Date: Friday, May 20th, 2022
Source: Supply Chain Quarterly
Supply chain companies should prepare for a chaotic peak shipping season, fueled by Covid-19 lockdowns in China, the war in Ukraine, rising energy prices, and inflation, according to a survey by Container xChange, a German technology company that tracks cargo container movements worldwide.
Container xChange polled 200 industry professionals for its xChange Industry Pulse Survey and found that most freight forwarders, traders, and shippers expect more disruption in the 2022 third-quarter peak season than they felt last year. The survey also found that although many companies have arranged international shipments early this year, most continue to rely on the spot freight market to move goods.
According to the survey, 51% of industry professionals expect 2022 peak season to be worse than 2021, while 26% say it will be “less chaotic,” and 22% expect about the same level of “chaos” as last year.
The peak container shipping season occurs in the third quarter of each year as retailers build inventories ahead of the fourth-quarter holiday shopping season. Last year, cargo surges resulted in record container shipping freight rates, delivery delays, and port congestion, and also affected the reliability of container shipping services, according to the report.
The industry is employing a number of strategies to deal with the potential shipping problems ahead, including growing their networks (56%), forming long-term contracts (38%), and following a “multi-tender strategy.” Nearly 38% of respondents said they were ensuring clients received enough inventory by shipping early in 2022; 25% were using alternative shipment routes; and nearly 19% were contracting long-term slot agreements with carriers, according to the data.
“Surprisingly, 62.5% said they were still relying on the spot market or doing nothing specific to ensure shipments reach clients,” according to a press release detailing the survey results.
The Covid-19 lockdowns in China are among the biggest problems facing the industry, with nearly 60% of respondents saying the situation has made it difficult to produce or ship as much product as they had planned this year. This suggests cargo backlogs and unsatisfied demand are building as China’s zero-Covid strategy limits exports to Europe and the United States, according to the report.