Welcome to the third edition of the Silq Scoop, your vital resource to the global supply chain world.
In this month’s edition, we find that apparel makers, including Levi Strauss, Skechers, and Canada Goose, are trying to get closer to their customers. Doing so will mean integrating the direct-to-consumer model, but these businesses may be trying to bite off more than they can chew. Although US shippers are excited about the freight economy, they are also weary about overstocking inventories.
We will discuss all these and more, so enough with the preliminaries. Let's dive in.
Apparel Giants Want To Dabble In the Murky Waters of Direct To Consumers….Why?
Logistics is complex, but it seems some of the fashion powerhouses don’t care.
In a bid to grow sales, apparel giants are eager to get closer to their customers. This would mean dabbling in the murky waters of direct-to-consumers and last-mile delivery. Well, people always say logistic operations are complicated, but it seems these companies are about to prove them wrong. They have good reason, though.
Getting closer to the customers will allow them to tailor their approach to ensure each customer gets a unique experience. The thing is, will it work though? Logistics is easier said than done - something that a vast majority of freight businesses riding the cyclical market would attest to.
Anyway, stakeholders are very invested. Some are neutral, some hope it fails, and some are eager to see it succeed so they can mirror the blueprint. Can you guess who?
U.S. Shippers Weary About Overstocking Inventories….Can’t Blame Them Though
The freight economy is looking good, and everyone is excited. Not so much the shippers, though.
The reason is simple. Inventory can be a pain. And no business or supply chain wants to be saddled with inventory it can’t move or sell on time. Although the direction of the freight economy is hopeful, shippers seem to be the party poopers this time around. Opting for leaner supply chains and inventory management.
Considering that no one is sure where inflation stands, it is difficult to tell how consumers will react a day or even a month from now. So why not stay cautiously optimistic?
Would you have the same cautious reaction if you were in their shoes?
Middle East Peace Talks Collapsed, But China Container Future Rates Soar
Trading of China's container shipping futures (CoFIF) bounced back in the last week, as peace talks between Israel and Hamas collapsed.
While geopolitics is messing up the Middle East, one country far, far away is cashing in on the situation. If you are thinking of China, then you guessed right! While China has continued to oppose the war and call for a ceasefire, it does not hurt to have a favorable market position.
Rates on the two main Asia-North Europe futures contracts, EC2406 and EC2408, traded higher on 30 April and 1 May. This is despite the shortened work week due to the US Labor Day holiday. Both contributed nearly 80% of daily trading volumes.
Again, someone is benefiting from this…and it is definitely not the Middle East.
Air Freight Set To Withstand The Traditional Slow Summer
Amid the continued tensions across the Red Sea, air freight has continued to soar.
It's all thanks to e-commerce and their desire to bypass the disruptive ocean to get their customers what they want when they want it. According to Jan Kleine-Lasthues, COO for air freight at Hellmann Worldwide Logistics, there would have been over capacity by now if the e-commerce businesses had not considered air freight as an option.
Again, like the Chinese mentioned in the previous section, sometimes drama favors one party over the other. In this case, it favors air freight as businesses seek to bypass the crisis across the Red Sea. Most of the e-commerce shipments are coming out of China and the businesses are taking advantage of the generous de minimis threshold.
The U.S. House is trying to correct this, so gear up. We might be about to experience another long and tedious showdown between the U.S. and China.
Supply Chains Are at The Mercy of Geopolitics as Costs Rise
If technology is the supply chain’s best friend, geopolitics is its worst enemy.
It is just one thing after the other with geopolitics. Supply chains are struggling to keep up, and just when they are about to catch up, something else happens. Now, it is raising the costs for these supply chains as businesses fear U.S. sanctions on China should the latter make good on its claim over Taiwan.
There is also a legitimate worry that the U.S. may increase tariffs on goods coming from China. That means the once attractive China now witnesses supply chains seeking alternatives. Already India is the great alternative, but you can expect other countries to start contending for that soon enough.
Although it is better to be safe than sorry, it is sad that both parties are seeing a negative impact because of speculation.
Silq is a Source of Stability in Unstable Times
Global trade and supply chains are constantly on their toes. Considering how volatile the market is, you cannot blame the stakeholders. It takes one policy or one misunderstanding to upend the entire market. However, there is a way your supply chain can enjoy stability, even in the most volatile shipping situation.
The Silq platform helps streamline shipping solutions for shippers, supply chains, and customers. We have enjoyed great success doing it for others, even with the constant headache of many supply chains today. We can do the same for you. Get started today.
