In 2020 we will see the unusual become the norm. The ocean export market tanked in 2019 and had its most turbulent year in recent memory, decreasing 25 to 30 percent over the prior year. The ebbs and flows of export volume create havoc for shipper, carrier, and ocean intermediary (OTI) planning and execution.
Fueled by the trade wars, the high US dollar value, and IMO 2020, the race to beat increases in the market has disadvantaged the flows of export cargo. Terminal throughput, cash flow and inventory are all out of kilter compared with historical norms. Putting additional carrier capacity (tonnage) into the market, outpacing demand, further constrains cargo rates to unhealthy margins.
Gone are the times of budget planning and consistent cargo flows at a profit to guide investment and expansion, replaced with knee-jerk market rates lasting weeks and even days on the open spot market.
Responding to the ebbs and flows of cargo will continue to pose logistical challenges. Resolution of the trade conflict in 2020 may cause a spike in cargo volumes but will not avoid the turbulence associated with those challenges. We can only hope that an election year may avoid large policy changes that would result in swings in consumer demand. However, with a possible recession on the horizon, that may not be the case.
What is certain is that the inability to reliably project cargo flows and rates will continue to be the norm into the next year and beyond. The OTIs’ role in assisting shippers and carriers has become invaluable in navigating the chopping waters of ocean export cargo. Let’s hope they continue to be up to the task.