Tuesday, January 04, 2022
Corona continues to slow down world trade
The global container jam does not want to end
The “Ever Given” stuck in the Suez Canal kept the world in suspense for days. However, it is not responsible for the fact that the global flow of goods is still massively disrupted. The problem is much deeper. Before the corona pandemic is defeated, world trade is also unlikely to fully recover.
Companies are missing components and the bike they ordered has been overdue for months. Where global transport chains otherwise function like clockwork, there is great confusion in the corona pandemic – to the annoyance of business and consumers, who put material shortages and delivery problems to the test of their patience. Economists and logistics experts expect the problems to remain in 2022.
As spectacular as the pictures of the day-long accident of the Megamax freighter “Ever Given” in March in the Suez Canal were: The problem is much more persistent than that it can be explained by just this one shipwreck. “Unfortunately, it is unclear when the situation in the supply chains will improve sustainably. But I am sure that once we have defeated the pandemic, whenever that is, everything will flow better again,” says the new president of the Association of German Shipowners, Gaby Bornheim. “The tense supply chains are clearly the result of the corona pandemic. Here, due to the pandemic, we have a unique situation in which a lot comes together,” said Bornheim.
“We still cannot simply bring our seafarers on board as we are used to and we cannot get them off board unhindered,” reports the head of Hamburg’s Peter Döhle Schiffahrts-KG, one of the largest German shipping companies. “There are considerable restrictions that change in the individual ports on a weekly, sometimes also on a daily basis, so that we have no certainty that we will now be able to change crews in many parts of the world.”
Bottleneck harbor
For a long time, missing containers were also a major problem because the transport boxes were not where they should be for reloading due to delays in the timetables. At Hapag-Lloyd, for example, containers are normally on the move for 50 days before they can be loaded again; due to the congestion in the ports, it is more than 60 days. To compensate for this, the major Hamburg shipping company alone has purchased a total of 625,000 new transport boxes since 2020.
After all, many ports are proving to be huge bottlenecks – especially those on the Chinese coast and the American west coast, between which the huge trade flows between the two largest economies are handled. In China, ports have been partially or completely closed because port workers were infected with corona. Ships have to wait days for loading and unloading or switch to other ports, in front of which also large traffic jams form. Due to the very strict reaction of the Chinese authorities and the unprecedented rate of spread of the corona variant Omikron, closed port terminals in China are likely to remain an issue in 2022.
Also in front of the Port of Los Angeles and Long Beach in the immediate vicinity, the two most important ports on the US west coast, there are tons of ships in the roadstead, in autumn there were at times up to 100. In addition, the hinterland traffic does not work as it should, also because there are not enough truck drivers. US President Joe Biden made the port problem a top priority in the fall and got the port of Los Angeles to work seven days a week and at night.
11 percent of the goods are stuck
The economist Vincent Stamer, who regularly analyzes worldwide ship movements at the Kiel Institute for the World Economy, estimates that more than 11 percent of goods shipped worldwide are currently parked on immobile ships – a huge amount if you consider that 90 percent of the global flow of goods is transported by container ship . The German seaports are not considered to be at risk of congestion because they are approached very last on the major global routes of the liner shipping companies.
Towards the end of the year, Stamer observed a slight easing in traffic jams. But: “It can be assumed that the easing of the congestion in container shipping is a result of the dampened trading activity, not a trend reversal towards more fluid processes again.” The first improvement could be seen in February. “Although demand is still high, we hope that after the Chinese New Year there will be the first signs of gradual decompression in the supply chains,” Hapag-Lloyd wrote in a message to customers at the turn of the year.
Stamer also sees the New Year celebrations in China as the first important milestone. The festival is traditionally a high point of consumption in the most populous country in the world, after which consumer demand drops significantly. “But even then it will still take a while for the global delivery network to swing in sync again. Delivery delays and bottlenecks could therefore keep us busy for a long time into the current year,” the Kiel-based economic researcher expects.
“We don’t hide ships”
In the early summer of 2021, the leading associations of the German economy complained about the situation in an open letter to the Federal Government at the time: “Artificial bottlenecks in transport capacities in the maritime supply chains” were made responsible for the ramp-up of the industry after the Corona recession in 2020 to stutter. There was talk of a lack of availability of containers, a lack of transport capacity, unpunctual ship arrivals and sharply rising transport costs, especially on the routes between Asia, North America and Europe.
The shipping industry does not want to let this accusation sit on it, especially since the fleets have shrunk in Germany after the financial crisis, but have grown globally. Hapag-Lloyd boss Rolf Habben Jansen said in a public discussion with experts from the logistics industry: “Everyone knows that we do not hide ships and boxes.”