As the global economy, ports, and shipping lines slowly move toward recovery in 2011, a key issue will be maintaining a balance between supply and demand.
Although it may sound simple, that balance is difficult to achieve in the transportation arena. In addition to the many economic variables involved, there are numerous regulatory standards and industry sectors. With today’s increased emphasis on efficiency and cost savings, achieving that balance has never been more important to a successful business environment.
A look back on the shipping industry illustrates what can occur when supply and demand get out of sync. When we experienced an oversupply of container shipping capacity, the results were disastrous. As we look ahead, our industry and partners need to carefully rebuild supply in sync with market demand.
That means bringing on the right amount of additional equipment and services to meet trade growth. It also means having an adequate pool of skilled labor to handle new business. Build new capacity too fast, or invest too much too soon, and profit drops. Dramatic fluctuations on one end or other can harm your industry and your bottom line.
How can this balance be best achieved? Reliable economic forecasts are important, but these are often difficult to obtain when the stability of the global economy is still in question. Increased cooperation and understanding between each of the supply chain partners — ports, shipping lines, terminal operators and other transportation providers —are also essential.
Over the coming year, we can expect to see more market fluctuations. While this clearly presents a challenge, what remains to be seen is how each company’s business model and strategies adapt and adjust.
The companies that forecast accurately, are flexible and keep their supply in sync with changes in demand will see positive results in their increased efficiency and improvement in their bottom lines.