The Impact of Coronavirus on Global Logistics

Shipping containers and why a tin box is so important to you

The impact of coronavirus on supply chains

Given the UK’s status as one of the highest consumers of electronic goods, toys, sports equipment and furniture from China alone, coupled with the massive increase in online demand during the pandemic, you can be sure that next day delivery is very likely to start to become 5-10 days due to stock shortages from supply waiting times.

Darren Chaisty FCILT, Daniel Barry (CHpp CMILT)

Ignoring the notion that stuff just magically arrives from a tardis-type warehouse that stores everything and teleports goods to vans for seamless next day delivery of your next distraction from lockdown, there are some serious issues in the wide world of logistics that are starting to compound and may well impact consumer goods for much of 2021 and beyond.

Ultimately to get goods shipped en masse in a cost-effective volume, a shipping container is required. In normal times, getting hold of either a 20ft or a 40ft container ¾ of the year is no issue. Even in the peak of Asia to US Q4 shipping (driven by holiday demand and the well-timed release of the latest electronic goods) prices may be higher but capacity can be found.

 

Containers, the pandemic and cost

Fast forward to being in the midst of a pandemic; individual country policy and response to coronavirus, as well as recovery rate is challenging the status quo of international shipping by indirectly creating a shortage of available shipping containers. The problem was well publicised at the end of Q3 last year, with prices ramping up due to a lack of availability and an eyewatering increase of 110 – 208% on prices for the same period in 2018 and 2019 depending on which coast you were shipping to.[i]

The problem isn’t going away, in fact it’s likely to get worse due to the hold up from return import port delays and lack of available trucks and drivers as a consequence of increased checks and policies to combat coronavirus.[1] Additionally, any available containers are now being held (in good logistics practice) for the backloads to try and mitigate the supply and demand imbalance.

[1]

[i] https://www.scmp.com/economy/china-economy/article/3117257/shipping-containers-becomes-new-buzz-word-coronavirus-leaves

So, what does this mean for me?

What does this mean for the average consumer? Well, if you’ve gone overboard during lockdown to support your local independent businesses then not very much. But given the UK’s status as one of the highest consumers of electronic goods, toys, sports equipment and furniture from China alone, coupled with the massive increase in online demand during the pandemic, you can be sure that next day delivery is very likely to start to become 5-10 days due to stock shortages from supply waiting times.

The other impact to look out for is the charge passed on to the consumer. After all, shipping is not free, in fact its more expensive than ever, but consumers would not think about additional cost coming from that quarter, we expect shipping to be part of our purchase. Prepare to see those annoying 50p increases soon from retailers who cannot see past absorbing the costs. At least you’ll now know where it’s coming from.

1 https://www.fastenerandfixing.com/industry-news/container-shortages-impact-fastener-supply-chain/

https://www.scmp.com/economy/china-economy/article/3117257/shipping-containers-becomes-new-buzz-word-coronavirus-leaves

Daniel Barry (CHpp CMILT) – Director, North Star Projects

 

In Summary…

  • There are some serious issues in the wide world of logistics that are starting to compound and may well impact consumer goods for much of 2021 and beyond.

  • At the end of Q3 last year, with prices ramping up due to a lack of availability and an eyewatering increase of 110 – 208% on prices for the same period in 2018 and 2019 depending on which coast you were shipping to.

  • The problem is likely to get worse due to the hold up from return import port delays and lack of available trucks and drivers as a consequence of increased checks and policies to combat coronavirus.

  • You can be sure that next day delivery is very likely to start to become 5-10 days due to stock shortages from supply waiting times.

  • Prepare to see those annoying 50p increases soon from retailers who cannot see past absorbing the costs.

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