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4 Bold Predictions for Shippers in 2015

Some people believe that there is an art to reading tea leaves or rubbing a crystal ball to predict the future. Who knows, there might be something to either practice; however, I don’t have a crystal ball and I usually compost any used tea leaves.

Predictions for shippers in 2015

All of us are hoping for a much better year this time around. But I am usually a pragmatic person. So let me offer some of my personal (and educated) opinions on what are likely to impact your supply chains this year.

After you read this article, feel free to comment and share some of your own predictions for shippers in 2015.

Waiting Times Continue on the U.S. West Coast

Vessel delays are likely to remain a problem for West Coast ports. We previously discussed the impact of port congestion. Unfortunately, problems with increased demurrage, long lines for drayage into the port and their associated expenses for shippers will remain a factor going into 2015. Many shippers have sought to avoid the aforementioned by using alternate routes via Canada or U.S. East Coast ports. But we may see these changes go beyond a short-term solution and become a more permanent shift in routing as importers take advantage of infrastructural improvements across U.S. East Coast ports.

Carriers Remain Focused on Controlling Costs

Trim the fat, cut the costs and go lean – carriers have been on a trend to reduce their operating costs and that won’t change in 2015. The focus on maximizing economies of scale has brought us larger vessels and changes to ship designs to increase the capacity for containers on board. It is also noteworthy that all major East-West carriers will participate in carrier alliances. We will certainly take a closer look at this trend and examine how it impacts you in future blog articles.

Manufacturers Are Increasingly Optimistic

The MAPI Foundation released a report in November 2014 on behalf of the Manufacturers Alliance for Productivity and Innovation (MAPI). This report states that in 2016 the manufacturing production will increase by 3.5 percent, putting it on track to outpace GDP for the same period.

Daniel J. Meckstroth, Chief Economist for the MAPI Foundation, predicts that “We will have full employment in 18 months and manufacturing is already there.” Meckstroth’s outlook is optimistic; however, if the remainder of the MAPI forecast is correct, 2015 will see positive improvements in manufacturing:

  • 3.8 percent growth in non-high tech manufacturing
  • 8.2 percent increase in high-tech manufacturing
  • 6.9 percent improvement in the investment of equipment, adjusted for inflation

Agricultural Exports Decline as Imports Increase

The U.S. Department of Agriculture forecasts that 2015 agricultural exports will be $143.5 billion, $9 billion less than 2014’s total, largely due to decreases in the price of bulk commodities. But 2015 is expected to post $116 billion (a record number) in agricultural imports, an increase of $6.8 billion more than 2014. According to the USDA, lower fuel prices will mean savings for farmers on transportation fuel and other petroleum-based products such as fertilizer. Additionally, farmers are expected to benefit more in 2015 from the expansion of international trade, favorable exchange rates and world growth.

When you take all variables and contingencies into account that can impact your supply chain, predictions and forecasts are just… well, predictions. Shippers have to adjust their businesses in response to the market. That fact will never change.

One of my favorite quotes probably best sums it up. “The best way to predict your future is to create it." - Abraham Lincoln

 

Continuation from Part 1 on November 22, 2013

Original text appeared in the January-February 2012 issue of Breakbulk Magazine

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