In this episode…
We have 3 main questions for Marshall: What is the logistics situation like now in the USA, what will it be like for the rest of 2022, and what might it be like a few years from now?
They also both give their thoughts on cost drivers, energy costs, trucking legislation, near-shoring, China’s role, and more.
If you’re interested in global logistics and/or are importing into the USA, this one’s a must-listen!
Just hit the play button to start listening..!
Listen to the episode right here 👇👇👇
00:00 – Greetings and introduction.
01:49 – Introducing our guest Marshall Taplits.
04:53 – What is the logistics situation in the USA right now (July ’22)?
Shipments are getting through to the States and companies are storing more stock. Amazon seems to have tightened requirements leading more vendors to store stock outside and fulfill orders themselves. There are new truck drivers working, so more seem to have been hired, although they are not as skilled as experienced drivers yet so internal logistics is moving but is operating at a lower efficiency right now. Costs overall seem to be much higher than before the pandemic and Marshall is doubtful that shipping costs will go back down to pre-pandemic rates due to energy costs.
11:25 – Has getting containers into and out of US ports improved recently?
It has improved, but the entire delivery time from China to the USA has generally settled at being two weeks longer than it used to be pre-pandemic, so importers need to factor this in. The ease of getting goods depends on the product type. General consumer goods are fairly plentiful, Target, Walmart, etc, have sales on so they have too much stock probably, but there’s a real shortage of automobiles right now, and industrial products, building materials, etc, are also suffering from delays and increased costs.
15:15 – Has the change in legislation for truckers in California made a difference?
Regulating the industry for truckers to be full-time employees, with certain rights, trucks under a certain age, etc, could add costs. Laws usually start in California and then spread around the States.
16:39 – Why energy, gasoline, and diesel costs are a key driver in trucking costs.
The cost of diesel alone has ballooned, maybe tripling in the past couple of years since the pandemic struck. Smaller trucking companies are under pressure and if they go out of business it leaves only large companies which could result in higher spot rates for customers due to less competition.
18:24 – What might the logistics situation in the USA be like for the rest of 2022 (July to December)?
Marshall’s opinion is that the remainder of the year will be about the same in the USA. The energy situation will be stable, more people are at work, there are plenty of new truckers, and business seems to be OK. When it comes to booking containers and shipping goods from Asia, don’t be too ambitious and factor in delays and longer times than before with a 4-5 week buffer on top of the ‘regular’ shipping time of maybe 3-4 weeks.
21:57 – Focusing on China.
Chinese manufacturers are often late by 1 or 2 weeks, so factor in a delay at the factory, too, on top of longer delivery times. There are no large-scale lockdowns in China right now affecting manufacturing like before, so predicting that China can fulfill orders without disruption to supply for the rest of 2022 seems fair. However, lockdowns can happen quickly, and the large Shanghai lockdown serves as a warning to other regions that don’t act swiftly to quell Covid outbreaks.
Not being able to visit China has been detrimental to business in some ways, because it has led to difficulty in inspecting quality, communicating with suppliers, and building relationships, sometimes ending up with relationships finishing and importers needing to find new suppliers which could have been avoided if China were open to visits.
27:29 – How might the logistics situation in the USA be in 3 years’ time?
There is a record number of container ships on order, so (if costs stay similarly high and the shipping companies don’t cancel orders) there will be a lot of competition and a lot greater shipping capacity than now.
Different currencies will be used more often than the recent focus on USD and Euros.
Insurance and energy costs will be higher.
Shipping will continue to be more complex and supply chains could require more links to get products from A to B.
Shipping costs may fall to between USD8-10,000 per container, but it’s unlikely it will be much below that.
It may take a couple of decades to get back to pre-pandemic speeds and costs related party also to energy independence, as the green transition means higher energy costs in the short to medium term.
33:13 – Have other countries taken a bite from China’s business?
India and Vietnam have been taking some business. There seems to be less near-shoring to the USA than some people say, as Mexico hasn’t done as much as expected yet. In Europe, Northern Africa is increasing, but still negligible compared to Asia. Some US companies are actively trying to source from different countries rather than China, but so few locations can offer the manpower, costs, speed, supply chain depth, and infrastructure of China, that it’s a slow process.
36:55 – Wrap-up.
- Sea freight costs falling in summer ‘22. Too early to celebrate?
- The Impacts of Russia Sanctions on International Trade & Logistics
- How Do Logistics From China Work for Importers?
- Types of Incoterms [Guide]
- What’s Causing The USA’s Logistics Troubles? [Podcast]
- Logistics Management from Sofeast’s supply chain management team – we support you by setting up and managing your shipping from suppliers in Asia to your location with acceptable costs and lead times
Subscribe to the podcast
There are more episodes to come, so remember to subscribe! You can do so in your favorite podcast apps here and don’t forget to give us a 5-star rating, please: