The shipping market has been under immense pressure over the past year. We have seen shipping prices skyrocket and ships facing considerable delays for various reasons, most notably the pandemic. However, there is some good news on the horizon.
Shipping prices have stabilised, and shipping times have begun to improve. However, some significant uncertainties could still impact shipping in the coming months as we head into the traditional peak season for shipping. The biggest concerns are labour disputes at West Coast American ports and continued apprehension regarding COVID-19 policy within China.
Shipping during the peak season can be difficult for raw material providers as demand can grow 11-15%. The increased demand for consumer goods around the holiday season globally creates shipping issues for all, including those moving raw materials. This is because shipping lines do not prioritise raw materials over consumer goods.
Several ongoing labour disputes are affecting major ports globally, with dealers particularly prevalent on the West Coast of the USA and in some European countries. These disputes typically result in increased dwell time and can reduce the global capacity for large container vessels. One of the main issues causing concern is the looming expiration of port workers’ contracts on the West Coast of the USA in June. Data shows congestion is already starting to build up in Californian ports, with containers waiting for more than nine days on average – the highest figures seen year to date.
Port of Long Beach: The pandemic has put immense pressure on the Port of Long Beach: The pandemic has put immense pressure on the shipping network, but dockworkers have continued to rise to the challenge. Their hard work has kept the US economy moving, even in difficult times. network, but dockworkers have continued to rise to the challenge. Their hard work has kept the US economy moving, even in difficult times.
In Europe, there is also an ongoing threat of trade action slowing down major feeder ports in the United Kingdom and Germany, which would have flow-on effects across the continent. While it is difficult to predict the outcome of these disputes, it is clear that they are having a significant impact on global trade.
The appearance of the Omicron strain in China led to a 70-day lockdown of Shanghai, which resulted in delays for 20% of the world’s container ships. This had a significant impact on the ability of suppliers to manufacturing goods globally. Another lockdown could occur in any city, province or port, which would further delays and disruptions. The continued zero COVID-19 policy in China is an ongoing, difficult to predictable variable in global shipping.
Despite the challenges of 2020, the shipping industry has shown its resilience in the face of disruption. And while the worst of the COVID-19-induced supply disruptions may be over, it is crucial to be prepared for continued uncertainty ahead. The good news is that carriers are already planning for the 2022 shipping peak season and are implementing measures to avoid a repeat of last year’s disruption.
It is essential to discuss strategies to mitigate shipping issues with your sales representative and book stock well ahead of time to minimise risk. Doing so can help ensure that your materials arrive promptly and without incident.