Supply Chain Impacted by Unstable Shipping


Just this past spring, the Transpacific Stabilization Agreement (TSA) recommended rate increases across the board for shipping goods westward from the United States to Asia. In stark contrast, the instability of European economies and markets is causing quite the supply chain stress headache for transportation management officials. Now, Reuters is reporting that shipping companies are experiencing a sort of whiplash as they try to adapt to global market seizures.

One of the main issues plaguing shipping is the supply-demand seesaw that makes predicting market conditions (and shipping) treacherous at best. Transportation management and supply chain management professionals are experiencing difficulty adjusting to the wild global economic conditions, even as new ships ordered before the peak of the crisis are either being cancelled or delivered and promptly sidelined. With many European shippers operating at half capacity, the crisis is expected to worsen before it gets better.

Bankruptcies and consolidations appear to be weeding out some of the weaker shippers, while the more tenacious are looking toward cost cutting and resource maximization as they attempt to weather the economic crisis. Supply chain management solutions are assisting in increasing productivity while allowing cautious employers to keep their number of full-time employees at a manageable, financially feasible level.

While conditions continue to worsen, shipping companies are looking to Asia to potentially keep them afloat, as rising demand fuels the need for food exports to countries such as China. Reuters quotes Danish shipping professional Peter Hag as saying, “This is the new market – China. Even if we sell all the pork we have in Denmark, we’ll still be feeding only a small percentage of the Chinese.” Even though it looks to be an arduous 2012 for European shipping companies, attention is turning eastward to see what Asia’s booming population can potentially do for these struggling carriers.

About the Author