The New Year has been anything but smooth for those who operate in the supply chain. But just how much supply chain pressure are we dealing with right now? And how much are we likely to experience in the coming months? The answers to those questions might surprise you.
Continue reading this week’s Cargologik newsletter to get the latest from around the supply chain and logistics industry, and get in touch with us to learn more about how our single-source-of-truth orchestration platform can support your organization’s supply chain.
The New York Fed’s Supply Chain Index Remains Below Zero
At a time when it feels like global trade is blocked by a series of disruptions, there’s good news from the Federal Reserve Bank of New York: The Global Supply Chain Pressure Index for January remained below zero, which reflects lower than normal supply chain pressure. The Index for January was -0.11, which was only a slight increase from the -0.15 registered in December.
The all-time record for the Index was 4.33 in December 2021 during the heart of the pandemic. While shippers and others in the supply chain may be feeling pressure right now, there are indications that those pressures are easing and/or concentrated in specific geographic areas worldwide.
How Rising Tides Impact the Global Supply Chain
While the New York Fed provides quantitative signs that supply chain pressures remain below zero, there are qualitative indications that significant supply chain issues will persist into the coming months. In a new article, Forbes explores how “severe weather events and changing climate patterns are forcing international logistics and trade organizations to confront very real, multifaceted economic and operational challenges.”
The article notes that the World Bank estimates $110 billion in losses from natural disasters in the first half of 2023 alone. The threat of disruption and financial loss related to climate change and natural disasters should inspire anyone involved in the supply chain to choose technologies and establish workflows that help mitigate these consequences.
An Update on the Red Sea Crisis
There’s no end in sight to the crisis in the Red Sea, as yet another Houthi missile attack may lead to the sinking of a British cargo vessel. As the situation continues, J.P. Morgan writes about the impact of what’s happening in the Red Sea, noting that the “disruptions could add 0.7 percentage points to global core goods inflation, and 0.3 percentage points to overall core inflation, during the first half of 2024.”
At a time when governments around the world are using interest rate increases and other tactics to fight inflation, this news is unwelcome. Shipping costs on some routes, specifically Asia to Europe, have increased almost five-fold. This increase in shipping costs is sure to trickle down to consumers and all corners of the global economy.
BCOs and LSPs need advanced technology in place to help plan their routes and mitigate to the greatest extent these rising costs.
A Lack of Data Analytics and AI in Logistics
Speaking of the need for advanced technology, a new study finds that data analytics and AI are lacking in logistics. Specifically, the lack of data analytics and AI makes it more difficult to pursue sustainability goals and achieve supply chain visibility — two priorities that will only grow in importance in the coming years. The survey of 900 transportation and logistics professionals in the United States, United Kingdom, and Germany found that only 25% of respondents said their organizations effectively use AI in logistics.
Advanced technology holds the power to help with visibility, document management, booking, and myriad other supply chain-related tasks. Any organization that fails to embrace these new technologies will struggle to deliver a high level of customer service and create a competitive advantage.
The Solutions to Modern Supply Chain Complexities
Beyond advanced technology, what else can supply chain professionals do to navigate modern complexities? A new story from BNN highlights how “diversifying manufacturing locations, unifying and standardizing data, and forging better data sharing agreements” can help “improve agility, resilience, and efficiency in supply chains.”
Operational efficiency is the ultimate goal of most supply chain participants. Efficiency means lower costs, better customer service, and more time for team members to devote to high-value tasks. Without it, BCOs and LSPs will get lost in the maze of the modern supply chain, struggling to respond to disruptions and falling behind the competition.
Embrace Modern Technology to Rise Above Supply Chain Pressure
Don’t be one of the organizations that fall behind by using manual processes and ignoring opportunities to integrate new technology. At Cargologik, we offer a single supply chain visibility and orchestration platform that enables you to avoid fragmentation that impacts so many BCOs and LSPs.
Get started now with technology that can help you keep moving forward, even in the face of supply chain disruptions.
