The COVID-19 pandemic has had a major impact on global supply chains, leading companies to adopt a “China Plus One” strategy that diversifies their operations outside of China to anticipate future volatility. Countries such as Thailand and India are seeing an influx of companies establishing regional manufacturing hubs to ease their dependence on a single supply chain. This shift in logistics design from just-in-time to just-in-case strategies helps maintain inventories and supply lines, however, 90% of respondents still report higher logistics costs than in 2020.

Despite the current market forecast not being as favorable as the previous month due to inflation in Australia, carriers do not intend to pull capacity out and rates are expected to remain at their bottom level until the beginning of Q2.

The return to “supply chain normalization” has resulted in an estimated surplus of 5 million TEU of containers for the container liner industry, causing equipment storage costs to soar as freight revenues plummet. The surplus of containers has caused the cost of a new standard 40ft high-cube container made in China to decrease from $6,500 at the peak of demand to less than $3,000.

In conclusion, the COVID-19 pandemic has brought attention to the importance of diversifying supply chains and reducing dependence on a single source. While the return to normalization has caused some challenges for the container liner industry, it highlights the need for companies to continue finding ways to streamline and optimize their supply chain operations.