Freight logistics congestion not only for christmas

Freight carriers and shippers are facing a crisis of global proportions. Shipments are stuck in ports around the world because of overcapacity, and seafaring vessels are being stuffed to the brim with cargo. The ships that should be on their way to deliver Christmas presents will not be here for days or weeks, yet shipping rates will continue for peak season. The prices carriers charge for transport advertise double this price, bringing the total costs up twenty five percent more than last year's rate of tariffs for trans ocean freight. It remains to be seen if global trade will falter under these conditions. And worse, it doesn’t seem to get better anytime soon!

These problems could get worse too because wave after wave of new disruption is coming from all over the globe - from renewed conflicts in Europe and Asia, causing increased demand for ships due to potential trade restrictions, to technological advances that are changing how cargo is loaded onto ships or connecting Britain’s supply chain as it prepares for Brexit. There is no easy solution for businesses seeking safe ports or reliable transit options and paying outrageous fees.

James Hookham, GSF's Director, talked about challenges that importers and exporters face in securing their goods before the holiday season last week at a High-Level Maritime Dialogue hosted by FIATA.  Shipping lines, terminals, and inland logistics providers provide historically poor levels of service to them. However, they continue to pay the highest shipping rates and surcharges in decades.

In the retail market, importers and distributors are most at risk due to retailer deadlines.  It is simply impossible for them to predict when they will be able to take delivery of the goods that they paid so much to transport. Additionally, they risk losing future contracts due to penalties incurred from late deliveries and blowing their logistics budgets this year. They are the ones dealing with the negative impacts of the great shipping crisis of 2021, which has affected the entire shipping industry.

The holiday season is now in full swing and seems to be busier than ever with some major chokepoints already appearing as demand ramps up. Will this situation improve next year? Should consumers expect this congestion to subside when the holiday season is over? There are some well-respected transportation experts that believe that congestion will not subside, but rather continue indefinitely. A predicted increase in e-commerce sales in the coming years, it's likely that a similar condition may occur in the future. This will cause the need for more efficient retail and supply chain management, some experts say.

Given the expected profits of $150 billion this year, what could be the reason for this? Yet, there is some validity to the hype that continues to abound.

Many economists predict that the consumer price index will rise faster next year in many developed countries, and some central banks are likely to hike interest rates as a result. While that might not impact retail prices immediately, the shift in consumer sentiment it may bring will lead to a sudden halt to the 'click-fest' of online shopping driving shipping demand in the past 18 months.

In closing, James Hookham noted that GSF now includes container ship operators among its global membership!

Speedshift | Pallet Shipping T call 0845 519 0270