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"20 Facts That This Shipping Crisis Is
Creating A Supply Chain Collapse"
by Epic Economist
"The global supply chain crisis has entered an ominous new chapter. Massive disruptions, congestion, capacity shortages, and skyrocketing shipping and freight rates have challenged shippers, ports, carriers, and logistics providers in the past couple of years. The price to ship a 40-foot container from Asia to the U.S. West Coast shot up by a shocking 400% last year, but soaring prices do not mean that supply chain reliability and resilience have improved. In fact, across both coasts, U.S. ports continue to struggle with bottlenecks, and delivery delays while shippers scramble with a shortage of containers and rising operational costs. That's to say, the supply chain crunch of 2020 and 2021 was just a small demonstration of the crisis we're facing this year and will continue to face in the years ahead. Executives, business owners, and experts do not expect a light at the end of the tunnel any time soon.
Furthermore, a report commissioned by DP World, produced in partnership with Economist Impact, noted that supply shortages will keep increasing inflationary pressure despite the recent rise in interest rates. At this point, about a third of companies expect increasing transport costs to limit export-led growth, contributing to higher inflation. About the same rate, or 31%, companies that export are concerned about the risk of rising inflation due to supply chain disruption, the report found. DP World Group Chairman and CEO Sultan Ahmed bin Sulayem said that: “the report is evidence that rising freight rates, and low production levels, coupled with a volatile social-economic situation in the US and Europe, will keep inflation high in 2022 as companies navigate a risky trading environment.”
The CEO of Sea-Intelligence, Alan Murphy, is warning about a record backlog of containerships during this year’s peak shipping season. During a press release, Murphy revealed that there will be a 60% increase in the number of vessels on the Asia-North America East Coast trade lane in the coming months, which means that both coasts will be dealing with a record flow of imports at the same time, heightening the risk for disruptions. Experts at the TPM22 and TPMTech Conference warned that shippers should expect no relief for the rest of 2022 as many structural issues in ocean transportation have yet to be solved. "We don’t see the tide turn in 2022," said Thorsten Meincke, board member for the ocean and air freight at DB Schenker. Meincke said infrastructure problems, labor constraints, high demand, and reduced capacity will continue to trouble the market in the foreseeable future.
At grocery stores, empty shelves can be seen everywhere, a reflection of the fact that our global supply chain had become far too linear and vulnerable to the unexpected. With all that said, Americans should brace for an era of constant price increases and persistent shortages. As problems compound, inflationary pressures will get worse and worse, and this year's peak shipping season is on track to be the most chaotic on record. Of course, many other things can still go wrong in the short-term, which will only result in more disruptions, delays and imbalances between supply and demand. Once broken, it might take years before supply chains are restored once again. Until then, the nightmare will continue for businesses, logistics companies, workers, and, of course, millions of consumers out there. Thus, in today's video, we brought a compilation of facts that indicate just how much worse conditions are going to get in the months ahead."
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