Merchandise is stuck on ships that are stuck in the water. It might be awhile before some arrives.
Boca Terry is doing its very best to keep all the bathrobes, linens and towels you need in stock, and we’re taking every action possible to keep our shelves full. The items you’ve ordered from other vendors? Whether hotel room desks, bicycles for guest use or restaurant tableware, they may arrive very late.
The world — truly the entire globe — is in the midst of a shipping crisis. As a result, manufacturers literally can’t get their wares to end-users without a long delay. Here’s an explanation.
What is the global shipping crisis? A tremendous amount of merchandise is transported from one destination to another, often one continent to another, in metal “intermodal” containers loaded onto enormous ships. It’s said that 80 percent of goods are scooted around this way — ovens, tech goods, blenders, apparel, legumes. Usually the system runs smoothly: A container leaves China, say, is emptied in Rotterdam, filled again and sent to the United States, is emptied and filled again and goes back to China.
Not now. A couple of months after the pandemic started in 2020, the system got out of whack. Folks sheltering in place unexpectedly ordered a whole lot of big items like home office furniture and treadmills, filling up shipping containers. At the same time, some containers were abandoned, empty, at unbusy ports since nobody anticipated how badly they’d be needed. Now the shipping companies are focusing all their attention on the busiest destinations, including China and the United States, and often skipping others altogether. In fact, one container line has cut off all Latin American business for now.
Meanwhile, docks have been understaffed since workers need to be physically spaced apart for safety, quarantine at home when exposed to Covid-19, miss work when they are sick with the virus, or need to tend to their children who are home all day instead of in brick-and-mortar schools. Plus, truck driver ranks have been thinner due to illness, quarantining and home responsibilities, while demand is high. That slows goods from getting to and from the ships. On top of that, China is quarantining some incoming ships for two weeks as they return from other countries.
Shippers with deep pockets are gobbling up available space by purchasing “premium” vessel space at an even higher price.
When it rains it pours, right? So the container ship Ever Given got stuck in the Suez Canal for nearly a week in April 2021. That stopped all container traffic there in both directions for several days. Some nasty winter weather slowed things down more in Europe.
How bad is the problem? Outside Los Angeles and Long Beach, California, for example, more than two dozen ships at times remain anchored offshore waiting for their turn at the dock for two weeks. At the peak, that number was 40 ships. About 30 percent of the United States’ $220 billion of imported goods come through that gate, so that’s a huge portion of the United States’ merchandise. In February 2021, container ships filled with winter 2020 holiday decorations, among other items, were sitting off the coast of Africa waiting for their turn to be unloaded. An organization called UNCTAD (United Nations Conference on Trade and Development), among others, is working to improve the maritime supply chain in a variety of ways, including “Maritime informatics.” In practical terms, it might take about nine weeks to receive a shipment that would have arrived in half that time pre-pandemic.What’s more, Asia ports are short on equipment and that’s not getting better soon. Demand to ship cargo is likely to continue at this intense pace through the first half of 2021, at least. Holiday and back-to-school purchases make August a peak season, so that’s worth watching for too. Asia simply isn’t getting containers back quickly enough, and looks to improve that.
Courtesy Marine Exchange of Southern California
What are the downsides? First off, delays hurt businesses and end-users. Second, global shipping costs have quadrupled, with differences regionally. In late 2020 and early 2021, the cost to ship goods was the highest in history. What used to run $1,000 might now demand as much as $10,000, and some experts cite price spikes of more than 440 percent to less-popular ports, 60+ percent for popular routes like China to Los Angeles, and 53 percent across the Atlantic. That’s if you can even find space on a ship for your container. And if you can access a container. Ultimately, the businesses and individuals who buy goods shipped from abroad are likely to see prices of merchandise rise. (This crisis has been a bonanza for shipping companies and container manufacturers.)
Courtesy Marine Exchange of Southern California
Can they just make more shipping containers? That’s not as simple as it seems. Only a few companies manufacture these metal boxes, mostly in China. It takes time to get the materials to produce containers. Plus, what will happen to the extras once the crisis is over?
Fun fact: No buyer receives a virgin container. Even brand new ones are filled with merchandise en route to the owner. Why waste a trip?
Reprinted with permission by UNCTAD
Abbreviations: FEU, 40-foot equivalent unit; TEU, 20-foot equivalent unit.
Source: UNCTAD calculations, based on data from Clarksons Research, Shipping Intelligence Network Time Series.
Can’t they fly the merchandise instead? Some goods have always been shipped by air, often in the belly of passenger planes. Now fewer flights are in the air, and that shipping space is in huge demand — and therefore prices are sky high.
Will my orders show up eventually? Most of the time, with a big “but.” Ships are loaded with a generous number of containers. Rocky waters occasionally cause those containers to tumble into the ocean — 3,000 in 2020 alone, and a third of that so far in 2021. Those items cannot be recovered from the bottom of the sea. Officials are working hard to get containers bolted down onto cargo ships better, and to develop computer systems that help captains circumvent storms more efficiently. Officials also lament that, due to global warming, they experience more storms than in the past. In addition, fuel prices are rising and expected to continue in that direction.
Demand isn’t slowing.
Chart reprinted from The Wall Street Journal I couldn’t figure out how to ask for permission to reprint this, so we can put it up and take it down if they ask, or just delete it.-rg
How does the global shipping crisis affect Boca Terry? The bottom line: You won’t see a difference in service or in the quality of the goods you order. “All of our warehouses — in Florida, California, Canada, London and Hong Kong — are fully stocked with all our robes and other goods, and we are doing our very best to keep everything in stock,” says Bruce Cohen, who co-owns Boca Terry with his brother, Edward. “We’ve been aware for months that there has been a worldwide back-up of goods leaving mills. To compensate, we have adapted to increased lead times. For example, we now place orders well in advance of our needs and book container space 30 days prior to shipping.”
Boca Terry’s proprietary products haven’t been affected so far. “Our mills have been receiving the materials needed to produce our goods without a problem,”he shares. “I am thrilled to say that, for now at least, we can ship all our products to customers without delay.”