The end of the year is generally a time of reflection, and as we look back on the past 12 months, it’s impossible to miss some significant differences in how the shipping and logistics industry started the year, compared to how we are ending it.
2022 has been a year of ‘returning to normal’ as many have described it, with COVID-restrictions virtually disappearing around the globe (with the exception of China), and the resumption of domestic and international travel.
Global freight prices were sitting at almost US$10,000 per 40ft in January, and have continued to fall ever since, to be sitting at less than US$3000 per 40 ft at the end of November, as consumers slowed their spending and cargo volumes started to drop dramatically.
The speed at which prices have fallen hasn’t been seen since the Global Financial Crisis, and came as a surprise to some, especially on the back of such significant price hikes during the peak of the pandemic.
Of course, the drop is related in part to continued global rumblings of recession.
It was little more than 12 months ago that the RBA Governor said it was ‘plausible’ that the record low interest rate of 0.1% wouldn’t start to rise until 2024, and yet here we are at the end of 2022 with eight consecutive months of increases under our belts and an official interest rate of 3.1%.
However, while the interest rate has been rising, the national unemployment rate has continued to edge lower, sitting at 4.2% in January, and now at 3.4% in November.
Skills shortages are being felt across all sectors of the supply chain, with port workers, bio-security inspectors, truck drivers and freight-forwarders all among the list of workers in high demand.
We started the year with a lack of workers due to COVID-related restrictions, and we end the year still with a lack of workers, but for different reasons.
China’s COVID-Zero policy remained a consistent throughout the year – at times adding to various delays and congestion along the supply chain as parts of the Chinese economy were locked down.
At the time of writing, it appears China is now moving away from that policy, however that is likely to present new challenges as case numbers rise.
Of course, we can’t reflect on the year that was without making some predictions for the year ahead.
I’d expect we’ll continue to see low freight rates for a while to come, and cargo volumes will remain low as consumers continue to slow their spending.
There will be ongoing challenges around sourcing staff, and ongoing cost pressures for businesses, especially around wages growth, and we will also start to hear more about decarbonisation in the industry.
However, I also expect there will be some positivity within the industry, hopefully in the form of real action as a result of recommendations from the Productivity Commission inquiry into Australia’s Maritime Logistics System.
After years of doom and gloom, I believe the industry is on the cusp of being able to implement measures to improve the supply chain and make it more efficient, and hopefully shift from being reactive to proactive.
My wish for 2023? That the conversation we’re having in 12 months’ time, looks nothing like the one we’re having now.