{"id":133983,"date":"2023-05-01T16:57:07","date_gmt":"2023-05-01T20:57:07","guid":{"rendered":"https:\/\/www.agribusinessglobal.com\/?p=133983"},"modified":"2026-03-03T10:22:26","modified_gmt":"2026-03-03T15:22:26","slug":"is-the-global-supply-chain-back-to-normal","status":"publish","type":"post","link":"https:\/\/www.agribusinessglobal.com\/zh\/agrochemicals\/is-the-global-supply-chain-back-to-normal\/","title":{"rendered":"\u5168\u7403\u4f9b\u5e94\u94fe\u6062\u590d\u5982\u5e38\u4e86\u5417\uff1f"},"content":{"rendered":"

After three years of pandemic-related disruptions, the global supply chain is starting to even out into a\u00a0new\u00a0normal. But what defines that standard is still developing.<\/p>\n

Gone are the weeks of backlogs of cargo ships at large ports. Ocean shipping rates have dropped to pre-pandemic levels in some shipping lanes.<\/p>\n

But have global supply changes returned to normal?<\/p>\n

\u201cCertainly, in terms of getting hold of available capacity, and normal lead times to secure a shipment and process through the docks, I would say it\u2019s definitely business as usual again,\u201d said Keith Holdsworth, Director and Senior Supply Chain Consultant for\u00a0Perfection Ltd.<\/a>, and Senior Associate at\u00a0AWP Associates<\/a>, based in the United Kingdom. \u201cBut, that said, it\u2019s hard to really say what was normal.\u201d<\/p>\n

And it might not be the growth of global supply capacity that\u2019s really improving as much as the weak demand and oversupply is causing the reduction in freight costs, adds David Li, Marketing Director for SPM Biosciences in Beijing, China.<\/p>\n

Today, as shipping delays, port congestion, and limited containers ease up, agrochemical companies learn how to navigate this new world of lower transportation costs, reduced shipping rates, improved reliability, increased competition, and weaker demand.<\/p>\n

Years of Ups and Downs<\/h2>\n

During COVID-19\u2019s first waves in 2020, there was a total shutdown \u2014 no manufacturing, no shipments, no demand. A semi-surge through the traditional holiday peak at the end of 2020 couldn\u2019t \u201cprepare us for what then became a full year of rate increases,\u201d Holdsworth said.<\/p>\n

This was due to supply chain disruptions that led to a shortage, resulting in panicked buying in overseas markets and driving a significant increase in pesticide sales, Li said.<\/p>\n

\u201cThat only really abated once the Chinese New Year spike in February 2022 passed,\u201d Holdsworth said.<\/p>\n

Since then, it has been a \u201ctotal reverse story, with effectively all of those late-2020 and 2021 increases now removed out of the system,\u201d Holdsworth explained.<\/p>\n

When it comes to shipping costs, \u201cwe\u2019re not back to pre-pandemic rates, but, in all honesty, I think carriers have become better, swifter at trying to manage supply versus demand having experienced the COVID impact \u2014 and are now looking to try to retain some of the improved margin they secured as a result of the pandemic,\u201d Holdsworth said.<\/p>\n

Normalizing Shipping Rates<\/h2>\n

While most shipping lanes have followed a similar price pattern, \u201csome of the individual lanes have fared somewhat better than others in holding onto some of the peak pricing built over the past 18 months,\u201d Holdsworth said.<\/p>\n

One example is China to Northern Europe, where the balance of supply and demand has left the current rate still around 170% of the end of October 2020 price.<\/p>\n

But China to U.S. lanes have plummeted recently. The current U.S. West Coast rate is 27% of that end of October 2020 level \u2014 and is, in fact, the lowest rate since March 2018. The U.S. East Coast is at 49% of the end of October 2020 price \u2014 the lowest rates since November 2019.<\/p>\n

\u201cOn those lanes, therefore, you can see why they consider they have returned to pre-pandemic levels,\u201d Holdsworth said.<\/p>\n

China to Brazil and China to South Africa have followed similar patterns. China to Brazil is at 23% of the October 2020 level and is back at the rate from July 2020, \u201cso somewhere between these two other markets in terms of how far back its price compares to,\u201d Holdsworth said.<\/p>\n

\u201cOnly the Intra-Asia lanes appear to buck the trend, as what were traditionally very low-cost ocean legs really took a step-change around the start of 2021, and have only lost a fraction of those gains through the past year,\u201d he added.<\/p>\n

A lot of pricing debate also comes into play around contracted versus spot-rate market dynamics. \u201cIn the past, I think carriers sought contracted rates for even annual terms, but through the pandemic challenges, almost the entire market went to spot rates as space availability and price weren\u2019t even guaranteed for the highest contracted rates,\u201d Holdsworth said. \u201cLong-term contracts are definitely back on the table now, but there do appear to be premium options available in exchange for reliable capacity.\u201d<\/p>\n

Overall, \u201cit is definitely getting closer\u201d to normal, Holdsworth said. Some individual lanes \u201care moving back faster than others due to the specific balance of supply and demand on those lanes, and the economic environment in the receiving market,\u201d he explained. \u201cSome of that economic uncertainty is what makes it difficult to truly predict the outcome, but my opinion is that I don\u2019t imagine rates dropping back very much further providing the carriers don\u2019t go into an all-out volume-chasing strategy.\u201d<\/p>\n

Other Supply Chain Impacts and Lessons Learned<\/h2>\n

Another result of supply chain reshaping after COVID-19 is increased competition in regional agribusiness markets, Li said.<\/p>\n

Multinational crop protection companies are selecting long-term strategic partners in China to produce market-strategic patent molecules using proprietary processes before patents expire. They are also \u201cbecoming more open to outsourcing cooperation in the production of formulations,\u201d said David Li, Marketing Director for SPM Biosciences<\/p>\n

\u201cThird-party licensing of proprietary compounds for mix formulations has led to increased competition in the local market,\u201d he added. \u201cThe result of this increased competition is likely to favor the top two crop protection companies, while it is likely to be the third-ranked competitors that will suffer the most.\u201d<\/p>\n

The pandemic also brought improved technology, meaning tracking shipment movements has become easier. This will continue to be a useful tool going forward. \u201cTrack shipments so goods don\u2019t inadvertently remain stuck at a point in the chain,\u201d Holdsworth said. \u201cAnd always track the real lead time you experience on given lanes. The distribution curves of shipment lead time and the real time from dispatch to receipt are very important to track to ensure proper inventory planning on raw materials.\u201d<\/p>\n

Finally, two major shippers \u2014 Maersk and MSC \u2014 recently announced they are ending their \u201c2M alliance,\u201d where they shared vessels and berthing slots to improve efficiency and utilization, once it expires in 2025. The companies want to follow separate, unique strategies \u2014 Maersk wants to provide full end-to-end supply chain capability and MSC has invested heavily in additional ocean capacity. \u201cNo one is quite sure whether other carriers may follow suit and exit some of the other alliances that exist,\u201d Holdsworth said, \u201cand equally no one is sure what it will ultimately mean for capacity and rates.\u201d<\/p>\n

Return of Demand<\/h2>\n

The difficulty now is predicting when demand may return. \u201cAt the moment, carriers appear to be willing to negotiate to reduce the [shipping] price in favor of keeping revenues relatively stable,\u201d Holdsworth said. But \u201cso many consumer markets appear to be sitting on high inventories, and with the inflation and recession backdrop, it\u2019s not clear how long some of those will take to clear through.\u201d<\/p>\n

Take China as an example. According to the China Custom data, even though the China Entry and Exit Shipments increased around 25% from 2021, the absolute value did not return to the level before the outbreak of COVID-19 in January 2020. \u201cAs a world manufacturing center,\u201d Li said, \u201cChina\u2019s export and import could show us the demand is far below pre-COVID-19.\u201d<\/p>\n

The current challenge then is dealing with stagflation \u2014 persistent high inflation combined with slow economic growth and stagnant demand \u2014 that, as Li explained, \u201ccould be more complicated to manage.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

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