Supply Chain logistics is a well-choreographed dance with all moving parts working so harmoniously in sync that when one piece of the dance is off, everything to follow falls like dominoes.
This domino effect in conjunction with the extended state of global upheaval cause by the COVID-19 pandemic has created a new status quo of increased prices and longer wait times affecting not just the logistics industries, but manufacturers, traders and retailers and can be felt by the end consumers in all markets.
HOW IT WORKS
Exports make their way to ports around the world where the cargo containers are offloaded from the shipping vessels.
Wait times for vessels to be unloaded at the ports are around two weeks (versus 4-5 day average prior to COVID-19).
Cargo containers are then loaded onto chassis and taken inland by truck to their final destination.
Trucking time has double or tripled in all markets since the COVID-19 pandemic began.
Empty cargo containers then make their way back to the ports by chassis.
Return times on empty containers back to ports is up to over a week compared to 2-3 days prior to COVID-19.
The empty cargo containers are loaded onto cargo ships for transport back to the export country at the ports.
The amount of shipping vessels checking in at ports was down 8% in the height of global lock down and has yet to bounce back to average numbers.
WHAT WENT WRONG?
DECREASE IN AVAILABLE RESOURCES
- Lack of overall manpower, from port workers to drivers, reduces cargo handling speeds.
- Shipping lines reducing number of ships they are using due to rising costs limits the movement of cargo and amount of containers available at a time.
INCREASE IN DEMAND
- While economic activity was significantly reduced in Q2 of 2020, demand for materials and products grew as the e-commerce industry boomed as a result of the global lock down.
INCREASE IN OVERALL SHIPPING TIMES AND COSTS
- Because of the length of the shortage/demand crisis of our supply chain, freight forwarders cannot continue to absorb the increased costs to stay in business, resulting in costs being passed on to clients and end consumers.