There’s a line in the classic baseball movie “Bull Durham” that goes to the unpredictability of the game of baseball. It’s where the character played by Tim Robbins mulls, “Sometimes you win, sometimes you lose, sometimes it rains.”
Add to that, “Sometimes the conditions are such that the entire game is delayed” – as is the case with the global logistics industry these days as it continues to respond to rapid swings in cargo pricing, availability, and reliability due to unprecedented pressures along the world’s supply chains.
“At a time when consumer demand is at all-time highs, shippers are faced with protracted delays in moving cargo due to a global shortage of needed capacity,” says Omar Zambrano, Chief Operating Officer of Prime Group, “all of which is primarily a direct result of the pandemic.”
Another significant challenge facing virtually every manufacturing, service, and distribution company worldwide – and the supply chains they depend on – is the acute lack of equipment needed to enable all lines of cargo transport. Says Zambrano, equipment such as dry containers, reefer containers, and special equipment to move project cargo.
It all adds up to a serious situation with no short-term solution.
A Very Merry Q4
“All of this comes as major retailers are busy buying all they can now to stock up for what is surely to be a very frantic fourth quarter,” he adds. Even in a good year, planning in advance of Black Friday, Cyber Monday, and Christmas all comes with unique challenges. This year, however, those traditional pressures are now further amplified against a backdrop of existing heavy consumer spending.
“It’s going to get to a point in October and November where it will be extremely difficult to find space – and there’s no simple solution, as so many of our products come from across the globe, from aircraft engines and canned foods to, well, even baseball trading cards!”
One way that cargo owners are dealing with the rampant shortage of equipment in the ocean shipping market is to bring in their product earlier in the hopes that it at least arrives during third quarter 2021. Additionally, they are importing more goods from multiple sources, increasing the number of container lines they are using, and routing goods through more ports than they have in years past.
Therein lies the conundrum: meeting the heightened demand for goods this year is making congestion at the major U.S. ports on the West Coast even worse – and the cascade of incoming containers is not expected to stop any time soon.
Wrong Place, Wrong Time
According to Zambrano, while there may be plenty of shipping containers across the globe, the reality is so many of them are now in the wrong places. For example, as the pandemic began, cargo ships in transit from Asia dropped off hundreds of thousands of containers in Western Hemisphere ports.
“But with pandemic-era restrictions in place at many overseas ports,” he adds, “they couldn’t be reloaded with other products and shipped back to Asia. Instead, they are piling up at ports and railway depots.” They were, and still are in many cases, out of position.
“In turn, the supply of shipping containers has shrunk at major export hubs, while COVID-shocked consumers continue to spend a ton of money on new manufactured goods,” says Zambrano. “It’s a spiraling situation that is likely continue into 2023.”
Looking for Answers
As a result, Prime Logistics is finding itself in the unenviable position of having to explain to its customers that very little can be done at this point to ameliorate the deepening issues affecting the logistics industry.
“It’s not in our corporate DNA to deliver news like this. With a service-oriented mindset and great contacts in the industry, we have always been able to provide alternative solutions for our long-term and new customers alike,” he stresses, such as utilizing the pre-arranged contract space Prime Logistics has with many of the major ocean carriers.
Build It and They Will Come
Across the globe, one idea in the pipeline right now is to boost production of new containers, and the three Chinese manufacturers that supply 80 percent of the world’s shipping containers are hard at work doing just that. But this may be a lot too late, as observers agree it’s just not going to quell this year’s acute and growing shortage.
Ocean carriers also are doubling orders for container ships this year as a result of the lack of tonnage to meet the strong demand. There are nearly a thousand new container ships presently on order for future delivery. In fact, Hapag Lloyd has commissioned ships that will expand it global system capacity by 60,000 TEUs to address the critical lack of equipment. Ironically, in many cases, production is being delayed as raw materials to manufacture those ships are caught up in supply chain bottlenecks.
Whatever It Takes
The pandemic-driven mentality of “do whatever it takes” is understandable but the options remain severely limited. Where creativity and innovation have helped Prime Logistics in the past to get customer cargo where it needs to go, they are now endeavoring to work with customers much closer and well in advance, to be able to offer more than just one option to move their cargo.
Prime Logistics shipping consultants are having outside-the-box conversations, as well, suggesting cargo owners might look at diversifying suppliers and resetting expectations of their existing partners, while factoring in higher costs – all key components of peak-season management.
Zambrano also emphasizes the importance of keeping up with the headlines. “Being knowledgeable and insightful on the rapidly changing marketplace is what we do best. When customers come to us looking for answers, we are ready to get to work for them.”
At present, in fact, news is breaking about record-setting lumber prices and supply restrictions, as well as the continued impact of high oil prices on transportation costs and petroleum-based products. Stay tuned there’s bound to be more reports like this.
Keep Your Eye on the Ball
The industry has had to face some hard lessons, says Zambrano, particularly around the importance of adaptation, persistence, and resilience.
“In essence, the pandemic has served as a coach, teaching us to keep on slugging even under the most cataclysmic conditions so that we might go on to win another day.”