The supply chain industry has been hit by reports from the Chinese port, which suggest that Christmas shipping could be threatened. The port, Logjam, has a backlog of ships on the water, and several containers that have stuck at docks will delay the worldwide supply until the late months of the year. There are approximately fifty container ships that remain backed up around Yantian port, which is the major gateway for China goods exported to Western nations.
The current hindrance to worldwide shipping is likely to slow down trade flows for many weeks and can delay the plans individuals have come end-year holiday. The gateway is still recovering from the effects of the Covid-19 pandemic that disrupted optimal operations of the port. The ship struggles started in 2020, the onset of the global pandemic that made authorities shut down parts of the Guangdong province which hosts the Yantian port. This port is among the world's busiest and still a significant gateway for containerized exports such as furniture, car parts, home appliances, and electronics.
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The port officials at Yantian port gave a hint of the increased number of cargo-hauling operations, with an increment of about 40 percent. However, the vessel queue is still lengthy, forcing liner operators to divert some ships to nearby ports, swamped with containers. The decision was made because peak season is nearing, with the capacities expected to be even higher (Paris, 2021). Reports suggest that Germany-based container operator in terms of capacity, Hapag-Lloyd, has their ships waiting at Yantian port through marine data providers. Forecasts believe the capacity will stay tight until the last quarter of the year, and the freight rates will skyrocket.
The Logjam is among the series of disruptions that have affected the supply chains around the world this year. This delay has led to shortages of raw materials and consumer goods, which directly have affected manufacturers, retailers, and companies' attempts to capitalizes on the increased demand for goods in the Western economies. Earlier in March this year, the weeklong blockage of the Suez Canal due to a grounded container ship led to delayed deliveries of containers by one month. Elsewhere, ship backups are still delaying transport through the ports in California, which constitute the biggest gateway in the United States for imports in Asia. According to reports, there is a positive response with the number of ships that need berthing space to reduce in California ports. However, shipping companies and clients suggest delays of goods moving inland due to congestion and shortages of freight equipment.
The demand for box ships is because of the need to restock after a year of supply chain disruptions by the Covid-19 pandemic by retailers like Amazon and Walmart. These efforts are backed by the anticipation of acquiring a full range of merchandise before Christmas to sort the skyrocketing demands and maximize sales during celebrations. This congestion increases the costs for shipping customers who jockey for space and have goods stuck in overstuffed channels of distribution. The price of shipping sea containers from China to the United States coast ports is 386 percent more than in January 2020.
Transportation and logistics have faced havoc this year, with the costs of transportation having tripled from last year and delivery periods doubled. Other big container ship operators like France's CMA CGM SA also anticipate a busy peak season, with full swing end-year imports, to begin earlier than normal years to cater for the disruptions. The crisis caused by excessive demand and the severe supply shortage will create much mess for an extended period.
Reference
Paris, C. (2021, June 21). Chinese Port Logjam Threatens Christmas Shipping Rush. The Wall Street Journal .
