Offering reliable delivery in uncertain times

“We live in interesting times”. In view of the many different challenges facing shippers and delivery operators at present, this well-known and timeless Chinese saying is certainly true as we approach this year’s peak season. What lies ahead in the coming months and next year? And what are some of the consequences for international companies shipping goods cross-border and their logistics service providers? Paul Needham, Chief Editor of CEP-Research, analyses some of the key trends.

Volume fluctuations

As a result of these and other factors, volumes of goods for transportation and delivery fluctuated over the first half of 2022. Indeed, many logistics providers and parcel carriers have reported lower domestic and international volumes compared to the pandemic-driven peaks of last year.

Less clear, however, is how the current volumes compare to the pre-pandemic levels of 2019 and what the fundamental underlying sales trends are. Are we seeing a temporary adjustment that will disappear again once trading conditions improve? Or is this the start of a longer-term downward trend? In other words, where is the ‘new normal’ baseline in 2022?

Business confidence

What is notable, however, is that while many executives are being understandably cautious with their short-term planning, they remain confident about the medium-term outlook. For example, various multinational logistics groups have stressed that they will continue to invest in their networks and product portfolios to broaden capacity and capabilities. And M&A deals remain on the agenda.

Shipper needs

At the same time, businesses are adjusting their supply chain strategies and volume flows in response to changes in demand and supply. On the sourcing side, there appears to be an increasing diversification towards more suppliers and more source markets (the so-called ‘China + 1’ approach) to reduce supply chain risks. At the same time, outbound flows of finished products and consumer goods are fluctuating in line with changing demand in different countries and regions.

In terms of logistics services, shippers are certainly looking closely at costs but remain just as focused on service levels as ever. This means that service providers offering reliable services at affordable prices are likely to be well-positioned, especially in comparison to more expensive premium players or less dependable price-focused transport companies. Moreover, added-value customised solutions that go beyond the ‘one size fits all’ approach remain attractive for businesses with specific shipping needs.

Opportunities in a crisis?

To quote another well-known Chinese proverb: “in every crisis lies an opportunity”. In other words, those logistics companies that can adjust flexibly to changing circumstances more rapidly or in a more customer-focused manner than their competitors may well have good opportunities to steer their way successfully through these uncertain times. As in sport, winners in business are not always the biggest but often those who are suited best for the task in hand.

(Note: this blog article reflects the personal views of the author.)