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How the Container Crisis Affects Everyday Americans

crisis de los containers

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The container crisis is worsening and is increasingly affecting the pockets of Americans due to the rising prices that are already beginning to be felt in the basic food basket of families. Although caused by the abrupt changes imposed by the pandemic during 2020, few people came to see the current situation.

Throughout the course of the pandemic people have begun to buy more things online, demand for products on the Internet not only grew during 2020 by nearly $1 billion, but has maintained that growth through 2021 and is expected to reach a value of $6.388 billion by 2024, up from $3.354 billion in 2019.

The shipping industry, through which 90% of international trade circulates, was not prepared for the boom in demand for products coming mainly from China and costs began to rise subtly at the beginning of 2021.

A problem of excess demand and short supply

During the pandemic, international trade dropped abysmally, so many shipping companies decided to stop production of their freighters and even took some of them out of circulation. This decision proved to be fatal, for while hundreds of ships went out of business, online retail grew on a staggering scale.

Already strained supply chains were further strained by the closure of Shenzhen Bay, through which up to a quarter of China’s trade with the United States departs. The closure of the port, together with the quarantining of many port personnel, meant that a large number of shipments were delayed and had to wait for weeks at the port.

container crisis
In both China and the United States, ports are congested and goods take longer than expected to get from one port to the other. (Image: EFE)

Faced with the number of containers waiting to be loaded in Chinese ports, up to 40% of the cargo ships sailing from East Asia to the Middle East were diverted to meet the bottleneck in the transatlantic trade.

Efforts to increase the number of ships failed to decongest China’s ports in time, and today shipping a container across the Pacific is four times the cost of a year ago, according to data from the Freightos platform.

Normally, maritime trade is cyclical and has its peaks from the beginning of August to November, due to the festive seasons, and has a small peak again during the months of February and March due to the Chinese New Year, however, the rates have remained at a peak since May.

Container crisis exacerbated by congestion at U.S. ports

Congestion in the U.S. ports themselves has also caused delays in the value chain, with the operation being affected by the lack of personnel to unload the containers, as well as of carriers to take the goods to the warehouses to free up space in the ports.

container crisis
The container crisis is already affecting the pockets of Americans. (Image: EFE)

Many warehouses in the United States are fully booked, so even if a shipment arrives at port, it may have to wait a considerable time to find space.

In San Pedro Bay, Los Angeles, last week there were about 144 ships, 85 of which were waiting to anchor, a number never seen before in the busiest port in the United States. According to a Bloomberg analysis, the number of ships waiting to dock at the three major U.S. ports has broken records month after month since July.

At present, a product traveling from China to the U.S. can take an average of 73 days to reach its final destination, an increase in wait time of 83% over 2019.

Air trade also affected

China’s zero tolerance policy with Covid-19 has also affected air trade, whose prices have soared, not only because of the increased demand from affected maritime importers due to the closure of the port of Shenzhen, but also because of the cancellation of numerous flights throughout the country, as well as the imposition of quarantines on crews arriving in China.

Airports in China aware of the delays caused by the restrictions have taken action, as is the case at Shanghai Pudong Airport, one of the largest commercial cargo hubs in China, where staff take turns working seven days in a row at the cargo hub, and then quarantine for another seven days at a government hotel.

In the latest survey of Amazon retailers by Freightos, as many as two out of three sellers expect inventory shortages in the coming months due to the high costs caused by the container crisis.

Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica

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