There is much talk about what a ‘new normal’ will look like post COVID and for anyone with a supply chain it will go like this;
Issue:
Blank (omitted) sailings aggressively magnified to ensure maximum capacity (by removing capacity); this ensures that shipping lines can prevent a freight rate slide with decrease in demand to maintain profits. More than likely you will see an increase in rates as capacity is further reduced.
Solution:
Make sure your forwarder is aware of what shipping lines control which trade lanes, where it is best to maintain multiple contracts to piggyback shared space allocation and find a forwarder that controls both CIF and FOB contracts.
Issue:
Air freight will become critical for resiliency of the airlines which will mean costs will remain high and volatile, freight will be a strategic priority as passenger sales remain bleak and sparse with social distancing preventing full flights.
Solution:
Be prepared to spend big and accept fluctuations as they change per flight per demand of space per flight. Maximise weekend consols and breakpoints, send more and spend less if weight /volume allows.
Issue:
Operating supply chain in silos (each area of your business operates independently; sales just send off random orders) across multiple terms of trade will result in chaotic and unpredictable supply chains.
Solution:
Minimise the silos and control your terms where you can.
Issue:
Relationship fragility with China will change the face of contracts and possibly local export laws, and tariffs within Australia, preventing efficiency and adding costs.
Solution:
Control what you can and watch this space. Now is not the time to start new business relationships in China.