Explained what is the new normal for the logistics industry after container shortages by Video
Hello, it’s Iino.
This time, I would like to talk about my opinion how the logistics industry will change because of the recent container shortage problem.
I made a video to explain the cause and effect of the container shortage.
If you haven’t checked it yet, please take a look through the link in the comment section.
Skyrocketing of Ocean Freight
Ocean freight has skyrocketed recently. Some routes have increased by 20 times.
Increasing by 20 times is a bit extreme, but we could say that ocean freight for the last couple years has been too low.
In previous years, some shipping lines have merged with another company and one big shipping lines went bankrupt.
In last few years, many shipping lines were running in the red.
Then container shortages occurred.
Even with the increased cost for ocean freight, there are still many customers who need to transport their cargo.
Due to the increased demand, the shipping lines do not need to reduce their ocean freight as they did previously.
What will happen after solving Container Shortage ?
This means, once the Covid-19 situation has been brought under control and there are enough containers in the market, they will still control container volumes.
If so, ocean freight will not be cheap like it was previously.
Then, I guess it will be resulting in the following issues.
· Businesses with small profit margins will be unable to continue
· Businesses will unable to make profit unless they deal with high valued items
· Some products will have more advantages to be procured domestically
· Even if there is less profit, companies who can get volume to make profit will have the advantage
Sea shipment is the infrastructure of the world.
Ocean freight being so expensive is a problem.
But being too cheap will cause more problems.
Shipping lines will go bankrupt and the infrastructure will become unstable.
If there are fewer competitors resulting in fewer vessels for other countries, we won’t be able to ship cargos on time.
Also, it might affect the quality of shipping line services.
I believe that maintaining the balance is very important.
How important to get containers
In addition to this, as there is a limited amount of containers available, freight forwarders who cannot get containers will struggle to survive.
I’ve observed companies who are unable to find containers resulting no work and companies which have get containers are busy for new job opportunities.
Shippers need to send their cargo on time.
If their freight forwarder cannot find containers, then they will choose another freight forwarder who can.
Since they are unable to get containers and ocean freight has skyrocketed, there are shippers who request to use alternative methods to sea shipment such as air shipment and LCL shipment.
Increase of Cross Border Requires
Our company based in Thailand is receiving more cross border truck enquiries, especially to Singapore and Malaysia as they are transshipment ports.
The port congestion in these countries is causing problems.
A truck schedule from Thailand is more visible, therefore some shippers prefer to choose this method.
Importers are now maintaining high stock levels and they sometimes request warehouse facilities.
It is important for a sales person for a freight forwarder to be able to provide the suitable warehouse for importers.
So Freight Forwarder sales will be required to have a full skill set to enable the customers to provide a total logistics service.
Too many Freight Forwarder in Thailand
In my opinion, there are many freight forwarders in Thailand.
There are about 100 Japanese transport companies who are registered with the Bangkok Japan Chamber of Commerce.
Many of these companies deal with freight forwarding businesses.
Also, there are about 1150 registered Japanese manufacturing and trading companies in Thailand.
When I was working as a sales person, I had the responsibility for more than 30 companies.
Based on this, I feel there are too many Japanese freight forwarders in Thailand.
A freight forwarder business can be started with few members.
In the past, they were able to arrange logistics, as they could get containers from shipping lines even with small volumes.
However, at present, if there is not enough volume, we cannot get containers.
There is limited manpower for shipping lines sales people, so they prioritize freight forwarders with more volume.
Please Contact IINO san for Logistics from/to Thailand
Now, let me advertise our company.
In our company, as a group we normally deal with 5,000 TEU volume per month, and we have a good relationship with shipping lines.
Therefore, we can get containers from Thailand.
Because of this advantage, we also receive a new booking requests from other companies as they are unable to get containers.
Our strength is sea shipment, and as I have 7 years experience with total logistics arrangement in Thailand, we will be able to accept any type of logistics enquiries.
If you do not have a branch in Thailand and have any shipment from Thailand, please contact us.
Well let’s summarize today’s points.
Due to container shortages since late 2020, logistics industries have experienced a new normal.
I don’t think we will have the same container supply and ocean freight levels, as we experienced previously.
It maybe not the new normal but more like returning back to the old days.
For shippers, business models with logistics will become more important.
For freight forwarders, experience and sales proposal skills will become more important.
At the moment, the impact of Covid-19 is still increasing, and I believe it’s important to be flexible to the market situation.
That’s all for today. See you next time.