Container shortages, capacity constraints, higher shipping costs, and ongoing impacts of the global pandemic all placed new challenges in front of ocean shippers last year.
Those roadblocks have yet to be removed in 2021, although some early signs of relief are beginning to surface. The problem is that the shortage—among other forces—is driving shipping rates up across many routes at a time when global organizations are trying to realign their supply chains after a difficult year in 2020.
A recent study found that 88.2 percent of shippers either had or were planning to diversify suppliers, and 89.8 percent of respondents already were, or were likely to increase their collaboration with other supply chain stakeholders. The report finds firms moving towards both vertical and horizontal across the supply chain, forming interconnected networks of logistics partners – including cargo owners, ocean carriers, freight forwarders, ports and terminals, customs authorities, amongst others.
Below we’ve outlined the four biggest challenges you might face this year and some expert advice on how to overcome them.
- High Demand Means Less Space
Ocean freight services declined during the first quarter of 2020, but since then until now, demand has increased steadily.
In a complete U-turn from what experts expected, ocean carriers are maxing their capacity ceiling on many trade lanes. This means higher spot rates.
The FBX Global Container Index had a weekly price of $1,461 on January 3rd, 2020. By January 29th, 2021, this price was $4,087, or an increase of 279% from the previous year.
It is predicted this trend will continue, and even when the COVID-19 pandemic withdraws, the demand for freight will potentially boom.
2. Altering customer expectations
Client expectations are now changing as they become information-enabled and have expectations that their transport services to keep them fully informed throughout the entire process.
Similarly, because of the ballooning amount of accessible data, clients want to discover a business that operates with their precise expectations. This implies that the age of catch-all solutions is fast shrinking. It is being replaced with a more prominent, innovation–powered supply chain.
3. Freight Forwarder Freight Tech and Digital Transformation in 2021
Ocean carriers are implementing technology to digitally convert their operations to restructure freight procurement to create steady revenue channels.
Freight forwarders must also digitally transform their services to align with ocean carrier FreighTech. Forwarders with instant access to ocean carrier information can offer the following data directly to customers in real-time:
Spot rate data
With the risk of commoditization waning margins for so many freight forwarders, digital transformation could be a competitive advantage for business needs in 2021.
4. Increased Cybersecurity for Freight Forwarders
Ocean shipping hasn’t been immune from cyberattacks in 2020. Four of the world’s largest shipping companies underwent cyberattacks. Trucking and logistics companies were targeted too.
Freight forwarders need to set up their systems to minimize the effects of cyberattacks. For example, failing to centralize cybersecurity strategies, using outdated antivirus tools, systems, drivers, and tools, and employees accidentally releasing sensitive information can result in devastating cyberattacks.
5. Post-COVID 19 Boom and Securing Freight in 2021
It is predicted that post-COVID 19, we will see a huge rise in demand for everything. Revenge travel is already a trending term in 2021, suggesting that tourism is likely to boom as hundreds of millions of people will travel more when borders reopen.
Logistics already underwent a boom during COVID-19. Likewise, e-commerce sales grew by a whopping 27.6% in 2020, and the revenge travel trend will likely emerge in ocean shipping as consumer demand explodes after over a year of lockdowns.
6. Core systems transformation
Transport firms need to know what their core systems are. They need to be aware of this before going ahead to attempt to disrupt their businesses. If they know, it’s wise they check again because companies develop unique architectures more often. Businesses growing disparately make it challenging for the stakeholders to comprehend the business.
However, with the latest technologies emerging in the transportation industry, companies have a chance to rejuvenate their business. They will also be able to modernize their supply chain administration.
- Transport automation and the Internet of Things partnered robots.
Order fulfilment and automating warehouses with robots have been challenging for the industry. However, with the pushing demand, various transport organizations are looking forward to utilizing them. They will assist in simplifying the processes. Clients are pushing for more modern transport techniques.
With the emergence of e-commerce, transportation providers are required to operate efficiently and faster. They need to process an individual’s orders quickly. This is a sector that has surprised the industry. Many transportation companies are still struggling to adjust. Either way, they have no choice.
Labour shortages have handed robotics the platform to reshape the transportation landscape. Companies used to have 80% of the warehouse’s operation conducted manually. With the rising demand, they have to deploy robots to make things more accurate, flexible, and affordable. This is a puzzle that most transport companies will cross the year with attempting to solve.
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