The Global Cargo Holdup Could Last into 2022
According to one of the largest US freight brokers, the global cargo holdup affecting the roads, seas, and air corridors may continue into 2022, increasing shipping and transportation rates.
“The domestic freight markets are extremely dislocated and the global air-freight and ocean markets have tremendous amounts of constraints around them,” said Bob Biesterfeld, chief executive officer of C.H. Robinson Worldwide Inc. “We could be standing up a pretty strong freight market throughout 2021, if not into 2022.”
This spells trouble for air/freight companies and ocean shipping lines; along with manufacturers, distributors, and retailers who rely on procurement around the world.
Brokers contracting with carriers on behalf of their shipping customers will be affected, especially if their long term contracts don’t account for the increasing rates in spot costs and air freight, which have nearly doubled from a year ago.
The biggest increase seen is in ocean freight. According to data from research firm Drewery, shipping costs for a 40-foot container from Hong Kong to Los Angeles has increased by nearly four times compared to last year.
The COVID-19 pandemic forced many countries to lockdown, creating strains on the economy. The closure of non-essential businesses and rising unemployment created shortages in the transportation workforce causing supply chain bottlenecks on roads and air freight. The worst, however, is in ocean freight which has seen many ports operating above full capacity to move goods in and out.
The backup may not see an end soon, as there simply aren’t enough ships to accommodate the increased demand coming from businesses.