How COVID-19 Gave the Shipping Industry a Cold
By Diane Tait
|Image courtesy Pixabay|
The Delta Variant caused the shutdown of several key port terminals. On August 11, a terminal at the Ningbo-Zhoushan port south of Shanghai, China was shut down after a port worker tested positive for Covid-19. As a result, several international shipping lines had to reroute cargo to other ports. They also notified customers of the delays this action will cause. Other shipping snafus have occurred in other parts of the globe, including a Japanese cargo ship that ran aground only to block the Suez Canal in March of this year. Even after the vessel was refloated, it caused a ripple effect that left 422 vessels waiting to transit through the canal.
Will factory shutdowns affect delivery schedules? You bet they will. Key factories in China, South Korea, Malaysia, Thailand, and Vietnam were forced to either scale back operations or close due to the emergence of the Delta variant. Factory workers who tested positive for Covid-19 in Thailand were quarantined along with the entire production crew for 28 days. In Vietnam, factory workers are being rotated every 14 days to try to meet production schedules while avoiding contagion. However, many factories around the globe are experiencing labor shortages that are playing havoc with the supply chain. It was reported by Barron’s that as much as 90% of apparel, furniture, and textile factories in Vietnam were forced to suspend manufacturing since March 2021. While these shutdowns seemed like a golden opportunity for factories in China, they are also dealing with shutdowns and shortages caused by the Delta variant.
|Image courtesy Pixabay|
Can truckers keep on trucking? – The trucking industry has had its share of issues caused by the outbreak of the Delta variant. Just when truckers were starting to bounce back from the problems caused by the government lockdown of rest and fuel facilities in 2020, this year the industry has had to deal with a shortage of qualified drivers. The pandemic brought the introduction of new drivers to a crawl due to health restrictions imposed at truck driver schools added to the glacial pace of motor vehicle administration personnel that slowed everything from drug testing to licensing. While the DMV stated the reason for the slowdown was due to the pandemic, it left many trucking companies unable to wrangle enough drivers to keep all their trucks on the road.
Will Covid-19 derail the railroad? Just as with other parts of the transportation infrastructure, the railroad industry was nearly derailed by Covid-19 in 2020. So much so that in March of 2021, the Federal Railroad Administration issued an emergency order requiring railroad personnel who work on trains and in transportation hubs to wear masks. This edict affected both passenger trains and freight trains. This was after revealing that for the first 36 weeks of 2021, rail traffic had increased by 10% over that of last year. However, freight traffic last year was down more than 16%. This means even the railroads aren’t immune to disruptions in the supply chain caused by manufacturing and warehousing shortages related to the pandemic.
Air freight companies are feeling the pinch as well. The backlog at ports is having an adverse effect at airports that are hard-pressed to fill the gap left by sea and ground transportation companies. According to a report by CNN Business, “At some of the larger airports such as Chicago, there are delays of up to two weeks to claim cargo.”
How has the pandemic affected the cost of transporting goods? Since transporting goods is a supply and demand issue, it should come as no surprise that disruptions in the shipping industry is going to cost shippers, retailers, and consumers more in the short term. The cost of shipping goods from China to the US has soared in the past year. The cost of shipping a 40-foot container rose to $9,613 as of August 19, an increase of 360% from the same date in 2020. This is sure to have a ripple effect when it comes to the availability and pricing of consumer goods during the holiday season.
How are retailers dealing with the delays? The current transportation dilemma has left retailers reeling. Many stores, including big box chains, are having problems keeping their shelves stocked, much less preparing for the biggest shopping season of the year. While some consumer goods producers have tried to do an end around by moving manufacturing from Asia to Mexico and Brazil, other companies have already admitted that they won’t be able to meet demand for their products.
What will this mean to consumers in the US between now and the end of the year? The bottom line is consumers are being advised to do their holiday shopping early instead of waiting for the last minute. As supplies dry up, the prices for many coveted consumer goods are sure to rise. Even those shoppers who do order early should be prepared to wait up to 4-6 weeks for delivery, as well as having alternate gift ideas in mind in case supplies dry up altogether. Some retail industry pundits are already predicting that shoppers can be expected to see some bare shelves come the holidays. If you don’t want the Grinch to steal your Christmas, lets hope the shipping industry soon recovers from the cold that resulted from a virus named Covid-19.
Diane Tait owns and operates A&B Insurance. To find out more about how you can save money on insurance, go to her site or fill out the form at right.