International supply chain challenges that impact us all
Whether you are an importer/exporter or a standard consumer, the constraints placed on the supply of labour and the transportation of products will impact every member of society. 2021 will be one of the toughest “peak seasons” in decades for global freight and many will feel the effects of global supply chain disruptions.
The major impacts of the current global supply chain breakdown can be summarised below:
Port Congestion
Many of the major ports throughout the world are experiencing severe congestion. Including a build-up of both shipping vessels and containers. This congestion causes international shipping lines to be either delayed when arriving/departing or in many cases. It completely omitting the port of discharge. All aspects of supply chain logistics are affected and therefore are running behind time in all required operations.
International Freight Rates
Shipping lines are currently experiencing a substantial lack of vessel space. Container slots are much harder to come by and importers are having to book further in advance in order to lock in their spot. Due to the ongoing logistical issues that are constantly arising, the demand for services has considerably increased. As a result, shipping lines are taking advantage of these demands by increasing average freight costs by up to 1000% in some areas. Importers are having to fork out much more resources than previous in years for their cargo to be made available to them down under. In short, these costs will indirectly be forced onto consumers which you can expect to see towards the end of the year.
Lack Of Equipment (Containers)
With the rise in port congestion in destination ports, shipping lines are struggling to have their containers returned to them at origin. The increase in containers arriving into Australia and the decrease of them departing causes issues in the availability of empty containers at major origin ports such as China. There are currently unprecedented amounts of empty equipment being stored in container yards around the country. There is no way of having them removed and shipped back to their origin unless exporting cargo is required. Shipping lines are having to send vessels from Australia directly back to their home ports, with nothing but empty containers. This is a cost that again will indirectly fall onto the consumer.
This also presents another issue, with bookings not being able to be fulfilled due to a lack of containers at origin ports. Importers may have a booking in place months before the vessel is set to depart however, when it comes time to have the cargo loaded into a container, there simply aren’t any available. If the cargo is unable to be loaded into a container by the shipping lines cut-off date, importers are forced to wait for the next available schedule.
COVID -19
Finally, there is the dreadful virus known as COVID-19. As we all know, when the virus breaks out within a specific region, all operations are likely to slow down, or in some cases, completely cease. This the same within the freight industry. When large regions such as China are significantly affected by the virus, they are forced to act. Ports operate at a slower pace; employees are sent home and vessels are either forced to wait to be unloaded or choose to completely omit the discharge port. These major impacts will continue to arise until COVID 19 can be contained.
In Summary
There are many factors that importers/exporters along with supply chain professionals are forced to deal with daily. The issues we are seeing throughout the international supply chain are causing severe delays, additional costs and constant headaches which consumers will be impacted by within the coming months.
Jake of One Global Logistics takes a few minutes to share a little about himself.
1. Talk us through your ideal day off
My ideal day off begins with a sleep in, followed by a walk along the beach with my girlfriend, Sara and our Golden Retriever, Hudson. A sneaky beer whilst watching the footy would finish it up.
2. What is your weirdest habit?
Sometimes I see how many tasks I can complete before the microwave timer is done.
3. What is the most spontaneous thing you’ve ever done?
Sara and I once packed a bag, drove to the airport and booked a flight to Sydney within an hour, just so we could have a few cocktails in our favourite underground bar – The Baxter Inn.
4. Do you have a favourite quote?
“When we long for life without difficulties, remind us that oaks grow strong in contrary winds and diamonds are formed under extreme pressure” – Peter Marshall
5. What part of your business have you successfully outsourced?
Supply Chain Logistics often incorporates outsourcing. From offshore IT consultants to collaborating with trucking companies, it all makes the world go round.
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