NEW RELEASE: Expedock Launches Digital BPO and Customer Experience Platform
Supply chain growth forecasts and market trends to watch out for this year
Many analysts have released forecasts for the freight market in 2021 – some optimistic and expecting increased growth volumes while some have expressed market decline. Below is an overview of what a number of industry experts foresee.
Supply Chain Quarterly reports that freight market growth is anticipated to decelerate in 2021 as COVID-19’s effects on the US economy will remain to negatively impact freight volume growth this year based on IHS Markit forecasts.
2021 growth will vary on the mode of freight transport according to IHS Markit Transearch 2021 tonnage forecast. Despite the overall freight tonnage forecast of 0.7% drop in the United States, air and rail intermodal are expected to see tonnage growth carrying on from their strong end in 2020. Air cargo and rail intermodal are seen to increase 2.2% and 0.5% respectively due to e-commerce related shipping. Air cargo is also expected to generate demand from vaccine and PPE shipments. According to the International Air Transport Association (IATA), the air cargo market is “poised to recover to pre-crisis levels in 2021” anchored on the recovery of the global market and sustained activity in e-commerce.
Similar to last year, the e-commerce segment is expected to continuously grow and with Section 321 and the de minimis rule, there's going to be ongoing growth in e-commerce goods coming in from China using 321 into the US region.
Compared to the growth forecast for air cargo and rail intermodal, ocean freight is expected to decline 1.2% in 2021 combined with severe equipment imbalance to last until end of Q1 2021 probably extending until Q2 this year based on DHL’s Ocean Freight Market Update. Trucking is also seen to plummet 0.7% this year according to IHS Markit.
In line with the growth forecasts for various modes of freight transport, supply chain industry experts have additional insights on how to optimize the supply chain in 2021 for businesses.
It’s essential to ensure that supply chains do not have a single point of failure associated with and has redundancy built into it. It’s crucial for businesses to ensure they’re doing the best they can and need to from a visibility perspective given the value of ingesting data across all touchpoints.
From a 2021 perspective, it’s relevant to have that resiliency, visibility, track and trace capability, and the ability to do the what-if scenarios. In this line, Bernie Hart, VP Customs & Trade Business Development, Flexport encourages businesses to access their Automated Commercial Environment (ACE) information if they haven’t yet.
As an importer of record into the United States, everybody gets something similar to a unique social security number, which the government uses to record five years’ worth of your data in. Bernie strongly encourages importers/exporters to pull and mine that data and study trends. It's good to look at how you have done reporting from a consistency perspective and also look for ways to minimize duties, taxes, and fees based on ship-from, ship-to location. There are 400 different free tide programs in the US where 14+ of which, importers and exporters can take advantage of.
From a duty drawback perspective, there are many businesses that bring in products to the United States, which are either exported or destroyed in the country. There are different types of drawbacks, but it used to be $3 billion left unclaimed annually. That number has now gone up because of the trade wars. Now it’s probably around $4-6 billion that's left unclaimed. The government knows that the businesses have access to this information on both import and export side, but they're lacking the expertise or knowledge to be able to go in and recoup that drawback. Companies that aren’t exercising drawbacks, or haven’t looked into it, are strongly encouraged to look at the drawback landscape as it's going to continue to grow into 2021.
Drawback is also a perfect example of unstructured data. You have an importer that's buying on a DVP basis, and the products being exported by a separate exporter. Those are two different parties of two different freight forwarders that you're working with, probably two or three different truckers and two different customs brokers that just leave a whole lot of unstructured data information sitting in different structures. Industry experts think that some of those are the challenges as customs brokers, Freight Forwarders Associations, and customers face where more guidance is needed.
In terms of drawback, it's getting the data to do the drawback that's extremely tedious. Jack Chang, Managing Director, JUSDA USA thinks it would be those organizations that can organize the structure and actually use RPA in those processes, who will be the winners as we look at 2021. As we move ahead, Jack further adds that what we could look forward to is hopefully that vaccine relief gets going in quarter one which could bring some normalcy back to the warehouse operators, and people who are working at the front lines to have some comfort in knowing that they could go home and be safe in their work environment.
A Look Back: 2020 Ocean Freight Industry Status
Top Global Megatrends That Will Transform Supply Chain Management 2021
Benefits of Big Data Analytics for Supply Chain Management
How to Digitize Your Logistics: Supply Chain Technology Trends 2021
Expedock: Your Reliable & Trusted Supply Chain Technology Partner in Workflow Automation
