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Editorial: Shipping Struggles to Stay Afloat

Chennai, 1 March 2023:

At the peak COVID-19 lockdowns, demand for many products decreased, but as the world returns to normal and demand continues to increase dramatically, the shipping industry finds itself struggling to stay afloat.

As a result, maintaining the chain of supply has proven to be difficult for businesses across a wide range of industries.

Cost per container has increased rapidly from around $1,500 in 2019 to $7,600 in July of 2022 and peaking at over $10,000 in September of 2021, having an adverse effect on the market for medium to large goods the most, especially those of lower value and regular demand.

With this shortage, the cost of other methods of transportation, such as airfreight, has increased due to the high market demand and low supply, with airfreight rates between Hong Kong and North America as high as $12.72 per kg.

There are several new techniques that companies can implement to get their chain of supply flowing once again. Creating direct lines between ports, cross docking, using break bulk shipping, and locally sourcing parts are effective ways to ease strain on the market for containers.

Break bulk shipping specifically is beneficial, as it allows for oversized goods to be shipped in their entirety, cutting out the need for a container.

For this same reason, smaller ports can be utilized rather than being restricted to large ports that can accommodate massive container ships. This frees up more container space for those goods that need it as well.

Another valuable practice is cross docking, the immediate loading of inbound goods onto outbound vehicles, in turn eliminating the need for storage in between.

This is used to create a quick turnaround process and effectively lower the margin of time needed to store goods, freeing up the container for its next use rather than using it for storage at a port or in a warehouse.

Ownership of your container loop and contractually allocating containers to specific supply chains supports the consistent availability of containers.

Although sourcing parts from other countries may come at a cheaper cost, the uncertainty and extended delivery times in accompaniment are proving that locally sourcing goods may have greater benefits.

Having your suppliers nearby not only decreases the time in transit but can cut out the need for maritime transportation and transparency is key to a running supply chain.

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