How to Mitigate Ongoing Supply Chain Freight Issues

With recent COVID-19 lockdowns across Asia, key ports are facing even greater delays, exacerbating global supply chain issues.

Multiple municipalities throughout China are experiencing COVID-19 lockdowns, including Shanghai, where residents have been under strict rules for over 6 weeks, according to a recent Reuters article. Given the average time of transport to the United States, the full effects of these shutdowns are just now reaching Western supply chains.

For companies that outsource manufacturing overseas, the shutdowns have impacted both production and transportation of goods, and U.S. companies have growing concerns of ongoing shortages possibly spanning months.

While Shanghai officials have promised to restore normal production and life in the city by late June, many residents are skeptical, having repeatedly been disappointed by shifting schedules for the lifting of restrictions, the Reuters article notes.

For U.S. companies faced with product shortages and increased competition for transportation, planning ahead is critical to minimizing the financial impacts of global supply chain pain points.

Negotiating Freight Rates & Planning Ahead for the Holiday Rush

With continued bottlenecks and shortages of product arriving from overseas, the holiday season will likely see an earlier rush than usual as companies plan for delays. As a result, spot rate prices and competition are projected to increase as the third quarter of the year approaches.

According to an article from The Wall Street Journal, freight rates are expected to remain elevated and the lack of product reaching the U.S. could further exacerbate inflation well into the summer.

To mitigate these risks, LiVe recommends negotiating contract pricing on a 3-month basis vs. annually so that you ensure your shipments will be covered and you don’t overpay for them.

Last year, the holiday rush occurred earlier than expected, in October and November rather than the typical November and December influx. This year, the industry should be prepared to see an even earlier rush, starting in September.

Rising Fuel Prices & Driver Shortages Complicate Supply Chains

Fuel prices, diesel availability and driver shortages are additional obstacles companies may face as the effects of inflation and COVID-19 continue to create challenges. Fuel rationing and skyrocketing diesel prices could become realities over the next quarter.

While the demand for goods has decreased as many consumers choose instead to spend on services, the transportation market is still facing severe driver shortages. One CBS news article cites a Transportation Department study that found nearly 300,000 truck drivers leave the profession each year. The COVID-19 pandemic has only exacerbated this deficit, despite a push for higher pay, younger driving ages, and weekends off.

For shippers, this makes it difficult for some carriers to accept your loads, causing them to reject your tenders and force you into the traditionally more costly spot market. Because we don’t own the trucks, LiVe Logistics has an almost unlimited pool of drivers and equipment to cover your loads, resulting in less rejections and decreased overall supply chain cost.

Work with an Experienced Transportation Partner

LiVe can help your organization manage the ongoing, unpredictable shipping challenges of today’s economic and global environment. With 24/7 tracking technology, a team of industry veterans, and a network of drivers, we can help plan ahead to avoid supply chain challenges, mitigate product shortages, lower your total cost of ownership, and more.

Contact us to learn more about freight brokerage services