Shippers: beware! Delays, congestion and ocean capacity
Over the past couple of months we've seen an increase in articles reporting that Christmas this year might be 'canceled'. The Sydney Morning Herald wrote an article about it earlier in August following a report by the American Shipper. So what exactly is going on?
While that may be too soon to call, it's clear that these are trying times for shippers and brokers that purchase ocean capacity. Containers don't lie -- and currently, they tell the unvarnished ugly story of the supply chain bottleneck facing importers and serious congestion in global supply chains, causing massive delays in shipping new consumer goods.
There are numerous reasons that are delaying shipments around the world, but the main ones are:
The recent terminal closure within the port of Ningbo, on the coast of the East China Sea, has brought about increased fears of additional lockdown measures being put into place in China. COVID-induced restrictions put a massive strain on capacity at the port of Yantian in June and also on air cargo crews and equipment. Rising delta variant outbreaks and China's zero-tolerance exposure policy have led many to believe that more lockdowns are almost inevitable.
90 percent of the global fleet of freighters are currently in use, a rate compounded by a lack of passenger flights coming in and out of countries, which are responsible for carrying a significant amount of airfreight. Add this to the port closures highlighted above and we have other ports that are all also running well above capacity.
Demand, soaring demand
Consumer demand has been at record highs due to border closures and lockdowns, redirecting dollars that would have been spent elsewhere, such as travel. With higher demand meeting the scarcity of air freighters and ports running above capacity, it is almost a recipe for disaster. Home and leisure goods are most likely to be affected, along with electronics as markets are also currently experiencing a shortage of semiconductors.
So, what's the solution?
The real message is to book container/freight lines now or Christmas may be canceled. Pulling inventory forward and ordering much larger amounts than normal might be your best bet in hopes of at least a fraction of it arriving in time for the holidays.