Supply-Chain Challenges Spurred by Covid Now Abated
New York, NY, December 23, 2022-"The Covid-19 pandemic might not be gone, but the global supply-chain crisis it spawned has abated,” reports the Wall Street Journal.
“Goods are moving around the world again and reaching companies and consumers, despite some production snarls and Covid outbreaks inside China. Gone are the weekslong backlogs of cargo ships at large ports. Ocean shipping rates have plunged below prepandemic levels.
“‘It’s obvious that freight rates peaked and began to normalize, driven by falling demand and an easing supply-chain congestion,’ said Soren Skou, chief executive of Maersk. In November, the shipping company lowered its 2023 forecast for container demand-a proxy for global trade. It now expects a decline from 2% to 4%, from a maximum decline of 1% previously.
“In the U.S., retailers have ample inventory. Railroads averted a labor strike and package delivery trucks have plenty of spare capacity. That bodes well for U.S. consumers heading into 2023, executives and analysts say, although profits for transport companies will be pinched now that demand and supply are back in balance.
“‘Just to remind us of where we were, a year ago, in the holiday season, Americans were wondering if we would get basic goods, not to mention Christmas presents, when we needed them,’ said U.S. Transportation Secretary Pete Buttigieg in a speech at UPS Worldport in Louisville, Ky., in early December.
“Parcel carrier FedEx Corp. and other regional carriers are having an easier time delivering packages this peak season, with additional capacity and steady parcel volume. On Tuesday, FedEx reported average daily parcel volumes fell 10.2%, declining for the fourth straight quarter.
“There were generally enough package sorters, drivers and sorting machines, helping FedEx hit a higher on-time performance rate, 95.3%, in the last week of November, up from 83.9% in the same time a year ago, according to data from ShipMatrix Inc., a parcel analytics firm.
“The U.S. Postal Service, which makes last-mile deliveries for several package delivery companies, said its previous investments in new sorting machines have helped expand its daily package processing capacity to 60 million a day. This has helped it better handle the holiday mailing and shipping rush.”