Container crisis: Are Christmas and Black Friday at risk?
The increase in production costs and shortage of raw materials are some causes for the major supply chain breakdown.
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The disproportionate increase in costs to move goods between the different ports of the world has gotten out of hand. In September 2020, during one of the toughest stages of the pandemic, the cost of maritime freight between China and the United States quadrupled, and it hasn't gotten better as the economy recovered.
The dramatic increase in the cost of freight and production costs of different types of goods and commercial merchandise is due, in part, to the shortage of space available to transport the products between the ports of China — the country has eight of the 10 most important ports in the world — and those in the West. The health and safety measures taken by China against COVID-19 also sent major shockwaves across the global economy.
The shortage of containers does not have to do with the scarcity of units, but with their absence in ports where they are needed most. After hundreds of thousands of the containers left China for destinations in the West, the arrival of the pandemic drastically altered logistics operations in ports, leaving the containers empty and without goods to return to their place of origin.
In addition to the closure of ports and the inability of Western merchants to fill containers with goods to send them back to Asia, the closure of factories, shortage of raw materials and products, decrease in the pace of work and the dramatic increase in costs are also major contributing factors.
One major impact of this ongoing crisis could be a Holiday season in the West that looks much different. Instead of the major splurges that take place on Black Friday and until Christmas, there may not be enough goods to splurge on.
The hope of Western countries to be able to have the goods that are so in demand during the most important time of the year for traders, lies in the possibility that governments reach agreements to reduce the costs of maritime transport of goods, which has increased seven-fold. Likewise, it is expected that economic reactivation may contribute to stabilizing the balance between exports and imports and the movement of containers to reactivate naturally.
Following the trends of the current market, in the effort to normalize container traffic and promote the recovery of the logistics sector, it will be the consumer who must also bear the cost of the price increase. As a result, they must prepare to pay much higher prices for their "promised gifts."
The pandemic continues to present scenarios that would never have been imagined years ago, including a long-awaited season that is now at risk due to the very high increase in import costs. This represents a major blow to international trade.
With the difficult outlook ahead of the most important shopping season of the year, it would be good to start planning some austere and well thought out purchases. Unlike other years, before the arrival of the pandemic, those gifts we give to others, or ourselves, must be conceived in a rational way and appealing to creativity.