As the mid-point in the year, we see that ocean shipping price fluctuations are back, driven by port congestion in Southeast Asia, pushing up spot rates on major trade lanes.
In contrast, air rates have remained relatively flat despite elevated demand. On the domestic freight side, both trucking and warehouse demand remain soft.
In the long term, the global supply chain continues to embrace disruptions as the new norm. Geopolitical developments, trade shifts, and dynamic changes in volume and demand are compelling shippers to adopt flexible worldwide shipping strategies and accelerate nearshoring efforts.
Ongoing international and domestic disruptions necessitate prioritizing flexibility and resilience. Internationally, port congestion and vessel diversions due to attacks in the Red Sea persist, causing delays, equipment shortages, and price volatility on major trade lanes.
In North America, both trucking and warehouse demand remain soft. Looking ahead, potential disruptions are anticipated in Q3 from a possible rail strike in Canada and in Q4 from the North American East Coast port contract renewal. However, there is optimism for mitigating their impacts.
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Highlights from this month's update:
- Ocean rates surged significantly in June due to port congestion in Southeast Asia and diversions in the Red Sea.
- Over-the-road carriers face heightened pricing pressure due to persistent overcapacity in the trucking market.
- Air demand remains elevated in June, driven by increased volume from Asia and a modal shift to avoid delays related to the Red Sea.
- The North American rail industry is experiencing increased tension with unions.
- Parcel carriers are projected to raise rates in Q3, ending a recent trend of declines over the past three quarters.
- Warehousing rates and vacancy rates have stabilized amidst reduced demand and recessionary concerns.
- Nearshoring, particularly the China+1 strategy, emphasizes trade routes to and from Mexico, India, and Vietnam for North American and European cargo.
Further reading:
This month we are highlighting commentary from our Retail experts, including Steve Scales, Christopher Considine, and Jay Sills on retail product flow in:
- In today's dynamic retail landscape, supply chain management has become more complex than ever before. The rise of omnichannel retailing, shifting customer preferences, and global disruptions have introduced complexities beyond what traditional supply chains were designed to handle.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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