Supply chain threats come in a number of formats and target various sectors of the supply chain. This is part four of a five-part series by Marina Meyer of Food Logistics.
Increasingly, ESG principles are requiring supply chain due diligence as a key indicator in positioning companies for success in the global marketplace. In turn, the key ingredients to effective due diligence are: visibility, transparency and knowledge, according to Suzanne Offerman, director, product management, international trade, Thomson Reuters.
Many companies lack proper insight into the intricacies of their sourcing operations. What’s more is that today’s disruptions are inevitable. In fact, they’ve been challenging supply chains for years, just in different capacities. And today, it’s these disruptions that are now threatening many of the U.S. and global supply chains.
In an outline of the Top 5 threats set to impact supply chains in 2023, here’s no.4:
Freight shipping
Perishable freight shippers are not immune to issues of lost, damaged or stolen shipments, as outlined in the most recent UPS Capital report. In fact, 55% of freight shippers experienced loss of time and resources to resolve the issue, while 48% experienced loss of sales and revenue.
Meanwhile, 67% of companies shipping perishable food remarked that their customers are the most affected by complaints due to delays.
“Forty percent of merchants reported that they expect to see an increase in damaged or expired merchandise, and a third of merchants anticipate the need to invest in weather stabilising shipping packaging over the next five years. Rising temperatures and other extreme weather conditions are a threat to cold food chains, however merchants are thinking about the future and how to safeguard their goods and margins,” says Ryan Fannon, director of product management and user experience, UPS Capital. “Freight shippers stand to lose USD180 000 or more each year due to lost, stolen or damaged shipments. With claim filings on the rise, swift resolution is crucial. Shippers can reduce financial repercussions and focus on customer resolution by partnering with third-party insurance providers. While shipping mishaps may be unavoidable, mitigating threats to your company’s finances and reputation is key.”
Moreover, there is significant market volatility that continues to disrupt the container shipping industry. With a significant oversupply of containers and a further influx of more TEUs in 2023, shipping lines continue to reduce vessel capacity and suspend services by considerable blank sailings, according to the market forecaster issued by Container xChange. In fact, some shippers plan to continue making capacity adjustments on services from Asia to North America, Europe and the Mediterranean to better align with demand fluctuations.
“In 2023, there is a high possibility of an all-out price war. It doesn’t seem that the capacity restrictions that we have seen in the past two years are due to return, so we’ll just have ample capacity both on the vessel as well as on the container side. With the competitive dynamics in the container shipping and liner industry, I don’t expect especially the big players to hold back, and we do expect prices to come down to almost variable costs. We also foresee market consolidation,” says Christian Roeloffs, co-founder and CEO of Container xChange.