Global shipping shortages caused by Covid-19 & its impact on the Supply Chain.
The global pandemic has caused its fair share of industry carnage and the logistics industry has been no exception. The problem originally began in 2020 with the global lockdowns, social distancing measures and overall demand decreasing. This resulted in a reduction of staff, cargo ships and shipping containers, the abandoned containers ended up in landfills or being sold off to be repurposed. However, as demand began to increase again in 2021, logistics companies worldwide are unable to keep up with demand as there are not enough containers currently in use.
Effects the shipping crisis has had on the Distribution of Cargo
The backlog of cargo ships in ports and the delay of off-loading the ships has resulted in delivery times being almost doubled. Which has caused companies to limit the products they offer, prioritising smaller products in order to make the most out of every square inch of their shipping containers. Furniture companies such as IKEA and Sears are promoting foldable products over solid furniture as they can ship more in one container.
Effects of the crisis on Prices
The overall costs of shipping have almost doubled in the last year thanks to the global shipping crisis. This has placed enormous pressure on the logistics industry as they try to keep up with the demand, delays and unexpected price increases that are assumed to continue until 2023. With shipping and distribution costs increasing, price hikes are expected to continue for the next two years. Although large companies are looking for alternatives such as air freight, road freight or even to change their factory locations in order to mitigate shipping costs, the industry is in for a few more difficult years.
Products expected to be in Short Supply this year
Due to the shipping crisis, these products and more are expected to be scarce in 2022;
ICT Products (Electronics)
Information and communication technologies (ICT) products are said to be one of the worst affected by the shipping and manufacturing crisis we are currently facing. Many factories that were responsible for producing these products were converted to create personal protective equipment (PPE), which has led to a global shortage of parts needed to create laptops, robots, televisions and other digital devices.
Potato Shortage
Numerous fast-food restaurants have noted the fact that due to the shipping crisis and extreme weather conditions potatoes are in short supply. Leading chip manufacturers in South Africa warned that the frost and flooding occurring in the country would further worsen the already short supplies, consumers were warned to get their fix before supplies run out.
Auto Parts
As the majority of auto parts are manufactured in China which is currently the worst affected by the shipping crisis. Many auto companies are warning of part shortages and ever-increasing waiting lists for those wanting to purchase a new vehicle. Consumers can wait up to a year for a new car depending on the supply available.
Games and Toys
Similar to auto parts the majority of games and toys found on the market today are made in China and other Asian countries. With Asia struggling the most with the shipping crisis toy retailers are bracing themselves for indefinite delays in their deliveries. Parents have been warned to purchase or order their desired gifts well in advance in order to avoid disappointed children.
Casual T-shirts and Socks
As Asia is the main producer of cheaper fabrics the apparel industry has been on high alert since the shipping crisis began in 2020. With one of the largest ports in the world, Port of Shanghai’s heavily congested retailers are warning consumers of potential delivery delays and to be properly prepared in case supplies run out.
2022 is the year to be prepared for the unexpected as the shipping crisis continues. To stay up to date with the latest happenings within the Logistics Industry, follow us on our social media accounts @bridgewatergroup or visit our website at: https://bridgewaterlogistics.
