The vast network of ports, container vessels and trucking companies that moves goods around the world is badly tangled, and the cost of shipping is skyrocketing. That’s troubling news for retailers and holiday shoppers.
More than 18 months into the pandemic, the disruption to global supply chains is getting worse, spurring shortages of consumer products and making it more expensive for companies to ship goods where they’re needed. Unresolved snags, and the emergence of new problems including the Delta variant, mean shoppers are likely to face higher prices and fewer choices this holiday season. Companies such as Adidas (ADDDF), Crocs (CROX) and Hasbro (HAS) are already warning of disruptions as they prepare for the crucial year-end period.
“The pressures on global supply chains have not eased, and we do not expect them to any time soon,” said Bob Biesterfeld, the CEO of C.H. Robinson, one of the world’s largest logistics firms. The latest obstacle is in China, where a terminal at the Ningbo-Zhoushan Port south of Shanghai has been shut since August 11 after a dock worker tested positive for Covid-19. Major international shipping lines, including Maersk (AMKBY), Hapag-Lloyd (HPGLY) and CMA CGM have adjusted schedules to avoid the port and are warning customers of delays.
The partial closure of the world’s third busiest container port is disrupting other ports in China, stretching supply chains that were already suffering from recent problems at Yantian port, ongoing container shortages, coronavirus-related factory shutdowns in Vietnam and the lingering effects of the Suez Canal blockage in March. Shipping companies expect the global crunch to continue. That’s massively increasing the cost of moving cargo and could add to the upward pressure on consumer prices. “We currently expect the market situation only to ease in the first quarter of 2022 at the earliest,” Hapag-Lloyd chief executive Rolf Habben Jansen said in a recent statement. The cost of shipping goods from China to North America and Europe has continued to climb over the past few months, following a spike earlier in the year, according to data from London-based Drewry Shipping.