A shipping yard holding international freight and shipping containers

The Global Shipping Demand Warning Sign You Should Know About

Think back to the very beginning of the pandemic in America. Fitness centers and gyms temporarily closed down, prompting exercise enthusiasts to rush to their nearest sporting goods store looking for weights and equipment.

That sudden rush in demand led to plenty of inventory outages in stores. Consumers waited weeks – even months – to find equipment for their makeshift home garages. Naturally, retailers sped up production orders trying to grab as much inventory as possible while demand was high.

Global shipping picked up steam as overseas manufacturers produced as many dumbbells, barbells, weight plates, and exercise machines as possible to ship to the U.S. But, the pandemic eventually eased and gyms re-opened, sending consumers back to public workout spaces.

By the time shipments reached the U.S., the demand for personal equipment had cooled, and retailers found themselves with excessive inventory.

Now a few years later, companies like Peloton are feeling the pinch. They have too much inventory, they’ve halted the production of new bikes, and their business is facing difficulties.

This example highlights a significant challenge retail companies experience trying to anticipate customer demand while at the mercy of long lead times on overseas inventory orders.

It’s why retailers need to pay attention to a warning sign about global shipping demand that could help them make informed decisions for 2023 and beyond.

Industry Insight: a Downturn in Global Shipping Demand

Maersk, one of the largest shippers in the world, recently predicted that demand for shipping containers would decline by 2-4% by the end of 2022.

The prediction is a major reversal from the previous few years when shippers couldn’t keep up with demand from retailers – and even ordered new ships to be built! Now, it looks like they will have difficulty filling up their existing vessels.

So, what’s going on?

  • The U.S. economy is showing signs of continued weakness.
  • Consumers are not expected to buy as much due to inflation.
  • People already have too many items they purchased during the pandemic.

Unfortunately, retailers have to act now to decide whether to hold onto their current inventory or order new inventory in time for the 2023 holiday shopping rush. Typically, overseas shipments take 6-9 months to reach U.S. retailers, prompting the need for fast decision-making.

But, the lingering effects of 2020 continue to be a factor in present-day demand planning.

“Shippers generally went a little bit higher with their inventory levels because they didn’t want to miss sales,” said supply chain expert Chris Wetherbee of Citigroup in a recent interview. “That has a hangover as we move into a sort of slower demand environment.”

The mixture of too much inventory, insufficient demand, consumer overspending, inflation, economic concerns, and long wait times for retailers makes for a challenging environment in the retail industry.

It may take another year or two for the market to restore a proper balance of supply and demand. But, another global disruption could lead to more difficulties for retail companies.

For now, retailers need to do their best to remain nimble and agile while navigating the slow-moving nature of global shipping.

We get that it’s been challenging going from running as fast as possible to meet customer demand to then slowing to a crawl and figuring out what to do with excess inventory. But there are some things you can do to smooth out the lumpy cycle and make decisions with confidence.

The Importance of Real-Time Visibility and Communication

We cannot stress enough the importance of having real-time visibility into each critical area of the retail supply chain. It will also help to establish strong communication with each vendor, supplier, and partner in your supply chain.

Achieve Real-Time Visibility

Your company needs to know the status of every order in real-time. To find the balance between the fast-paced retail world and the slow-paced global shipping environment, you need to be able to view orders at any given time.

Without access to real-time visibility, you could experience these challenges:

  • Lengthy delays in receiving orders.
  • Additional costs trying to make up for lost time with premium shipping.
  • Unable to receive orders once they reach your warehouse due to a lack of preparation.

Visibility is crucial to be able to track the movement of every order and proactively address any issues that come up. But how can you address order problems if you don’t have healthy communication?

The Importance of Communication

Retailers managing hundreds of orders at a given time know how important communication is. There simply isn’t enough time in the day to follow up on every order via email, phone, or basic communication tools.

You need access to robust software tools that allow you to execute key tasks:

  • Check the order status in a centralized location.
  • Follow up with each participant in the supply chain.
  • Work with suppliers and vendors to streamline processes.
  • Resolve issues on the spot.

When you have healthy communication, you can make decisions that will pay off months and years down the road.

Our Solution to Improve Visibility and Communication

The retail supply chain is a highly complex entity that requires advanced planning. Throw in the warning sign about declining global shipping demand, and retailers must make the right decisions to offset the effects of an inventory glut.

Fortunately, you can take countermeasures to build a more resilient and stable supply chain. We can help your company achieve real-time visibility and improve communication through our CloudLogix platform.

The platform was designed by supply chain logistics professionals who have been in your position before. We built the platform to help companies simplify their supply chain and streamline crucial processes.

  • Increase visibility: support end-to-end shipment visibility between stakeholders.
  • Enhance communication: bridge gaps in communication and eliminate mistakes.
  • Integrate with other tools: use our integrations with your ERP system and other platforms to seamlessly manage data across the supply chain.

Using our platform to support your retail supply chain has many other advantages. Now is the time to stabilize the supply chain so that you can meet customer demand – no matter how much it fluctuates during challenging economic conditions.

Talk to us today about embedding CloudLogix into your supply chain. We are sure that you will benefit from utilizing our tools!