The past year has been a year of crisis planning, with port congestion and capacity shortages forcing shippers to reconsider their options.
Many members of the, Drewry Benchmarking Club a user group of over 120 multinational shippers, are already looking at sourcing products from alternative locations to avoid spending 5-digit freight rates per container from Asia to the West, according to a year-end briefing by the maritime consultancy.
“Others are looking at using warehouses closer to the port instead of using those located near congested rail hubs such as Chicago, for example.”
And the question is: will 2022 see a continuation of the trend?
Very likely it will.
“The new state of unreliable, very expensive international shipping calls into question the previous assumptions behind low-cost production in Asia serving distant markets at minimal logistics costs,” says Drewry. “While it was rarely the case until 2019, the ‘freight’ component of the total landed cost now makes a real difference for many types of products. Also important in 2022 will be the need for many BCOs (beneficial cargo owners) to raise product prices to reflect higher transport costs, while proactively benchmarking (higher) transport costs to ensure their rates remain competitive - and regularly talking to merchandising, sourcing and production colleagues to update them on the reality of those much higher ocean transport costs.”
Clearly the new logistics landscape demands a paradigm shift which will see a total rethink of long-held traditional norms.
