NOVEMBER 2024LOGISTICSTRANSPORTATIONREVIEW19 In this continued period of sourcing and spending uncertainty, it's never been more important to have access to independent, timely, and accurate data to better understand the risks and to identify when to take advantage of ever-changing market conditionsof their terminals and if manual labor work can be replaced by automated systems. Maritime FREIGHTThe recent years have been for the global Ocean freight trade. For several years, the carriers have operated below cost but had historical results during the pandemic, with costs as high as $25,000/container from Shanghai to Los Angeles. To compare the years prior to COVID, the cost was $1,600/container for the same trade lane. Currently, the carriers have increased their rates due to the events in the Red Sea and are artificially reducing their capacity by announcing `blank sailings' (Cancelling routes). Due to the events in the Red Sea, the annual negotiations have been postponed ­ in previous years, the annual rates (NAC) would be valid from 1st April till the end of March the following year. In 2024, this is postponed with a minimum of a month, but we're seeing rate levels that are closer to the pre-pandemic rates. Fleet ManagementThe larger ocean freight carriers have placed orders for a new fleet of vessels that will be coming into the market in 2024/2025, which will bring additional capacity to the market. While it is expected that the old vessels will be scrapped, there will still be a surplus of capacity in the global market. The carriers were forced to get new vessels due to the new shipping regulations to combat global warming; therefore, the new vessels are highly restricted in their carbon release when traveling across the various oceans. StorageDue to all the delays, everyone has opted to increase inventory levels this creating a high demand for qualify storage (Bonded warehouse) and certified warehouses. As a result, high cost and limited space is currently available impacting more the organizations in cost.Air Cargo and AirportsThe global airfreight trade has settled down after some hectic years during the pandemic ­ the rate level is not down to pre-pandemic due to various reasons: high fuel cost (50 percent of operating a plane is fuel) and big demand for Chinese e-commerce. The largest cargo airport in the world, Hong Kong, reported that 50 percent of the airfreight leaving the former British colony was e-commerce-related business, in particular from Shein, Temu, Alibaba, and TikTokShop. The Chinese e-commerce companies are keeping their inventory in Asia and moving their product by airfreight to U.S. consumers once an order is placed online on their platforms. Key TakesIn this continued period of sourcing and spending uncertainty, it's never been more important to have access to independent, timely, and accurate data to better understand the risks and to identify when to take advantage of ever-changing market conditions. This will help analyze and create the best logistics routes that are cost-effective and avoid premium costs. Here are some of the strategies some of us are taking to improve logistics:Strategic Sourcing: Improve supply chain resilience through sourcing diversification. Improve your supplier footprint; try to allocate more domestic suppliers.Container Buying Strategy: Enable effective buying negotiations and strategic purchases through detailed price forecasts and cost analysis. Fak and Nac rates are super important, which is why the forecast is so important.Competitive Intelligence: Assess competitors' and suppliers' import and export activity.Keep an eye on the following:1. The U.K. and the U.S. have applied new rules to limit Russia's earnings from aluminum, copper, and nickel, but the main result may just be shifting trade flows. The U.S. administration of President Joe Biden is also launching a new range of aluminum and steel tariffs. Indonesia's nickel policies may have claimed another victim while the Chinese government is removing urea export restrictions.2. The Iranian government's seizure of M/V MSC Aries may disrupt supply chains in plastics and chemicals, while the risk of escalating action with Israel brings an increasing probability of the closure of the Strait of Hormuz. Elsewhere in the logistics sector, shipping volumes via the Panama Canal are set to increase ahead of the peak shipping season and three container lines have outlined ambitious growth plans through 2030. QUICKBYTESThe United States Freight and Logistics Market size is estimated at 1.33 trillion USD in 2024, and is expected to reach 1.67 trillion USD by 2030, growing at a CAGR of 3.90 percent during the forecast period.
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