Supply Chain Tools that Create Value vs. Prevent Value Leakage
It’s not demand, but worries about finding peak season capacity later in the summer that have driven the trans-Pacific container shipping market into a frenzy.
Container spot rates are soaring. Some shippers, drawn from two years of disruption, which led to some logistics managers losing their jobs, are willing to pay thousands of dollars more to ensure they get slots and container equipment. As of Tuesday, container spot rates, as measured by Drewry, were about $7,800 per FEU from North Asia to the US West Coast, compared with a record high of $15,214 per FEU in September 2021.
Rate rise continues
There is certainly no sign of rate levels coming down yet, with port congestion in Asia and the Mediterranean delaying ships, disrupting schedules and creating growing shortages in equipment for Asian exporters.
Average spot market prices are now well over $6,000 per FEU on some rate indices, with the Shanghai Containerized Freight Index showing a 12.6% increase in spot ocean rates ex-Shanghai last week, the 10th consecutive week of rising rate levels.
Say there is a myriad of tools for supply chain now, with fancy words of visibility and agile. But how do you know what drives value for your organization? Based on recent McKinsey & Company studies on supply chain tools, here are the clear pointers on how to assess two crucial business metrics for a tool: creating value and preventing value leakage
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