What happens when your supply chain breaks down?
Mar 24, 2021
Last week there was a great article in the Wall Street Journal with the title “Everywhere You Look, the Supply Chain Is a Mess”. This reflects what we’ve been hearing from shippers for the last year, reading in articles and seeing on a global basis: Whether they know it or not, a lot of shippers have supply chains that are living on life support.
Think about this for a moment. As the article highlights, when you see world class companies like Toyota, Honda and Samsung having to shut down their lines, or experiencing production delays, every C-Level executive in the manufacturing, retail or distribution business should be asking: How vulnerable is our company’s supply chain?
How this will affect these companies' sales volumes and profitability has yet to be determined, but I had to agree with what one CEO told me: “Having a supply chain that breaks down would be bad for business!”
In our Freight Market Update, we highlighted things that are going on across the different transportation modes. And while we’ve seen a little easing of the ocean market capacity crunch, we’re nowhere near normal. The Shanghai Containerized Freight Index this week is down to around $2.5k from a high of around $3k at its peak, and the number of ships waiting to anchor has been dropping, but there’s still a long way to go. While we haven’t seen anyone hazarding a guess on whether the recent stimulus will have a big impact on ocean freight, a recent FreightWaves article highlighted the fact that big time ocean shippers are signing contracts for two to three times the rates they paid in the first half of 2020. So most folks are predicting that capacity will be tight for the remainder of 2021.
And when you look at other modes such as TL, LTL, Intermodal or the parcel market, expect tight capacity for 2021 as well. For shippers, we know this can be an exceptionally challenging time to plan, so we encourage you to take advantage of our Transportation Spend Management Plan eBook if you haven’t already. Another resource to consider is our Rapid Assessment process, in which we evaluate your current plans and help you identify opportunities for improvement.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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