Many supply chains are finally looking to normalize two years after the pandemic
Two years back, the world observed the pandemic gradually obstructing one of the most used pathways of worldwide commerce: container ships filled to capacity and stationed near the Southern California shoreline.
The bottleneck started with five ships on October 15, 2020, but more than 40 ships joined the queue in February as Americans hurried to stock up ahead of the COVID lockdowns. The queue dropped to nine ships in June 2021, but more than 60 ships joined the line this time last year, and it peaked at 109 ships in January. There are many signs that supply chain pressure is decreasing.
Supply chain management has been turbulent over the last two years. However, the outlook for 2023 is improving. The Logistics Managers’ Index reports that by September, a return to regular operations is forecasted by the following year.
While there have been substantial improvements in international transportation capacity, industry experts caution that the recovery’s speed may take some optimism from people but that things are going in the right direction. In the United States, for example, raw materials and components may still need to be secured by some companies.
Ocean Freight Shipments See a Decrease in Demand
Consumers are significantly reducing their ocean shipping activity. Machinery, housing, industrial and apparel items are all affected by the decrease in demand. The surplus of goods and lack of knowledge about consumer needs contribute to the decline in ocean freight shipments, further heightened by the early stockpiling of items this summer.
Oxford Economics reported U.S. supply strain peaked in February but has been better since September. Spending less by consumers in developed economies is beneficial, as it reduces supply chain pressures. Industry experts anticipate further improvement in supply chains in late 2022 and 2023.
It won’t be all roses and sunshine in 2023; with the continued risk of labor unrest at rail and port sites, predicted delays at European harbors, and unexpected timing issues, some hold-ups will occur throughout the year. Changes caused by Mother Nature’s fury are likely to result in more canceled sailings.
Ocean carriers are utilizing tactical “blank sailings” to align their ship’s space with orders, aiming to minimize costs and stop future cost declines. This is akin to airlines canceling under-booked flights. Data from Drewry shows carriers removing entire service loops to better match their capacity with demand.
Normalized Supply Chain Will Help the Relocation Industry, Stay in the Know
Reduced container ship traffic will result in household items arriving on time and with fewer delays. A sustained drop in ocean freight requests could also lead to more reasonable customer pricing.
Though hope remains, businesses shouldn’t count on returning to pre-COVID times soon. The shipping sector is still anticipating a consumer expenditure surge that will bring shipments and voyages back to 2019 amounts.
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