When discussing problems in the supply chain, the delicate nature of the global shipping routes becomes evident. It is only when such a disruption occurs that our attention is drawn to the sheer fragility of such chains. As of the last quarter, the global supply chain has seen a shortage of shipping containers. This has resulted in a ripple effect with drastic implications for the supply chain. Shipping times and availability of products all over the world are now in flux.
What’s Going On Here?
The lack of shipping containers is truly a unique situation. Due to unforeseen circumstances (namely, COVID-19) shipping companies across the world began sending out less cargo ships than usual. This also resulted in empty shipping containers stationed at various spots around the world being left there, uncollected. This was then coupled with the sharp decline in the production of goods all across the world, The ultimate result was a domino effect that ripped down the supply chain and disrupted global trade routes on a massive scale.
The Messiness of Things
To add to the disastrous nature of slowed trade routes came coronavirus travel restrictions. Due to different nations’ employing different rules and regulations for imports and exports, containers were often stuck in one country, as its destination country would refuse to take the containers back. Additionally, different countries obviously began to recover from COVID-19 at different times, at different rates. This led to even more confusion. Some nations – such as China – reopened its import and export routes, but found themselves with no other countries to trade with.
Where Have the Containers Gone?
These missing shipping containers haven’t just vanished into thin air, of course. Rather, they’ve been stuck at various steps of the supply chain, like inland depots or ports. When Asian centers of commerce began to recover from COVID-19, other countries were unable to send any shipping containers back to the continent due to lockdown restrictions. Considering the huge volume of production that comes out of Asia, the lack of containers being sent back began to have huge effects on the rest of the world.
Trickle-Down Effects
The staff shortages that arose off the back of the coronavirus pandemic also played a part in the frozen supply chain. It meant that fewer people were around help to organize the rerouting of shipping containers or securing of new ones. Then take into consideration that due to being quarantined at home, much of the global population leaned on online delivery services, increasing demand for shipping containers. Many of us are familiar with scenes from the peak of the pandemic – empty supermarket shelves and month-long waits for Amazon deliveries.
Solutions
Shipping companies have needed to get creative over the past year with these unprecedented challenges. Even giants Maersk and Hapag-Lloyd found themselves needing to reevaluate their shipping logistics systems and adapt accordingly. Hapag-Lloyd boosted efficiency when it came to refilling and emptying times by about 25%. This allowed them to optimise their container usage. They’ve also used their refrigerated containers for non-refrigerated goods, switching them on and off depending on what’s being shipped. Additionally, they’ve reused older containers, ones meant to go for repair or selling.
There has also been talk of many large companies switching from ‘just-in-time’ (JIT) supply chains to ‘just-in-case’ (JIC) supply chains. JIT supply chains became the norm during the 21st century. They depend on very fast, responsive shipping routes and therefore reducing the need for companies to stockpile products. However, going forward, with the weaknesses of this system exposed, many companies will be switching to JIC chains. Such chains favour a smaller range of offerings, but need months of stock available.
The Future of Shipping
Even shipping companies, whose business models have largely stayed the same for decades, are starting to innovate and change things up. As one of the backbones of the economy, digitalisation is now rife throughout the industry. You’ve heard of self-driving cars, but there’s been talk of self-propelling ships as well. For example, the Kongsberg Group is currently developing “the world’s first “unmanned and fully automated vessel for offshore operations.” Laws currently prohibit the sailing of unmanned ships, but the implementation of various autonomous functions on cargo ships is increasingly popular.
Drones are also being appropriated for shipping purposes. Drones are potentially a cheaper and faster option for moving cargo across oceans than ships. This would present a huge win for shipping companies worldwide who are looking to downsize costs while maintaining or increasing efficiency. This is not to mention the whole host of efforts in progress to help sustainability efforts in this sector as well. Streamlined hulls, more efficient propellers, and low-carbon fuels are just a few of the innovations in development. We look forward to seeing how this sector develops in the near future!
What other developments in supply chain logistics can we expect to see? Feel free to get in touch with me to discuss this topic and more:
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