The global pandemic has changed the transportation and shipping industry in many ways, some of which will linger for years to come. Issues with logistics and shipping capacity continue to haunt supply chain management as experts predict that the shipping bottlenecks and backlogs at big U.S. ports will continue well into 2022. General rate increases are expected to be higher than in the past as shippers and carriers attempt to balance costs and expenses during ongoing recovery as we saw just last week with Central Freight Lines going bankrupt after 96 years and laying off over 2,100 employees. Many business leaders and supply chain logistics managers are preparing for continued disruptions along the major ocean, truck, and air routes.
As of the end of October, and according to CNBC, "some 77 ships are waiting outside docks in Los Angeles and Long Beach, California, carrying $24 billion worth of goods looking to find their way into the American ecosystem, according to Goldman Sachs." In 2022, shipping trends are likely to reflect the unprecedented level of disruption and change the supply chain has seen over the past few years. The pressures felt throughout the supply chain network are now feeding into local and global economies, putting constraints on everything from grocery stores to major warehouses and suppliers.
Prices for consumer and wholesale goods have gone up significantly and continue to do so at a rapid pace. The trends will likely create an even tighter supply-and-demand balance as the potential for fewer goods on the shelves may mean fewer presents under Christmas trees. As a result, shipping costs in 2022 will likely be even higher than they are right now. Shippers must find ways to remain strategic and maintain the maximum potential for growth in the coming years.
To mitigate this shipping rate increase, shippers must understand why congestion and backlogs occur in the first place and why cost management is so vital to the supply chain today.
These factors are just the tip of the iceberg when considering everything that influences the modern supply chain network. Both on a local and national level, and even a global level to a certain extent, the chain reaction of supply and demand imbalance continues to create bottlenecks and delays. As we look toward the 2022 shipping trends, it is important to remember that shipping capacity and driver availability directly feed into these trends. Shippers must begin preparing for next year's added pressures and disruptions now.
According to professional industry insight and market tracking, the outlook for shippers did improve slightly in mid-2021. Still, that improvement came on the heels of some of the lowest rates and numbers in recent memory. Conditions are still tough for most shippers and will likely remain problematic for some time to come, even as many companies begin looking to 2022. Strong capacity utilization will continue to be critical for supply chain growth as will planning for the likely higher shipping costs in 2022. As problematic as the issues at hand appear for truckload shipments, maritime shipping conditions are even worse. Port delays continue to worsen, container shipping costs rise, and carriers are charging higher rates than ever before to try and compensate for the unpredicted bottleneck mess.
The combination of a lack of capacity and the far-reaching pandemic conditions leads to carriers passing along additional fees and rate increases to shippers. In turn, this leads to shippers increasing their rates to reduce the impact it had on their overall budgets and profits ahead of the peak season rush and holiday shipping deadlines. And all of these seem to be leading to a potential scenario where customers who are still willing to pay more for shipping service this season may be faced with even higher rate inflation to compensate for shipping capacity issues.
Anticipation over 2022 shipping trends and associated costs continue to plague shippers even before the year officially gets underway. Planning for these expected issues of congestion and delays requires strategic planning and thinking. There are many ways shipping managers can overcome and remain adaptable, from overcoming shipping capacity issues to preparing for expenses associated with shipping processes. Here are some things shippers should know:
Looking ahead and planning for possible 2022 shipping trends as well as increases to supply chain disruptions and shipping costs in 2022 and beyond, can help shippers account for these issues more efficiently. The better-prepared shippers are, the more likely they will adapt and adjust to congestion and disruptions to stay strategic and profitable in any market.
Despite a slow and steady climb out of lockdowns, the shipping and transportation industry is still strongly feeling the effects of the pandemic. Recovery is picking up, but the going is still challenging for most shippers and, unfortunately, will continue to be that way for some time to come. Many companies across all markets and industries have already started looking to 2022 to prepare for coming supply chain issues, shortages, and congestion. Strong capacity utilization will continue to be critical for supply chain growth, as will planning for the likely higher shipping costs in 2022. Planning for shipping capacity and transportation issues is easier with the right partnership in place. Contact Intelligent Audit today to be as prepared as possible for whatever 2022 shipping trends have in store.
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