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News: Global shipping Industry is facing several challenges in the post pandemic world like surging freight rates, logistical bottlenecks and various supply-chain disruptions.
What are the challenges being faced by the shipping industry?
Less capacity, more demand: Due to an unexpected increase in consumer demand for goods after the March 2020 lockdowns , shipping companies have struggled to locate adequate capacity. This led to chronic shortages of vessel space, container equipment, warehouses, intermodal hubs, and labour.
Congestion at major regional trans-shipment ports has reduced the daily container sailing capacity, causing backlogs in export shipments.
Increase in shipping rates: Global container shipping rates have increased four to five times from their 2019 levels.
If left unaddressed, these supply-chain issues can decrease competitiveness of India’s booming export industry and drag down the overall economic recovery.
| Must Read: Winners and losers in shipping crisis |
What is the way forward?
– Companies must strengthen their end-to-end real-time visibility of supply and demand through a ‘global nerve centre, in place of Individual control towers of companies. This will have data all the way from their international suppliers to their customers.
This could also help companies spot international multi-modal solutions which may speed up delivery.
To implement this idea in India, companies should provide technological aid to their distributors who may lack such IT infrastructure.
– Companies need to immediately revisit global inventory norms, especially for critical components like automotive chips that are either fully dependent on imports or have a single supply channel outside the country.
– Optimization in supply chain and its diversification will lead to better health of shipping Industry.
– Shippers must monitor shipping capacity closely and track where capacity is being deployed.
They should invest resources in materials which will provide them high revenue with lower proportionate shipping cost.
Source: This post is based on the article “Turmoil on the high seas-Indian shippers need stability assurers” published in Livemint on 22nd Dec 2021.
