Joe Biden issued a new Executive Order on July 9, 2021, aimed at curtailing the skyrocketing transportation costs weighing heavily on manufacturers and retailers. Many organizations such as the National Retail Federation and American Apparel & Footwear Association have asked the White House to address the strain on supply chains. For example, the cost of transporting one shipping container has risen 195% in the past year and that is coupled with new fees and surcharges.
While the transportation industry is one of the more volatile industries, most experts can offer up a detailed 3-month forecast, an approximate 6-month forecast, and a hypothetical 12-month forecast. What many are saying for the remainder of 2021 and even into 2022 is the annual trends we have long witnessed are no longer valid. The question being pondered is, ‘can there be a peak season if the entire industry is already sitting in critical status?” The economy has the throttle set too high in nearly every industry and they all need freight moved. For months we have witnessed a surge in shipping that has remained at the highest level and that surge is expected to remain through all of summer, the fall, and into 2022. If the surge never subsides, how can one measure the peak seasons?
- Chinese New Year:
The annual holiday for many Asian countries will come later than it usually does, but even in times for Covid-19 it will have a major impact on manufacturing and production. Any supply chain that includes countries celebrating Chinese New Year will experience a shutdown of some kind during this period. The holiday officially runs from February 11th to February 26th this year. Shutdowns begin a week before the two-week long holiday and production will return to current levels by the end of February.
In a market punctuated by increasing demand, increasing production, and decreasing carrier availability, shippers are in a race to find carriers to ship their freight. Problems often arise when contracting out carriers due to 1) the shipper’s lack of a carrier network and 2) limited market information.
Many Americans have an unfavorable view of outsourcing. The older generations commonly mistake outsourcing for offshoring. Younger generations grew up hearing outsourcing used in the same sentences as job losses, layoffs, or companies moving departments to foreign countries. Additionally, many Millennials and Gen X’ers remember the original NAFTA discussions in the 1990’s and there are as many who viewed it negatively at the time as there are who viewed it positively. All across the region commonly referred to as the “Rust Belt” the word outsourcing is a four-letter word.