Shipping crisis bites

Categories: Salford Business School

Dr Jonathan Owens comments on the shipping crisis affecting world trade.

Dr Owens said: “The global shipping crisis will not only lead to a potential shortage of some products for UK business but also as it continues there a real possibility for a rise in the costs of goods to the end customer.  One significant reason for this is because of soaring freight costs on imported goods to the UK due to rising waiting times in the shipping channels.

“So why is this happening?  We are seeing a significant spike with more goods being moved through the supply chain because many businesses are wanting to beat the Brexit deadline, because of the uncertainty created around the trade deal.  Add to this the traditional Christmas rush we have the perfect storm developing in the short term.  We must remember whether we are shopping online or on the high street most of these goods  have to be transported to the UK.  Subsequently, having these two major spikes in demand on the global shipping supply chains have created a major bottleneck for us in the UK and we are now seeing the results with shortage or no products. 

“Also, the global COVID-19 Pandemic has played a part in this too by creating global unbalancing of supply chains.  All over the world we have a stockpile of empty shipping containers that are where they should not be.   Subsequently, since the handbrake went on in early in the year, the normally balanced flow of shipping containers within the supply chain has been seriously disrupted and has never fully recovered.  We have seen further global lockdowns since March too, to control the virus that has further disrupted the global supply chain and created more instability. Global Supply chains do not cope well with big changes.  It has traditionally prepared and in general faired well with the Christmas Rush.

“However, couple this with significant movement of goods due to businesses wanting to beating Brexit deadline and not having recovered a balanced supply chain due to the previous problem with the container shortage, then it is three big hits, all at the same time.”        

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