The shortage of containers in virtually every port in the world and the difficulty encountered by shipowners with the lack of space cause daily concerns for those involved in international trade between countries.
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The greatest impact suffered by world trade was caused by the health crisis in Covid-19. From there several segments of the economy suffered an imbalance in their logistics chains.
As a result, it has also been common to address the lack of insum and raw materials, as well as the constant lack of containers and spaces on cargo ships to meet current demand.
Continue reading and check out more details!
What generated the lack of container space?
According to research conducted by entities that manage supplies worldwide, supply chains of great importance to countries have been affected by the pandemic. In addition, there was an increase of almost 80% in the movement of goods consumed through the maritime modal, resulting in another operational bottleneck.
In addition, after the effects caused by China’s lockdown , the values for shipping containers between the continents reached the absurd level of thousands of dollars per unit.
Not to mention the “traffic jam” in the Suez Canal because of the ship that was stranded in early 2021. And more recently, the war between Russia and Ukraine that has been going on for more than six months. These are countries whose ports carry out important movements for the distribution of essential products to the whole world.
In this act, the economic recovery of the U.S., countries in Europe and Asia has been establishing itself since the end of 2020. These are aspects that influence and become a pressure factor in the movement of cargo around the world, certainly contributing to the lack of container space.
In other words, the high and low international demands create an imbalance between the flow of logistics operations of international trade in partner countries.
Thus, for sectors that already have the most heated demand and require that the execution of routes be met the obstacles are continuous. This is because the challenges encountered in ship congestion in major ports hinder efforts to rebalance supply and demand.
What are the effects of the pandemic in 2020?
As the main factor of the economic slowdown, the total or partial closure of ports in developed countries causes scarcity in the supply of products, added to the higher demand for ships and containers, also increasing the cost of international freight values in the import chain.
Consequently, the peak consumption of raw materials essential for the continuity of the production line suffered setbacks in the pandemic. Thus, in the face of the chaos in global logistics due to the lack of container space, the processes become more expensive, time-consuming and increase the cost of imports.
What are the impacts on the Supply Chain?
Faced with so many factors, supply chains in various sectors have suffered strong impacts. This led companies to make certain decisions to continue their operational logistics, adding value for improvement in product movement.
Certainly, companies operating in international logistics were previously more likely to have immediate access to containers. These days, however, suffer the consequences of lack of space and need to wait for weeks in a queue for availability on cargo ships.
The greatest impact caused in the Supply Chain was due to this dependence of container companies for their movements and to achieve operational efficiency. Thus, the first step was to seek to reduce production and transportation costs with the aid of an orderly containerization system for cargo storage.
However, companies did not think about the risks they could suffer from the unexpected (new) disruption in the value chain due to the unavailability of containers. Also because the lack of space was caused by a number of factors that are outside the control of managers.
China’s new zero-tolerance policy that closed the Port of Yantian for weeks, close to the country’s major industries, is an example of these contributing factors to the Supply Chain crisis. Soon after, the Port of Ningbo, the world’s third largest container, was closed.
Anyway, all this caused a stress in the navigation system between ports, with extra ship congestion, causing even more bottlenecks in a cascading effect.
How to minimize the potential problems of lack of container space?
Faced with the crisis in the maritime sector, the empty containers that need to return to be reused are not being returned. Especially because with the high demand for freight transport, preference is given to units that are full so that cargo agents do not miss the most profitable trips.
As a course, empty containers take up space in ports that should be used to unload others, causing the lines of embarkation and disembarkation.
In order to work around the problems caused by the lack of container space, companies are looking for internal solutions. Their goal is to ease the pressure of the global market and be able to maintain the operationality of its port activities.
Within the expectations controllable by managers, some actions are taken, such as:
- anticipate the chaotic scenario; and
- increase your local inventory to ensure supply on the domestic market.
In this way, they can maintain continuity in production and seek other alternatives of intake in Brazil. Even if it is for a higher value, it is a viable alternative so that trade negotiations are not interrupted.
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What are the prospects for the international freight scenario?
In principle, experts are optimistic that container demand and logistics operations could normalize. This will reduce the lack of space in this post-pandemic phase, with the launch of new container ships by 2023.
This investment in port infrastructure, with a new fleet, will help the resumption of the balance of the global logistics chain. Not to mention the expectation for the renewal of the world container park and also the higher traffic of goods via air modal.
Although international conflicts result in a string of diesel prices, the price of a barrel of oil is stable, creating a positive expectation around the values traded for international freight.
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It is always important to emphasize to foreign trade companies that pay greater attention in hiring a good cargo agent to carry out operations, as this allows to minimize impacts through specialized and reliable work.
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