Ocean freight rates have fallen significantly in the last few months, but at more than $9 500 per container from China to the US, prices are still about 6.5 times higher than in June 2019.
That’s one of the findings of a survey of more than 200 importers undertaken in June by global freight booking platform Freightos.
Importers have accepted the additional expense as the cost of keeping shelves stocked and have also come to expect significant delays – which means adjusting ordering patterns to meet customer demand.
Most respondents (55%) reported plans to place peak season orders early this year, with 74% citing lessons learned from delays during last year’s peak season.
SMBs (small business buyers) are also trying to mitigate the disruptions in other ways, with 20-30% using multiple logistics service providers, and another 20-30% switching shipping mode – from ocean to airfreight, or from FCL to LCL.
The bottom line is that halfway through 2022, shippers are still facing shipping volatility, delays, and elevated costs.
The majority (88%) of businesses have reported supply chain difficulties in the past six months, with the latest lockdown in Shanghai hurting 68% of respondents.
However, for some businesses things have improved. Almost a third (31%) said the state of their logistics operations was better than six months ago.
Perhaps a part of the easing of logistics backlogs has been the changing consumer landscape. In the early months of the coronavirus, there was a surge in consumer spending on goods that resulted in soaring freight costs, leaving shippers struggling to adapt.
Many businesses began planning shipments far in advance to keep inventories stocked despite severe delays.
Now, two-thirds of small and medium businesses are seeing a decrease in consumer demand, due at least in part to a combination of inflation and a shift back to spending on services.
Retailers like US-based Target, which failed to read the market, landed up in hot water due to its recent inventory overshoot.
The company’s profits took a severe hit as it marked down unwanted items, cancelled orders, and took aggressive steps to get rid of extra inventory
Once again, businesses will need to seek other ways to minimise supply chain uncertainty, says Freightos.
“With ongoing supply chain disruptions, flexibility can be a key factor in keeping goods moving on time, and within budget.
“Many businesses are already working with different shipping modes and service providers to be able to move quickly and adapt to challenges that arise.”
Information courtesy of FTW