Before we get into the 7 trends to look out for in 2021, here are the 7 most significant events for global freight in 2020.
IMO2020 went into effect on January 1st
Remember the moderate changes the shipping industry used to have to cope with? Ones that we could prepare for? We may now even chuckle at how dramatic we thought a reduction in the sulphur content of fuel was when, months ahead of time, ships had the chance to be fitted with scrubbers.
IMO2020 was a bit overshadowed by the COVID-19 pandemic, however. For what it's worth, the global carbon emissions went down by 7% this year anyway.
The Great Lockdown started January 23rd in Wuhan, China
With the first lockdown starting in China at the beginning of the year, the global freight industry hit it’s first of many challenges. Like dominios we have all fallen into our lockdowns in all of our far corners of the globe, some of us currently on round 2.
What have lockdowns done other than force us into too many Zoom meetings? Stranded more than 400,000+ seafarers across the various oceans. While the IMO has called for them to be classified as essential workers, many have lost their jobs regardless, unable to be accomodated.
It also changed the priority of distributed goods. TCG Global Logistics, a 7ConNetwork member, responded to the dire need of quick delivery of medical equipment. Between April and May they chartered over 2,560 cbm of PPE.
Blank sailings in April
Declines in shipping volume out of China forced ocean carriers to reduce their capacity. They managed this by way of blank sailings. Seatrade Marine News reported a total of 435 blank sailings by container lines through April 2020, as carriers continued to match capacity with decreased demand.
What does the consumerist population do when there are no lavish holidays or nights out on the town to spend money on? Find another way to spend money. Trapped in our houses and bored, we turned to the world wide web to fulfill the void in our lives with material goods. Worldwide retail e-commerce sales increased by 19% from 2019.
Record breaking spot rates
From the beginning of the summer, rates started increasing in a manner unusual of the typical seasonalities. As of the beginning of December, Container spot rates from Asia to North Europe are now 130% higher than at the start of the year. On top of these increasing rates, carriers have added peak season and congestion surcharges, further hiking up the prices of global freight.
Current port congestion in the West and container availability crisis in Asia
Tight capacity management and increased blank sailings are the major contributing factors. The many blank sailings in the early stages of the pandemic have resulted in the dramatic imbalance of global container volumes. Now empty containers that should otherwise be carrying cargo are being repositioned to Asia as quickly as possible.
Merry Christmas, it’s a Brexit deal. Not the gift we’d always been hoping for, but the one we received nevertheless. With this breaking news and a final deal being made, global freight forwarders with operations in the UK can finally stop speculating and begin to learn and adapt to the new procedures.
Which brings us to the trends to look out for in 2021...
Ecommerce is booming and is here to stay
Online shops are thriving and people young and old have become accustomed to ordering online. Early adapters to digital tools are winning the race. From 2021 to 2023, retail e-commerce sales are expected to increase by 2.336 billion USD.
Port congestion in Los Angeles
The port plans to provide financial incentives to cargo terminals for decreased dwell time and increased dual transactions is moving forward. The port's proposal allocates $8 million for the initiative and will present it to the Harbor Commission in January 2021.
FMC conducts investigation on carriers
In response to the critical level of port congestion in Los Angeles, Long Beach, New York and New Jersey, the US Federal Maritime Commission (FMC) is launching a formal investigation into ocean carriers’ operational practices.
The three main issues the FMC will focus on are: demurrage and detention practices, empty container returns, and the refusal by some lines to carry US exports as they expedite the return of empty containers to Asia to be refilled with higher-paying import cargoes. Hopefully global freight forwarders can take back some power in the market and recoup demurrage and detention costs as a result of the investigation.
More reliance on digital tools
To cope with the demand for speed, focus will be placed on putting inventory where it can easily reach the end consumer. Digital third part service providers are offering real-time data analytics and inventory management systems to ensure efficient last-mile delivery. The shift to data driven decision making has been well underway, as we already know. And It's not just end consumers who demand easy digital interfaces.
Digital booking platforms, such at the 7ConNetwork Booking platform, are becoming a must-have for shippers. Those who invest in digitalization or join digitally progressive networks will be the winners of the new roaring 20’s.
Changes in trucking
In the US, trucker salaries are increasing due to the thinning workforce. Some speculate that it will take more than just a salary increase to attract workers to the profession of truck driving. We’ll see if any structural changes in the job take effect or not. Last mile solutions may also play a part in changing the nature of the job as well.
World economy depends on vaccine distribution
The first vaccinations have been administered in the US and Europe, and now on to the larger population. But let's not get too ahead of ourselves...
“Until there is a vaccine for enough of the population to be effective, we are going have restraints on international trade and transportation,” says Paul Bingham, of IHS Markit. He doesn’t expect world economies to return to pre-pandemic levels until sometime late next year, or possibly early 2022.
What else does Brexit mean for the global freight forwarder? A lot of new customs paperwork to be learned and dealt with. If you have business importing to or exporting out of the UK and don’t have an agent on the ground for you there, it could be to your benefit to join a freight forwarder network that has the area covered. Likewise if you’re a forwarder in the UK, your expertise and insight would be a positive contribution and assurance of business in a global freight forwarder network of trusting members.
After enduring quite the roller-coaster ride throughout 2020, global freight is not yet relieved of uncertainty. But we humans, and especially logistics professionals, are resilient. If we have been able manage global freight through the ongoing chaos, we can manage it through whatever 2021 holds. See you next year!