berth places, also major Chinese ports are facing severe congestions caused by typhoons. The recent Suez Canal blockage by an Ultra Large Container Ship (ULCS) can serve as another example to illustrate how fragile the already over-heated global supply chain is and which impact on manufacturing plants such a blockage can cause.
Despite this situation cries for more transportation capacity to catch-up with the delays, Ocean Carriers are blanking already planned voyages. This looks like a contradiction. In fact, this is a logical consequence of the supply situation of the carriers and the inability to call ports as agreed due to the disruptions described. Hence, the blanking of voyages is rather to be understood as a ‘sliding of bookings’ to adjust the plans to reality. This can even mean that confirmed bookings will slide to another ocean carrier’s vessel due to existing partnership agreements in place.
Partnership agreements are key in this industry to optimize the utilization of vessels, especially for main liners operating ULCS class vessels in their fleet. Sharing capacities to balance the supply plan is common practice.
SAP Transportation Management add-ons for container shipping liners for SAP S/4HANA provides numerous functionalities that support ocean carriers to define their network, plan their supply (also considering alliances or other kind of partnership agreements), understand negative impacts, adjust the supply plans to reality through simulations and keep their customers informed at the earliest time.
This blog series is to provide answers to
- how can SAP Transportation Management add-ons for container shipping liners for SAP S/4HANA (CSL) support partnership agreements in alliances
- how can voyage blanking be achieved in CSL with which consequences
- how to understand the impact of blanking/sliding voyages from various aspects such as cargo, cost, bunker or documentation in CSL
- how to move already confirmed CSL bookings from a blanked voyage to another voyage (sliding)
- how can CSL help to communicate such changes proactively to customers and ports
In the industry, partnerships have a long tradition and are important from various points of view. Specifically, but not limited to the increase of vessel capacity in conjunction with the establishment of reliable ocean line services, the balancing of supply and demand on a network can be managed more efficiently when peers are entering into partnerships – considering not to breech regulatory frameworks. SAP Transportation Management add-ons for container shipping liners for SAP S/4HANA caters for multiple types of partnership agreements:
- Vessel Sharing Agreement (VSA)
All parties (carrier and partners) offer an equal share of capacity (vessels) in the same line. The parties take responsibility for one or more cycles of the same line and offer space on their vessel to the partners.
- Slot Charter Agreement (SCA)
The agreement type used to buy capacity (slots) in a vessel from a partner or sell capacity in a vessel to a partner.
The carrier offers capacity from one line and exchanges it for capacity from a partner’s line thus extending the delivery capability of the network.
Through the transparent management of partnership agreements, the supply plan can be managed more efficiently, and the vessel utilization can be increased. Once in place, partnership agreements can be considered as early as at the time of price negotiation with customers (see SAP Transportation Management, lead to agreement for container shipping liners for SAP S/4HANA). Even more important, partnership agreements are embedded into the capacity and allocation planning and are being considered in case of operational replanning, e.g. due to voyage blanking (see SAP Transportation Management, network and operations for container shipping liners for SAP S/4HANA).
A vessel voyage consists out of scheduled port calls in a defined sequence and at defined times. Port calls included in a voyage can be commercial calls (i.e. where cargo load and discharge activities take place), or other calls (i.e. technical stops for bunker or maintenance related activities or stops before entering certain passages like Suez or Panama Canal). Typically, a voyage represents a string or a loop. Meaning, after the call of the last port of destination the vessel calls the first port of loading and commences a new voyage. From then onwards, the commercial voyage number can change.
Voyage blanking or “blank sailings” means to cancel a planned voyage from a schedule in totality or in parts. Blanking can have numerous reasons. These can be vessel or port-related but can also be based on commercial decisions. In any case, formerly scheduled services will not be available for an executable voyage.
In SAP Transportation Management add-ons for container shipping liners for SAP S/4HANA, voyages can be edited and blank sailings for certain port calls or the entire voyage can be created in the Schedule Monitor Worklist. Once ports get omitted this is shown in an alert list. Based on the alerts, a communication towards the business partners within the port can be issued at the earliest possible time.
If a voyage has associated documents such as a manifest or service orders, then the system cancels the voyage along with all the associated documents.
Towards business partners, the commercial voyage number (CVN) is an essential information. Before creating a blank sailing for the entire voyage, it can be chosen how to manage the CVN that is assigned to the voyage:
- Release the assigned CVN number from the voyage.
When releasing the assigned CVN, it is removed from the voyage which means it can be assigned to another voyage.
- Keep the assigned CVN.
When keeping the CVN assigned to the voyage, the number remains linked to the voyage. The CVN cannot be reused in other voyages even after the voyage has been canceled.
Creating a blank sailing for the entire voyage means, the system automatically removes the vessel from the voyage. This action can be reversed if necessary.
Impact analysis through simulation
To understand the impact of blanking a voyage, omitting ports, changing the sequence of port calls or phasing in/out vessels, multiple considerations must be taken. There is the operational impact on own but also on partner cargo. Further the cost- as well as bunker-related aspects play an important role before taking a decision. Not to forget the impact on documentation.
To better understand these impacts, a voyage change can be simulated in the schedule monitor. This function offers a simulation cockpit where adjustments can be made before taking a final call.
The voyage including all port calls is displayed on a GANTT chart.
Details are available in respective sections on the screen.
Already when entering the schedule monitor, a comparison of the formerly created baseline voyage and the current voyage in execution is presented. Coming from there, simulation of changes can be done. Once having finalized a simulation, all impacts described above can be understood. This leads to an educated decision. Accordingly, the voyage in execution can be updated with the simulated changes.
Blanking an entire voyage means to cancel the executable voyage. By that, the voyage will be removed from related objects such as partnership agreements and the supply plan.
Replanning of bookings
Blanking a voyage leads to the need of replanning bookings that were assigned to the blanked voyage. Each booking contains one or more cargo units (e.g. ocean containers but also break bulk, out-of-gauge or other non-containerized cargo). Each cargo unit has an individual trip plan assigned. The trip plan monitors the execution process of a cargo unit and considers operational, documentary and financial aspects. Deviations from the plan leads to alerts, if the tolerance has been exceeded. In case of a blanked voyage, the respective ocean leg of the trip receives a change, and the trip plan recognizes that the cargo unit cannot be delivered according to the planned ETA.
Trips that cannot live up to the plan get the status ‘broken’. Broken trips can be visualized in a graphical screen which helps the planner to understand the situation, i.e. which ocean leg is affected, what is the reason for the change and what impact does this change have on the trip.
Based on this information, bookings can be replanned. Replanning can be done booking per booking or for many bookings in one step in a mass mode. In both cases, the current network situation will be considered. Along with the network, a ranking of options according to business rules applies. According to business rules, bookings that come from a replanning run can receive higher priority than other bookings.
As a result, the bookings get assigned to the highest ranked available voyage. The commercial allocation will be updated accordingly, so do the documents that would be impacted by the re-assignment. Once assigned to another voyage, handling lists for the port operations are being refreshed, too.
Value added services that are connected to a replanned booking or to a replanned cargo unit remain intact.
In case where services have to be delivered at the port or terminal, the updated port calls will receive respective service orders. By that, the execution of commercially agreed services can be monitored still.
Voyage blanking typically results in an extended stay of impacted cargo units at the terminal, as the originally planned voyage will not happen. Business partners at the port need to be aware of such a change as this would have an impact on many cargo units. An early information (see voyage blanking) prevents the terminal operators from performing unnecessary moves and supports them in their berth planning.
However, the delay will cause additional and unexpected storage costs. Storage as such is an agreed service with the terminal. This service will be charged based on duration. According to service agreements, the respective costs can be planned and forecasted. In case of blanking voyages by the carrier, such costs cannot be charged towards a customer or a partner carrier. Hence, the costs will have an impact on the contribution and profitability. In cases, it is even cheaper moving cargo units out of the ocean terminal into a dry port.
Another important aspect to be considered when replanning bookings after an entire voyage or a part of a voyage has been blanked is the bunker situation. SAP Transportation Management, network and operations for container shipping liners for SAP S/4HANA offers capabilities of operational bunker management. Both supply and consumption get impacted by blanking already planned voyages. On the supply side, a bunker request might become invalid as the formerly scheduled technical stop will not happen. Such a situation will be determined automatically, and the respective bunker request will be flagged accordingly.
This can lead to an information to the bunker planner. Hence, the bunker request can be cancelled, and the provider needs to be contacted and informed. At the consumption side, the vessel might be used for other purposes. Whatever purpose this might be, it will have an impact on its consumption which has to be planned accordingly.
Customer First: proactive communication of changes
Once a trip plan has been detected as broken, automatic actions can be triggered. These actions can result in information being sent to the customer. As the trip plan is the first issue detector related to bookings, customers can be informed at the earliest stage.
As a next step, customers can be informed once a replanning has been performed. After replanning, new ETA has been calculated. Depending on the type of the booking (e.g. to port, to ramp, to door) the import activities differ. Accordingly, delivery orders or arrival notices can be produced.
With SAP Transportation Management add-ons for container shipping liners for SAP S/4HANA, Ocean Carriers can run their core business on a standardized though configurable application. This application caters for both operational and commercial processes and has built-in flexibilities to respond to exceptions in the global supply chain. Exemplary, blanking or sliding of already planned and confirmed voyages is fully supported, even including simulation and visualization capabilities.