The freight and logistics industry has witnessed a massive transformation over the past two years through disruption of the supply chain — with labor shortages and shutdowns.
Last year, freight rates spiked as many shipping companies and logistics providers struggled to maintain in the midst of rising trade volume, while numerous countries were reinstating travel restrictions to curb the spread of COVID-19.
This has been a hindrance for many in the industry — especially ocean shippers.
Despite these recent setbacks, March has proven that the rest of 2022 could look different.
“Ocean-base shipping into the U.S. is going to be a roller coaster,” said Chris Jones, EVP, industry and services at Descartes. “The biggest thing is the COVID lockdowns in China. While we have seen a slight slowdown in imports over the last few weeks, that was due to the Chinese Lunar New Year and the Olympics. There are a lot of goods stuck due to the shutdowns and those goods are still going to make it to the U.S. — they just won’t be coming very evenly because China is not opening up very evenly.”
A leader in supply chain technology solutions, Descartes works to improve logistics and supply chain productivity, performance and security through innovative technology and supply chain management solutions.
Jones believes that supply chain performance for the rest of 2022 could be uncertain due to limited capacity and continued high shipping costs. He urges those in the industry to implement advanced ocean visibility as an integrated function of their TMS.
“We recently conducted a transportation management benchmark study, and it showed that visibility was the top solution that people were wanting to implement,” Jones said. “[Companies] really need to start with ocean visibility — knowing where the ship is, and the goods associated with it , and having ETAs and milestone statuses. They may not always have control over it, but they need to know where it is to make operating decisions.”
Jones recommends making a shift to less congested ports. The port congestion issue arose when the U.S. began consistently exceeding import volumes of 2.4 million TEUs per month. This began in March 2021. However, it seems that port congestion issues will remain until infrastructure changes are made – as long as monthly U.S. container import volumes are above 2.4M TEUs.
He also recommends shifting to alternate sourcing.
“Furniture started to really move to Vietnam, for example. I think we’ll see a lot of goods start to diversify manufacturing beyond China to Southeast Asia,” Jones said. “Equally, we’re [in the U.S.] going to be seeing nearshoring into Mexico increasing.”