Capacity Shortage Threatening Viability of Global Business Supply Chains

When businesses procure products wholesale, they make precise arrangements to transport the goods to their facility or retail store, and get set for resale to customers, all the while eagerly awaiting profits to begin rolling in the door. It’s as simple as that – in theory.

Because the reality is, sometimes a critical supply chain breaks or is slowed by extreme fluctuations in worldwide cargo capacity that end up causing unexpected spikes in shipping prices. So now what’s the plan? Order more product to get ahead of any future delays or order less to stave off the sudden expenses?

“That’s exactly what’s happening right now, as a direct result of the pandemic and other disruptive forces,” says Omar Zambrano, the chief operating officer of Prime Group who oversees operations for subsidiary Prime Logistics. “There’s a terrifically serious shortage of needed shipping capacity, primarily from Asia but elsewhere across the globe, into the U.S. market. It’s a major issue.”

Worse yet, “prices are changing every week, and even by paying the highest rates, shippers still can’t often get solid confirmation of space,” he adds.

Even globally connected firms like Prime Logistics are struggling – not just to find available capacity for customers, but also to explain how in the world costs have risen up to 300% over the last six months.

Sticker Shock

According to Zambrano, as prices soared, many Prime Logistics’ importers said, at first, “I can’t pay that.” Eventually, they budged and bought shipping for just one container, and waited to see what would happen. “But they’re still waiting and it’s not getting any better!”

Stunned by the higher prices, many customers wrongly assumed this would be a temporary blip, not an all-out sustained and deepening situation. “Traditionally, our customers turn to us without question to do what we do best – move their product efficiently, reliably, and at the right price,” he says. “But now, we are also playing the role of a counselor, continually providing fair and accurate assessments of the current market conditions – and advising how to best to adapt.”

Prime Logistics has also been working side-by-side with customers to help prepare for the annual rush to get inventory onto shelves for the busy end-of-year retail season. “Compared with previous peak holiday periods, this year shipments must be booked up to eight weeks earlier than usual – which essentially means, today!”

So What Happened?

Zambrano notes that the primary reasons for the current global capacity problem are COVID and the new variants of the virus and, of course, the Suez Canal debacle.

He says the lack of back-up inventory caused by the first wave of COVID persists as retailers and wholesalers were never quite able to replenish their stock of product. They never really had chance to do so. “So with no inventory and limited ability move product quick enough to match the now-exploding increase in consumer demand, we are experiencing an unprecedented shortage of global shipping capacity.”

Then there was the Suez Canal crisis that exacerbated an already bad situation – when a massive ocean freighter ran aground this past March, blocking canal traffic for six days. More than 400 ships, laden with cargo, sat idle waiting to pass – as the world waited for delivery of the stranded goods.

So just when it would make sense to turn to air cargo to pick up the slack, many airlines had already begun reconverting their pax-freighters to pure passenger service. This, combined with the emergence of the Delta variant of the virus that resulted in a reduction of frequencies into certain key Asian markets, created sharp increases in rates in the air cargo segment, as capacity dropped.

Consequently, all of these factors conspired to lengthen the normal supply-chain flow. For shipments from Asia to the U.S. East Coast, for example, the norm is four to five weeks. Now, it is up to two months. But, says Zambrano, because Prime Logistics has strong relationships with both ocean carriers and air carriers worldwide, “we have, for the most part, succeeded in moving freight for our customers from Asia, even during this most difficult time.”

Now What?

On the home front in the U.S., supermarket shoppers accustomed to paying $.50 for a can of fruit, are now suddenly discovering that very same product has jumped to $3. Zambrano says that’s because it’s not just the cost of transporting a can of fruit, but the higher cost of the can itself and even the higher price of the wood that is used to build the shipping pallets.

“Every industry is being impacted by the lack of available capacity to move the commodities that support businesses and serve consumers worldwide,” he adds. Medical supplies as well are costing more. For example, Prime Logistics transports hundreds of  shipping containers per month of medical supplies from Shanghai to U.S. Gulf ports. “Yes, even shipment of essential products and equipment is an uphill battle,” he added.

“This also comes as wholesalers and retailers here and worldwide are presently buying up product for the holidays,” Zambrano says. “It’s only going to get more challenging to find space in the last four months of the year, and there’s no simple solution, as so many products for every-day life come from across the globe – everything from tires and canned foods to electronics, machinery, medical supplies, and even fresh and frozen produce and seafood.”

Better Safe Than Sorry

This situation is highly problematic for U.S. retailers who normally rely on their ability to maintain ample inventory to keep pace with rising consumer demand. No easy task – as the U.S. Bureau of Economic Analysis recently reported consumer spending on durable goods through May 2021 was running 25 percent higher than pre-pandemic 2019, while the inventory-to-sales ratio continues to skim near record lows.

Because of the unabated growth of U.S. sales and major supply-chain disruptions, Zambrano reiterates that it is especially important that medium and small shippers secure cargo space now and store inventory to keep ahead of the capacity shortage. “Clearly, freight-rate shock is hitting them hardest.”

But at the end of the day, no entity anywhere across the globe is able to escape this space problem – including even the major retail and online stores. Due to their towering market strength and deep pockets, they’ve been able to charter cargo container vessels between Asia and the U.S. to mitigate their risk of being impacted by the capacity shortage. Meanwhile, many other retailers and wholesalers are taking a different route – planning way ahead.

“To ensure that sufficient inventory will be available, particularly for the holidays, we are working with our clients in every market niche to move up their shipments this year to secure needed shipping capacity,” he adds.

Perfect Storm

According to Ben Hackett, a consultant in of maritime strategy and trade logistics, clearly the strain of the continuing economic expansion is putting considerable pressure on the logistics supply chains supporting all industries worldwide,” “We’re seeing first hand the lack of shipping capacity combined with port congestion as vessels line up week after week to discharge goods from both Asia and Europe.”

He says delays are stretching to landside as port terminals struggle with space shortages, and labor challenges are affecting ports, railroads, and trucking companies alike. “This part of the recovery is not a pretty sight,” he adds.

Zambrano agrees. In fact, he describes what is presently happening in global logistics as “the perfect storm.”

Prime Logistics has substantial shipping industry contacts and relationships to help customers through the tough times, but the path isn’t easy. “We are finding solutions for our customers – albeit, right priced under these converging conditions.”

“My best guess is that recovery may start in 2024 with global shipping returning to some sense of stability,” he stresses, but adds that the worldwide problem is likely going to get worse before it gets better in 2021: “This is the most difficult period ever for the global logistics industry.”

Prime Logistics Standing By as COVID Crisis Continues

As the world works together to continue the fight against the persistent spread of the coronavirus, Prime Logistics is stepping up to do its part by providing expert logistics services to customers who need immediate transport of essential goods, medical supplies, and vaccine products to the most affected areas of the world.

Timing is everything during this crucial period, as variant strains of this deadly virus continue to emerge – and there is no room for error. That’s why government agencies, public and private interests, and logistics providers rely on Prime Logistics staff and representatives who are positioned and ready in key international locations – right now.

Standing by, 24/7, Prime Logistics’ highly capable team of movement managers not only has the necessary expertise to work hand-in-hand with pharmaceutical companies and makers of hospital equipment, but also with most major industry types. Our client portfolio also consists of top makers of aerospace and automotive components, heavy equipment manufacturers, wholesalers and retailers – and of course, distributors of time- and temperature-sensitive perishables.

We are widely respected for our skills in custom creating smart logistics solutions that shorten the shipping process, cut transfer times, and quickly and expertly resolve complications that arise along the way, as they often do.

Prime Logistics is a division of the Prime Group, an international logistics conglomerate founded in 2001 and based in Miami. With a vast network of agents around the globe, Prime Logistics reps are skilled at finding competitive air and ocean rates for your shipment.

Here’s a summary of types of cargo we handle, as well as special services provided worldwide by Prime Logistics:

Industries served:
  • Biotech & Pharmaceuticals
  • Medical Supplies
  • AOGs and Aerospace components
  • Perishable commodities
  • Chemicals & Hazardous Material
  • Project Cargos
  • Time-Sensitive Cargo
  • Live Animal
  • Human Remains
  • Military Cargo

Services Available:
  • Pick up
  • Delivery
  • Customs
  • Crating
  • Warehousing
  • Pre-Cooling
  • Valuable Cargo

Big or small – whether it’s one box or multiple pallets, customers team up with Prime Logistics to avoid the need to juggle multiple service providers all over the world. For information, call 305-592-2044 or visit

Prime Group’s Promising Position on the Global Map

When the Prime Group relocated in 2019 to an all-new headquarters complex, it was a bold step forward that served as the capstone of a well planned launch into a new era for the company.

Little did we know, we were also entering an all-new era for the logistics industry – as the global economy was about to be slammed by the coronavirus pandemic.

In this business timing is everything – and it turns out, this move was right on time. We didn’t know it then, but the staged lead up to our corporate realignment effectively put us in a most fortuitous position to better endure the coming crisis.

The long-awaited relocation within the city of Doral, Fla., was just one component of the overall strategic plan to energize our organization from top to bottom. We focused on streamlining internal systems, recruiting top qualified talent, and launching multiple new management and marketing initiatives. In the process, we were bolstering the very resilience and capacity that would permit us to withstand the enormous pressures that we along with the entire logistics industry were about to bear.

So today we look back at the past three years in our new home, and while the world has shifted and the industry has persisted, we are in a much more promising place on the world map than ever before in our 20-year history.

Prime Group has truly emerged as a  global leader with diverse services and products – and our corporate base of operations says just that. At the same time it signals that we are right-placed for continued growth and expansion of our worldwide brand.

As we enter what appears to be an all-new and very serious phase of the pandemic, Prime Group’s ability to survive and thrive goes well beyond the strength of bricks and mortar. It goes to the core of our values, integrity, and commitment to remain strong for our customers, employees, and the industry overall.

Please stay safe.

~ Roger Paredes – CEO