Carrier service cuts amid lockdowns

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Anxious to hold onto the profits and control they had during the pandemic, carriers are struggling to amend capacity and availability to keep rates up as demand flops worldwide. Coupled with new lockdowns coming from China’s zero-COVID policy in Ningbo, Shanghai, and Tianjin, there could be more cuts coming in addition to the issues that arise from just blanked sailings. If we didn’t learn anything in the pandemic, now is the perfect time for making contingency plans for your supply chain. 

 

As proven by disruption in the transportation market, there are situations where contingencies are filed away, ready to deploy in outlier situations that require creative problem solving. In other cases, for longer-term issues, looking into methodical corrections that start to untangle the supply chain snarls can help you rebuild a faster, more efficient logistics plan by using decades of experience to proactively seize the opportunities that come in a near-shoring boom. 

 

One good thing about the import market slowdown in the US is the increased availability of equipment, a commodity that drove forwarders to epic headaches in 2020. Basic economics aside, the demand reduction for equipment hasn’t just equalled more supply and left the market perfectly balanced. Rather, the excess empties are filling up vast amounts of space that ports and railroads are desperately trying to clear out. With the FMC declaring that there should be compensation for companies to keep empties if the terminal can’t receive them, the issue of too many containers turns the tables on a pre-pandemic problem. 

 

This leaves rates in a precarious position. Capacity reductions and restructuring are the best options carriers have to influence rates, but eventually blanked sailings fall short in light of sustained limited demand. Some carriers are cutting full service lanes to devote more resources to more critical passages and to try to subvert some troubles caused by climate change and water shortages. 

 

At Coppersmith, we’re always paying attention to what’s coming next and then what’s after that. Long term planning is part and parcel of a business model that spans eight decades of excellence. If you want to make logistics plans that work, with a team of experts unmatched in today’s market, Coppersmith is ready to show you how doing things differently can get things done.