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Panic Sweep Across Supply Chains As Disruptions Push Container Shipping To Massive Crisis

60 Views· 05/23/22
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A sense of desperation is fast spreading across global supply chains. On Friday, one of the most notable executives of the industry has warned that supply chains will never return to normal, disruptions and threats will extend well beyond 2023, and the next wave of bottlenecks is going to be far worse than anything we’ve ever seen. At the same time, as Shanghai has begun to emerge from a lockdown that has constrained the global economy and created even more turmoil for the system over the past two months, U.S. ports are set to face record congestion this summer given that an unprecedented number of containerships are being sent to the U.S. coast. And if you thought that things were already chaotic in our domestic supply chains, by now there’s no doubt that more unrest is coming as 7 in 10 U.S. supply chain workers are threatening to quit their jobs this year.
The world’s largest port and one of China’s main financial hubs has opened today after two months of continued lockdowns. However, as port operations resume in Shanghai, Maersk and Goldman Sachs are sounding the alarm about the ripple effect the reopening will have all over the world in the coming weeks and months. 
For over seven weeks, a massive parking lot of vessels has been building outside Shanghai ports as operations came to a halt. China’s zero-tolerance policies have hit businesses in the manufacturing and commercial hub of Shanghai, as well as the broader global economy, with thousands of factories being shuttered and millions of workers being required to stay confined to their homes. Truckers have also struggled to move goods in and out of the city's huge port due to restrictions on movement. But authorities announced last week that lockdowns would finally be lifted in the megacity this Sunday, and public transportation networks are scheduled to reopen on Monday. 
Goldman alerted last week, that “a resurgence of ship bottlenecks” is likely as China suddenly “restarts sailings all at once." Meanwhile, Maersk released new data indicating that container rates have already rebounded. Container freight rates on the Shanghai-Los Angeles shipping lane have already gone up by 30% and are set to increase more as shipping volumes surge. The giant logistics company also noted that this will result in a new wave of supply chain congestion in the U.S. by the summer.
And with no structural changes at US ports expected in terms of truckers, workers, and port facilities, those ports won't have the capacity to deal with the sudden and unprecedented rise in ships arriving, experts highlighted. The shortage of qualified labor at U.S. ports has dramatically aggravated over the past two years. The lack of enough dock workers, truckers, warehouse workers, and many other professionals across the system have contributed to prolonged congestion, extensive delivery delays, and shortages all across the country.
To make things even worse, over one in seven, or about 77% of U.S. professionals working in supply chain and logistics, are threatening to quit their jobs this year. The absence of these essential workers can lead to the collapse of domestic supply chains this year as it becomes virtually impossible to process the huge amount of cargo headed to U.S. ports. In fact, according to FreightWaves CEO Craig Fuller, one of the most important executives of the industry, supply chains will continue to deal with a long list of threats over the long term.
For smaller retailers, who often count on speed, nimbleness, and agility for an edge over larger competitors, current supply chain disruptions are proving to be a high hurdle. A survey from Software Advice exposed that 91 percent of small businesses and retailers believe larger companies have an advantage over them in the current supply chain crisis. Small businesses and retailers account for 47% of U.S. consumer demand, and as these companies are being forced to reformulate, downsize, and find alternate sources, out-of-stock rates are expected to soar this year. In other words, the nightmare has only just begun.

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