Here are some of the top news stories impacting supply chains this month:
The number of blanked transpacific shipping sailings is increasing, largely due to escalating trade tensions between the US and China—but weakening demand is a factor as well. Ocean Network Express (ONE) has suspended its planned PN4 service, which was supposed to start in May, calling out challenging market conditions as the reason. The trend is a reflection of carriers' efforts to manage overcapacity and stabilize freight rates while dealing with declining cargo volumes and the market’s uncertainty in the face of a trade war. The fallout is continued disruptions in supply chains, with shippers having to cope with reduced service availability and potential delays. Bottom line, geopolitical tensions have a huge impact on global trade.
Our take: The impact of tariffs is being felt by the industry. Importers should expect more volatility as the tariff landscape remains fluid. Maintaining flexibility and exploring new sourcing options need to remain a priority because uncertainty is the new normal for 2025.
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The US manufacturing sector contracted in March, with the Purchasing Managers' Index (PMI) dropping to 49%, a signal of economic contraction. The decline was mostly attributed to uncertainty surrounding the Trump administration's tariff policies, specifically market uncertainty in the days leading up to the Trump administration's tariff policies that were announced on "Liberation Day"—April 2. New orders fell as suppliers and customers disagreed over who would pay the costs of tariff-induced price increases. Input price inflation rose to its highest level since August 2022, driven by tariffs on steel and aluminum. The administration says the point of the tariffs is to bolster domestic manufacturing, but the experts say they’ll lead to higher consumer prices.
Our take: This pullback may be a short term reaction to the uncertainty created by the tariffs. The overall health of the US economy is okay according to the Federal Reserve (as of April 16). Companies can use this time to evaluate their supply chain partners and consider new carriers options and modes. Rates have changed in some lanes so it’s worth looking to see where you can find some savings.
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Industry experts are concerned as regular Suez Canal transits resume. The worry is that BCOs aren't prepared for the expected detention and demurrage (D&D) charges at congested ports. Ongoing geopolitical issues—particularly the Red Sea Crisis—have created a situation at global ports where container pickups and returns aren’t happening in a timely manner. Meaning congestion. And the industry is warning that things will likely get worse, that challenges related to D&D are just beginning, and that the full impact of the Red Sea disruptions has yet to be felt. BCOs need to be proactive, plan, and be prepared for any potential logistical and financial issues.
Our take: Although they often appear to be forgotten, the problems in the Suez Canal are still impacting global ocean shipping. The region still deserves logistics managers attention and is still impacting transit times and costs.
Read more here.