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Home News Hey World, Where’s My Stuff?
HEY WORLD, WHERE’S MY STUFF?
June 7, 2021
Merchandise is stuck on ships that are stuck in the water. It might be awhile
before some arrives.
Boca Terry is doing its very best to keep all the bathrobes, linens and towels
you need in stock, and we’re taking every action possible to keep our shelves
full. The items you’ve ordered from other vendors? Whether hotel room desks,
bicycles for guest use or restaurant tableware, they may arrive very late.
The world — truly the entire globe — is in the midst of a shipping crisis. As a
result, manufacturers literally can’t get their wares to end-users without a
long delay. Here’s an explanation.
What is the global shipping crisis? A tremendous amount of merchandise is
transported from one destination to another, often one continent to another, in
metal “intermodal” containers loaded onto enormous ships. It’s said that 80
percent of goods are scooted around this way — ovens, tech goods, blenders,
apparel, legumes. Usually the system runs smoothly: A container leaves China,
say, is emptied in Rotterdam, filled again and sent to the United States, is
emptied and filled again and goes back to China.
Not now. A couple of months after the pandemic started in 2020, the system got
out of whack. Folks sheltering in place unexpectedly ordered a whole lot of big
items like home office furniture and treadmills, filling up shipping containers.
At the same time, some containers were abandoned, empty, at unbusy ports since
nobody anticipated how badly they’d be needed. Now the shipping companies are
focusing all their attention on the busiest destinations, including China and
the United States, and often skipping others altogether. In fact, one container
line has cut off all Latin American business for now.
Meanwhile, docks have been understaffed since workers need to be physically
spaced apart for safety, quarantine at home when exposed to Covid-19, miss work
when they are sick with the virus, or need to tend to their children who are
home all day instead of in brick-and-mortar schools. Plus, truck driver ranks
have been thinner due to illness, quarantining and home responsibilities, while
demand is high. That slows goods from getting to and from the ships. On top of
that, China is quarantining some incoming ships for two weeks as they return
from other countries.
Shippers with deep pockets are gobbling up available space by purchasing
“premium” vessel space at an even higher price.
When it rains it pours, right? So the container ship Ever Given got stuck in the
Suez Canal for nearly a week in April 2021. That stopped all container traffic
there in both directions for several days. Some nasty winter weather slowed
things down more in Europe.
How bad is the problem? Outside Los Angeles and Long Beach, California, for
example, more than two dozen ships at times remain anchored offshore waiting for
their turn at the dock for two weeks. At the peak, that number was 40 ships.
About 30 percent of the United States’ $220 billion of imported goods come
through that gate, so that’s a huge portion of the United States’ merchandise.
In February 2021, container ships filled with winter 2020 holiday decorations,
among other items, were sitting off the coast of Africa waiting for their turn
to be unloaded. An organization called UNCTAD (United Nations Conference on
Trade and Development), among others, is working to improve the maritime supply
chain in a variety of ways, including “Maritime informatics.” In practical
terms, it might take about nine weeks to receive a shipment that would have
arrived in half that time pre-pandemic.
What’s more, Asia ports are short on equipment and that’s not getting better
soon. Demand to ship cargo is likely to continue at this intense pace through
the first half of 2021, at least. Holiday and back-to-school purchases make
August a peak season, so that’s worth watching for too. Asia simply isn’t
getting containers back quickly enough, and looks to improve that.
Courtesy Marine Exchange of Southern California
What are the downsides? First off, delays hurt businesses and end-users. Second,
global shipping costs have quadrupled, with differences regionally. In late 2020
and early 2021, the cost to ship goods was the highest in history. What used to
run $1,000 might now demand as much as $10,000, and some experts cite price
spikes of more than 440 percent to less-popular ports, 60+ percent for popular
routes like China to Los Angeles, and 53 percent across the Atlantic. That’s if
you can even find space on a ship for your container. And if you can access a
container. Ultimately, the businesses and individuals who buy goods shipped from
abroad are likely to see prices of merchandise rise. (This crisis has been a
bonanza for shipping companies and container manufacturers.)
ROBE REPORT
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