Time and money: It’s what the shipping game is all about. But the tradeoffs we make between time and money reveal a lot about where the supply chain is and where it might be going.
Remember the days before the recession, when we had a serious capacity crunch? If you could save a shipper time, you were a hero. Obviously, shippers weren’t upset if you could save them money. But costs often took a backseat to getting the cargo to its final destination, pronto.
Fast-forward to today. The port capacity crunch is a capacity surplus because of the recession’s impact on international trade. Shipping lines are easing up on the throttle, sacrificing sailing speeds for fuel savings. The hours at truck gates have been scaled back as terminal operators reduce costs.
Where does this leave us in the next year and beyond? Are we facing a major shift in the time-money continuum? I predict the pendulum will start to swing the other way, and we will see some improvement in cargo flows, but with a few caveats.
We’ve seen the early signs the recession is about to break, but the Fed warns we may face a fickle, jobless recovery. While U.S. consumption will likely pick up as consumers become more confident in the recovery, we can no longer depend on the appetite of the American consumer to grow without limit.
I see the time factor growing in importance as shippers react to a modest increase in consumption. We will be challenged to adjust the supply chain to place a greater emphasis on U.S. exports, by repositioning equipment and re-evaluating port calls and sailing schedules.
The shipping industry will keep a tight lid on costs. While we all hope trade volume increases, everyone is preparing to be profitable even if volume remains sluggish. If we can strike a balance between saving shippers time and money, we will steer the industry in the right direction.