This creates another big headache for supply chains . Logistics does not like multiple peaks . All these supply chain issues create capacity inconsistencies . For example , reductions in the amount of time ships are berthed in port has led to greater capacity which has weakened spot rates and seen a dramatic increase in blank sailings . In the October Ocean report , blank sailings were highest on the Asia to Europe trade lane in September with an average of 41 percent compared to an average of 27 percent in October . The average for blank sailings on this trade is forecast to rise again to 31 percent in November .
The biggest problem these supply chain issues are causing for operators and their customers is cash flow uncertainty . Companies need cash more than ever in the current economic climate to be able to save . If they ’ re stockpiling goods , not shifting them , cash is not flowing . And we all know that cash has become more expensive with rising interest rates .
Outlook for 2023 : Welcome to a world of unknown unknowns
2023 will bring other cost considerations . There will be more changes to regulatory requirements with scrutiny on sustainability reporting . IMO2023 ( Oceanside ) will mean older ships must slow down to reduce emissions with a knock-on effect for capacity as ships will reduce the number of trips . Combined with the rising cost of oil and bunker fuel there could be even more incentive for carriers to run slower steaming services to save on rising transportation costs .
Capacity issues will impact rates as demand is still strong . Supply chain operators and their customers will have to build this consideration into their budgeting .
Labor costs will also escalate as staff demand salary increases to cope with the cost of living crisis . We have already seen this impact on where goods are shipped as companies worry about fulfilling peak demand this Christmas . In the most recent Ocean report , New York has become the number one box port in the US , overtaking Los Angeles due to fears about strikes by the International Longshore and Warehouse Union . In our recent Global Insights report , it was estimated the eight-day strike at Felixstowe port impacted some $ 4.7 billion in trade .
Extreme weather events are also on the rise . Experts are warning about the social and economic impacts of extreme weather events , such as drought on the Mississippi and the Rhein which in the last year has impacted key transportation routes . In our most recent Global Insights report we flagged that this summer ’ s record low water levels on the Rhine forced many containers to use rail networks and trucks for shipping adding unexpected intermodal costs and delivery headaches . Such unpredictable changes have a knockon effect for other ports as well , making it essential to have real-time visibility of supply chains so that logistics routes can adapt .
Supply chain professionals always cope with change and black swan events but given how central the performance of supply chains has become to the global economy there is even more pressure on the sector to reassure businesses they can handle not just the uncertainty , but the increased unpredictability of geopolitical , economic and weather factors .
What is clear from our data is that supply chain performance is an early warning system for potential softening in economic performance , underlining the strategic value to the business of having better visibility of what is happening . For example , in the October Ocean report Twenty-foot Equivalent
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