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The supply chain industry continues to grapple with significant demand and supply imbalances, notably a surplus of ocean capacity, leading to downward pressure on rates. These conditions raise solvency risks for carriers and may prompt capacity removal through slow sailings. Geopolitical shifts and changing cost dynamics are driving trade strategy adjustments worldwide. Nearshoring, accelerated by the pandemic, remains a prominent discussion topic. Meanwhile, attacks on container vessels in the Red Sea have caused diversions, delays, equipment shortages, and doubled rates on Asia-EU & Asia-NA trade lanes. While this has short-term pricing impacts, normalization is expected as we progress into Q2 2024. 

Potential disruptions loom in Q4 from the North American East Coast port contract renewal, though optimism remains for minimizing its impact.

Highlights from this month's update include:

  • Ongoing transportation demand and supply imbalances: It is still a buyer’s market as carriers grapple due to a capacity surplus. 
  • Supply Chain de-risking through shifting trade flows: Nearshoring, particularly the China+1 strategy, highlights trade routes from/to Mexico, India, and Vietnam for North American and European cargo.
  • Persistent Supply Chain disruptions: Attacks on container vessels in the Red Sea caused diversions, delays, equipment shortages, and doubled rates on Asia-EU & Asia-NA trade lanes.
  • Ocean rates are normalizing from the Red Sea crisis-induced peak and benefiting from the end of Lunar New Year celebrations.
  • Over-the-road carriers face increased pricing pressure as dry van spot rates dip below 2020 averages.
  • Air demand rose in February due to e-commerce growth and spillover from ocean volume shift, but rates remain below 2023 levels.
  • Warehousing rates and vacancy stabilize amidst reduced demand and recessionary concerns.

Take a deeper look into shipping, logistics, and supply chain operations topics discussed at TPM24 in early March by reading our article: Charting a new course: Navigating disruptions and a down cycle, four key takeaways from TPM24, Erik Mattson, Kai Kang, James Roe, Alexis Parisi (alixpartners.com).

If you are a retail industry leader who missed the recent RILA LINK Supply Chain conference, we have you covered with our recap: For retail leaders, the customer relationships are shifting, Rebecca Nolan, Steve Scales, John Samuel, Chris Considine, Amit Mahajan (alixpartners.com)

If you missed our inaugural edition of the Supply Chain Market Pulse newsletter, our goal is to provide industry commentary and data to help you assess and reassess strategies and build resilience in this complex and ever-changing landscape. Let us know what’s on your mind for future editions.

 

 

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