The global network of ports, container ships, and trucking companies that transport goods is tangled, and shipping costs are skyrocketing. For retailers and holiday shoppers, this is bad news.
More than 18 months into the pandemic, the disruption to global supply chains is worsening, causing consumer product shortages and increasing the cost of shipping goods where they’re needed.
Due to unresolved issues and the emergence of new issues, such as the Delta variant, shoppers can expect higher prices and fewer options this holiday season.
“The pressures on global supply chains have not eased, and we do not expect them to any time soon,” said Bob Biesterfeld, the CEO of C.H. Robinson, one of the world’s largest logistics firms.
The most recent roadblock is in China, where a terminal at the Ningbo-Zhoushan Port, south of Shanghai, has been closed since August 11 due to a positive Covid-19 test by a dock worker. Maersk (AMKBY), Hapag-Lloyd (HPGLY), and CMA CGM, among other major international shipping lines, have adjusted schedules to avoid the port and are warning customers of delays.
The partial closure of the world’s third busiest container port is causing disruptions at other Chinese ports, stretching supply chains already stretched by recent issues at Yantian port, ongoing container shortages, coronavirus-related factory closures in Vietnam, and the lingering effects of the Suez Canal blockade in March.
The global shipping crunch is expected to continue, according to shipping companies. This raises the cost of moving cargo dramatically, potentially adding to the upward pressure on consumer prices.
In a recent statement, Hapag-Lloyd CEO Rolf Habben Jansen said, “We currently expect the market situation to ease only in the first quarter of 2022 at the earliest.”
According to data from London-based Drewry Shipping, the cost of shipping goods from China to North America and Europe has continued to rise in recent months, following a spike earlier this year.
According to the company’s World Container Index, the average cost of shipping a 40-foot container on eight major East-West routes in the week ending August 19 was $9,613, up 360 percent from a year ago.
The most significant price increase occurred on the route from Shanghai to Rotterdam, Netherlands, where the cost of a 40-foot container increased by 659 percent to $13,698. The cost of shipping containers from Shanghai to Los Angeles and New York has also increased.
“The current historically high freight rates are caused by the fact that there is unmet demand,” Soren Skou, CEO of container shipping giant Maersk, said on an earnings call this month. “There’s simply not enough capacity,” he added.