Global and U.S. Logistics is a Mess Heading into the Holiday Season

Global and U.S. Logistics is a Mess Heading into the Holiday Season

Manufacturers and retailers continue to reel over the logistics nightmare that is slowly unfolding across the global and U.S. stage. Shipping containers (from Shanghai) to the West Coast — if you can find one — for the holiday season can now cost as much as $32,000, an increase of over 400% in recent years.

But, ocean freight challenges only tell part of the story. Labor shortages, infrastructure shortages (including shutdowns and bottlenecks) and even warehouse capacity in North America continue to constrain nearly all aspects of truckload, less-than-truckload (LTL), last-mile and related supply chain transportation areas.

According to DAT, freight volumes hit a record in July, with DAT’s volume index rising over 100% to 222 from its baseline of 100 in 2015. From a cost perspective, according to DAT, summer spot prices were $2.73 per mile, an increase of over 70 cents from previous years, “setting records for all three equipment types.” Even last-mile delivery is a challenge, with 37.8% of last-mile delivery firms suggesting that finding qualified drivers to hire is a bigger issue.

Transportation capacity remains on a downward trajectory while prices and utilization are rising “at an increasing rate” and sector indexes have seen “capacity contracting for 15 consecutive months.” Conversely, tender reject indexes have been rising at a “at a higher clip starting around the same time.” Warehousing capacity is facing similar constraints, with a lack of available labor being referenced as the primary challenge curtailing availability.

What can manufacturers and retailers do to address these challenges?

A number of CEOs are facing logistics challenges that impact both the top and bottom line, all sharing a number of common themes and strategies.

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