By now, it most likely won’t surprise you to hear that 2020 and 2021 brought drastic changes and uncertainty to supply chains around the globe.
Change isn’t always bad, however, and businesses have learned a lot in the past two years about adaptability and perseverance.
So given all that has happened, what can we expect in 2022?
- Demand is at an all-time high, and supply is struggling to keep up. And your business must plan accordingly. Bolster inventory levels as much as possible, and account for continued lengthy transportation times to receive your shipments. Some shipments are taking as long as 80 days to reach their destination – and if current industry conditions continue, we don’t see that improving in the short term.
- Success depends on a good plan. Develop a supply chain plan 2-3 months ahead of time, and make sure to communicate that plan clearly to your employees, suppliers, and transportation service providers.
- Teamwork makes the dream work. Make sure to educate and engage parties at every stage of your process – ordering, manufacturing, shipping, etc. Sometimes, you may find answers to downstream problems further upstream, with suppliers and their needs. In addition, keeping everyone on the same page can bring more ideas into the mix and may reduce friction when last-minute changes are necessary.
- Progress takes time. Though we continue to see near-record numbers of ships anchored outside key ports around the globe, we’ve seen moderate improvements in some areas. With the full attention of the White House Supply Chain Task Force on the port congestion situation in the US, particularly at the Ports of Los Angeles and Long Beach, there is hope in sight.
- Data is king. Investment in data analytics is critical. More planning and forecasting will allow businesses to consider inventory management for possible future states and build flexible plans to address potential issues that may arise.
- Rates are dynamic, but reductions aren’t in the forecast. High demand, growing fuel costs, a dwindling labor pool, and various other circumstances beyond our control may continue to affect shipping rates across all modes and lanes. Rates that have, up to now, been classified as inflated due to current events may continue if volatility and cost pressure do not subside.
- Blank sailings will increase. Port congestion and equipment shortages are forcing carriers to increase blank sailings to help reposition vessels and move containers.
- Capacity will continue to cause headaches. With growth in the forecast for both air and ocean volumes, it’s a safe bet that companies may struggle to find space to ship their goods. Though airlines and ocean carriers are investing in infrastructure, new acquisitions and builds take time, and pallets may continue to pile up waiting for space to squeeze in.
- Customs expertise is in high demand. As with other pieces of the supply chain puzzle, there aren’t quite enough customs brokers to go around yet. Existing brokers may be feeling spread thin as they try to meet the needs of their customers. If you’re looking for an experienced Brokerage professional to help you navigate the tricky world of customs, UPS Supply Chain Solutions® Customs Brokerage can help.
- Keep an open mind. Be prepared to be flexible and consider alternate shipping options to keep your freight moving. There is a wide range of UPS Supply Chain Solutions services to help get your goods where they need to go, when they need to be there. Our experienced representatives know all about changes in the market, and they can help you review your options and choose the right path for you.
It's true that shipping these days seems to be characterized by unending volatility. But the good news is that understanding and accepting change as part of our day-to-day means that we can begin to expect it, plan for it and consider it when making business decisions. In the short term, shippers are encouraged to focus in on the most impending upcoming issues – namely, Lunar New Year, rate setting season, and port congestion.
As always, UPS Supply Chain Solutions is here to help your business grow and thrive in 2022. Learn more about our products and services on our website.
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