2022 - A Journey into the world of Logistics

When you click "buy" on Amazon, you might not be considering shipping companies in the UK, but they are a crucial factor when it comes to online shopping. When the price of an ocean container rises, those costs have to be passed on to the consumer.

A year of challenges

COVID brought passenger travel to a standstill in March 2020, and aviation cargo — half of which is routinely carried in the cargo hull of passenger planes — became prohibitively expensive, with substantial delays and disruptions. You may also recall there was a frantic effort with regards to airlifting huge quantities of personal protective equipment into the U.K. So in 2020, consumers began spending more money on "things" than on services like travel, dining out, and other experiences, as practically everyone was confined at home, which led to a huge boom for e-commerce.

Meanwhile, ocean carriers were bracing themselves for a downturn similar to that experienced in 2008, which had a detrimental impact on shipping companies in the UK, therefore they initially reduced their activities to save costs. Due to the fact that demand for goods produced mainly in Asia expanded so dramatically, the demand for container ships swiftly overtook supply. The consequences of this new trend became apparent in July 2020, when maritime freight rates skyrocketed, and they have continued to rise ever since.

What about startups & small businesses?

It's perhaps no surprise that small firms are being disproportionately affected by these circumstances. They're less resilient than larger enterprises who have more varied product lines, bigger margins to absorb costs, and direct contracts with ocean carriers, all of which lessen their susceptibility to dramatic freight rate increases.

So then, going forward, what’s the answer? To alleviate the impact of supply chain interruptions, over 30% of importers have adapted with the following strategies:

  1. 1. Using a number of different logistics companies in the UK.
  2. 2. Booking containers directly with ocean carriers, or investing further in their chosen forwarder's relationships.
  3. 3. Choosing to allow their suppliers to handle freight on a more regular basis.
  4. 4. Changing from ocean to air cargo, or from full container to less than container load (LCL)
  5. 5. The majority of respondents (70%) did not modify their sources due to challenges, while roughly 15% shifted to a different country overseas, and 15% migrated to domestic providers.

So, what does all of this mean?

Two things are obvious from these findings.

  • First and foremost, companies are scrambling to do their best to manage a less-than-ideal set of circumstances.
  • Secondly, there really isn’t a single optimal solution to the current set of challenges.

When looking at the supply chain problem as a whole, this is a fair viewpoint to take: every logistics company in the UK is trying as hard as they can to find the best way out of this difficult situation through industry-wide digitisation and standardisation.

Each firm will require its own distinct strategy, and at the end of the day, every crisis provides an opportunity for innovation, which is especially tantalising in a trillion-dollar sector such as global shipping.

Related Blogs

UK Haulage Companies — Driving your success

Empowering your business with Logistics Companies in the UK

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