News Alert: Rate & Schedule Volatility

Ocean and airfreight volatility skyrocketed almost immediately during the pandemic when border closures were announced. With no flights, no staff and major lockdowns, combined later with increased consumer spending, supply chains were tested like never before.

Infrastructure failed and congestion spilled out to empty parks and port docks as containers were stuck at ports. More containers were coming into the ports than were leaving, so equipment was stuck in ports around the world. It was quite a challenge getting equipment in place and on time. Sometimes the containers were in such bad shape they were just patched up and sent on the vessels to prevent more delays — but the damage cost a small mortgage!

Throw in a very sad war, a few natural disasters, continued last-minute schedule omissions, cancellations and changes — supply chains were at breaking point (if not already broken).

What often follows chaos is exploitation: increased rates, poor service, contract cancellations and massive changes to freight negotiations. The introduction of the spot rate was and is a reflection of that chaos. 

So here we are, still in a very vulnerable, unprecedented, and unpredictable kaleidoscope of supply chain challenges. The decrease in rates out of Asia is welcomed but not something we should think of as standard.

Let’s look at Rate and Ocean Contract Reliability when the pandemic first started — which was only the beginning. 

BCOs Rate and Ocean Contract Reliability Graph

As you can see from the stats, ocean contract reliability actually got worse.

Freightos Baltic Index January 2020
Global Schedule Reliability Graph

Looking at global shipping schedule reliability, you can clearly see a drop in service aligned with price increases.

Late Vessel Arrivals Global Average Graph

Where Does This Leave Us?

It leaves consignees in a place where they MUST develop very good relationships with their freight forwarders: they are now partners. It leaves freight forwarders in a place where they must be more transparent with their clients. 

The world is changing with respect to business intelligence tools and what the consignee can see and do across their own supply chain. It means they must be more informed than they were previously, and the freight forwarders need to understand and offer this as a value add.

Business analytics, forward planning, more reporting and digital tools are the way forward in this industry. Stockwell is already developing a more digital-focused client process and solutions. Contact us to learn more about how we can improve your freight forwarding experience.

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