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Demand for Supply Chain Intelligence Remains Elevated in Post-Pandemic Landscape

Container demand—and prices along with it—may be plummeting, but the demand for supply chain visibility is only climbing.

Nearly two-thirds (60 percent) of BCOs (beneficial cargo owners, which are the importers of the shipment) and freight forwarders said they expect to be more engaged with market intelligence data after the supply chain stabilizes, according to a survey from Freightos Data.

Almost all (92 percent) of the more than 200 respondents surveyed indicated that they expect to remain at least as engaged with the data as they are currently, while 64 percent called supply chain intelligence “very important” to the future of their business.

The numbers illustrate a reality that there is a drastic need for data regardless of where a business fits and operates in the supply chain.

The firm’s analysis of visitor traffic level to its container rate data appear to reflect this need, which ramped up during the first year of the Covid-19 pandemic. By July 2021, Asia to U.S. West Coast container rates increased more than 8X compared to January 2020, with rates on their way to a 13X peak in September. During this time, monthly visitors to the Freightos Baltic Index (FBX), which calculates the weighted average container spot rate of 12 underlying regional route indexes, spiked 50X.

By the end of 2022, ocean prices had plummeted back to normal and FBX visitors decreased by more than 50 percent from their 2021 peak. But, the fact that the number of FBX visitors still remained 23 times higher than in January 2020 suggests that businesses appreciate the value of freight market intelligence much more than they did in 2019, Freightos says. This further suggests that the logistics intelligence that was generated during the pandemic will carry over even as supply chains normalize.

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According to 76 percent of the respondents, operational updates are the most important type of intelligence, which can help inform on the necessary mode of transportation, and assist in making timing and routing decisions.

Coming right behind operational updates are ocean spot rates and economic data/demand levels and protection, which 72 percent classify as crucial forms of intelligence. Another 61 percent look to ocean contract rates, while 40 percent think air spot rates are important.

Among the shippers that were surveyed, 70 percent said they use freight intelligence as a basis to explain the level of freight costs incurred by their business or justify their logistics budget to company executives.

For most shippers (62 percent), market data is also used in rate negotiations with carriers and forwarders, while 61 percent use it to inform operational decisions.

Among forwarders, freight data is relied upon most often as a basis to explain the current rate climate to shipper customers (63 percent), with roughly half also using pricing data in negotiations with carriers or operational updates to make shipment decisions.

Freightos Data produces two freight pricing indices: the Freightos Baltic Index (FBX) and transaction-backed air cargo rate index monitor Freightos Air Index (FAX). Combined between the two, both cover more than 60 major airports and dozens of trade lanes.

New technologies have entered the fray in recent years in an effort to bring more knowledge to an industry that is often plagued with outdated, manual systems and tends to keep data in separate silos. And they’re still attracting some investors even amid the current unfriendly economic climate.

A supply chain report from PitchBook said that 2022 fourth-quarter venture capital activity in supply chain tech plummeted 71.4 percent year over year to $4 billion. But on a sequential basis, funding rose 28.2 percent, showing that spending was once again ready for a rebound. For example, AI-based supply chain management platform Altana raised $100 million in October, while supply chain visibility platform Project44 raised another $80 million.

To kick off 2023, funding rounds have already been raised at supply chain risk management platform Everstream Analytics, logistics and container visibility platforms Bluecargo and, drayage transportation management software PortPro, supply chain visibility platform Craft and supply chain risk management software Overhaul.

Despite the obvious need for visibility and the money being funneled into it, sophisticated visibility technologies remain widely under-deployed, with 47 percent of supply chain and logistics executives saying they have implemented this tech within their truckload transportation and air freight operations, according to a January study from Descartes. Another 46 percent have introduced these capabilities into their rail transportation, while the same amount brought the technology to ocean freight.

The Freightos report indicated that in deploying more of these visibility technologies, companies can be entering into more sensible contracts, which the Covid-19 pandemic upended when freight rates skyrocketed.

According to Freightos, nearly 50 percent of BCOs had forwarders ask to renegotiate a contract in 2020, up significantly from the almost 30 percent that did so in 2018.

“Shippers pushed to sign new—more expensive—contracts for 2022 in the hopes of ensuring better reliability, but as spot rates plummeted well-below contract levels in the second half of that year, the cycle restarted in reverse with shippers either abandoning contracts for the spot market or pushing for renegotiations with carriers,” said the report.

To stave off the ongoing volatility, BCOs can link ocean contracts to benchmarks like the FBX, Freightos says, because index-linked contracts remove the incentives for price-based disruptions like rolled containers in times when contract levels become out of sync with the market.