Making the most out of today’s challenging supply chain trends requires a deep understanding of the market and timely information that helps you achieve a competitive advantage. In our first Market Insights Live! event of 2022, my colleagues, Christina Carroll, vice president of LTL, Alan Rowlett, director of global operations and strategy, and I set out to offer exactly that.
Q1 2022 Supply Chain Trends and Hot Topics
As many of you have experienced firsthand, there are several factors influencing shipping today—most are adding challenges to an already constrained market. During the live event, we discussed supply and demand trends for 2022, what can be done about port congestion, why less than truckload (LTL) strategies are so important, and pricing and labor challenges to watch for. If you missed it live or want to see it again, be sure to watch the recording.
There were several popular questions that we didn’t have time to address during the live event. So we put together answers and a few short videos in response.
1. We keep talking about a “normal” market. Do you think this is a thing of the past and the current market is the new normal?
We expect the demand versus supply equation to become more balanced, but the big question is when that will happen. There are two important factors that play into this balance. The first is pricing, especially the record rates within the international supply chain. Unless we see a hard economic downturn, we don’t anticipate rates returning to pre-pandemic levels. The second is transit time, which has the potential to return to pre-pandemic levels if volumes drop significantly or if there is more investment in capacity. There are more nuances to these factors; watch the video for a deeper look:
2. As port congestion continues to be a problem, what’s your view of container track and trace solutions? Do they help gain access to containers sooner? Do they improve ETAs?
While these solutions help with many aspects of supply chain visibility, there are still challenges on the international side. First, the steamship lines (SSLs), ports and carriers are not able to create reliable dates because of the difficulty of determining length at anchor. Second, international cargo is multimodal dependent and the ability to maintain visibility across multiple bills of lading (BOLs) remains a challenge. Lastly, many of the solutions are participation-based, meaning SSLs, railroads, airlines, trucking companies, ports, and others need to have some architecture to interact with these services. To hear more about track and trace solutions, watch the video:
3. Can you provide an update on intermodal long haul?
Since the start of the new year, intermodal demand has remained strong, although slightly lower than previous year. The winter weather, a challenging labor environment, and changes in ocean port bookings with a shift of some volume from the West Coast to East Coast have posed challenges to the rail and dray carriers meeting operational goals. Still, intermodal’s competitive position is expected to remain positive for all of 2022 and offer an attractive alternative to truckload service. For a more in-depth look at the intermodal market, watch the video:
4. As the economy improves, do we suspect those currently using LTL will shift to full loads and add pressure to that market?
When supply versus demand becomes more balanced in the truckload market, we could see the freight with greater density migrate into truckload markets if it is more cost effective. In today’s market, LTL carriers continue to target the freight that delivers inefficiencies to their operations and networks, so it comes down to a pricing elasticity decision.
5. How is C.H. Robinson working with its carrier network to get LTL freight picked up in a timely manner with the current labor shortages?
Many LTL carriers are diversifying their talent acquisition and retention strategies, as well as optimizing their linehaul jobs to deliver a more balanced employee experience. We collaborate closely with contract LTL carriers and work to understand where they are having bottlenecks or shortages. Having access to one of the largest portfolios of LTL capacity in the industry allows us to quickly provide alternate solutions when needed. For more information on how LTL carriers are mitigating the labor shortage challenges, watch the video:
6. Will military tensions between Russia and the Ukraine impact shipping in the Black Sea?
The strait connecting the Black Sea to the Mediterranean can see a vessel pass every 10 minutes, equating to 150 vessels per day. We all remember the disruption caused by the blockage of the Suez last year, and the Suez sees lighter volumes than the Black Sea. With the high cadence and volumes passing through this channel, any disruption would have an impact in this lane.
7. Is the Drug and Alcohol Clearinghouse still impacting capacity?
This is a tricky question. While the Clearinghouse does not remove drivers, it does make it easier and more accurate for carriers to do background checks on applicants. The December 2021 report showed that violations increased 10.2% over 2020. However, the challenge is balancing violations with the legalization of cannabis in 19+ states. Watch the video for a deeper look at the challenges and impact of Clearinghouse data:
8. The Florida Port Council is making a strong push for their Florida “Ports First” initiative. Do you think that re-routing to Florida will make a significant impact on the port congestion issue in the United States?
Expanding the capabilities of our ports and infrastructure is a great step under any circumstance. Being able to facilitate more volumes in our port systems will lead to more balance in the future. However, since there is no new capacity coming to the market this year, the ability to take advantage of Florida-based ports will be contingent on many factors. Watch the video to learn more:
Plan to attend our next webinar
Thanks again to everyone who attended live and those who asked questions. We hope these market insights on supply chain trends help you make more informed decisions that mitigate risks and avoid disruptions.
Until our next webinar—scheduled for Tuesday, May 10, 2022—you can find the latest supply chain trends, in-depth analysis, and ideas to prepare you for what the market has in store by visiting our North American Freight Market Insights and Global Forwarding Insights web pages.