What does the future of freight look like? Right now, sea freight rates are sitting at a record high. And they don’t look set to ease off any time soon. So we’re taking a look at the future of the logistics industry. These are our predictions for the next 12 months and beyond.
To say that the last two quarters of 2021 have been a rocky road would be a bit of an understatement. The September/October fuel crisis showed the public exactly how the current shortage of HGV drivers could impact their lives if proper action isn’t taken. And at the same time, the industry was reminded of the power of PR. As the combination of media and driver shortages lead to widespread panic.
But it wasn’t all bad. The Government announced a new visa scheme to bring more HGV drivers back into the UK. Meanwhile, the private sector started to entice new drivers over through better wages and new employment opportunities.
At the same time, key ports remain bottle-necked across the US West Coast. Whilst China and Taiwan continued to be impacted by issues in Yantian and Kaohsiung.
Although disrupted equipment availability is starting to improve, it will continue to be a challenge. And competition for space will remain extremely tight. All this means that freight rates will stay high. Or potentially continue to climb.
January and February 2022 should offer the first sight of some stabilisation across the logistics market. We’re hopeful that this period will also see some minor improvements for sea freight rates too. However, we’ll also be entering Chinese New Year which has an effect on market conditions in the logistics industry even at the best of times.
The test will be how well shipping lines and ports are able to deal with their equipment and congestion issues, a hangover from 2021. Unfortunately, these are largely co-dependent and hard to deal with in isolation. But it’s not all doom and gloom. We’re optimistic that some relief could come in the form of the return to passenger air travel. This will offer the opportunity to increase capacity in the air freight market, reducing the pressure from the sea freights sector. So, whilst a pre-Christmas space crunch is always anticipated, the following months should bring more stability.
Although long-term predictions are impossible, we’re hopeful that freight rates will start to stabilise later in 2022. After a settling period, freight carriers will have more flexibility to balance market and contract rates. Which should build in more rate certainty, especially as equipment levels become more manageable.
We’re already starting to see a move to digitise the freight industry. Here at Linkline, we offer fully traceable international freight. And it’s our digital platform that makes it all possible. Soon you’ll be able to manage your air, sea and land freight bookings all through one platform. The entire process will be far easier, more approachable and more efficient. At the same time, customer shopping habits will adjust to match this digitisation. As Deloitte explains here, supply networks will be able to flex according to capacity and demand. Giving consumers more choice as to when and how they receive their products.
After decades of globalisation and international outsourcing, we’re anticipating a move for lower value products to be sourced from within the same economic area. This move towards more localised supply chains will help companies cut their costs through lower important dues and smaller shipping costs. Whilst also improving customer experience thanks to a shorter time to market as a result of more local supply.
As the pressure from our environment continues to grow, it seems only natural that the logistics industry will continue to look at more sustainable transport options. From emissions to congestion and air quality, we’ll all be exploring how we can reduce our carbon footprint whilst continuing to deliver the same level of exceptional service.
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