The global shipping crisis continues to march on, defined by relentless hikes in pricing, congested ports, and container and labor shortages. According to an article from Independent Commodity Intelligence Services (ICIS), shipping rates are estimated to continue to experience inflation, with the hope that they will stabilize in mid-2022. The ICIS article also reports that some of the largest shipping companies around the world, like CMA CGM and Hapag-Lloyd have announced rate freezes in an effort to salvage and ease tension among long-term customer relationships. However, this is not viewed as a viable long-term solution.
With regards to the containers available, Financial Times reported that Chinese manufacturers are producing a record-breaking number of freight containers, following increased orders from shippers around the world. The massive number of orders has pushed Chinese manufacturers to the limit of production, however, John Fossey, an analyst consultant for Drewry has said that the number of containers in circulation is “adequate”. He goes on to state, “It’s more of a logistics issue than a supply issue,” referring to the supply chain congestion.
In an interview with Bloomberg, Jeremy Nixon, CEO of Ocean Network Express (ONE), the sixth-largest container shipping company in the world, discussed the current challenges facing the industry. He mentions that while the congestion is building at ports around the world, “the supply on the ocean side is ok, the issue continues to be on the land side which is of course really COVID-19 related”. The pandemic has stressed and restricted the global economy to the point where labor shortages have become commonplace. Nixon says, “we’re seeing ongoing shortages of workers in the warehousing operations and also a shortage of truckers, and then that backs up into the port areas.” These decreased levels of productivity have led ships to spend around 10-20% longer in the ports according to Nixon. This past weekend, there were a record 73 ships waiting outside of the Ports of Los Angeles and Long Beach, which serve as the main ocean entry to the US, especially for Chinese goods. This record of stranded ships is almost double the number stuck this time last month.