How supply chain shortages, port congestion and skyrocketing rates have disrupted the transportation industry—and what it all means for your business.
Throughout the past year, the freight industry has experienced unparalleled challenges with businesses across the world being impacted by high rates and shipping delays. Greg Keys, the Director of Logistics and Warehousing at Gamer Packaging, explains what is going on with the transportation industry, what we can expect the near future to look like and how Gamer Packaging is helping our customers overcome uncertainties.
Why is the freight industry dealing with such unique and significant challenges right now?
Global supply chain disruptions over the past year have created a long-lasting ripple effect. The onset of the COVID-19 pandemic caused massive shortages of labor, containers, equipment, and transportation. Plus, the demand for goods has only risen. According to Keys, import volume has grown at over 20% compared to last year, which was already a record year. This growth has led to congestion and delays at every point of the freight and shipping process, impacting businesses in ways they feel for weeks and even months.
These disruptions are also creating higher operating costs and thinner margins all around. “The global transportation infrastructure is stretched to its limit,” says Keys, “Ocean, rail and air services are overwhelmed by demand and escalating costs. Suppliers have to implement surcharges and consumer-facing businesses are forced to raise their prices—right now, it’s a never-ending cycle.”
What can we expect the future of freight to look like?
Although it’s difficult to predict how long this ripple effect will last, Keys believes we can expect things to get worse before they get better. “Compared to last year, the actual increase on ocean freight is more than 100%. And in some cases, it’s more like 200% – 300%. Right now, the tendency is still in favor of the rates going even higher.” Every trade lane in the world is seeing the same circumstances, Keys says, “Europe/USA – Asia/Europe – Asian/LATAM, etc., these lanes are experiencing similar trends, and in a few cases, the rates have even gone up proportionally higher than the USA trade.”
With the COVID-19 Delta variant causing prolonged restrictions in many areas, the constant strain on the supply chain and skyrocketing rates, Keys says, “Not to expect any meaningful improvements through the remainder of the calendar year.” Although, Keys is hopeful 2022 will bring some much-needed relief and recovery. “Things are tough right now,” Keys says, “But these issues are not here to stay.”
What advice do you have for businesses during this time?
Keys’ number one recommendation is to “forecast and schedule in advance.” The best thing you can do for your business is to be proactive and flexible—understand that things are not going to dramatically improve overnight, but being prepared is going to help you through these supply chain problems and uncertain times. “Also, know that you’re not alone,” says Keys, “Everyone everywhere is working through these challenges and dealing with supply chain issues in one way or another. It’s important to remember that at the end of the day, we’re all in this together.”
How is Gamer Packaging helping customers overcome these challenges?
During these times, Gamer Packaging has found success by focusing on forecasting, forming strategic alliances and providing full visibility into our logistics operations. The logistics team continuously works to leverage and build partnerships with domestic and international carriers, freight forwarders, warehouses and other transportation services to plan ahead for space allocation and gain comprehensive insight into the state of all logistics-related transactions. “We’ve also added team members who actively track and trace every container,” states Keys, “This helps avoid delays and allows us to have proactive reactions on any issues that do arise.”
Due to the many discontinued services regarding shipping to the Midwest, the Gamer logistics team has concentrated on creating cross-docking programs that offer cost-effective sailing options and drayage deliveries to warehouses or directly to our customers. These programs allow Gamer Packaging to better manage the supply chain and help circumvent any disruptions. “Visibility, communication and control are some of the most important things we can offer right now,” says Keys, “We want every customer to know where they stand and what we’re doing to help achieve their business goals.”
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