Compared to previous During the holiday season of the year, the major maritime trade routes operate relatively smoothly, as shipping rates return to earth and cargo moves at a steady rate in ports.
That’s all good news for businesses and consumers worried about inflation and recession rumors, but those improvements are misleading.
A deeper look reveals that global shipping speeds have not returned to pre-pandemic levels, and serious challenges remain in supply chains that portend even bigger problems. If we do nothing and improve shipping technologies, the roadblocks we’ve endured for the past two years will become commonplace.
New season, new problems
This year’s improvements in shipping largely reflect a decline in consumption rather than any improvement in underlying infrastructure.
Companies are still taking too long to ship their goods from Asia to the United States or Europe. While it’s better than the record delays we saw during the height of the pandemic, it still lasts 69 days for companies to ship goods from China to US ports nearly twice as long as before the pandemic. This is happening against the backdrop of a slowing economy and shipping company Maersk is forecasting one 2% to 4% decline in global container demand this year.
A host of other issues, both new and known, will plague global logistics in 2022, including volatile fuel prices, lengthy labor negotiations and staff shortages.
Meanwhile, large and small companies are signaling problems. Retail giants such as Target and Wal-Mart are struggling to build inventory in the run-up to the holiday season as many companies were hit by a increase in imports which arrived suddenly after shipping delays eased. This will depress profits and cause investor anxiety, while hurting small and medium-sized businesses, which find it difficult to reserve space in warehouses already overcrowded with goods from major retailers.