Daily Management Review

Goods For Firms Around The World Getting Delayed Due To Global Cargo Logjam


Goods For Firms Around The World Getting Delayed Due To Global Cargo Logjam
Usual flow of trade has been upended by the growth in demand from people staying back at home during the novel coronavirus pandemic for furniture, exercise equipment and other goods.
In order to reduce its business risks, about half of its production out of China by Amazon seller Bernie Thompson and yet he could not avoid the trouble of logistical chaos which had hit the movement of goods all around the world.
Containers have been stranded in the wrong places because of the chaos in transportation which had resulted in bottlenecks that now start at the factories and end at sea ports and beyond. The majority of consumer goods is shipped by container ship operators. There can be shortages and complication of the global economic recovery because of prolonged industry disruption, warned transportation and trade sources.
Work-from-home staples like laptop docking stations are sold by Thompson, the owner of Washington-based Plugable Technologies. In order to reduce reliance of sourcing from a single country and to avoid the tariffs of the United States on Chinese goods, he had diversified sourcing of its goods.
However despite this there were issues, and he is currently concerned about being able to keep enough product in stock, just like many other importers, according to reports. "We've moved production out of China and moved ourselves right into a disadvantage," said Thompson in an interview to the news agency Reuters.
Delivery delays of about four weeks was suffered by his new factory in Thailand, partly because empty containers were routed by shipping companies to the US-China trade lane which apparently was their top priority.
The logistical issues had a cascading impact and currently there is a delay of as much as three weeks for the remaining shipments from China – top manufacturer of the world.
Delays have also hit many other firms such as the United States based retailer Costco Wholesale Corp and Honda Motor Co Ltd in the United Kingdom.
"Everyone's trying to squeeze through this narrow opening all at once," said Rick Woldenberg, chief executive of Illinois-based Learning Resources which supplies educational toys to Amazon.com and other major retailers.
He said that it can "really screw up your plans".
And according to Peter Sand, chief shipping analyst with trade association BIMCO, since August, there has hardly been any free space on container ships which has not happened in more than a decade.
The container line was "deploying every available ship", Rolf Habben Jansen, chief executive of Germany's Hapag-Lloyd, told investors.
There is growing frustration because of the issue.
Gene Seroka, executive director of Port of Los Angeles – the busiest US seaport, said that importers and exporters are "upset they're not able to move their product or crop as willingly as they would like to".
"We need to get the trade flow going to grease the engine for the whole world economy," said Christopher Tang, a business professor at the University of California-Los Angeles.
Another reason for this is the reduction in staff at the ports because of the Cvoid-19 safety rules.
"It's a combination of strong volume and slower and less efficient operations," said Lars Mikael Jensen, head of network with Denmark's A.P. Moller Maersk, the world's biggest container line. "This is the perfect storm for global container flows,” Jensen said.