In 2021, the economic rebound had literally boosted the financial results of the world's major transport and logistics groups. Some voices had even been raised, at the time, to call out certain groups, suspected of being “crisis profiteers”. The year 2022 shows how much these shows of indignation were exaggerated, in the face of what was ultimately only a very traditional market mechanism: in times of high demand, access to capacity is difficult and prices rise. And in the event of a reversal of trend, the phenomenon is also reversed...
In the first half of 2022, economic activity remained dynamic. As a result, freight rates continued to rise in all transport sectors during this period. However, the market turned sharply from the second half of the year onwards. Over the year as a whole, global GDP growth halved compared to 2021, from +6% to +3.1%, according to World Bank figures. Global merchandise trade has been hit hard by this slowdown. The growth rate of trade in goods fell from +9.8% in 2021 to +2.7% in 2022, according to World Trade Organization statistics.
On the demand side, transport operators and logisticians therefore started to experience a downswing in the second half of the year, but the performance in the first half of the year allowed most of them to show record results for the whole year.
Shippers began to regain some bargaining power at the end of the year. On the one hand, congestion in supply chains has begun to fade. On the other hand, international transport prices, and in particular sea freight rates, have started to fall again. On some corridors, particularly between Asia and Europe and the Trans-Pacific, the fall was even faster and more brutal than anticipated by shipping companies.
Road transport followed a similar trend, but to a lesser extent, and with a lag time and not necessarily for the same reasons as international transport. In 2021, the increase in road freight rates in Europe started a little later than in international transport and proved to be much more limited since it was up around 3.6% for the whole year compared to 2021, against double-digit growth on most corridors in maritime container transport and in air freight. The outbreak of war in Ukraine, in February 2022, accelerated the upward trend, due to the pass-through mechanisms for fuel price increases. In European road transport, the increase in freight rates thus continued until the 3rd quarter of 2022, while prices fell a little later internationally.
Historically, the balance of power between shippers and service providers has almost always been favourable to the former. The period July 2020 - July 2022, with its problems of access to capacity and its stratospheric transport prices, is a very one-off anomaly. As volumes to be transported begin to decline, shippers have regained control and have been quick to take advantage of this, especially in the maritime sector where they have felt that they have been particularly badly treated for two years...
Can we then speak of a return to the fundamentals of the supply chain that prevailed before the Covid 19 pandemic? Certainly not.
Supply Chain departments sometimes struggled to be heard on the chapter of risk analysis, often neglected in favour of cost control. It would be an exaggeration to imagine that the trend has been completely reversed. Now that the fluidity of operations is back to satisfactory levels, the pressure on costs is also back. However, the arguments in favour of securing supplies are better understood now. The Covid 19 pandemic and the war in Ukraine gave birth to the unthinkable (or the unthought-of).
The most concrete translation of this new consideration of risk factors is undoubtedly the movement to reconfigure supply chains, consisting in diversifying the sources of supply and the places of production, especially towards “friendly” countries and/or towards countries closer to the areas of consumption. The Covid 19 pandemic created an awareness of the vulnerability of supply chains, which has led companies to put the implementation of a risk reduction strategy on their agenda. But what was still only at the pre-planning stage at the end of 2021 was clearly accelerated by the war in Ukraine. Diversification is beginning to materialise itself on the ground.
On the question of the balance of power between shippers and carriers, we may have the impression that the pre-pandemic system is back in place. However, the traditional logic of dominant/dominated is at risk of being disrupted by two major issues: the energy transition and the labour shortage (...).
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