Logistics Container Shipping Push

According to a recent report from Dimerco, air cargo volumes have experienced a significant increase since mid-December. This deviates from the norm. Again, these increases relate back to the potential port strike, tariffs, and geopolitical uncertainty. According to Prologis Research, air cargo volume will surge by double digits, fueled by growing international e-commerce beyond China and the U.S. Thus, keep an eye out for continued increasing rates in package shipping and e-commerce.

Air Freight & E-commerce Thrive

According to the ISM (Institute for Supply Management)’s PMI index (Purchasing Managers’ Index), although the manufacturing economy is improving, it is still in shrinking overall because it is less than 50. The latest PMI is 48.4 (November) which is up from 46.5 the month prior. This goes hand-in-hand with what we are seeing across most manufacturing industries (except for defense, building products, etc.) as sales remain sluggish as customer postpone orders. However, clients are seeing positive signs on the horizon.

Manufacturing Headwinds with Aggressive Growth on the Horizon

According to the ISM (Institute for Supply Management)’s PMI index (Purchasing Managers’ Index), although the manufacturing economy is improving, it is still in shrinking overall because it is less than 50. The latest PMI is 48.4 (November) which is up from 46.5 the month prior. This goes hand-in-hand with what we are seeing across most manufacturing industries (except for defense, building products, etc.) as sales remain sluggish as customer postpone orders. However, clients are seeing positive signs on the horizon.

The future remains bright. As my financial advisor says, manufacturers must get ready. There is no way they can catch raindrops with the expected onslaught of need. As companies plan to mitigate the geopolitical risks, proactively work to avoid tariffs, and ramp up to address customer requirements as inventories are depleted and demand remains robust, aggressive growth is on the horizon. Companies will be reshoring, expanding manufacturing capabilities, and pursuing vertical integration strategies if they want to successfully control their ability to scale profitably. To stay ahead of these changing trends, listen to our weekly series, Supply Chain Bytes.

The Expansion of Latin America’s Manufacturing Footprint

Mexico is already a powerhouse as it took over for China as the #1 trading partner of the U.S. in 2023. Mexico also offers the advantage that they can produce to scale which is vital in supporting customer needs. As additional companies determine that the geopolitical risks are not worth the negative consequences of importing from China, Latin America is expected to benefit. In addition to Mexico, Brazil, Argentina, Panama and Costa Rica are also seeing gains from nearshoring.

This brings us to why Trump is talking about the Panama Canal. Currently, China can control the Panama Canal because they can control both sides of the canal. The risk is heightened for key waterways supporting the United States trade. Both raw materials and finished goods are vital to supporting the U.S. economy and the expected manufacturing resurgence. To learn more about threats and priorities, download our special report, “FutureScape: Crafting Tomorrow’s Supply Chain Today“.

Automation & Digitization a “Must”

Most sources expect GDP growth around 2.5%. As the economy continues to grow and manufacturing is expected to ramp up significantly, automation and digitization becomes a “must”. Proactive manufacturers are focused on digitization across the board. There are several priorities with the top strategies of the following: #1) Further leveraging and/or upgrading ERP to automate repetitive tasks and provide superior customer value and pinpoint growth and profit opportunities. #2) Automation, robotics, and advanced technologies supporting manufacturing and the end-to-end supply chain. #3) Artificial intelligence use cases in the end-to-end supply chain.

The use of ERP and advanced technologies has become essential to serving customers profitably with lean resources as high-skilled talent remains scarce. To gain additional ideas on how to roll out these types of improvements, review our article from Adhesives & Sealants, “Manufacturing and Assembly: Automate, Create Value, and Deliver Bottom-Line Results“. Find avenues to get ahead of the latest technologies and which will provide the most value for your organization to thrive in the next decade.

If you are interested in reading more on this topic:
Planning & MRP Upgrades to Support Revenue Plans & Proactively Plan Capacity