When Will the Ship Right Itself?

In the News5 Minute Read

"Air freight is never the answer- it is always the last resort." - Brian Glick, CEO Chain.io

When Will the Ship Right Itself? Sourcing Journal 2022 Sourcing Report

While U.S. port congestion is easing with the implementation of a 24/7 productivity framework and the threat of container dwell fees, greater efficiency is unlikely to lead to low prices for shippers, specially in the near term, Glick said. Rates remained extremely elevated at 8-9x the pre-pandemic norm, and goods being shipped from Asia to the West Coast of the U.S. averaged $14,924 per container - a 285-percent increase over the same period in 2020.

"There will be, and there already has been, a bit of a dip" in container pricing, he added, which will take the heat off brands to spring for space on aircrafts. However, "the fundamental market structure has shifted, and [ocean] carriers are executing better price discipline." A small group of competitors are operating with "a lot more data" than they have in the past, and carriers are now in a position to use those insights to maintain favorable profit margins.

Gone are the days of glad-handing and striking backroom deals with clients, he explained. In line with the industry at large, carriers are adopting tech-heavy processes to manage all facets of business, from operations to pricing.

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written on January 24, 2022
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