The 2:00 Minute Warning

Recently, during a discussion I was having with a a transportation and supply chain industry expert, I asked him: “What is the one word you would use to describe the freight markets in 2021 – 2022?” Without blinking an eye, he answered: “Volatility!”  

One year ago, shippers were paying $15,000 - $20,000 to move a container in the Trans – Pacific lanes. Today, the rate is moving at $1,000 - $2,000 per container. HOWEVER, some shippers and industry experts tell us that ocean carriers are focused on short term contracts (a.k.a. three to six months) because they believe container rates will go to $5,000 - $7,000 in 2nd/3rd Quarters, when China emerges from their Post – Covid lockdowns. 

On the truckload side, rates in the spot market are 30% to 40% lower – or more, than they were one year ago. HOWEVER, capacity could once again cause a rapid rise in rates if low rates result in carrier consolidations or several carriers shut their doors. And we haven’t even touched on parcel and the substantive pricing changes from  FedEx and UPS.

Add it all up, and we have some tips for shippers who are wondering: “How do we manage our freight budgets and supply chain activities in this sea of volatility?”  

First, know what’s happening in the transportation industry. Throughout the year TranzAct shares lots of free resources and recommendations because we want you to be well informed. So take advantage of things like the Two Minute Warnings, Webcasts or On the Record Interviews with Industry Leaders, and you will be more prepared to handle issues that can affect your freight budgets and supply chains. 

If you want to really get up to speed on ocean freight issues, then the Journal of Commerce's TPM Conference in Long Beach at the end of February is a MUST ATTEND event. Every year the JOC puts together an outstanding agenda with industry leaders and the executives who run some of the largest transportation companies in the world. As they share their insights, you will see what to expect for the rest of 2023 and be more prepared for the future.

And if you have not yet downloaded our “What Me Worry” list, DO IT NOW - and share it with others. We’ve gotten fantastic feedback on this list of five items that need to be on your supply chain radar screen.

Second, even the Lone Ranger had Tonto so don’t be afraid to ask for help. With so many challenges and changes, it’s not surprising that people often ask: “Any recommendations on how to handle these challenges?” The answer is always the same: “Don’t be afraid to ask for help!”  I love belonging to CSCMP, NIT League, TIA and other Associations because I can, and have often picked up the phone and asked a fellow member for help and/or advice. Relieve yourself of the burden of always having to be the smartest logistician or supply chain person in the room. It’s easier than you think and you can get help with your logistics operations by simply getting in touch.

Third, be prepared when your C-Level Executives or Board “comes a calling.” This year several shippers from of our Two Minute audience have told me that their C-Level executives have now taken a keen interest in freight and supply chain issues. I think this may be because of what Kevin Smith shared during our recent TranzAct – CSCMP’s What You Wish Your CEO Knew About Truckload & LTL Freight webcast: The days of “flat” transportation budgets with tweaks to reflect increases/decreases in sales are gone. Be prepared if/when you your C-Level executives start asking about what you are doing to control freight costs and avoid supply chain disruptions. If you want some thoughts about what to say, check out this snippet from the Webcast: 3 Transportation Budgeting Items for the C Suite Heading into 2023.

For more news, updates and advice, visit our Resource Center.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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