Two words describe the nation’s struggling supply chain: not enough. From not enough raw materials to not enough workers involved in production, shortages of all shapes and sizes are preventing the supply chain from normalizing. Complicating matters even further are the receptacles used at ports to transport manufactured goods: Once again, there simply aren’t enough of them.
As reported by The Wall Street Journal, steel boxes are increasingly hard to find at many of the world’s busiest shipping ports. John Fossey, head of container equipment and leasing research for the container indexing firm Drewry, told the paper that while there is more than enough material to build the steel boxes themselves, the ones that are already built and ready to use are largely stuck in the wrong places, meaning the ports that already have a sufficient amount. A variety of unrelated global events has contributed to the logjam, such as the weeks-long blockage of the Suez Canal that occurred in March and the backup of container ships at the Yantian port in China; that alone led to 350,000 containers being stuck in neutral, unable to reach their intended destinations.
Cost of steel boxes has doubled since 2016
Contributing to the complexity is the cost shippers must pay for steel boxes, as limited supply is driving the average price to new heights. In 2016, the average annualized cost for a standard 40-foot shipping container was approximately $2,500. Today, it’s more than double that amount at nearly $6,000, the Journal reported, based on Drewry data. Experts anticipate the price will go even higher as the busy holiday shopping season approaches.
“Approximately 22% of sales go by the wayside when cargo is unable to reach buyers.”
The result of not enough shipping containers in the right places is a loss in sales. Indeed, according to a survey of participants belonging to the Agriculture Transportation Coalition, approximately 22% of sales go by the wayside when cargo is unable to reach buyers. This may be due to businesses or consumers canceling their orders or spoilage, as in the case of perishable foodstuffs.
“Global trade right now is the hottest restaurant in town,” Brian Bourke, chief growth officer for freight forwarder Seko Logistics, told the WSJ. “If you want to get a reservation, you need to plan it out two months in advance. Everyone’s trying to grab any spot they can and they’re all spoken for.”
Pricy steel boxes to persist into 2022
Perhaps the biggest frustration of all is container prices are expected to remain in lofty territory for the foreseeable future. Philip Damas, who heads the supply chain advisors division at Drewry, said shippers and business owners should expect delays to persist well into 2022.
“There is no end in sight,” Damas told the Journal. This could also affect holiday shoppers; buyers may not have their presents in time as Dec. 25 draws nearer.
Timeliness — or lack thereof — isn’t likely to adversely affect the giving spirit. The National Retail Federation says a busy holiday shopping season will push overall retail sales to north of $4 trillion in 2021, a double-digit percentage increase from 2020.
The original article can be found at: Strategic Sourceror