Resurgence in Global Demand Spurs 300% Surge in Shipping Costs

A recent spike in global demand led to a 300 percent jump in shipping costs as container shipping firms struggle to overcome a supply chain bottleneck, according to CNBC.

 

Maersk CEO Soren Skou told the news source the shipping company missed its fourth-quarter profit expectations due partly to the firm’s issues with capacity.

 

In the second quarter of 2020, Maersk saw a 15 percent decrease in shipping volume. This naturally prompted the shipping giant to reduce capacity, which became a problem when consumer demand and shipping volumes quickly rebounded.

 

Global trade is now continuing its track toward a 5 percent year-over-year increase – which Maersk and other shipping companies weren’t fully prepared to handle given the pandemic-driven disruption early in the year.

 

The container shortage increased freight rates and led to shipping delays for goods coming in from China. Some carriers have been sending empty containers back to Asia rather than waiting to fill it with exports from the US, Skou said.

 

Maersk and other carriers are now deploying at full container capacity again to meet demand. Presently, the firm is experiencing an 85 percent increase in quarterly earnings compared to the same period last year.

 

In the Maersk earnings report, Skou stated the firm is confident earnings will continue to grow as they begin to comfortably adjust to the demand patterns associated with the pandemic.

 

“Given the current exceptional situation where demand surge has led to bottlenecks in supply chains and equipment shortage, the first quarter of 2021 is expected to be stronger than the fourth quarter of 2020,” the company explained in the report.

 

A platform to manage supply chain instability

 

Gaining consistent, real-time visibility into the supply chain can give retailers, brands, and manufacturers the agility they need to alleviate issues associated with unexpected shifts in demand and avoid future bottlenecks that negatively affect the revenue cycle.

 

Bamboo Rose’s Global Trade Management (GTM) solution is specifically designed to give retailers, suppliers, freight forwarders, carriers, customs brokers, and banks a single, unified view of their logistics, compliance, and financial global trade operations to offset supply chain instability.

 

Freight forwarders, suppliers, and retailers can cohesively collaborate far earlier in the product lifecycle to ensure that sudden demand swings don’t impact on-time, in-full deliveries. If freight rates do skyrocket, retailers and suppliers can leverage cost simulation capabilities to evaluate contingency plans or cut costs from other phases in the product design and production process.

 

Increasing efficiencies and cutting costs

 

Retailers and manufacturers can also drive efficiencies and cost cutting measures to offset the negative impacts of the pandemic on their bottom line.

 

A single platform for collaboration across the partner network means users won’t have to waste time manually transferring data from one system to another. They also don’t have to input data on behalf of their partners.

 

The platform also provides upfront cost transparency, removing the need to guesstimate the actual landed costs of their product runs. Using Bamboo Rose intelligent engines, clients have tightened their estimated landed costs with their actual landed costs by 85% and improve gross margins by 10-15%.

 

Want to drive resilience and growth despite future industry disruptions? Check out the Bamboo Rose’s GTM solution on the Multi-Enterprise Platform along with our three other connected solutions here.

Kate Monica

About Kate Monica

Content Marketing Manager

Kate Monica is the Content Marketing Manager at Bamboo Rose. Previously, Monica was a content writer in the software and health IT sectors covering frontend tutorials and tech innovation.