Supply Chain Success in 2023 is Predicated on Planning Ahead
It is a new year, and it has become apparent that 2023 will be considerably different and more complex than anything we’ve seen in the last ten years. As a result, the main resolution all shippers should keep in order to thrive in what could be a rocky year is to work with a logistics advisor to develop short-and-long-term strategies that maintain functional and agile supply chains.
Over the past year, the market has shifted from a mad rush of shippers fighting for any sliver of available space to a complex landscape that features the following:
Carriers frequently cancelling services to better balance supply and demand
A lack of infrastructural improvement in the US
Longer than expected timelines to reduce excess inventory in the US
A long-term shift from West Coast ports to Gulf-and-East-Coast ports
Decreased reliance on China as the single dominant trade partner
Long-term plans to nearshore manufacturing
Adjustments to customs and brokerage rules
Air freight regaining momentum as an effective e-commerce tool
These developments will require shippers to have a thorough understanding of how their logistics strategy fits in with the market at large.
“Understanding the nuances of what is going on in the current market and being able to plan around market fluctuations will be the difference between those who thrive and those who struggle in the year ahead,” said Anthony Fullbrook, President of OEC Group’s Northeast Region. “For most shippers this year’s market will feature many unique challenges and shippers should expect significant surprises in the next six months. Developments could yield higher rates, less space, and increased congestion during the second half of the year.”
Adding to the potential complexities of the 2023 market is the continuous problem that underlying issues at U.S. ports exposed during the pandemic still remain. Infrastructure, dredging, and labor problems persist and could quickly cause significant problems if anything disturbs this very delicate ecosystem.
Finally, 2023 is looking like a year in which environmental initiatives will be prioritized across all sectors of the industry. With the launch of IMO 23, vessels nearing the end of their effective life spans will be much more highly regulated. These ships must steam very slowly so that their emissions more closely match newer and more environmentally conscious ships on the water. This will improve the carbon footprint left by ocean shipping, but operational efficiency will decrease as long as these older ships are operational and additional vessels will likely be needed on certain rotations to preserve reliability.
Shippers who want to have a greener logistics strategy and ensure their cargo is transported on more environmentally friendly vessels should work with a consultant who has privileged knowledge of which air, ocean and trucking vessels have the best emissions ratings. Not only can the right provider directly assist with environmental goals, they can also help avoid older vessels that will be forced to steam slowly.
“On its face, planning ahead can sound overly simplistic, but it’s something that can help shippers save dramatic amounts of time and money moving forward,” said Jason Haith, Managing Director of OEC Group’s Louisville office. “Therefore, working with seasoned experts to plan out a comprehensive logistics strategy will help shippers improve reliability, cut costs, and possibly even help improve the environment.”