Global shipping companies are reporting record-breaking profits as supply chain disruptions continue to elevate shipping rates around the world. The economic re-opening has been anything but smooth for ports, as shipping hubs deal with continual impediments, from natural disasters to COVID-19 outbreaks, driving transport costs higher with no end in sight.
Elevated rates will likely be passed onto the consumer due to endless delays creating product shortages for back-to-school shopping, potentially lasting into the holiday season.
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Disruptions Piling Up for Global Shipping Industry
As the Financial Times puts it, global shipping ports are facing the biggest supply chain disruption since the beginning of container shipping 65 years ago, struggling to overcome lingering effects of the COVID-19 pandemic. Data from logistics company Kuehne+Nagel shows that there are currently 353 container ships stuck outside of ports around the world, more than double the number from earlier in the year.
In June, MRP highlighted the shipping industry’s ongoing troubles, including new virus-related shutdowns in Chinese ports as well as the Suez Canal disaster back in March. We noted that, if disruptions persisted, ports would remain congested causing delays and shortages, and keep shipping rates elevated through 2022.
Unfortunately for consumers around the world, those disruptions have kept piling up.
In June, shipping bottlenecks arose at the Yantian port in southern China, one of the world’s busiest shipping hubs, causing operations to fall as low as 30% capacity. Now, the Ningbo-Zhousan port, China’s second busiest port, currently has more than 50 ships waiting to dock after a dockworker tested positive for COVID-19, per Fast Company.
The news comes as the majority of Chinese ports have yet to return to full capacity and global economies aim to re-open from shutdowns last year. It remains to be seen how significant of an impact the new bottlenecks will have, but the South China Morning Post did note that it will be a problem of lesser magnitude than previous instances at the Yantian port.
However, it must be noted that even one isolated, positive COVID-19 test can now cause setbacks in the global shipping economy. As the pandemic remains wildly unpredictable, smooth shipping operations are unlikely to return anytime soon.
Similarly, floods in Western Europe and China’s Henan Province, separate from the Ningbo port, have been another disaster for global supply chains. CNBC writes that the floods have damaged railways, warehouses and machinery, adding major delays to already backed up ports.
While the global economy labors through the ever-changing realities of the COVID-19 pandemic, it’s likely additional supply chain disruptions will pop up through the rest of the year. Due to this, already skyrocketing shipping rates should remain elevated in the months ahead, creating shortages that last through back-to-school shopping – perhaps all the way into the holiday season.
Shipping Rates Surging, Shortages Set to Hinder Holiday Shopping
For the shipping industry, supply chain disruptions have meant that shipping rates are breaking records every month, allowing the industry to rake in some record profits as well.
According to McKinsey & Company, the average cost to ship a container from China to Europe has surged 600% since the start of 2019. That number has accelerated even further in recent months, as…
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