What’s causing the global shipping crisis and the increase in the prices of goods?

The 2019 pandemic severely disrupted the global supply chain, and the effects are still reverberating today. The current dramatic increase in freight shipping prices is related to the shortage of almost everything from lumber to semiconductors.
Ocean shipping allows us to purchase an astonishing variety of inexpensive goods. Our complex, global supply chain is why we can get two-day shipping on a cheap dining table made in Asia.
However, as we are currently finding out, there is a catch. If any of the elements essential for the system malfunction, the whole global supply chain can break down.
In the current crisis, just two essential shortages-of containers and personnel – have been enough to bring the system to its knees.
Container Shortages
There are four main reasons for the container shortage, although to be accurate, it is more a case of containers being in the wrong place than an actual shortage.
1. Recovery times from the pandemic differed between Asia, particularly China, and the rest of the world. When factories in China were returning to production and shipping goods to the US, Europe, and the rest of the globe, those countries were still experiencing pandemic conditions that limited their ability to produce goods for export. This imbalance led to containers shipping out of Asia but not returning and empty containers piling up at ports.
2. There has been a massive increase in purchases of goods from Asia due to the quarantine conditions in many countries, especially for work-from-home, gardening, and home decorating items. Since people could not go out to spend their discretionary income, they spent it purchasing goods online. This demand exacerbated the container shortage even further.
3. Shipping companies are currently prioritizing long-haul cargo over short-hauls as they are more profitable, leading to a build-up of empty containers at ports within Asia.
Manpower Shortages
There is an ongoing shortage of long shore personnel to load containers due to Covid19 illness and quarantine requirements in the US and globally, resulting in delays in ships unloading and reloading their containers. Ships are also waiting longer to enter ports with their goods leading to an increase in turn-around times. The personnel shortage has also impacted the ability of logistics companies to predict delivery times for cargo as accurately.
Increased shipping times and costs
These delays have led to increased shipping times, and the cost of a 20ftt container has increased from $1800 in 2019 to $3,500. The doubling and even tripling of shipping prices have made it uneconomical for some companies to import their products, leading to shortages. These price increases are affecting consumers who are experiencing price increases and product shortages in their local supermarkets.
Should you be stocking up on bathroom tissue? Experts say they expect the current shipping crisis to last until 2022, but I will leave that decision to you.
Michelle Francis June 22, 2021
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