Currently, globally, we are dealing with massive disruptions to freight, shipment and transportation. There are a wide variety of reasons why we are experiencing these delays. From the ongoing COVID-19 pandemic, to the shortage of drivers.
In March 2021, the Megaship called the Ever Given, blocked the Suez Canal for about a week. This resulted in a massive misalignment of cargo, as they were blocked and delayed. Similar to being stuck on the motorway. This caused a surge in container rates which had a knock on effect on trade costs. This poses a continued challenge for businesses that need to get stock in from across the world. Most businesses are unable to bear the brunt of higher rates.
Demand for containers has grown during the pandemic. This has been caused by a change in consumer habits, increasing the demand for manufactured consumer goods. This leads to a shortage of containers as businesses scramble for stock in anticipation for new waves of the pandemic.
Disrupted Supply Chains
At the beginning of the COVID pandemic demand for goods was high, but economies worldwide shut down in various lockdowns. Manufacturing and sailing was shut down and workers displaced. As we came out of the lockdowns, manufacturing changed to online retailers and workers and trade could continue. But in the process of this restart, the supply chain was fractured.
A shortage of shipping containers emerged, shipping rates skyrocketed, congestion developed, all exasperating the trucking shortage.
Once the cargo is unloaded it is transported by truck to its end location. But there is a massive driver shortage. According to driver recruiting firms, there is one qualified driver for every 9 jobs. This lack of drivers is caused by employment prospects, safety concerns, expanding unemployment benefits and simply ‘having kids at home.’ Even though the salary drivers are being offered is healthy, it will take time for them to return to industry, as they have moved onto jobs with better lifestyles.
Container prices are soaring currently
Currently there are many shipping containers in Africa and South America, empty and uncollected. This is because shipping carriers have concentrated their vessels on the more profitable Asia, North America and Europe. Simply this means there are fewer containers in circulation.
More ships are needed, but additional supply is many years away. Furthermore, the trend for larger and larger ships creates massive infrastructure challenges at ports. These bigger ships require more trucks, warehouse capacity and trains, to unload and load them in the ports. Therefore, when delays occur, more containers are affected.
The Future and Us
This disruption seems to be stagnating as people in the industry wait for policy makers to interject. Only time will tell if we can withstand the coming holiday seasons, any future COVID outbreaks and extreme weather battering individual links in the supply chain.
As a small business which imports materials from India, at Tiles For Ever and Wide Wings Tiles, we have been dealing with all these pressures for months now. We have been lucky so far to get hold of containers when we need them, and to be well stocked coming into the end of the year. But we are currently trying to prepare for anything the future may hold for us.