- Port Congestion and capacity crunch are impacting businesses
- Supply chains and consumers have been heavily impacted
- Watch industry experts unpack these impacts and what to expect
‘Severe Acute Respiratory Syndrome Coronavirus 2’ (SARS-CoV-2) better known as COVID-19 was declared as a pandemic on the 11th of March 2020.
Like all other industries around the world, the shipping, freight, maritime, logistics and supply chain industries were also impacted cause major upheavals in global trade.
Starting with the closure of factories, industries and ports in China in 2020, the pandemic and its many variants (Alpha, Beta, Delta, Gamma, Lambda) continues to rage on, affecting every country in the world and causing global chaos.
On the shipping side, the effects of the pandemic affected both operations and supply, but also increased the demand of cargo movement to levels which neither the shipping lines nor the ports could cope with.
Due to the closure of many Chinese ports in early 2020, imports dropped by around 5.2% as per industry reports with the downturn continuing into the 2nd quarter of 2020, when the pandemic spread to other countries around the world resulting in their own port closures.
Just as the industry got back on its feet around the 3rd quarter of 2020 new problems emerged heralding the beginning of sharp increases in freight rates due to the burgeoning demand in consumer goods, severe shortage of empty containers first and then space on board ships especially from Asia to Trans-Pacific and Trans-Atlantic.
As the demand continued well into the 1st and 2nd quarters of 2021, shipping lines increased freight rates to astronomical levels to manage the space and equipment crunch with equipment and space going to the highest bidder with rates increasing by about 342% since Jan 2020.
This situation of port congestion and shortages was further exacerbated when Ever Given, a 24,000 TEU capacity ship with a length of 399.94m operated by Evergreen Marine Corp got stuck diagonally across the 225m Suez Canal.
The ship was stuck for 6 days across the Canal before it was freed and, in the meantime, around 400+ ships were stuck on either side of the Canal with many more spending around 11 plus extra days navigating around the Cape of Good Hope instead of waiting in queue at Suez.
This was then followed by new cases of COVID-19 in Yantian port, one of the top 10 ports in the world, which caused port closures leading to many vessels skipping Yantian or waiting in line to be berthed.
Due to this closure, the impact on Yantian port affected some of the neighboring ports of Shekou, Nansha and Hong Kong.
In the middle of this congestion and capacity crunch, the freight rates continue to increase unabated.
But what does this all mean to the general public..??
In a webinar, Rachel Premack, Senior Investigations Reporter at Business Insider, Michael J Gordon, Senior FMC Advisor (retd), and Adam Compain, SVP of Global Growth at project44 discuss how rising freight prices have set off a domino effect, manifesting across supply chains through port congestion, drayage holdups, dropping inventories, inflation and lengthening lead times.
They reference insights from a market survey of over 200 supply chain professionals and talk through a possible timeline to a freight market cool down, when it can potentially happen and the circumstances that will lead us there.
Register below for this riveting discussion on the 20th of July, 2021 @ 12:00 noon EST which may very well affect you as a consumer.