The less-than-container -load (LCL) cargo sector is facing unprecedented challenges due to ongoing supply chain disruptions and increased costs, industry experts warn. Despite a gradual recovery from the Covid-19 pandemic, the market remains in constant f lux, leaving many carriers struggling to stay af loat.According to Peter Sand, chief analyst at Xeneta, no one anticipated the extent of the challenges that the LCL cargo sector has faced over the past ten months. Carriers have gone from record profitability to fighting for volumes, and numerous factors on the horizon will continue to hit consumer demand.High inf lation, increasing interest rates, and elevated energy prices are some of the challenges that the industry is currently facing. The negative spiral of declining consumer demand affects how well businesses perform, which in turn impacts job security, making it extremely difficult for airlines and shipping lines to operate from a cargo point of view.Sand stressed that the game of procuring and carrying freight had changed, and it was becoming increasingly difficult for companies to keep up in the current market environment. The LCL cargo sector is particularly vulnerable, as it depends on small-scale shipments and has limited room for error.Sand said another ongoing unknown factor impacting the market in general was Covid-19 and geopolitics. To mitigate the risks associated with these factors, businesses should consider implementing contingency plans and diversifying their supply chains.He said regarding Covid-19, businesses should stay up-to-date with the latest information and guidance from health authorities and governments in the regions in which they operate. They should also be prepared to adapt quickly to changing conditions, such as travel restrictions, border closures, and quarantine requirements.As for geopolitical developments, businesses should monitor the situation in the regions in which they operate and maintain open lines of communication with their suppliers and logistics partners. They should also consider diversifying their supply chains to reduce their reliance on any one region or supplier, which can help to mitigate the risks of disruptions caused by geopolitical events.Niall van de Wouw, chief airfreight officer at Xeneta, emphasised that the most crucial factor to consider remained whether the cargo was reaching its intended destination within the expected timeframe. “That is ultimately what it is all about. We saw how airfreight benefited when sea freight became unpredictable.”Both Sand and Van de Wouw said capacity – or the lack thereof – remained one of the major challenges facing shippers in 2023. “Whatever the carriers and airlines do in terms of capacity dictates the foundation and ability to jack up prices,” he said. “Another factor that has to be considered and that will impact consumer demand is that it’s unlikely that people will be buying the same amount of goods this year.”
