The jaws of the supply chain vise are gripping trade so tightly that the headache it creates will be a real nightmare for logistics managers in this peak season. Port congestion is increasing again due to inefficient labor and equipment. Commerce needs people, and what we see in CNBC’s supply chain heatmaps is that the human component of commerce is driving this latest squeeze.
Shanghai is still in the process of reopening, and although there are more green lights on the screen, the supply of drivers and people to get around and produce the product is slower than normal. This affects the delivery of critical medical devices.
“The Shanghai manufacturing plant has been closed for 75 days due to ‘zero-COVID’ restrictions,” said Gerry LoDuca, president of Dukal, which sells infection control products and has manufacturing plants in Shanghai. , Wuhan and Xingtai, China. “They are now operating 24/7 and they will be caught up at the end of July. Then the products will have to be packed, shipped to Shanghai port and transported by ship.”
Unfortunately, this delay is one of many experienced by global importers.
Europe is another vice that compresses trade.
The labor dispute between the German trade union ver.di and the Central Association of German Port Companies (ZDS) is burning. Almost all German North Sea ports were hit by a second warning strike last week that lasted 24 hours.
According to sources, a final offer of a salary increase of up to 11% in 18 months has been made. Some hope for a conciliation procedure in which politicians or a neutral person would get involved in the mediation.
The delays created by the latest warning strike have added to the congestion already plaguing German ports. Container ships are currently delayed for several weeks in some German ports. Logistics officials fear congestion will worsen, as will the availability of empty containers to fill with trade.
“The overall situation in Northern European ports is deteriorating,” warned Andreas Braun, director of ocean products EMEA for Crane Worldwide Logistics. “Port congestion is increasing as well as the occupation of construction sites. Early shipping companies like MSC are reacting to the current scenario with emergency storage surcharges for imports and exports. These surcharges will be applied after exceeding the standard free storage time and are in addition to the standard rates. Although this surcharge is currently limited to only Dutch ports and so far only MSC has circulated a communication regarding the additional charges, we can assume that other ports and shipping companies will follow suit.
The shipping company Hapag-Lloyd published a to remark on the increased demand for trucks due to this downturn in the labor force. And Maersk reported it would ‘absorb’ the shutdown of its German terminals, telling customers that ‘in the interests of minimizing any further disruption to your supply chain, we will be monitoring developments closely up to and during the next round of meetings between the ver.di and ZDS unions, recognizing that further strike action is possible.
America’s logistics system continues to have its own host of problems with ongoing rail issues, chassis shortages and full-capacity warehouses.
“Consumer trends are changing,” explained Spencer Shute, senior consultant at Proxima. “Shopping habits have shifted from home, electronics, casual wear to more services. We are seeing the purchase of travel apparel and cosmetics return to pre-pandemic levels. Luggage, cream solar, insect repellent, these are items that are increasingly in demand as consumers need them in their experience searches Major appliances are no longer being purchased It’s an interesting dynamic to see how quickly the consumer has switched into account given what is happening in the economy.
Despite the historic container volume, a pullback is expected as future orders from Chinese manufacturing fell 20% to 30%, according to shippers surveyed. Lumber orders were reduced along with orders for furniture, appliances and DIY products.
“But for other sectors like apparel, sporting goods and e-commerce, they are still seeing strong demand,” explained Akhil Nair, senior vice president of products for Asia-Pacific at Seko Logistics.
Steve Lamar, CEO of the American Apparel and Footwear Association, explained that the continued strength in orders is the result of consumers looking to gear up for experiences like back-to-school, back-to-work in the office and trips. But despite this demand, the impact of inflation is a major concern.
“We remain deeply concerned that persistently high prices — in our industry and across the economy — will begin to dampen consumer spending and hurt American families,” Lamar said. “That’s why, with consumers still being a driver of economic growth in our economy, we continue to push for [Biden] the administration to avail itself of all of its own inflation-reducing tools, including relief from the high and regressive tariffs that are currently imposed on the products of our industry.
Alan Baer, CEO of OL USA, told American Shipper that the decline in container volume was visible.
“We are seeing declines in some customers from 30-50 FEU per week to 10 FEU per week,” Baer said.
Compression is in progress. It’s time to swallow that aspirin.
The CNBC Supply Chain Heat Map data providers are artificial intelligence and predictive analytics company Everstream Analytics; the global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; the logistics provider OL USA; the FreightWaves supply chain intelligence platform; the Blume Global supply chain platform; third-party logistics provider Orient Star Group; the marine analysis company MarineTraffic; Marine Visibility Data Society Project44; shipping data company MDS Transmodal UK; sea and air freight benchmarking firm Xeneta; research and analytics provider Sea-Intelligence ApS; worldwide crane logistics; DHL Global Forwarding; and freight logistics provider Seko Logistics.