Transportation and warehousing capacity to remain in high demand in 2021
Some manufacturing industry analysts suggest supply chains need to be shorter to be more resilient. This could reduce global freight demand and shrink the freight forwarding market. However, others argue that companies will look to expand suppliers within a region to reduce the risk of being cut off from one company or country. A survey by HSBC suggests that many companies plan to increase their China based supply chains in 2021. China’s quick economic recovery from the pandemic is one factor in some companies choosing to expand their supply chains there while the size of the domestic market and manufacturing capabilities may also outweigh the drawbacks.
Port traffic increased in the second half of 2020 although COVID-19 outbreaks in January 2021 at the ports of Long Beach and Los Angeles have contributed to issues with cargo congestion on the US West Coast. Transportation and warehousing capacity will remain in high demand as a result of the boom in eCommerce. According to the Logistics Manager’s Index tight capacity is expected to keep warehousing utilization and prices high until more capacity can be brought online. Transportation capacity is also down and some companies are struggling to find enough truck, ship, and aircraft space to meet higher consumer demand, which is driving up prices.
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