Inbound Freight Challenges & Costs 2023
In 2022 we looked at some of the challenges facing the inbound freight industry and companies importing goods into the UK. Whilst the nature of some of the challenges has changed (and the Ever Given has been moved on) and the market “normalises”, new challenges continue to present themselves.
The market has shifted considerably with costs normalising and reducing by around 75% YOY. Port congestion continues to ease and the cost of living crisis continues to impact on demand. The Drewry WCI composite index of $1,763 per 40-foot container is now 83% below the peak of $10,377 reached in September 2021
In terms of current situation some of the top challenges include:
- The post-Brexit era and its effects on trade and customs regulations
- A shortage of drivers in the freight industry
- The imbalance of UK imports and exports, resulting in a high level of empty container movements
These challenges have disrupted the trends of freight movements into the UK, and businesses continue to work to adapt to these changes.
Whilst we cannot directly control many of these factors, we work with our clients to review contracts and pricing. Whereas spot pricing was the norm 12 months ago, , freight providers are now looking to secure volume and pricing certainty. Our benchmark data allows us to quickly identify opportunities here which can help drive savings into client businesses.
Although these rate card savings are important, the greater impact we have is often operational. By delivering operational service improvements, additional savings can also be made through changing the way our clients work.
- Container Fill Optimisation. There are multiple ways to address this, however, one of the simplest ways to optimise fill is to consolidate freight requirements across the business. Are you aware when you are sending multiple shipments and can these be consolidated? For more complex operations there are software solutions available. By comparison, when well sourced these will deliver value but take time to implement. You may benefit from our expert impartial guidance when selecting these.
- Chartering Vessels. This is solution for large volumes. Charter vessels can operate on long term contracts. This is not to be confused with the spot charter market activity that exists and is very unreliable. The port-to-port transit times are also the fastest on the market. Providers have invested in their own container equipment and have stock on hand to satisfy the service equipment demands, this element is also controlled for clients.
- Explore systems to improve supply chain visibility. Many organisations manage their supply chain through spreadsheets, compiling data to share with their colleagues and other departments. You have the ability easily share spreadsheets but they lack in real time reporting. Supply chains are often, therefore, unaware of delays or cancellations until goods are due.
- Route your supplies through more economical ports and airways. This may result in slightly longer lead times to transport but if planned in advance can deliver considerable savings.
- Keep close to your suppliers and spread your risk. Ideally, don’t put all your eggs in one basket. Work with more than one freight provider and keep a close eye on the market and freight rates. Test the market regularly to ensure you are getting a fair price. Ebit has freight experts that can assist if you want support here.
We are happy to discuss your current processes and challenges to see where we are able to work together to add value and drive out cost. Working together, we can identify which changes can be implemented to help form your approach to international freight
Here at EbitIP we are experts in the field of indirect procurement, delivering real solutions – not just reports!. Providing benchmarked and proven savings across multiple categories for many clients we have a track record of innovation and excellence. You can review our case studies around freight and logistics here.
If you would like to find out more about how our procurement services could benefit your budget, contact us to arrange an introductory call.