With economic news dominating the news throughout much of this year, it’s a fresh reminder that businesses and governments should be closely monitoring trends within shipping and freight, to ensure they stay ahead of the game and are able to plan well for the future.
For those of us working in the industry, it’s no secret that shipping and freight can act as a beacon for the entire economy.
Small ripples in the shipping industry can soon become huge economic waves – and it’s important that both business and government doesn’t take their eye off the ball.
What we’re seeing now is that industry is returning to pre-COVID ways and forgetting the lessons learned over the last few years.
All it would take is an unforeseen event, like another canal blockage, or a COVID-type situation -which is still a live problem around the world – for the problems of recent years to take another huge toll on the economy.
The relative current stability of the sector – and the fact we’re no longer seeing the empty shelves of previous years – has meant many of the initiatives and attention given to the shipping and freight sector have stalled while attention turns to more pressing concerns.
However, I would encourage everyone to pay attention to particular trends within the shipping industry, including:
- Availability and pressure on space: What we’re seeing now is that many businesses have returned to a just-in-time ordering model rather than a just-in-case model, assuming that stock will be readily delivered and aiming to cut down on warehousing expenses. However, if the shipping industry shows signs of higher pressure on space and availability, that strategy could heavily backfire – especially in the lead-up to Christmas.
- Sailing Schedules – All modes of the supply chain are working productively, with of course the exception of blank sailings and spontaneous port congestion. Blank sailings are occurring with little notice and can affect planned departure dates.
- Volatility in exchange rates: I have rarely seen exchange rates as unpredictable as they are right now, which has huge influence over the value of imports and exports.
- Consumer demand: As Christmas approaches, consumer demand for shipping companies has lifted, which is usually reflective of overall consumer demand – however consumer confidence is still mixed, and some of the demand is purely driven by the time of year.
- Pricing: An uptick in pricing in shipping rates is indicative of increased demand, which can create huge competition for space, lines and access – flowing on to business as a whole.
While costs have gone down and the supply chain has returned to some level of normalcy, it remains important to continue reading the signs and looking for warnings.
Similarly, it’s important that we ‘maintain the rage’ when it comes to improving support and structure in the shipping industry from an institutional point of view.
We have seen attention in that area drop off as well as things have stabilised – but the underlying concerns from recent years haven’t magically disappeared.
And if the shipping industry begins sending the wider economy warning signals again – it’s incredibly important that we’re able to take heed of them.