By Benny Lim    Photo：Jose Parra

Global supply chain conditions have largely normalized after temporary setbacks around the beginning of the year. Pressure on global supply chains fell again in March.

GSCPI integrates a number of commonly used indicators. Global transportation costs are measured by using the employing data of Baltic Dry Index (BDI) and the Harpex Index, as well as airfreight cost indices from the U.S. Bureau of Labor Statistics. The GSCPI also uses several supply chain-related components of the Purchasing Managers Index (PMI) survey, focusing on manufacturing firms in seven interconnected economies: China, Eurozone, Japan, South Korea, Taiwan, the United Kingdom, and United States.

A number of factors contributed significantly to the downside, with the largest negative contributions coming from lead times in Europe, backlogs in Europe and Taiwan sourcing.

Supply chain disruptions are gradually easing as demand weakens, offering shippers an opportunity to clear backlogs. But inland shortages of labor and equipment -- mainly trucks and drivers -- still lead to traffic jams at warehouses and store loading docks. While ocean, air, rail and long-haul truck rates have fallen to maintain asset utilization, last-mile package rates, less-than-truckload and other costs associated with e-commerce growth are rising, while carriers retain pricing power.

A host of external, global geopolitical and economic trends beyond the shipper's control - Ukraine war and Russian sanctions, new pandemic may happen and outbreak shutting down in every country again, potential longshore work stoppages on West Coast, bad weather, recession - could easily bring back levels of supply chain disruption seen during the peak of COVID.

Finally, there is increasing pressure from customers, shareholders, and regulators to demand that companies achieve environmental, social and governance (ESG) goals. This translates down the supply chain into pressure on operators and service providers to reduce fuel consumption, emissions, packaging waste, etc., saving money over time but adding considerable upfront costs.

Shippers are grappling with this uncertainty as they simply want to get their cargo from point A to point B on time. Relationships with asset carriers who control physical transfers are critical, but easier said than done — especially for smaller, less frequent accounts. Strategic shifts that increase resilience, such as diversifying models, gateways or suppliers, or alternative product inputs, involve risk and careful planning. The option of adding capacity by leasing planes and trucks is costly and complex, and beyond even the core competencies of large shippers.

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