Freight forwarding: Year in review and 2022 predictions

It's almost a wrap on another eventful year in freight forwarding and logistics. While we'd hoped to have left the worst of COVID-19 in 2020, the impacts lingered throughout the year and are likely to stick around a little while longer. The good news is, we've learnt a thing or two about how to navigate these stormy seas. Let's take a look at the year that was and what we can expect to see in 2022.

‍2021 in review

‍If there's one word that can be associated with freight forwarding and international trade during 2021, it's "volatile". Conditions were disrupted often, fuelled by a fragile market situation and an ever-changing macro environment.

Here are some of the disruptions that affected the industry:

• Congested market conditions.
• COVID-19 flare-ups in key regions - COVID-19 heavily impacted ports in New Zealand, Vietnam, Thailand, Singapore and is still impacting ports significantly in China.
• Lockdowns, resulting in labour shortages and reduced production capacity in factories.
• Port closures.
• Equipment shortages.
• Waiting times - vessel reliability was on average 34% on time with some shipping lines sitting close to 15% of vessels running on time.
• On the ground, delays and shortages in trucking services.
• Vessel capacity - while some contract rates held, many shippers found their allocated volume was not available at times throughout the year.
• Peaking priority rates - rates this year reached a high of $12,000 per FEU in 2021 (nearly 800% up YoY) before levelling back to 250% increase YoY.

Key events during 2021, some of which were completely unexpected, exposed the vulnerabilities of international supply chains:

Suez Canal: The cargo ship Ever Given was front page news around the world when it became wedged in this key trade lane. Approximately 300 ships were halted, goods were delayed and the equipment shortage in Asia worsened.

USA port delays:Imports and exports at the USA ports were affected by persistent problems in rail. Cargo moving via rail experienced big delays and had a knock-on effect in the shipping supply chain. Many costs were potentially affected, as the more expensive option of trucking routes were used as back up.

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Explorate co-founder Conor Hagan commented:

"With close to 90 vessels waiting off the coast of Los Angeles/Long Beach there is no doubt that this has massively impacted US importers and exporters and in turn put some stress on global capacity. In Australia, we have had very low vessel waiting times comparatively however container availability, record high freight rates and vessel capacity was a huge issue for importers and exporters this year."

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‍2022 predictions

The impact of the pandemic is likely to linger, making the recovery of the sector quite fragile.

Conor adds:

"We have seen 2021 demonstrate that any disruption such as a port closure or vessel delay causes huge ripple effects to supply chains. As an example, chip shortages are causing delays to the automotive industry and therefore having a huge impact on car availability. This highlights that supply chains are now under extreme pressure. 2022 will not see a silver bullet for shipping recovery and fostering positive supply chain relationships will be hugely important for shippers in the coming year."

Historical data shows that going back to normalised freight rates after the 2021 all-time highs will probably take a long time. This will also be fuelled by shippers arduously looking to restock and get cargo out of Asia before the Chinese New Year holiday in February.

As ocean freight costs are expected to remain high, the cost of certain goods are likely to increase.

As companies work towards becoming more environmentally focused and ESG mandates become increasingly enforced we see the rise of carbon efficient supply chains becoming a 2022 trend.

Against this backdrop, here's how Explorate can help

‍2021 has exposed the weak links of existing supply chains and has emphasised the importance of having up-to-date information and working in an agile, transparent and flexible way - which is where we come in.Our platform uses the latest technology to respond to the changing needs of our customers, which translates into key logistical advantages:

• Valuable freight data analytics and insights: To easily understand your shipments, the performance of shipping lines for each of your tradelanes, and more.
• Automation & transparency: Including event triggered notifications and the powerful live tracking feature CargoTracker. Know where your goods are at all times.
• Organisational visibility of supply chain: Secured digital consolidation of all your shipping-related documents and a centralised Company Management Page that gives you easy access to add, update or retrieve information.
• End-to-end supply chain visibility: Don't limit your visibility to just the international leg.

We know that in the world of international logistics and freight forwarding, there's never a one-size fits all solution. That's why our platform fosters the right balance between technology and people, creating a new standard for the logistics industry. Our expert team is ready to solve any transportation dilemma.

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‍To summarise

‍2021 has emphasised the importance of being prepared for disruptions and the necessity of using supply chain data to build supply chain robustness.We are here to help you be better prepared for whatever 2022 throws our way. If you're already an Explorate customer, stay in touch with your designated operations specialist.

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If you're not with us yet but are interested in seeing how the Explorate Platform could change the way you do logistics, get in touch to arrange a free demonstration.