Ocean freight rates on major trade lanes have declined to historical lows and are struggling to rebound from persistent overcapacity.
After years of low revenue, carriers are now struggling, causing cost-cutting measures that have reduced their reliability. In that environment, savvy shippers (manufacturers and retailers) may not be able to operate as they have in the past, with long lead times and annual request-for-proposal (RFP) processes.
Instead, they will have to become far more flexible in procuring freight volume, relying on the spot market and in applying other, alternative strategies. Success in the new environment requires deep market intelligence and sophisticated forecasting, which in turn entail investing in the requisite people, processes, and tools needed to run supply chains with greater agility.
Authored by Brian Nemeth, Henry Pringle, and Jim Blaeser.
Compliments of AlixPartners – a member of the EACCNY