Wednesday, May 22, 2024

The Impact of Port Congestion & Ship Shortages on The Shipping Industry

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With the rise in online shopping leading to an uplift in the shipping industry, it’s no surprise that there has been a significant uplift in the number of shipping jobs available on the market to help keep up with this demand in all areas.

However, the shipping industry can be quickly and harshly impacted by just a small bottleneck in the supply chain such as port congestion or ship shortages. In this article, we’ll be diving into the causes of these issues and what is being done to help the industry to continue to thrive.

Causes Of Port Congestion

Port congestion is becoming a frequent problem with cargo liners struggling to dock at some of the world’s busiest ports. As global trade continues to expand, ports are experiencing much higher volumes of incoming and outgoing cargo, particularly as new trade deals are agreed globally. This surge in trade activity can quickly overwhelm port infrastructures, leading to a build-up in congestion.

In addition, there is a growing trend in larger container ships being introduced by shipping companies due to their economic efficiencies. This does, however, bring challenges to ports that may not have the necessary depth, berth length, or cranes to accommodate these larger vessels. This leads to longer loading and unloading times, as well as the potential for delays while these issues are being addressed, causing a backup of vessels waiting to dock.

Other causes of port congestion include limited infrastructure, such as storage space and handling equipment, as well as labour disputes, strikes, and shortages – all of which can cause issues at the ports and throughout the supply chain.

The ripple effect of one delay in a port can be significant across the entire industry, making it more important than ever for ports to improve their efficiencies and ability to handle increased cargo.

Ship Shortages

Another significant issue in the maritime industry is a shortage of ships and containers. While many shipping companies are investing in larger and more efficient ships, the unforeseen impact of the COVID-19 pandemic has led to unprecedented demand in eCommerce shopping – therefore increasing the demand for shipping items globally. A series of issues including logjams, port congestion and container shortages has quickly led to a cargo ship crisis.

Container and ship shortages in particular are causing a stir. This occurred as a direct result of the pandemic, where there was a shift to online shopping and a significant increase in demand from China. During the pandemic, the number of empty containers that were being transported ground to a halt as often one half of the world was in lockdown while the other was recovering. For example, in the middle of the pandemic, Asia reopened its shipping routes but could not collect empty containers from North America due to their lockdowns.

With the increase in the number of people shopping online and demand for products to be sent from across the globe (for example, sites like Shein and Temu growing in popularity), the number of products that are being sent around the world outmatches the number of containers that are accessible causing shipping delays.

The Impact on Global Trade

The impact that port congestion and a lack of ships and containers can have on global trade is significant.

Alongside serious delays in shipping schedules, which can quickly get out of control, port congestion can lead to increased transportation costs and severe supply chain disruptions from start to finish.

The most severe port congestion appears to be concentrated in the U.S. and China – as both of these countries tend to ship the most globally. As consumer demand for products continues to grow over the years, port congestion has led to some carriers in the supply chain having to reroute or skip stops to make up time and efficiencies.

The most notable case study for the impact of port congestion is when the Ever Given blocked the Suez Canal. This led to significant delays in a wide variety of industries throughout the supply chain for a period of months.

Efforts To Address the Issue

As demand only continues to grow, the efforts that are being put into addressing these issues is becoming more and more important. Governments are aiming to invest in improving and modernising port infrastructures around the world to allow them to keep up with the changes that shipping companies are making to the size and scale of their vessels.

In addition, new regulations and procedures are being drawn up to help reduce clearance times and expedite cargo movements around the globe. Improving intermodal connectivity, such as rail and road access between ports and distribution hubs is also a priority, alongside increasing the workforce to help continue to drive this growth.

Conclusion

In summary, port congestion and ship shortages are just two of the many complexities and challenges that the shipping industry faces on a daily basis. As new legislations are bought into the industry, we hope to see that this improves in order to keep up with the growing demand for products to be transported from all over the world.

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