In recent years, the frequency of disruption has been increasing. At the same time, they’re getting harder to predict and are impacting us more. Right now, across the globe, supply chain directors are navigating an unprecedented combination of challenges:
1. Major ports are still experiencing logjams
Across the US and Europe, major ports are still congested. Global port congestion is set to continue until at least early 2023 and keep spot freight rates elevated. Charterers have been urged to switch to long-term contracts to manage shipping costs. In addition, industrial action along the logistics chain is spreading globally and the effects of further COVID lockdowns in places like China, and its impact on economic activity, is still a threat. Shipping demand itself is still buoyant, supported by limited capacity due to ongoing port congestions, and freight rates are high.
However fewer containers are being loaded onto ships, with Danish shipping giant Maersk reporting that it loaded 7.4% fewer containers onto ships in the second quarter versus a year earlier. Surplus containers are reportedly already starting to pile up at some warehouses as demand begins to wear out in places, resulting in rising demurrage and detention charges, and contributing substantially to operational costs for shippers. In fact, demurrage and detention charges have increased by 12% worldwide. In any case, significant new capacity and eased congestions will likely alter the shipping landscape in the coming months.