Have Manufacturing Questions? Call or text us now at 619-473-2149
Avatar

Disruptions to supply chains and material shortages triggered by global pandemic have caused an unprecedented shipping crisis, and nations are scrambling to come up with solutions.  

As shipping container costs continue to escalate, several key ports have been closed due to COVID-19 case outbreaks, while others have experienced congestion as businesses rush to get products shipped out in time for the holiday season.  

Company’s and consumers alike are desperately looking for a way to return to normalcy. Earlier this fall, major retailers like Home Depot, Target, and Costco began using their financial resources to hasten deliveries by chartering their own shipping containers. Additionally, businesses that lease containers have control over shipment routes, which lets them redirect the ships to less congested ports.  

However, not all businesses — specifically small companies — can participate in this solution. The shipping container shortage combined with the ocean vessel traffic jams have forced many small businesses to hold orders or temporarily close their doors.  

As the world approaches its second year in a global pandemic, companies are now reevaluating their supply chains, and how they can effectively bring this shipping crisis to an end. 

The Impact of Global Trade 

“I don’t think anyone’s ever seen anything like this in their careers, anyone who’s alive,” says a board member of a large shipping company, according to Yahoo Finance. 

To say this shipping crisis is unprecedented would be an understatement. But to recognize just how much this affects the current economy, we have to go back to the basics of global trade.  

According to the Vision Project, 90 percent of the world’s trade is conducted overseas. Over the past 20 years, the emergence of new digital technologies have transformed trade by “increasing the services component, fostering trade in certain goods such as time-sensitive products, changing patterns of comparative advantage and affecting the complexity and length of global value chains,” according to the World Trade Organization 

But at the same time, the global economic crisis of 2008 caused an influx of high oil prices, port congestion, security regulations, and green initiatives that would wreak the most havoc on the trade and shipping industry — and the effects can still be seen today. 

These types of events have shaped the business of trade, particularly in the U.S, where we now rely heavily on imported goods. According to the U.S. Census Bureau’s report in 2019, China, Mexico, Canada, and Japan are the top four countries the U.S. imports from, with the largest group of imports being electronic machinery and equipment. 

The Rise of COVID-19 and the Subsequent Shipping Crisis  

Since the beginnings of the pandemic, workers and students have relocated from the office and classroom to the comfort of their homes and dorm rooms. This shift to remote operating has caused a demand for home office supplies and computer equipment, which the U.S. primarily received from China.  

But with this high and sudden demand came an imbalance in exports — exporting about three containers for every one imported. 

This imbalance created a massive amount of disruption and congestion for some of China’s largest ports, and the ongoing COVID-19 virus led to worker shortages, slowed operations, and reduced capacity. Plus, the process of quarantining both staff and cargo further delayed product deliveries. 

In June, China temporarily suspended all business operations at the Yantian Port due to COVID-19 outbreaks. In August, after a single worked tested positive for the virus, China enforced a two-week shutdown for the entire shipping terminal at Ningbo-Zhoushan — the third busiest port in the world. 

Then, China’s biggest cargo airport at Shanghai Pudong International Airport suffered delays after Chinese officials decided to close two terminals. Now, the Delta-variant surge threatens even more delayed shipments, container shortages, and port closures.  

Individually, these events have caused labor shortages and shipment delays that last months; collectively, they’ve resulted in a whirlwind of disruption to the global trade industry that could last years.  

How Businesses Are Handling the Shipping Crisis 

Thanks to the advancement of technology, businesses both large and small are using digital platforms to find new supplies or workers, analyze market trends, and effectively communicate with customers. This enables companies to use up-to-date data to make more educated decisions, so they can do what’s best for their company. 

Furthermore, business leaders are using this crisis to reevaluate supply chains and pinpoint any weak sports the company may have — and if there’s anything the pandemic has shown us, its that every business has vulnerabilities. 

Now that business owners have seen what happens during a global emergency, organizations are creating numerous plans for different demand environments, specifically how to manage and control panic buying situations, which we experienced early on in the pandemic.  

As far as the actual shipping container shortages go — which experts are appropriately dubbing “containergeddon” — big businesses are taking matters into their own hands by chartering ships and leasing containers. And with the holidays quickly approaching, this gives businesses the freedom bypass congested ports and disruptions by rerouting to more open port locations. 

In It for the Long Haul … 

At the beginning of the year, shipping experts had hoped business would return to usual by the end of 2021. However, as coronavirus still continues its global rampage, companies are preparing for long-term disruptions. According to Reuters, a return to any sort of normalcy may not occur until 2023.  

Until then, companies all over the world are maintaining a positive outlook on recovery. 

Though we currently live in a very remote world, the industry of trade still heavily relies on trust, personal interaction, and relationship building. As we approach the post-COVID era, large and small companies are ardently working to find the solution that best benefits their company and customers. 

Leave a Reply

Your email address will not be published. Required fields are marked *