TPM Cold Chain

TPM25 Cold Chain Theme

Disruption and the Next Supply Chain Shock: Preparing for the Unpredictable

With memories still fresh of the nightmare COVID-era market that refrigerated shippers endured, the experience already is recurring. Soaring rates on non-reefer containers make refrigerated boxes more valuable to carriers for moving dry goods, depriving reefer shippers of capacity they normally depend upon. With carriers determined to not leave any money on the table in a bull market that could lead to a lengthy period of overcapacity, the pleas from carrier reefer leaders for capacity for their customers, who make up 6 to 7% of global container volumes, are falling on deaf years. Rates in bellwether trades such as the eastbound trans-Pacific exceeded $8,000 per FEU as of early July, still short of the pandemic peak of $20,000-plus but several times higher than historical normalized levels of less than $2,000. The soaring freight rate market is only worsening the impact of other disruptions hitting reefer shippers, including the Red Sea shipping diversions, which already greatly lengthen transit times and complicate supply chains for fresh produce shippers, as well as increasing climate-related weather events wreaking havoc on crop yields.

This may be the situation as of the summer of 2024, but what the market will look like when TPM25 takes place in March 2025 is anyone’s guess. Still, certain things can be said with confidence: the pre-COVID days of periodic, often mild disruptions are over. Although the source, timing, or magnitude of new shocks are unknown, they are coming and shippers and other market participants must be prepared. The question is, how? The only answer is being plugged into both the market and its key people, who can help you when disruption strikes. Positioning your company as an insider, with strong, current relationships with key partner organizations and their leadership, means you will stand the best chance to eke out maximum benefit amid current and future supply chain shocks.