While delays in the supply chain will extend beyond this year, prices seem to have stabilized.
Speaking at the Automotive Aftermarket Suppliers Association’s 2022 Global Summit in early February, a leading industry observer explained that there have been six weeks of no price increases in the ocean freight market.
“It’s the first time now in 24 months that we haven’t seen price increases now of six weeks in a row,” said Tom Cook, managing director at Blue Tiger International, a supply chain consultancy. “And that’s also been true of the market for air freight.”
So it’s likely that pricing — which has been a major sticking point across the board — is at its high point right now.
But will things go back down? Don’t hold your breath for pre-COVID pricing, however. What used to cost US$2,500 for a container is nowadays costing almost US$20,000 — and upwards of US$30,000 in some cases. But there will be some relief, Cook predicted.
“We’re anticipating that the average 40-foot container moving around the world will probably be in the $6,000-$8,000 range,” he said. “And air freight [that used to be] $1.80/kg will probably be in the $3-$4/kg range.”
Moving product by truck, though, may see some normalization. “Trucking will probably get back to [being] competitive because it will end up having significantly more capacity than demand will require,” Cook said.
Cook gave these comments prior to Russia’s invasion of Ukraine, which has resulted in gas prices jumping in North America.
As for delays, those won’t subside anytime soon. Cook’s predictions are in line with what others have similarly guessed: It will last through this year, with relief starting in early 2023.
“So for all you are planning this whole circumstance, I think you need to be thinking about this time next year is when we may see stabilization,” he said.