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Storage and capacity constraints continue as another peak season looms

Shippers are facing a litany of constraints and challenges as we move closer to peak season. Here’s what you can expect and some tips for navigating the challenges.

The US industrial market achieved record-high asking rents amid extremely tight space conditions in 2021, and that wave followed shippers right into 2022. While demand well-outpaced supply last year—and created a record low vacancy rate of 3.2% by December—the situation has yet to ease up.

Credit the e-commerce boom and strong consumer demand for just about everything with making storage space scarcer than ever. Concurrently, capacity constraints on the shipping side have made getting goods out of any available warehouse space and into customers’ hands more challenging than ever.

“Amid the supply chain crunch, many companies have struggled to get the inventory they need. Now they have a new problem: finding a place to put it,” Inc., reports. Warehouse space is increasingly hard to come by, it adds, and this “presents a particular challenge for companies that aim to expand their operations and output.”

Peak Season Looms

All of this is taking place with peak season looming. And while increased shopping from home or work has somewhat evened out the fluctuations in the freight market (i.e., it’s pretty much always busy these days), there will still be a few somewhat predictable peaks to plan for and circumnavigate in 2022. 

Most years, shippers plan for peak season to start in July and then continue into the first week of December. Looking only at Amazon’s calendar, for example, Prime Day takes place in mid-June, the back to school season kicks off in August and then the holiday shipping seasons starts at the beginning of October.

According to JOC, key ports along the southeastern US are warning of a coming import surge — and subsequent vessel backlogs — this summer, driven by the ongoing volume shift away from the congested West Coast. External dynamics like factory slowdowns in mainland China linked to COVID-19, “make it impossible to say whether they will clear existing ship backlogs before the expected summer surge,” JOC points out.

Smaller Ports are Beckoning

One way shippers can manage during this uncertainty is by using smaller ports. For example, JOC says Baltimore, Jacksonville, and Wilmington, North Carolina, are all free of congestion at the moment, and that they’ve all lost Asian import share as importers gravitate toward larger hubs. “Asian imports into those three secondary ports fell a combined 20 percent between January and March,” it reports, “mostly owing to weaker volumes in Jacksonville and Wilmington.”

At the other end of the supply chain, ports in China are dealing with the impacts of the Shanghai shutdowns and other COVID-related activity. As of April 20, there were 662 container ships anchored off Chinese ports.

“Queues of vessels carrying raw materials have jumped after Shanghai initiated a citywide lockdown at the end of last month to combat COVID-19,” says SupplyChainBrain. “More than two weeks on, the congestion has expanded to nearby Ningbo-Zhoushan as ship-owners desperately divert ships to other ports in the country to avoid the trucker shortage and warehouse closures in Shanghai.”

Uncle Sam Steps In

The Ocean Shipping Reform Act (OSRA) currently making its way through Congress promises to improve conditions for importers. The bill revises requirements governing ocean shipping to increase the authority of the Federal Maritime Commission (FMC) to promote the growth and development of U.S. exports through an ocean transportation system that is competitive, efficient, and economical.

Steps to Take now

Knowing that both the storage and shipping constraints will likely continue, smart shippers are planning well in advance both for their freight capacity and their storage needs. Rather than taking a Band-Aid approach and fixing problems as they arise, companies can work with an experienced, tech-savvy logistics provider that can effectively navigate the crisis and match the company’s freight up with the best, fastest and/or most affordable option available.

Give yourself time to find the right partner(s) and then align with them to lay out a plan for success during the peak season, and beyond.

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