After almost three years of supply chain chaos, global macroeconomic factors have left small and medium-sized importers and exporters uncertain whether to be concerned about reduced demand or about lacking sufficient inventory, Freightos study finds
· 87% of US and European Import-Export Businesses Financially Impacted By Supply Chain Issues
· In run-up to holiday season, survey results highlight unprecedented level of uncertainty among small and medium size business
By Will Waters
Almost three years of supply chain chaos plus new global macroeconomic factors have left most small and medium-sized importers and exporters with unprecedented levels of supply chain and logistics uncertainty, according to a new survey by international freight booking and payment platform Freightos.
The results of the survey highlighting the experiences and expectations of small and medium-sized businesses (SMBs) with regards to the supply chain, current market landscape, and the upcoming holiday season. Findings show that on top of almost three years of supply chain chaos, global macroeconomic factors have left SMB importers and exporters uncertain whether to be concerned about reduced demand or about lacking sufficient inventory for increased demand.
According to the survey of over 1,200 small- and medium-sized importers on the Freightos marketplace platform, businesses have been hit hard by supply chain costs: 87% of respondents attributed reduced bottom lines to logistics costs. Businesses also reported dedicating larger percentages of operating costs to shipments: 22% of businesses currently spend over 20% of their operating budgets on shipping goods; compared to less than 13% of businesses prior to the pandemic.
Unpredictable consumer demand and volatile market conditions are currently top of mind for businesses, with an unpredictable market wreaking havoc on importer expectations: 74% of respondents are worried about how demand will impact their inventory or sales. Interestingly, 50% are concerned about the prospect of a reduction in demand during the holiday season, while 24% are worried that an unexpected surge in demand would leave them with insufficient inventory to meet demand.
“Navigating the complexities of international trade is tricky enough for businesses without the added obstacles that have cropped up over the past few years,” said Zvi Schreiber, CEO and founder of Freightos. “During the pandemic, 50% of businesses blamed the supply chain for their losses.
“Over the pandemic, importers have lost faith in the shipping network and now even when it’s running well, they are accumulating expensive inventory buffers. Now, just as we’re finally seeing the supply chain start to stabilize, importers are faced with a new variable – demand. Now, looking towards the holidays, the only thing they can predict is unpredictability.”
Over the past three years, importer and exporter businesses have contended with unprecedented price fluctuations. According to Freightos.com data, between 2019 and 2022, the cost of shipping a full container of goods from manufacturing centers in China to a distribution center in the United States jumped from $3,500 in 2019 to $25,463 in late 2022, now having regressed to approximately $6,500.
Other key findings from the 2022 Freightos Small Business Survey can be found here.