2 minute read

CAPACITY IMPROVEMENTS AMIDST SLUGGISH ECONOMIC GROWTH

The summer peak period has officially begun. Brought about by the influx of back to school supplies and those getting an early start on end-of-year holiday goods, the uptick in volume provides a good opportunity to see how the supply chain fares. From a capacity and operational standpoint, there have been minimal disruptions, and the situation remains fluid with virtually no port congestion or blank sailing issues. Economically, growth in the second half of 2023 is expected to be much slower than initially predicted at the beginning of the year. The first half of 2023 showed the global economy to be more resilient than predicted, but it has not set the stage for the second half to thrive.

All is quiet on the North American front, for the most part. Port congestion is a thing of the past with East Coast ports reporting 0-1 days waiting time, a significant improvement over this time last year. Other ports like Savannah and Houston also report 0-1 days waiting time. Los Angeles and Long Beach are being closely monitored by carriers due to a potential labor shortage risk. The biggest development affecting the North American supply chain are the Panama Canal draft adjustments taking place due to low water levels in the canal, which has an impact on capacity and disrupts lead times. The low water levels are caused in part by climate change – yet another example of how climate change causes a ripple effect which affects many things, including logistics. North American importers with goods that come through the canal will experience substantial delays and may need to seek alternative routes.

In the Asia Pacific market, ports have stabilized, and

By Jacob Wright

schedule reliability has improved. Exports are proceeding smoothly as China approaches pre-COVID conditions. Imports to Asian ports are seeing 0-1 day waiting periods. Intra-Asian transport has seen a decrease in demand YoY, but demand is starting to pick up in the summer months. Air freight exports to North America and Europe remain flat like they have all year due to ocean networks being more reliable and timely, and therefore air is less relied upon now than it was during the peak of COVID.

European terminals continue to operate smoothly. It is expected that stable port service across Europe will remain even as we head into peak holiday season later in the year. Inland, the potential for the Rhine’s water level to fall below operational levels like last year is a concern. This would pose a big challenge to barge operations and would force alternative methods of transportation like rail and trucking. The level of disruption to barge operations, and how well the rail and trucking side of things would be able to handle a spike in volume, remains to be seen. However, as of right now, conditions in Europe remain quite predictable and activity is proceeding as expected.

When looking at the big picture, the story remains much the same as it has all year - supply chain capacity and operability are improving while economic growth is struggling. Each month brings its own challenges and wrinkles into the picture, but 2023 is largely shaping up as expected. That is, 2023 is a stabilizing/recovery year for the global supply chain following the unprecedented and unsustainable conditions of the past few years. The biggest question that remains at the midpoint in the year is how the global economy will fare. ■

This article is from: