In this week’s blog, we will talk about some changes in the supply chain industry that are occurring at this moment, what that could mean for your business, and what trends could arise in the future from these events.
Despite the clear effects of COVID-19 on the global supply chain, most companies were able to keep their supply chain sustainability goals in order. In a study done by MIT’s Center for Transportation and Logistics, published earlier this week, only 9% of the 2,400 people surveyed said that their supply chain sustainability goals declined between 2019 and 2020. The executives and professionals surveyed defined supply chain sustainability as the social, as well as environmental, impacts on the production, distribution, and usage of their goods and services. The changes applied mostly to bigger companies (those with over a thousand employees), but that is probably due to the changes in priorities between smaller and larger firms.
The prices of shipping continue to skyrockets as the means of transport become more expensive and increasingly unreliable from the perspective of maintaining lead times. According to an index by Drewry, a London-based logistics consulting firm, the price of a 40-foot shipping container has quadrupled from what it was a year ago. The market price for a container stands currently at $8,399. Prices have surged further recently; more than 50% was reported between the first week of May and today. Containers sent from China to the states now easily break 5 digits, and last-minute deliveries on shipping vessels can cost upwards of $20,000. Sea-Intelligence ApS, a Danish logistics market research firm, found that 695 ships bound for the West Coast of the US arrived more than a week late between January and May of 2021. For reference, 1,535 of these types of delays were found in total between 2012 and 2020.
In the midst of all the chaos surrounding supply chains and big business in general, policy changes might affect the long-term outlook on these market conditions. The new legislation, executively ordered by President Joe Biden, aims to help cargo owners and curb potential greed present with some freight shippers. The order is attempting to help ease the burden of carriers and speed up the supply chain by issuing fines to companies that do not get their orders in on time.