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Will logistics win the “2022 battle” ?

“You will not find it difficult to prove that battle, campaigns and even wars have been won or lost primarely because of logistics”. Dwight Eisenhower’s famous quote reminds us about present year’s severe supply chain disruptions.

During 2021 logistics teams have been suffering continuous global supply chain bottle-necks, including port congestion, significant capacity shortages, cargo delays, while seafreights skyrocketted.

As we look ahead to 2022, we expect disruptions to soften, though these will remain. As a matter of fact, the OECD projects global GDP to grow by 5.7% in 2021 and 4.5% in 2022. However, global PMI survey indicators of business output have softened since May this year, ending shortly. Anyhow cargo owners should be ready for a new round of disruptions.

What can we expect for 2022 ? A good guess is that interferences and disturbances will remain. Covid outbreaks have exhausted and will keep harming, at least, parts of the global liner shipping system : For example, China's zero tolerance Covid policy close down, and without forewarning have been fateful. Further lockdown measures in other countries, triggered by the different pandemic waves and new variants also cannot be obviated for the upcoming months. We forsee the reappearance of the lack of coordination in cited actions together with the limited asset deployment efficiencies between ocean carriers, road and rail operators in the US, in particular. Moreover truck drivers and seafarer shortages plus additional more or less unpredictable travel restrictions may worsen with any new outbreak. Surely all these facts will further impact the schedules of the respective shipping companies.

The above brings us to the topic of what shippers should think about next 3 years. The 2021 logistics bad dream induced shippers to effectively respond to bottle-necks and to try to change to alternative ports of entry, different transport modes and different or new suppliers.There has been a learning curve and many cargo owners have come to a conclusion : Prioritise working with the right logistics providers. This statement is based not only in the ongoing disruption but in the proper trade development. Besides cited disruptions it is relevant to analyze cargo flow expectations and forecasts. Traditionally we find a correlation with OECD's growth predictions and the proper growth of the container trades. Above infographic clearly shows the trends expected for the upcoming 3 years which clearly indicate that 2021 "bounce" will be softened during 2022 and growth will follow a moderated path upto 2025.

The incorporation of new tonnage as from 2023 (newbuildings are in the pipeline), together with said expected trade pace should reduce known bottle-necks that will remain more or less active upto then. Remarkably Asia-Pacific will play an even bigger role in these development.

Furthermore shippers, are already implementing sourcing products from alternative locations to escape from the high seafreights from Asia. Logically the existing scenario of very expensive and unreliable container shipping leads to question the traditional low-cost production in Asia linking distant markets at past low transport costs. Related to this we need to consider known inflation trends, which, at this stage, appear to be consolidated and not transitory. Likewise the weakness of some currencies and the unpredicitability of the respective rate of exchanges influencing export of import trades. 

 

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