Sheesh!
Global trade has never been this messed up. We are having a hard time getting out-of-stock products back on the shelves. So is everyone else. Let me describe some of the reasons.
Global trade used to be boring.
Each month, Country A shipped raw materials to Country B. Country B made some products and shipped them to Country C. Country C bought and used the products and ordered more. Global trade was smooth, steady, even, and predictable. Ships plied the oceans with schedules as routine as busses coming down main street. If we needed to send Calamityware, there was a ship from Europe to North America every two weeks. Then Covid-19 hit and factories closed, crews were put in quarantine, and ship owners used the lull to pull boats out of service for maintenance.
Asia got back to work before Europe and North America. The result was a big imbalance. Throughout most of 2020, shipping containers were leaving Asia far faster than empty containers returned. The world still has plenty of shipping containers, but almost all of them are in the wrong place.
Fewer flights.
The pandemic also eliminated thousands of airline flights that once routinely transported small, high-value items daily. Suddenly, during the crisis, those items had to try to find their way on to already over-crowded ships.
Stumbling recovery.
As workers in Europe, Asia, and North America started to get back to work, everyone's productivity was down. Work required care, isolation, social distancing, sanitizing, testing, quarantines, and staying home to supervise kids that normally would have been in school. Entire production runs were held up because a skilled worker was stuck at home or some parts or raw materials didn’t arrive on time. Throughout 2020, deadlines slipped and then deadlines slipped again.
Lean inventories.
Because global trade used to run so smoothly, big businesses got in the habit of keeping inventory levels low and relying on frequent shipments to meet demand...an approach called "just-in-time." At the start of the pandemic, no one knew what was going to happen so inventory levels were allowed to run down. Now big retailers (think Walmart, Amazon, and Ikea, etc.) are ordering extra quantities of everything to build their inventory levels back up. If their big orders once filled a boat, they now need two or three boats, and thousands of extra containers...which don't exist! Yikes!
Ship building is pokey.
Adding more vessels isn't an option because it takes years to design, finance, and build a new ship. It also takes a lot of time to expand the ports where ships dock. So, global trade will have to find a solution with the tools that are already available. Returning to a balanced state is going to take a while.
No place to dock.
Unloading a container ship requires special port facilities with big, fancy cranes. The spaces where a ship can park for loading and unloading are limited. The number of ships waiting to dock at ports on the west coast of the U.S. are now at record levels. East coast ports are backed up too. It's getting so bad that ship owners are refusing to schedule trips from Europe to East Coast ports because the wait time to dock will be so long that the cost of waiting around may wipe out their profits.
Skedaddle. Your time is up.
Once a ship docks, the clock is running. If they can't unload and re-load within a specific time limit, penalties can be added. In some cases, this will mean leaving some containers behind to escape extra costs. Those containers will be picked up eventually, but it could easily be months later. Jeepers!
I know I promised, but I changed my mind.
One can have a ship scheduled for a specific date and discover the vessel has changed its plans. Your booking from Europe to North America has been cancelled. You must start over. One strong reason to cancel a planned trip from Europe to North America is cost. Ship owners are discovering that right now they can make more money with a run from Europe to Asia and back. Until a boat leaves with your cargo on board, you can't be 100 percent sure your stuff is really coming. Promises can evaporate.
Discover a new path.
Because of all these disruptions, it might make sense to use a more round-about route to get your product where you want it. For example, you could sail to a remote port that is not overcrowded and then use a train or trucks to shuttle the product to the final destination. Re-routing is brilliant, but it will probably take longer, and it is bound to cost more.
Plain old calamities.
Don’t forget that in addition to all these problems there are still the conventional disasters—Suez Constipation, storms, icebergs, malfunctioning gear, incompetent captains, mutinies, pirates, giant crabs, and all the ordinary forms of bad luck. They never go away.
If we seem to be taking too long to get your favorite product in stock, now you know why. Remember, things could be much worse.
Don—Pittsburgh, April 15, 2021
Susan Tancraitor
October 04, 2021
I’ll wait, but food for thought: I’m starting a new job designing semiconductor production facilities in the US because we can’t import them anymore.
Made in the USA is a good thing.
Things could be worse: We could all be cargo ship crew stuck on cargo ships without reliable schedule promise of return to home ports. Must be really tough for them.
Much love to the whole Calamityware crewe. Big fan since pre-pandemic.
Suzy