Trade Takes People: Navigating the New Economic Normal and the Work Year

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Every link in the supply chain — manufacturing, transportation and consumption — depends on one thing: people.

The supply chain imbalance is now based on human error – over-ordering of products and selling off those that people didn’t want – and port congestion – caused by fears of a labor strike. International Longshore and Warehouse Union (ILWU), which has diverted trade and created bottlenecks. We know trade is slowing, but congestion distorts the reality of falling orders.

Business data is actionable. It provides insight into retailer expectations. We know that orders have fallen and as a result we have seen freight rates drop and dry starts increase.

But how big is this hole in the consumer’s bucket?

CNBC supply chain heatmap data shows a 20-30% decline in maritime bookings in September and October. The range of products is wide, from clothing to home products. But even among the softness, there’s strength in orders for high-end items like ultrasound machines and time-sensitive promotional signs.

The decline in maritime bookings matches a forecast by the Georgia Ports Authority, which said it expects the number of ships at anchor to decline over the next few weeks. Meanwhile, the supply chain heatmap still shows vessel congestion on the East Coast and in the Gulf.

CNBC Supply Chain Heatmap

To put a floor on falling ocean freight prices, ocean carriers are positioning tactical blank sails to match ship space with the orders they receive. In its recent Trans-Pacific report, cargo tracker Honor Lane Shipping noted that vessel capacity reductions were down nearly 50%. This decline could continue into 2023 until demand picks up before the Chinese New Year.

“On the transpacific, capacity reductions should represent 22 to 28% of the weekly capacity deployed in the weeks following [China’s] Golden Week, while the maximum reduction during these weeks was 15-17% in 2019 and averaged 9-11% in 2014-2018,” said Sea-Intelligence CEO Alan Murphy. “We are also seeing higher numbers in Asia-Northern Europe, with the peak capacity reduction after Golden Week at just under 20%, which, while in line with 2019, is above the 2014 average. -2018. Asia-Mediterranean, on the other hand, is the only trade lane of the four to see a reduction in capacity during Golden Week 2022, in line with 2014-2019.

On the road, FreightWaves SONAR tracks spot rates 31% below spot rates per mile, excluding fuel, last year.

SONAR: National Truck Loading Index. To learn more about FreightWaves SONAR, click here.

The One Thing Commerce Can’t Control

Ironically, the Achilles’ heel of commerce is people.

This year will remain as the year of work. Those responsible for the flow of trade know their value and will do whatever it takes to be heard.

Labor strikes in Europe slowed the supply chain from Germany until the first quarter. The British union worker has the supply chain at his mercy. As a result, the supply chain heatmap in Europe is just plain ugly, and logistics managers are navigating the limited options.

“For OL UK, we process every [bill of lading]with new eyes, as each customer has different needs and wants,” said Paula Bellamy, OL UK Managing Director. “And it is our role to advise them on a daily basis on the situation, the additional costs to be involved, and to make a decision together that suits our client. European wait times in Hamburg and Bremerhaven are well above their annual average, and this solution also comes with Brexit challenges if containers remain destined for the UK. »

According to Andreas Braun, Ocean Product Manager for Europe, Middle East and Africa at Crane Worldwide Logistics: “While we are seeing slight overall improvements in terms of vessel dwell times in Hamburg and Bremerhaven [and]a downward trend in the occupation of construction sites in Antwerp and Rotterdam, the general situation in the United Kingdom is worsening due to the strikes. Vessel delays and omissions are increasing rapidly. Container availability and the trucking situation are deteriorating, and other terminals, such as London or Southampton, can no longer handle excess freight from the ports on strike.

With another strike scheduled for Liverpool and ILWU negotiations continuing, the only thing you can count on is the uncertainty of the human element of trade.

The CNBC Supply Chain Heat Map data providers are artificial intelligence and predictive analytics company Everstream Analytics; the global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; the logistics provider OL USA; the FreightWaves supply chain intelligence platform; the Blume Global supply chain platform; third-party logistics provider Orient Star Group; the marine analysis company MarineTraffic; Marine Visibility Data Society Project44; shipping data company MDS Transmodal UK; the Xeneta platform for benchmarking and analysis of sea and air freight rates; leading research and analytics provider Sea-Intelligence ApS; worldwide crane logistics; DHL Global Forwarding; freight logistics provider Seko Logistics; and Planet, provider of daily satellite imagery and global geospatial solutions.

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