5.2 Matson Current Issues

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Running head: MATSON CURRENT ISSUES 1 5.2 Matson Current Issues name Bellevue University SCLM 476 Professor Patrick Ruddy

MATSON CURRENT ISSUES 2 Abstract From capacity constraints to COVID19, companies have to balance all the complexities that make a supply chain exist and have the flexibility to adjust in order to be successful. How a company handles adversities can provide them with a competitive advantage among their competitors.

MATSON CURRENT ISSUES 3 Change is inevitable. Crisis and disasters will happen. Technologies will fail. These are the hard truths that supply chain and logistics companies must realize. In order to be successful, companies must be able to accept and adapt to change. Current issues will certainly arise and an organization that is able to manage these issues will set itself apart from the rest. Some issues that come up are common issues and Supply Chain companies do not need to necessarily reinvent the wheel as solutions have already been developed. However, as new technologies and advancements are created, so are new issues without pre-determined solutions, some even unique to each company and not impacting to competitors. Then there are those that we cannot forecast or plan for the event specifics but can only be prepared from similar past events. Risk management enables companies identify issues and prepare for the worst. Lost Freight Matson prides themselves as being the best at what they do, claiming to move freight better than anyone. They stive to be environmentally friendly with their green and marine life friendly initiatives. With that being said, one of the biggest challenges for ocean freight shipping is losing cargo during rough seas. This is not only a loss of goods, as well as a huge mess to clean up and a failed delivery but can also be very hazardous to marine life depending on the contents of the containers. Last year in November 2021, one of Matson’s competitors, COSCO shipping, made headlines as roughly 32 shipping containers were lost at sea during rough waters, some containers carrying hazardous materials (Shuler, 2021). The coast guard closely monitored the situation, and it was later reported as not nearly as impacting as it was originally thought. The COSCO containers is a very small number on the grand scheme of things according to the annual average. It is estimated that roughly 1,000 containers are lost in the ocean each year. 2020 has one of the highest number of lost containers in the recent years at 3,000 (Ho, 2021).

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MATSON CURRENT ISSUES 4 Even when the containers are lost at sea and they do not contain hazardous materials, it is still polluting the waters and shore. The good news is, searching Matson for events of shipping containers and how they handle this type of common issue in this industry, only one story comes up in recent news. Even this story is dated to 2015 when Matson’s ship Manoa was hit by rough waters that sent 12 nearly empty containers to sea. The containers that were not empty contained packaging materials and although most were considered as sunk, one washed ashore and scattered debris. Matson worked with the Coast Guard crew during the cleanup which is a positive insight for the company’s sake. Matson’s spokesperson also stated that this type of event is very rare (Gallagher, 2015). Similar to Matson’s Ocean shipping competitors, Matson’s operations are vulnerable to weather, natural disasters, maritime accidents and spills but Matson seems to have adapted to reducing these risks to a very minimum where such a common issue in this industry is “almost rare”. COVID-19 The COVID-19 pandemic has disrupted manufacturing and supply chains globally since it began in the year 2020. Mandated precautions issued by governments and health officials in an attempt to mitigate the spread of COVID-19 have added additional challenges and obstacles. The reduction of tourism caused by the pandemic has caused a diminishing demand for freight which means less business for Matson. Conversely, Matson has experienced an increase in demand for expedited services from China due to the delays from the pandemic that Matson man not be able to maintain when demand trends return to pre-covid volume with other segments. These large volumes from China have added to the concern of the industry-wide shipping container shortage and congestion at west coast ports. Covid-19 has caused disruptions due to labor shortages as well. The buildup of freight volume and less manpower to move cargo is causing more delays

MATSON CURRENT ISSUES 5 and disruptions. This can lead to detrimental impacts for the company if Matson is unable to unload vessels in a timely manner and therefore is less than satisfactory for customer’s expectations, they may find alternative transportation and logistics providers which can be a temporary or permanently lost customer. Fuel Prices One of Matson’s most significant operating expenses is fuel. The unpredictable cost and availability of fuel leaves Matson vulnerable to external events outside of the companies control that cause the variability and fluctuation of fuel prices. An increase in operating expenses will lead to other costs being increased as well and can negatively impact Matson’s competitive position.

MATSON CURRENT ISSUES 6 References Gallagher, K. (2015). Matson Inc. loses empty containers at sea off San Francisco. Retrieved on February 1, 2022. https://www.bizjournals.com/pacific/news/2015/12/14/matson-inc- loses-empty-containers-at-sea-off-san.html Ho, J. (2021). More and more shipping containers are falling into the sea. Retrieved on February 1, 2022. https://www.marketplace.org/2021/04/27/more-and-more-shipping-containers- are-falling-into-the-sea/ Schuler, M. (2021). COSCO Ship Loses Containers During Pacific Crossing. Retrieved on February 1, 2022. https://gcaptain.com/cosco-ship-loses-containers-during-pacific- crossing/ FYI: Please note – the assignment requests for a MAXIMUM of 750 words.

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