Of all supply chain elements, logistics is the hardest nut to crack. Varying freight rates due to the changing fuel costs or unpredictable weather are just a couple of examples to the volatile trends of the shipping industry. For effective logistics and supply chain activities, it is essential for businesses to be in touch with shipping industry trends for better forecasting and planning.
This year has been a special case primarily because we have just come from a challenging year prior. The covid-19 pandemic caught the global supply chain by surprise. The supply chain was much affected, and businesses were forced to make necessary changes to adapt to the turbulent market.
The ripple effect is still being felt now and probably for some years to come. Here are some of the inbound and outbound shipping trends to look out for.
Shipping Industry Trend 1: A shortage of drivers
While initially the shortage of drivers was temporary and a result of unpredictable weather, the shortage today is caused by Covid-19. In 2020 there was a trucker shortage due to the virus, and it is a problem that inbound and outbound shipping will continue to face this year.
With more logistics companies making entry into the market, the available driver pool may not be able to meet the demand.
Shipping companies should consider ways to facilitate smooth and quick pickups and delivery to reduce the drivers’ dwell time. This will ensure the efficient use of the available resources. Spreading out shipments throughout the month will also reduce drivers’ pressure, unlike when shipping is scheduled for just a few days within the month.
Shipping Industry Trend 2: A hike in shipping rates
Logistics companies like FedEx have already hiked the shipping rates earlier in the year. The shipping rates are set to hike globally in 2021, and businesses need to be prepared for this.
Optimization of the shipping process will be necessary this year to offer the truckers and carriers competitive returns and, at the same time, ease the burden on the shippers.
Logistics companies need to optimize their networking, routing logic, and carrier contracts. Carrier negotiation would also be a thoughtful approach in improving shipping charges. The best solution is to partner with a fulfillment provider that already has deep ties and leverage with the major carriers.
Shipping Industry Trend 3: Capacity challenges
The Covid-19 pandemic led to a halt in production as lockdowns were imposed. As customers reduced their stocks, manufacturers were also forced to slow down their activities. For that reason, shipping capacity was cut as a result of the drop in demand.
Things have changed a bit in 2021 as more countries have eased their lockdowns. Normalcy has resumed to some extent, and this has seen an increase in demand for products. Businesses have begun restocking, and manufacturers are back to work. As everyone is going back to work, the logistics sector is experiencing congestion.
Manufacturers and logistics companies are having a hard time securing space for their containers in ports resulting in delays in the shipping processes.
This has also resulted in the hike of spot rates, which have also contributed to the increase in shipping rates. To address the capacity challenges, logistics companies need to start thinking of forecasting demand and making orders in advance to tackle the delays.
The capacity will continue being tight for the better part of 2021, and businesses need to stay prepared.
Shipping Industry Trend 4: Increased profitability
As earlier mentioned, 2020 came with tons of challenges due to Covid-19. The projections made for the industry for 2020 were that the global maritime trade would take a 4.1% plunge due to Covid-19. And true to that, the shipping networks experienced many disruptions in the year.
Since many business activities are back, there is expected profitability in the industry. Despite the capacity and trucker challenges that shipping companies are facing, things will undoubtedly be better financially this year. Supply chains are rebuilding, and there is an increase in demand for goods.
Shipping Industry Trend 5: A rise in elastic logistics
The disruptions brought about by Covid-19 has motivated the need to make supply chain activities lean. Logistics will continue to be elastic in 2021 and adjust alongside market fluctuations. Elastic logistics will allow logistics companies to shrink or expand depending on the market demand.
In response, logistics companies will thus be using technologies such as artificial intelligence to create flexibility in their systems.
One thing is clear, there is a need for businesses to make their supply chain flexible to accommodate the volatile market. Strategic companies have made plans on how they can combat the increasing shipping rates, how they can deal with delays and ways of mitigating the driver shortage. How is your company approaching inbound and outbound shipping industry trends?Working with a fulfillment provider can ease the burden and hassle of the unpredictable shipping industry.
A worthy fulfillment partner will work with you to come up with the most strategic shipping plan for all of your SKUs. Reach out to QuickBox Fulfillment today to learn how we can optimize your shipping strategy.