The U-Freight Group (UFL) expects the current supply chain disruptions to continue well into next year citing ongoing challenges of port congestion and lockdowns in China impacting both capacity and rates.
"Nothing that I have read in the first four months of 2022 leads me to conclude that supply chain disruption is likely to end any time soon," the freight forwarder said in its latest newsletter.
"The combination of factors at play, including continued congestion at ports across the world, the possibility of a port labour dispute on the US West Coast, the Covid-19 situation in China, and a lack of new container tonnage coming into the market, are all likely to prolong disruption and keep rates high," U-Freight added.
Disruptions in 2022 and 2023
The Hong Kong-based freight forwarder noted how optimists suggest that the disruption will continue, for the next 12 months, while pessimists say it could be all of 2023.
"Personally, I hope that 2023 will not be as bad as 2022, but I'm sure rates will remain elevated, and we’ll continue to not be able to rely on a seamless supply chain," UFL added.
Meanwhile, the group noted that although "some believe that the current fall in spot container rates shows that the market is improving from a customer perspective" — for the freight forwarder, this means that "prices will increase again."
"Global supply chains are broken in many cases and the disruptions and lack of predictability that we struggled with for the past two years are not going away any time soon," U-Freight further said.
"Our advice to our customers is to plan for disruption for at least another 12 months, whilst diversifying the modes of transport they use within their supply chains," it added, noting that this could mean implementing sea/air solutions or switching to more expensive air freight to compensate for some disruptions in ocean freight.