Supply Chain Disturbances Challenge Global Retailers Yet Again This Holiday Season
Peak Season Volatility
At this time last year, shippers and carriers alike were feeling the holiday blues and anxiety associated with peak season, particularly global retailers. Again, this year, shippers are anxious to meet their biggest sales goals of the year and carriers are expected to meet on-time deliveries under the most challenging market conditions. Unfortunately, industry conditions have only become more dire and the storm of pricing escalations, severe market constraints and imbalances in fragile shipper and carrier dynamics are impacting shippers’ ability to drive profit through their supply chain during their busiest time of the year.
Consumers across the US have noticed the bare shelves at their local retail stores and are being advised to start holiday shopping early this season. Shippers are doing their best to combat major disruptions by preparing for the increase in demand while simultaneously navigating massive delays and bottlenecks. According to Western Overseas Corporation, on Nov. 3, 2021, the Southern California Marine Exchange reported 76 container ships in the anchorage/drift areas at Los Angeles and Long Beach ports. Marine Exchange data also tells us that these 76 ships are estimated to be carrying $25.5 billion worth of cargo, most of which can be assumed to be holiday stock. This is just one iteration of the disruption happening in supply chains around the globe.
Balancing Limited Capacity with Rising Demand
Port bottlenecks are creating a massive domino effect of delays for air cargo, railways, and trucking lines, as well as sending shipping and shipping container rates through the roof. Once a shipper’s goods do finally make it to port, the shortage of dock workers, container backlog, scarcity of carrier capacity and sky-high transportation prices are impacting how quickly inventory gets to warehouses or products to customers. Companies need more capacity while trying to manage costs, requiring more visibility into their carrier rates.
A handful of global shippers are acquiring more capacity by chartering ships and buying their own shipping containers. However, as more shippers bypass limited carrier capacity through chartering vessels, the container ship market is also seeing limited available ships and increasing rates. In fact, container ship charter rates have quadrupled since last year and companies are holding on to charter ships for 30.7 months compared to 4.3 months last year.
Regardless of a shipper’s strategy to gain capacity to meet peak season demand, market constraints are not going away and can be expected to last well into 2022. These constraints have exacerbated the always present “just get it shipped” mentality, making rates less and less of a guideline than management would like. The market has seen a dramatic increase in spot quotes and shippers who are not able to invest in charter ships need the ability to efficiently manage spot quotes across all modes and geographies to be nimble in response to rate changes. Having visibility into carrier rates is more crucial now than ever and will continue to be crucial through 2022.
Trax Is Your Partner in Rate Management
Trax knows that as a shipper in today’s world, you are constantly having to find multiple carriers to transport goods at reasonable rates. The current environment has made shippers and carriers negotiate spot quotes more frequently, and as a result, shippers are being charged astronomical rate increases. Multiple negotiations with multiple carriers can lead to a messy trail of emails and spreadsheets to manage, or even worse, no trail at all given the current urgency to get goods shipped. Shippers need a comprehensive solution that provides a centralized repository for all carrier rates and spot quotes, allowing for full visibility and collaboration between shipper and carrier.
Trax Rate Manager is a web-based solution that gives shippers visibility to see all rates across all carriers in one centralized location. Rate Manager enables users to manage the lifecycles of freight audit, rate maintenance, and spot quotes, providing a single source repository accessible to shippers, carriers, and auditors. Shippers will have increased visibility by seeing all rates in one place, with all of them complete, up to date, and available for an invoice audit. Rate compliance will always be ensured for each lane, carrier, and region. With all the information you need in one place, you will be able to make more strategic plans and have confidence in your decision-making.
Your first step to preparing for peak season and beyond is having full control and confidence in your rates and visibility. Trax’s Transportation Spend Management (TSM) Maturity Model can help your company optimize its processes, be more proactive, and become a leading company in TSM. Schedule a consultation today to learn how our Rate Manager and TSM solutions can help your company navigate market disruptions and succeed through the next year and beyond.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.