Dear Importers,
We are being asked this question daily “What is going in with shipping (congestion, rates, delays, etc.”). It’s a very good question and I will try to share my thoughts for what it’s worth.
U.S.-based port congestion is certainly related to COVID-19, record volumes, rail congestion, lack of dockworkers and truckers, etc. However, that’s just part of the issue. As of today, global port congestion is still causing major disruption to the industry. From China to Europe, Africa, Middle East & India ships are piling up while ports struggle to handle the massive influx of consumer demand & changing habits caused by the pandemic.
In an effort to better explain this let’s look at some main points:
Shipping History:
Nearly 85% of global trade is carried by ocean liners. This volume is hard to imagine for one mode of transport. Traditionally, when congestion occurred, the industry had plenty of capacity to handle it because it was not all over the world at the same time. You might have a strike at one or two ports (for example West Coast of the U.S.) or a port in Asia shut down due to a typhoon. This alone will cause minimal damage but when it happens all over the world at the same time the entire supply chain is turned upside down.
Shipping conditions past 12 months
Covid related disruption, lack of space, container imbalance, historic rates, uncertain sailing schedules, long delays worldwide, and unprecedented demand. All these combined have disrupted the supply chain. Container movement (supply chain) is like a well-tuned engine. If one part fails, the engine will not work in harmony and eventually, everything will fail. Pre Covid, ships that were routed around the world dropped off and pick up containers on a very tight schedule which was tweaked over the years to become as efficient as possible. There was a good balance of vessel movement and equipment both for imports and exports. This all changed in the past year. Vessels had erratic schedules if any at all (blank sailings). The fine science of container flow and balance was completely disrupted. Some ports had thousands of containers coming in but none being picked up (booked for exports). Carriers focused on high-profit lanes and neglected others. This quickly got out of hand and spread throughout the shipping world.
2021 – 2022
Even though we have not seen an “off-peak” season this year we are heading into even busier months, our “normal” peak season. Space will remain tight, and delays will continue but I feel it will start getting better by early 2022. It’s impossible to say for sure with so many variables in play (new covid variants, etc.) but we are optimistic.
I hope this recap helps.
Regards,
Bobby Shaida
