It’s been one year since the corona virus pandemic first hit China, disrupting global supply chains and closing factories all over. Unfortunately, we are still seeing shipping delays, , port congestion, equipment imbalance, and higher prices for just about everything.
Container volumes absent in the earlier part of 2020 have returned and exceeded capacity causing ports and cargo carriers a tough time keeping up with the demand. The cost of shipping a container of goods has risen by 80 percent since early November (Nathan Laine/Bloomberg News). This major increase in demand has primarily stemmed from changes in consumption, as consumers are spending money they once used for restaurants and movies, and instead are purchasing record amounts of imported products.
This spending shift was also very abrupt, as we’ve never seen this large of an effect on the shipping industry, on a global scale for such a long time. The long-standing trade patterns that once were held in the industry have been upended, thus causing bottlenecks in every step of the process – from Chinese factory lines to the doorsteps of U.S. homes.
Congested ports and delayed shipments
If you visit just about any US Port you will see congestion. For example, the Port of Los Angeles can sometimes have over 30 ships anchored offshore, waiting to unload their cargo into warehouses that are already full. Add into the mix a reduced number of dock workers and you have a very complicated situation for most ports. Inbound cargo volumes in December2020 were substantially higher than the previous year.
Here’s a global statistic that’s quite scary for many companies – during Covid, more than one-third of all shipping contains traveling throughout the world’s 20 largest ports have failed to ship when scheduled.
All of these logistics challenges have in turn caused rising costs, in which many businesses are anticipating inflationary pressures will continue well into 2021.
Overwhelming surges in demand
As the pandemic moved across the globe in 2020, it began affecting economies right away. The normal patterns of global production were disrupted shortly after China factories started closing post Chinese New Year, thereafter the balance of the world followed suit.
Before the pandemic, shipping carriers could have reintroduced idled vessels to match any small increases in demand. As the pandemic started spreading, consumers stuck at home, increased e-commerce purchases. Many factories worldwide including many out of Asia started jockeying for the best positions in over-packed warehouses – and as you would expect, chaos ensued. As the pandemic created havoc with supply chains, so did the surge in demand for overseas products.
As the supply chain disruptions affect everyone, many believe they are likely to continue into the unforeseeable future, or at least until the pandemic wanes and consumer buying patterns go back to normal. If anything good comes out of this, it will be all of the lessons that supply chains and logistics companies have learned from this situation.
We at ACB have more than 40 years of experience in logistics, transportation, warehousing, and customs brokerage. We have the capabilities to streamline your operations through seasoned logistics plans that will surely optimize your ROI now, and in the future.