After more than a year under the pandemic, the shipping crisis continues to get worse. If things don’t improve drastically, expect shortages and higher prices moving forward. In short, the situation can go from a shipping crisis to a shopping crisis.
Global Shipping Crisis Continues
Almost two years after the start of the pandemic, the global supply chain disruption continues. More manufacturers are finding it more expensive to get their products shipped to their markets.
The network of ports, roads, and moving companies are having trouble keeping up with demand. This can all lead to a disastrous holiday season for both retailers and shoppers.
Already, consumers should expect higher prices from their usual retail goods. Companies such as Hasbro, Crocs, and Adidas are already warning of shortages or higher prices.
Bob Biesterfeld CEO of global logistics firm CH Robinson, said disruptions continue to appear. “The pressures on global supply chains have not eased, and we do not expect them to any time soon,” he said.
China Terminal Shutdown Affects Other Ports
For example, a terminal at the world’s third busiest port shut down last August 11 as a worker tested positive. Major international shipping lines had to adjust their schedules to avoid the port. As a result, they advised clients that getting a new port meant delays in their travel times.
At the same time, the closure of the Yantian port in the Ningbo-Zhoushan port means other ports in China need to pick up the slack. This adds to the existing problems of container shortages, COVID shutdowns in factories. Then, the after-effects of the Suez Canal blockage remain.
Higher Prices Due To Shipping Crisis
As a result, many companies are jacking up prices to recover their additional expenses. At this point, many firms don’t see an end to their woes this year. “We currently expect the market situation only to ease in the first quarter of 2022 at the earliest,” Hapag-Lloyd CEO Rolf Habben Jansen said in a recent statement.
According to data from Drewry Shipping, the cost of shipping goods from China to North America and Europe continues to climb. It already experienced a spike in prices earlier this year.
In fact, the composite cost of shipping a 40-foot container on eight major East-West routes now cost $9,613 as of last week. This is up 360% from a year ago. However, this is lower compared to the Shanghai to Rotterdam route. This year, prices rose 659% to $13,698 for every 40’ container.
Soren Skou, CEO of shipping titan Maersk explained why prices are higher to ship goods. “The current historically high freight rates are caused by the fact that there is unmet demand. There’s simply not enough capacity,” he said.
Add the closure in Yantian and goods are now in danger of not reaching their destinations within the year. In a research note, S&P Global Panjiva said that “The closure at Ningbo is now particularly sensitive as it may hold up exports for the peak season of deliveries into the US and Europe which typically arrive from September through November.”
As early as now, retailers are already having trouble restocking their items. “Name almost anything and it seems like there’s a shortage of it somewhere. Retailers are struggling to replenish inventory as fast as they’re selling, let alone prepare for holiday demand,” Blesterfield noted.
Watch the Epic Economist as they report that “Shortages Are Going To Get Worse Later This Year As Global Supply Chains Increasingly Falter”:
What do you think of the ongoing shipping crisis? Do you think things will improve later this year? Or, should we accept the reality of higher shipping prices moving forward?
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