Supply chains are facing more trouble at sea as the pandemic and extreme weather continue to play havoc.
A fertiliser shipment has been stuck in Shanghai since the beginning of June, according to the news agency Bloomberg. In fact, it was ordered by a US company and February. But it won’t arrive in Chicago until some time in October – if then.
What would normally have taken only 70 days, now takes nine months and possibly more. For one, there is a shortage of container boxes. Second, it has been beset by typhoon In-Fa. Third, ports and railways in the US are dealing with backlogs.
It is a typical scenario today. Shipping carries around 90 per cent of world trade. However, it has fared better than expected from the impact of COVID-19, according to Clarksons Research. Global seaborne trade volumes dipped only 3.6 per cent in 2020 – and will most likely surpass 2019 levels this year.
So what is the problem? A surge in demand for containers caught ports and ship owners on the hop late in 2020. In addition, double the number of ships were scrapped in 2020 than the year before – with fewer new orders.
More worryingly, about 200,000 crew members were stuck on ships in March 2021 because of travel restrictions. That is out of an estimated workforce of 1,000,000 sailors worldwide, according to the insurer Allianz. Together with backlogs, these factors mean that delays in containers are likely to become the new norm.
However, there is further trouble on the horizon. While sea safety has improved over the past decade, so has the trend for bigger ships. They are more resilient to weather events and carry more goods.
But when something goes wrong – such as when the Ever Given got stuck in the Suez Canal – they go wrong on a bigger scale. For example, it took over a year for workers to remove the Golden Ray and its cargo of 4000 cars when it capsized in the US port of Brunswick in 2019.
It is likely that the trend to some supply chain nationalism that emerged during the pandemic will continue given the ongoing troubles at sea.