Navigating Air and Ocean Shipping Cycles: Strategies for Business Success in 2022

Introduction: The Changing Landscape of Global Shipping

The past two years have presented unprecedented challenges for businesses, particularly those in the retail and eCommerce sectors. From soaring freight prices to space scarcity on various transportation modes, the global pandemic has reshaped the logistics landscape. Coupled with record consumer demand and persistent inventory issues, these factors have created a perfect storm for supply chain professionals.

As we navigate through 2022, the key question for businesses is: How can we transform supply chain complexity into a competitive advantage? In this article, we'll explore the current state of air and ocean shipping cycles and provide insights on how businesses can adapt and thrive in this volatile environment.

Understanding the Current Shipping Landscape

Before diving into strategies, it's crucial to understand the current state of ocean and air freight markets. Let's break down the key factors influencing these sectors:

The Ocean Freight Cycle: A Complex Ecosystem

The ocean freight industry is a intricate network of interconnected players. When imbalances occur in supply and demand, the effects ripple throughout the global system. The current situation at major ports, such as Los Angeles and Long Beach, illustrates this complexity:

• Record consumer spending in the U.S. has led to a spike in freight and container prices.
• Rising prices have prompted carriers to deploy more capacity to profitable trade lanes like the Trans-Pacific Eastbound (TPEB).
• The resulting record-setting volumes have strained port infrastructure, labor, and equipment availability.
• Congestion at ports has created a domino effect, leading to equipment shortages, space scarcity, and inventory challenges.
• Transit times have reached unprecedented levels, with an average of 114 days from cargo ready dates to destination port departure.

This vicious cycle has made it increasingly difficult for importers to make accurate inventory decisions and highlights the need for alternative strategies.

The Air Cargo Market: Expanding but Still Catching Up

The air freight market faces similar supply and demand challenges, albeit due to different factors:

• Air capacity comes from two primary sources: dedicated freighters and belly cargo on passenger flights.
• Pre-pandemic, passenger plane cargo space was the largest source of air tonnage.
• COVID-related flight cancellations led to a significant reduction in available cargo space.
• Overall, there has been a 7% reduction in total air freight capacity.
• Demand for air freight is at an all-time high, outstripping available supply.

Recent data shows some improvement in air cargo transit times, particularly for Trans-Pacific Eastbound (TPEB) and Far East Westbound (FEWB) routes. However, the situation remains volatile and subject to seasonal fluctuations.

Turning Challenges into Opportunities: Strategies for Success

Given the current state of air and ocean shipping cycles, businesses must adapt their strategies to navigate these challenging waters. Here are some key approaches to consider:

1. Embrace Data-Driven Decision Making

In today's volatile market, access to real-time data is crucial. FreightAmigo's Digital Logistics Platform provides comprehensive insights into shipping trends, transit times, and market conditions. By leveraging this data, businesses can make informed decisions about inventory management, shipping routes, and transportation modes.

2. Diversify Your Shipping Options

Relying on a single shipping mode or route can leave your business vulnerable to disruptions. FreightAmigo's Digital Platform allows you to compare door-to-door freight quotes for various options, including international courier, airfreight, sea freight, rail freight, and trucking solutions. This flexibility enables you to choose the most efficient and cost-effective option for each shipment.

3. Prioritize Visibility and Tracking

In uncertain times, the ability to track your shipments in real-time is invaluable. FreightAmigo's platform connects with over 1000 reputable airlines and shipping lines, allowing you to monitor your cargo's status anytime, anywhere. This enhanced visibility enables proactive decision-making and improves communication with customers.

4. Streamline Customs and Documentation Processes

Customs clearance and documentation can be significant bottlenecks in the shipping process. FreightAmigo's Digital Logistics Solution offers one-stop services for arranging customs clearance, cargo insurance, and trade finance. Additionally, the platform automates shipment documents, reducing errors and saving time.

5. Consider Alternative Ports and Routes

With major ports experiencing significant congestion, exploring alternative entry points can help mitigate delays. FreightAmigo's comprehensive network and Digital Platform enable businesses to identify and book less congested routes, potentially reducing transit times and costs.

6. Balance Speed and Cost

While air freight offers faster transit times, it comes at a premium. For non-urgent shipments, ocean freight remains a cost-effective option. FreightAmigo's Digital Logistics Platform allows you to easily compare different modes and routes, helping you strike the right balance between speed and cost for each shipment.

7. Invest in Relationships with Logistics Partners

In a challenging market, strong partnerships with logistics providers can make a significant difference. FreightAmigo's 24/7 logistics expert support ensures that you have access to professional guidance whenever you need it, helping you navigate complex shipping situations.

8. Optimize Inventory Management

With extended transit times and unpredictable delays, traditional just-in-time inventory models may no longer be sufficient. Consider adjusting your inventory strategy to maintain higher stock levels of critical items. FreightAmigo's Digital Platform can help you analyze shipping trends and adjust your inventory accordingly.

9. Enhance Supply Chain Resilience

Building a more resilient supply chain is crucial in today's volatile market. This may involve diversifying suppliers, nearshoring or reshoring some production, and developing contingency plans for various scenarios. FreightAmigo's comprehensive Digital Logistics Solution can support these efforts by providing the tools and insights needed to manage a more complex, multi-faceted supply chain.

10. Leverage Technology for Efficiency

Embracing Digital Logistics Solutions like FreightAmigo can significantly improve operational efficiency. From automated document generation to real-time tracking and analytics, technology can help streamline processes, reduce errors, and free up resources for strategic decision-making.

Conclusion: Adapting to the New Normal

The challenges in air and ocean shipping cycles are likely to persist throughout 2022 and beyond. However, by adopting a proactive approach and leveraging Digital Logistics Solutions like FreightAmigo, businesses can turn these challenges into opportunities for growth and differentiation.

By embracing data-driven decision making, diversifying shipping options, prioritizing visibility, and optimizing processes, companies can navigate the complex logistics landscape more effectively. Remember, the goal is not just to survive in this new environment, but to thrive by providing superior service and reliability to your customers.

As we move forward, flexibility, resilience, and technological adoption will be key to success in the ever-evolving world of global logistics. With FreightAmigo's comprehensive Digital Logistics Platform, businesses have a powerful ally in their quest to master the complexities of modern supply chains.

Are you ready to transform your logistics operations and turn supply chain challenges into competitive advantages? Explore how FreightAmigo's Digital Logistics Solution can help your business navigate the complexities of global shipping and emerge stronger in 2022 and beyond.