WW Supply Chain Disruption

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It seems there are three major things preventing the ocean supply chain disruptions from resolving:

  • Congestion
  • Logistics bottlenecks
  • Container shortages

supply chain cargo ship

Congestion: Heavy port congestion is contributing to vessel delays worldwide. This congestion and delay are forcing carriers to announce blank sailings (disruptions to regularly scheduled routes). This is especially costly to carriers because the demand is such that they could be generating record revenue.

Logistics Bottlenecks: Normal sailing time from Shanghai to Los Angeles port is 14 days. Recently, the time-frame has increased to 33 days. The actual sailing time is the same but the time a vessel must wait to be offloaded has increased. Time to unload at a major port has increased by 5 or more days.

Container and Equipment Shortages:  With the delays in shipping, the port congestion, and a shortage of trucks and drivers to deliver the goods, containers are sitting for longer and longer periods of time, causing a shortage of available containers moving through the system as well to be returned to China. Along with the containers are the chassis used by truckers to move containers to their destination. New York, Chicago, and the west coast are impacted the most.

A 4th often cited reason for the worldwide logistics congestion issue is the global e-commerce boom.

Demand was anticipated to decline during the worst of COVID but online purchases unimpededly filled the gap and the demand for goods continued. COVID took its toll on personnel slowing the manufacturing, shipping, port, trucking, and air industry to a virtual halt. Inventories shrank, and when we began to emerge from COVID, the orders started coming in faster than they could be produced. The worldwide supply chain/logistics system has not been able to recover to the point of catching up.

Ports are full of containers waiting for ships.  Ships are full of cargo waiting to be offloaded. Containers are full of products waiting for trucks to deliver them. Factories in China are producing goods they can’t ship due to a scarcity of containers that are waiting at the ports, on the ships, and for trucks to be delivered.

Orders for new ships and containers are up significantly. 5-6 percent and 3 percent respectively.  Supply and demand at work.