Download the 2024 Gartner® Magic Quadrant™ to see why FourKites is a RTTVP Leader. DOWNLOAD
Skip to Main Content
Photo of Matt ElenjickalMatt ElenjickalCEO & Founder, FourKites

This article originally published on

In March 2024, the world’s largest international shippers, carriers and freight forwarders convened in Long Beach, California, for the Journal of Commerce’s annual TPM conference. At the event, industry executives encouraged (paywall) cargo owners to “rethink their inventory strategies” in light of Red Sea disruptions adding days to shipment routes and regulatory pressures around decarbonization driving a long-term reduction in maximum ship speeds.

Underscoring the need to adapt inventory strategies is the fact that about 95% of shippers planned to reduce or maintain inventory levels going into 2024—the highest levels seen in over a decade, according to Morgan Stanley’s Freight Pulse 72 Shipper Survey. As shippers run leaner operations, they face a familiar dilemma: How do you balance resilience and cost? Answering this question could be worth millions of dollars in saved revenue and avoided fees, not to mention happier customers.

So, how can cargo owners begin to rethink their inventory strategies? They should start by taking a closer look at their supply chain data and network.

Allow me to explain. International shipping is fraught with numerous handoffs—transshipment and final destination ports alone can be a black hole for data, where shipments get lost in disjointed communications. The chaos and confusion of customs clearance and drayage just compound the issues.

When you don’t know when your inventory will arrive, making informed decisions about stock levels, replenishment schedules and customer promises is incredibly difficult. Will your products arrive in time to meet peak season demand? Should you expedite alternative shipments at a higher cost? Can you confidently commit to delivery dates for your customers?

Forward-thinking companies have achieved impressive results by integrating real-time vessel tracking data, port congestion metrics and weather forecasts into their supply chain planning systems. Combining these external signals with internal sales and inventory data allows them to dynamically adjust stock levels and routing decisions based on the latest information. Although they’re not perfect, these predictive approaches can significantly reduce the uncertainty, risk and cost of ocean shipping.

But even with pristine data, supply chain efficiency is limited by the design of the underlying network. Complete visibility into a suboptimal system only takes you so far. That’s why network optimization is so crucial.

Effective network optimization requires a deep understanding of your products, customers and operational constraints. It also demands close collaboration with key stakeholders across the organization, from sales and marketing to finance and operations. By bringing together cross-functional expertise and leveraging data-driven insights, supply chain leaders can design networks that balance cost, service and risk. While it’s not easy, creating a collaborative atmosphere—built around proactive communication between customers, partners and carriers—can help everyone save time and money.

A few best practices include:

  • Creating a dedicated, cross-functional team with representatives from various departments, such as technology, procurement, customer service and transportation.
  • Implementing shared systems and platforms that facilitate efficient communication among supply chain networks, partners and stakeholders.
  • Setting clear goals while maintaining a mindset of continuous improvement. For example, partnering with carriers to define improvements in on-time delivery performance and reducing dwell time based on historical data and industry benchmarks.

Implementing these best practices requires a fundamental shift in mindset and approach. It necessitates breaking down organizational silos, fostering a culture of transparency and trust, and embracing a more holistic view of supply chain performance. By investing in the right talent, technologies and partnerships, organizations can create a foundation for effective collaboration and continuous improvement. However, it’s important to recognize that this is an ongoing journey, not a one-time initiative.

Supply chains have endured numerous disruptions these past few years, with shippers adapting accordingly. But as cargo owners at TPM24 learned, there’s more work to be done. Although some might attempt to maintain lean inventory operations without the proper data and network in place—especially at an international scale—they’ll find that it’s like cooking without salt: possible but not ideal.

Stay Informed

Join 30,000+ monthly readers and get exclusive ebooks, reports, and industry insights from FourKites every week.

Read our Privacy Policy