Colin Petrik, Account Executive for OEC Group's New York office, discusses the state of logistics and offers insight into what shippers can do in 2023 to improve their supply chain strategies.
As we move into 2023, are there any major operational changes in store for the transportation sector?
Yes, there are a few developments that have been in the works for some time. The first is the arrival of new ship builds. Multiple major ocean carriers, including CMA CGM, MSC, Wan Hai, ZIM, Evergreen, and Cosco, are expecting the bulk of their new orders to hit the water over the next two years. Impending new builds have also made it much easier for carriers to scrap older ships and better balance capacity with demand. Additionally, multiple dredging projects, similar to the project completed a little over a month ago that made Charleston the deepest gateway harbor in the US, are expected to take place.
Will infrastructural projects in the US and new ship builds improve overall capacity in a way that protects the supply chain from surges of freight in the future?
As of now, absolutely not. Efforts are certainly being made, but port infrastructure is lagging well behind both physical ship size and onboard capacity. With the latest updates to the Port of Charleston, and even the Port of Houston several months back, only a select few domestic ports can physically handle ships the size of new builds on the horizon. And even if the harbors and berths were deep enough for those ships, then unloading capabilities would have to improve to handle the payloads of those large ships effectively.
Backlogs and delays at major gateway ports around North America have largely been cleared. Are we out of the woods or are there any other areas or modes of transportation that are still delayed?
Unfortunately, there are still some areas and modes of transportation that are facing significant delays. Right now, railroads continue to be plagued by ground stacking at major rail yards as well as chassis shortages at ports and inland intermodal hubs. Domestic trucking networks are also experiencing their own difficulties with congestion, especially from the West Coast and Pacific Northwest inland. On top of those issues, backlogs have clogged consolidation centers with an influx of containers needing to be broken down.
How do you think recent action by the US government regarding rail labor agreements will impact lingering delays on domestic railways?
In the short-term, by removing the uncertainty of potential labor action, a new contract should improve reliability and alleviate delays. However, it’s important to note that the new agreement will not necessarily assist in immediately easing any existing issues like ground stacking or the overall issue of rail congestion. Those issues could persist through at least the first quarter of 2023.
Are there any global factors that shippers should be considering in 2023?
Yes, there are a few things going on internationally that shippers should stay aware of. First, is the ongoing conflict between Russia and Ukraine. The Black Sea Grain Initiative has largely protected prominent ports in the region, but ground transportation has been significantly disrupted. Air transport above the conflict has also been disrupted. Geopolitical situations like this one can impact shipping routes, and in turn, transit times and potential costs. Again, advanced planning with your logistics provider can alleviate – if not eliminate – these difficulties.
What advice would you have for shippers looking to map out an effective supply chain for 2023?
Planning your supply chain is key. Over the last few years, we saw a lot of difficulties come up when shippers either did not plan, employed an improper plan that didn’t account for changing market conditions, or struggled to follow their plan. I suggest that shippers work very closely with a logistics advisor who fully understands their short-and-long-term goals, can offer end-to-end visibility, is able to access long-standing industry relationships, and can adroitly conceptualize and tailor multiple routing options based on real-time market data and the client’s individual needs.