Continuing a series of discussions around visibility and technology supporting it, Senior Manager of Carrier Allocation Staci Alalem-Clark talks about capacity planning for ocean shipments and how this historically manual process is being changed by software to provide stronger visibility and flexibility for shippers.
Chris Parker: Counting the ceiling tiles or...
Staci Alalem-Clark: Exactly. I'm becoming very OCD about my house. I have more time. I'm like, "Oh, that's out of place. No, no, no."
Chris Parker: You run a tight ship at home now.
Staci Alalem-Clark: Yeah. Yeah. I have two sons that came back from college, so that was interesting to go through an empty nest, have them return, and now go through it again.
Chris Parker: And make sure that they know all the rules now. There are new rules. There's a new order, and you will abide.
Staci Alalem-Clark: Yes.
Chris Parker: Well, I'd love to get a little bit of background on you. Would you walk me through your time at Expeditors and before?
Staci Alalem-Clark: Sure, sure. Yeah. I actually started with Expeditors right out of college with the Seattle branch. I did many things, from accounts receivable to managing an ocean desk, brokerage. And then I actually was the first, what I would say, IS (Information Services) liaison that worked with our import offices and our IS departments. That was way, way back in the day. And then I took a seven-year sabbatical to start a family, and lucky enough to come back to Expeditors and started with their other Digital Solutions offering, Tradeflow, managing that project and that application for about 10 1/2 years. And now with Carrier Allocation. So collectively, if I didn't take that hiatus, I would have been with Expeditors for nearly 30 years.
Chris Parker: Wow! That's incredible.
Staci Alalem-Clark: Yeah.
Chris Parker: For right now, Carrier Allocation, what is that? And what do you do as a senior manager?
Staci Alalem-Clark: Carrier Allocation is our software-as-a-service application to help beneficial cargo owners, those importers, and exporters that are signing direct ocean contracts with steamship lines. It's an application that allows them to automate their capacity planning, their forecasting, and allocations with their ocean carriers. It allows them to secure capacity weeks in advance of the actual booking. So they have that secured capacity when they go to make the booking. There aren't any issues, right? They've secured it with their ocean carriers.
Chris Parker: So they don't have to do it individually or reach out to their carriers. This software effectively has their preferred carriers in this environment, and then they get to say, "I have this much stuff I need to move." And that gets automatically allocated to their respective carriers and stuff, like whoever has the best space and whatnot?
Staci Alalem-Clark: Exactly. It's taking in the various components that are used to create this forecast to the carriers. It's taking in customers' orders that have information such as the origin and destination, how much volume that they're going to be shipping, and when those goods need to be at destination, right? It's taking in carrier vessel schedules and digitizing all of that so we can leverage technology to create this optimized plan.
Staci Alalem-Clark: The key with Carrier Allocation as an application is it's comprised of highly configurable business rules, so customers are able to configure the system and the tool exactly how they want to manage their forecasting and allocation process, right? So they can create that optimal plan to ensure that their goods are going to find that optimal sailing with their ocean carriers and be able to make that requested delivery date at destination. What the platform is then able to do, because it becomes the centralized single platform, that they can collaborate with their other stakeholders in this process: the ocean carriers, their ocean consolidators, and their vendors.
Chris Parker: All right. So what about this service ties really well to your interests? Why is Carrier Allocation really cool to you?
Staci Alalem-Clark: I think what really has interested me, as I've returned now 16 years later, working in this digital space. It's leveraging technology to help our customers solve a problem.
Chris Parker: Sure.
Staci Alalem-Clark: Right? It's being able to kind of dabble in the techie side a little bit. I can't code or anything, but kind of being able to work in that environment, but then also to bridge it with our customers' needs and that whole business aspect, still interacting with the business, helping them solve problems. I like combining those two worlds together.
Chris Parker: Yeah, absolutely. Very cool. You're not just in one space or another. You're in between there and seeing the whole... the big picture, it sounds like.
Staci Alalem-Clark: Exactly. Exactly. Yeah.
Chris Parker: Well, I'm wondering if you can give a little insight into another big picture that I'm looking for. I just saw an image of the port of Shanghai with what looked like an exorbitant amount of dots hanging around. And I saw that each of those dots represented a ship that is waiting right now to either pick up cargo, drop it off. What is going on in the ocean world right now?
Yeah, it's crazy, isn't it? I think there's supposed to be blue water there, but now all I'm seeing are green dots.
Chris Parker: Yeah, right.
Staci Alalem-Clark: Exactly. I think our industry, there have always been incidents, whether it's the Suez Canal or typhoons, et cetera. There are always incidents that we have to navigate through. What's been interesting, I think, with the pandemic is its unique in its duration. It's just persisted and continues to persist, and it's affected across all aspects of logistics. It hasn't just affected a single mode of transportation, a single region, or even a single industry. It's given us all quite the lesson on the basics of economics, of supply and demand. Demand is currently outpacing supply significantly. And particularly as it relates to ocean, the pandemic has had a cascading effect on the ocean industry.
Staci Alalem-Clark: It started with the lockdown, right? And we had this growing pent-up building of demand. And then as suppliers and manufacturers emerged from the lockdown, there was a surge in trade, right? So we started to see congestion at the destination ports start to build, which then created delays with vessels and equipment being repositioned back at origins to pick up more freight and continue that rotation. So then that cascaded into building up backlogs of goods at origins, all while demand keeps growing at an all-time high. So we kind of have this cyclical thing going on right now where there's congestion at destination, which is then creating backlog at the origins. Ships are getting back to origin, but there's so much congestion to unload and reload them.
Staci Alalem-Clark: It's just... It's a tough market right now. It's affecting all of the stakeholders in the process, right? And it's affecting the beneficial cargo owners, our customers, on how they manage their supply chain, and particularly relative to Carrier Allocation around the planning activity, that they're getting their capacity that they've contracted with their carriers at their contracted rates and that the carriers are meeting their commitments to that capacity.
Chris Parker: Absolutely. And there's a number of milestones that are coming up or just really big events that happen every year, right? These are events that aren't new. In the US, we have Black Friday. I think Friends Day is in China, right? And there's going to be the holiday season, of course. There are things coming up this year. How could the upcoming holiday season differ from past years as a result of this shortage of capacity?
Staci Alalem-Clark: Yeah. It's a particularly stressful time for retailers, right?
Chris Parker: Yeah.
Staci Alalem-Clark: Historically, during the holiday season, there's an increase in demand for that capacity. But this year, as we've talked about, it's going to be particularly stressful because of demand being so high in the current market conditions. As I mentioned, importers are battling a backlog at the origins just to get general inventory of their goods to destinations. And obviously, with the holiday season, the demand not just for their general inventory of merchandise is increasing, but they also have specific holiday items: your artificial trees, your Christmas lights, wrapping paper. Right?
Staci Alalem-Clark: So importers are having to make decisions about which orders they're going to prioritize to ship. There's a finite amount of capacity, and so they're having to decide which orders are we shipping. They're pushing priority ship dates up. They're having to look at alternatives to their standard ocean shipping and contracts. Do they have to pivot and change modes? They're having to negotiate additional premium contracts with carriers and even find alternative routings, charters. Or if their commodities can support moving via non-traditional vessels, can they book with breakbulk ships? So they're having to not only make more decisions but make new types of decisions.
Chris Parker: Absolutely. Yeah. Absolutely. It kind of makes me think of when I'm driving in traffic, in gridlock, and a lane opens up, and then I think that's the new fast lane. I switch lanes, and now everyone else has switched lanes into that one, and now I'm in the slow lane again. It's just-
Staci Alalem-Clark: Yeah. Part of this whole equation is visibility, right?
Chris Parker: Totally, yeah.
Staci Alalem-Clark: Right? Customers, importers, exporters, they want visibility, and they want that visibility to be further upstream because they want to be able to make informed decisions, have time to investigate alternatives, have the ability to scenario play, and be able to make informed decisions and pivot if necessary.
Chris Parker: I talked specifically to the holiday season. Are there other things that shippers find themselves having to prepare for within the next year?
Staci Alalem-Clark: Yeah, definitely. They're having tough internal conversations. They're huddling with their demand planners and the marketing, trying to understand how they're going to move through the remainder of the year and into next year. How are they going to structure their contracts in the following year? They're having tough conversations with their carriers. They're meeting with their carriers weekly, trying to ensure that their carriers are meeting their commitments. They're trying to find different ways to gain visibility of what's coming down the pike to make these decisions and, like I mentioned before, being able to scenario play to determine alternatives.
Chris Parker: You mentioned forecasting and planning, and that's what Carrier Allocation helps out with. But outside of Carrier Allocation, what did forecasting look like? What does capacity planning look like? How is it usually done?
Staci Alalem-Clark: Yeah. Capacity planning and I interchangeably use the word forecasting, is the practice of where importers and exporters were planning in advance for their capacity needs. They want to be able to tell their carriers a forecast of capacity they will need ahead of time to ensure that they have the space when it's time to book and move those goods. Specific to forecasting for ocean, we're talking about those beneficial cargo owners that are signing those direct contracts with the carriers. They're wanting that consistent, reliable access to capacity at their contracted rates, and then be able to trend on performance. But it also involves the ocean consolidators wanting to have visibility to their upcoming workload. What is the volume that they're going to have to execute against?
Chris Parker: Not just for this customer, but for all their customers, right?
Staci Alalem-Clark: Correct. Yeah, exactly. And the BCO's shippers and vendors, they want to have visibility to which orders they're having to ship and when. And then, of course, the carriers, the steamship lines, they want the visibility to capacity needs far enough in advance that they can actually plan for that capacity.
Chris Parker: Historically, how was that handled?
Staci Alalem-Clark: It was a very manual process.
Chris Parker: A lot of phone calls?
Staci Alalem-Clark: Yeah. A lot of phone calls. It was really... The process was historically based on trend data, and it was very manual. Importers and exporters were using, again, this historical trend data and spreadsheets and running calculations to create a projected current forecast. They were then distributing these emails to all of their carriers. Carriers were having to respond to these emails, accepting and rejecting volume, right? Then the customer, the importers, and exporters were having to then read through all of these emails and decipher within the message how much volume was actually accepted, how much volume do I need to mitigate and find a home for still and do this all before the time of booking. So it was very cumbersome and not a very sustainable process.
Chris Parker: Why did it take so long for this process to get digitized? That sounds like a headache, right? Wouldn't this have been digitized much earlier than 2021? Or maybe it has been. I don't know. When did this start changing?
Staci Alalem-Clark: This started changing with Carrier Allocation, right?
Chris Parker: Oh, okay.
Staci Alalem-Clark: Right. I think there was always consensus within the industry that this problem space, it was broken. And we Expeditors definitely heard this from our customers, and we took it as an opportunity to be able to deliver a solution to our customers, to meet a market need. So we created Carrier Allocation. It's the systemic solution that, as I mentioned, allows our customers, those beneficial cargo owners, to automate this process, streamline it, and be able to help their stakeholders become more organized around the process.
Chris Parker: Right, right, absolutely.
Staci Alalem-Clark: And be able to collaborate much easier.
Chris Parker: With this more manual, analog process, what were some of the realizations from shippers through this?
Staci Alalem-Clark: They really needed to gain more control over the process. They needed a way that it could sustain through their growth, and they needed a way that it was easier to interact with their carriers and get those commitments and be able to gather those commitments and be able to leverage that data to create metrics to help them identify where they could optimize. Where is their fall-down that we can learn and optimize?
Chris Parker: So then how do you think technology can be leveraged to help all stakeholders involved?
Staci Alalem-Clark: When we're talking about this particular problem space in the ocean market around capacity planning, I think it really comes down to a few key points. It's around efficiency, time, and visibility. The ability for customers to leverage that technology to provide that systemic process to gain that efficiency, right? To leverage that technology to take away all that complex and cumbersome manual manipulation of spreadsheets and emails and provide that automated solution that systemically highlights and allows customers to focus on the exceptions.
Staci Alalem-Clark: It's a single portal that allows the customers and their stakeholders to execute on the customer's plan. The customer is able to gain control and be able to distribute that plan as one version to all of their carriers. And then they're able to leverage that technology to then take all of that rich data that we've collected and build that visibility into their supply chain, right? They're able to gain insight. What can they learn from the data, where there are opportunities, and be able to really gain that actionable intelligence. "I've highlighted those exceptions. What action do I need to take?"
Chris Parker: So you bring up exceptions and the fact that customers can learn from their data has me asking kind of two questions here. What can a shipper focus on once their capacity planning is figured out? But also what do they learn? What do they stand to learn from this data that they're collecting?
Staci Alalem-Clark: Carrier Allocation is going to help them be more efficient with that whole allocation process. The application is going to do what it needs to do. It's going to create that optimal plan, that forecast to the carriers. It's going to facilitate the carriers responding. It establishes that weekly cadence. And then it allows them that time that they can focus on other strategic areas. But in addition to the tool actually optimizing that whole process, the data is providing them a lot of insight into their supply chain. And again, we talked about being able to manage those exceptions. But because we have all of this plan data, we also can gather as ship data, and that provides another level of insight into their supply chain. We know how things planned. We know how things moved. Where are there areas that we can share this information to help make our supply chain even more efficient?
Staci Alalem-Clark: So for example, we've created this optimal plan data. We share that with the origins and our ocean consolidators. We've planned optimally. Now we want our origins and our ocean consolidators to book as planned. We can also share that plan even downstream with their DCs and their warehouses. So now weeks in advance, they can now start planning. They know how many truckers they're going to have to schedule, how many chassis they're going to need, how much labor, resources they will need, and be able to run their warehouses to capacity.
Staci Alalem-Clark: The data that is gained through this process can really help build a supply chain that's very lean and very precise, right? We know how much we've planned. We've secured the capacity. We've moved that, and we know how much capacity we're going to have at destination and when, so things can be very synchronized. With disruptions that we're seeing, the tools allow for that flexibility and that agility. They can move with the market conditions and still manage the flow of their goods.
Staci Alalem-Clark: For example, one of the business rules that we have in Carrier Allocation is around arrival windows. And we create these arrival windows to identify that optimal sailing to ensure the goods are arriving at the right place at the right time. And at destination, we can be very precise, because some ports tend to be free-flowing. Some typically can be congested. Take LA Long Beach, for example, historically congested. And we talked about earlier, as the pandemic unfolded, it became more and more congested.
Chris Parker: Absolutely.
Staci Alalem-Clark: Right? So customers were able to go into the application, broaden that arrival window to take in that extra time, and still find that optimal sailing to ensure, whether it was going into LA Long Beach, it was still going to meet that requested delivery date. As things get better and congestion maybe decreases, customers can go right in and adjust those arrival windows again.
Chris Parker: Right. Be a lot more targeted and more specific.
Staci Alalem-Clark: Yeah. We can move with the market conditions, and that has been highly valuable for customers, to be able to navigate the chaos.
Chris Parker: It's incredible. Just where does this box go has incredible ripples out of it, right? There's a lot of decisions after that decision is made that can get figured out once you know where you can put that box. It sounds like that it has a ton of impact, for sure.
Staci Alalem-Clark: Yeah. Everything starts with the planning, and if you can do that optimally and execute that, that's great. And when there are disruptions, to be able to have that flexibility to adjust to that market condition, that makes customers much more agile and resilient. I know words that we're hearing a lot in our industry, but they're important, to be able to respond quickly and with agility and ease.
Chris Parker: A closing question here. What do you feel shippers should be doing today, given the state of the industry? What can they do now? What questions can they be asking themselves? What can they be thinking about in order to increase their visibility, in order to plan strongly?
Staci Alalem-Clark: I think this is an opportune time for customers to consider technology and how technology can help them navigate, help them plan better. So if they're asking themselves, "How can I get out of this manual, time-consuming process to capture capacity with my carriers?" If they're asking themselves, "How do I manage my carrier commitments? I can't do this any longer via emails. How can I navigate all of these disruptions with more agility and ease?" I think those are questions customers are probably asking themselves. They should look to technology, and Carrier Allocation can help them solve for those things. It is the only software-as-a-service tool out there that not only can manage that forecasting process but can then leverage the data to provide them insight into their supply chain, marrying up how they're planning and how they're moving.
Chris Parker: Well, Staci, thank you so much for your time and talking me through this. Let's hope that the ocean world gets a lot better because I know that they've got definitely some tough times ahead of them, for sure.
Staci Alalem-Clark: Yeah. Santa Claus is coming, and we've got to help him.
Chris Parker: We absolutely do. You hear that kids? We're trying our hardest out there. All right, Staci, if people want to get into contact with you to either learn more about Carrier Allocation or your thoughts around this capacity-planning problem here, where can they find you? How can they get in contact?
Staci Alalem-Clark: I can be found here at Expeditors, at our corporate office. They can email me at Staci.Alalem-Clark@expeditors.com, or they can find me on LinkedIn.
Chris Parker: Perfect. Well, I hope that they all do. And Staci, again, thank you for your time. I hope you take care.
Staci Alalem-Clark: You too. Thanks, Chris.
Chris Parker: Thanks for listening to today's episode. If you've got any questions or want to learn more about today's topic, check out the show notes for more information. And before you go, make sure you're subscribed on whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at expeditors.com. Take care, and I'll see you next time.