In response to the recent disruptions in the Red Sea and other international situations impacting global trade, the Freight Buyers’ Club, sponsored by Dimerco Express Group, has released two in-depth episodes addressing these critical issues.
The first episode features host Mike King in conversation with Mark Szakonyi, Executive Editor of the Journal of Commerce, and Jon Gold, VP for Supply Chain and Customs Policy at the National Retail Federation. This episode delves into the Red Sea crisis, the Panama Canal, US elections, looming port strikes, and more, exploring their broader implications for global logistics, supply chains, and the shipping industry.
In the second episode, Alvin Fuh, Dimerco’s Special Assistant to the CEO, joins the podcast for a special news insight episode. The focus is on delving into the specific nuances of the Red Sea/Suez Canal crisis. This concise yet informative episode explores viable options for shippers amidst rising transit times and freight rates.
Below, we break down the key insights and discussions from both episodes.
Suez, Panama, Geopolitics and Union Disputes: A shipper’s Guide to Risk in 2024
Current Events in the Middle East
The ongoing threat of Houthi rebel attacks in the Red Sea is causing significant disruptions in global supply chains, with no clear resolution in sight. This has led to increased spot rates, shipment delays, and challenges in inventory management and transit time handling.
Geopolitical Factors and Resilience
The post-pandemic era underscores the importance of supply chain resilience, moving away from a sole focus on low-cost operations. The “China Plus One” strategy highlights the need for diversification, with retailers advised to prioritize reliability and adaptability in their supply chains amidst heightened geopolitical risks. With growing geopolitical risks over the past 25 years, the global trade dynamics become more complex, requiring businesses to navigate challenges strategically.
The Panama Canal and Surcharges
The Panama Canal faces challenges, including challenges like the El Niño drought affecting water levels. While minor delays occur due to draft restrictions, the larger concern is the persistent nature of the challenge, influencing East Coast rates. Federal Maritime Commission in maintaining transparency on surcharges is crucial.
Impact of US Elections on Global Trade
The results of the US elections have the potential to significantly impact import policies, job sustainability, and trade flows. There’s a focus on understanding how outcomes, especially a potential Trump win, might influence decisions on nearshoring and trade. Retailers strongly prefer a pro-business agenda, underlining the importance of political dynamics in shaping the business environment.
US Labor Disputes and Concerns
The potential for a dockworker strike on the US East Coast raises concerns about productivity and reliability. Shippers view risks differently in comparison to West Coast strikes, adding complexity to the situation. Retailers anticipate potential changes in shipping behavior, including shifts back to the West, emphasizing the crucial need for early planning to navigate challenges effectively.
Insights From Dimerco
In the latest episode, our expert Alvin Fuh shares insights on the ongoing Red Sea/Suez Canal crisis and its impact on shipping. The episode focuses on the challenges faced by shippers, such as longer transit times and increased freight rates, providing a comprehensive overview of the current scenario and offering guidance for navigating these difficulties.
Here are some key takeaways:
- Navigating Risks: The Red Sea continues to present high and unpredictable risks, despite ongoing coalition efforts.
- Assessing Carrier and Route Options: Shippers should carefully evaluate risks when choosing transit routes and stay informed about carrier decisions, particularly concerning the Suez Canal.
- Operational Impacts and Strategies: Prepare for possible capacity shortages of 25-33% on key routes. Expect constraints in space, soaring freight rates, and equipment shortages. Plan for longer shipping lead times due to potential service disruptions. Consider premium services for critical shipments to avoid delays.
- Understanding Market Shifts: Stay alert to rising rates, especially for Europe Westbound routes. Be aware of carriers potentially reallocating vessels away from less profitable lanes.
This episode underscores the importance of resilience and adaptability in the face of global supply chain challenges. Dimerco and the Freight Buyers’ Club podcast continue to provide valuable insights and strategies to help shippers make informed decisions during these challenging times. For more detailed advice and guidance, stay tuned to upcoming episodes or contact a Dimerco representative.