Over the last few years, the global supply chain has been an indirect victim of the pandemic. Widespread shutdowns caused unprecedented interruptions in both consumer purchasing and availability of goods and materials.
Are there any lingering effects from this historic event? Our fulfillment company staff shares industry expert predictions about what to expect this summer.
Freight Rates
- During the pandemic, logistics costs rose sharply, which was one of the elements contributing to high inflation. Over the last year, ocean freight charges have declined, with some lanes back to pre-pandemic levels.
- Falling rates are attributed largely to a drop in consumer spending, which had risen over the last two years as importers enjoyed increased sales.
- Carrier alliances are in a period of flux, as seen with the pending split between Maersk and MSC. Some experts believe this may be the beginning of a rate war.
- Despite these changes, experts caution that freight rates and shipping prices have not yet leveled off.
Shipping Demand and Inventory Volumes
- Consumer spending remains low, with more money being spent on services rather than goods.
- Job markets and wages continue to be strong. Whether this leads to growth in spending depends on consumer sentiment in the face of recent bank failures and rising interest rates.
- Shipping demand is beginning to creep back up as inventory levels are depleted. Import volumes saw monthly increases during spring, and this trend is expected to continue into July.
- Labor disputes involving Local 13 of the International Longshore & Warehouse Union (ILWU) may impact traffic at the Los Angeles and Long Beach ports.
Streamline Operations With Our Fulfillment Company
Experts recommend partnering with a fulfillment warehouse to mitigate the effects of demand fluctuations and changes in shipping rates. Contact Medallion Fulfillment & Logistics for a solution to fit your specific needs.