Gridlock at sea and chaos ashore as pandemic snarls trade network
The disruption has driven up the cost of shipping goods, adding a fresh challenge to the global economic recovery
New York
OFF the coast of Los Angeles, more than two dozen container ships filled with exercise bikes, electronics and other highly sought imports have been idling for as long as two weeks.
In Kansas City, farmers are struggling to ship soybeans to buyers in Asia. In China, furniture destined for North America piles up on factory floors.
Around the planet, the pandemic has disrupted trade to an extraordinary degree, driving up the cost of shipping goods and adding a fresh challenge to the global economic recovery. The virus has thrown off the choreography of moving cargo from one continent to another.
At the centre of the storm is the shipping container, the workhorse of globalisation.
Americans, stuck in their homes, have set off a surge of orders from factories in China, much of it carried across the Pacific in containers - the metal boxes that move goods in towering stacks atop enormous vessels.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The demand for shipping has outstripped the availability of containers in Asia, yielding shortages there just as the boxes pile up at US ports.
Containers that carried millions of masks to countries in Africa and South America early in the pandemic remain there, empty and uncollected, because shipping carriers have concentrated their vessels on their most popular routes - those linking North America and Europe to Asia.
And at ports where ships do call, bearing goods to unload, they are frequently stuck for days in floating traffic jams. The pandemic and its restrictions have limited the availability of dockworkers and truck drivers, causing delays in handling cargo everywhere. Every container that cannot be unloaded in one place is a container that cannot be loaded somewhere else.
"I've never seen anything like this," said Lars Mikael Jensen, head of Global Ocean Network at AP Moller-Maersk, the world's largest shipping company. "All the links in the supply chain are stretched. The ships, the trucks, the warehouses."
Economies around the globe are absorbing the ripple effects of the disruption on the seas. Higher costs for transporting American grain and soybeans across the Pacific threaten to increase food prices in Asia.
Wrong place, wrong time
Empty containers are piled up at ports in Australia and New Zealand; containers are scarce at India's port of Kolkata, forcing makers of electronics parts to truck their wares more than 1,609 km west to the port of Mumbai, where the supply is better. Rice exporters in Thailand, Vietnam and Cambodia are forgoing some shipments to North America because they can't get containers.
The chaos on the seas has proved a bonanza for shipping companies such as Maersk, which in February cited record-high freight prices in reporting more than US$2.7 billion in pre-tax earnings in the last three months of 2020.
No one knows how long the upheaval will last, though some experts assume containers will remain scarce till the end of the year, as the factories that make them - nearly all of them in China - scramble to catch up with demand.
Since they were first deployed in 1956, containers have revolutionised trade by allowing goods to be packed into standard size receptacles and hoisted by cranes onto rail cars and trucks - effectively shrinking the globe.
Containers are how flat panel displays made in South Korea are moved to plants in China that assemble smartphones and laptops, and how those finished devices are shipped across the Pacific to the US.
Any hitch means delay and extra cost for someone. The pandemic has disrupted every part of the journey.
Viewed broadly, the volume of global trade dipped by only 1 per cent in 2020 compared with the previous year. But that does not reflect how the year unfolded - with a plunge of more than 12 per cent in April and May, followed by an equally dramatic reversal.
The system could not adjust, leaving containers in the wrong places, and pushing shipping prices to extraordinary heights.
At the twin ports of Los Angeles and nearby Long Beach, unloading has been slowed by a dearth of dockworkers and truck drivers, as the virus has sickened some while forcing others to quarantine.
The ships off Los Angeles have exhausted available anchorage spots, resorting to so-called drift boxes - zones where they float freely, like planes circling over congested airports.
Major consumer brands - from the sportswear-maker Under Armour to Hasbro, the game and toy maker - have been dealing with shipping bottlenecks.
Peloton, an exercise equipment company, points to port congestion as a factor behind its delays in delivering its high-end stationary bicycles. To shorten wait times, it outlined plans to invest US$100 million in air shipping and expedited ocean freight.
But even in normal times, airfreight is roughly eight times the cost of sea shipment. Most airfreight is carried in the cargo holds of passenger jets. With air travel severely constrained, so are available cargo slots.
Next surge of orders
Some shippers have rearranged their schedules, stopping off in Oakland, California, 644 km to the north, before continuing to Los Angeles. But containers are stacked on ships in configurations set by their destinations. A sudden change in plans means moving the stacks around like a gigantic Jenga game.
In recent weeks, shipping carriers have aggressively moved empty containers to Asia, increasing availability there, data from Container xChange, a consultant in Hamburg, Germany, showed. Some experts assume that as vaccinations increase and life returns to normal, Americans will again shift their spending - from goods back to experiences - reducing the need for containers.
But even as that happens, retailers will begin building up inventories for the holiday shopping binge.
The stimulus spending plan moving through Congress may generate hiring that could prompt another wave of buying, as previously jobless people replace ageing appliances and add to their wardrobes.
"There could be a whole other subset of consumers out there that haven't been able to consume," said Michael Brown, a container analyst at KBW in New York. "You are potentially looking at some shortages for quite some time." NYTIMES
Share with us your feedback on BT's products and services
