Alarming supply chain disturbance affect global trade

Global supply chain trade

Supply chain disturbance puts a huge effect on global trade. Firstly came pandemic, then the world saw the Suez Canal crisis that shook world trade. Then Yantian port which is one of the largest to stop the pandemic from spreading more, such incidents hit the global supply chain deeply and in the end affect the trade at large.

With the arrival of the pandemic in 2019, many countries in the world went under lockdown and stopped the trade activities of goods that were not necessary. When the pandemic got under some control, the world witnessed an incident of the Suez Canal in which a Japanese-owned container ship got stuck in the Suez Canal for 6 long days, and with it got stuck many other vessels carrying thousands of cargo containers. After lots of effort, the officials were able to remove the ship from the Canal. But these six days had a huge effect on world trade.

In May, the South Chinese ports closed them for exports and imports, which impacted the world trade a lot as China sees the largest number of exports and imports being the world’s largest exporter. Though Yantian port, opened on June 17 but, being closed for a month, it had deeply affected the trade as it is the third-largest terminal in the world. The port authorities said that the workers were joining back but the damage incurred will take time to come back in shape. The productivity would increase in some time. But it would take time to resume as many vessels with metal containers were lining up at the port. Many shipping companies changed their routes and the ones who reached the port were waiting in the long queue. The condition of huge port congestion and terminal congestion is visible everywhere.

According to Bloomberg’s report, the Cosco Shipping Lines Co. was going to leave out the Singapore port that was scheduled for the shipping route due to delays in the ports of China. The port congestion of Yantian has hit at a time when the supply chain and the global trade were already suffering from the pandemic and the Suez Canal Crisis effects.

The shipping container companies and shipping companies are in distress as the ports are seeing a bottleneck situation. As where the ships are lining up at the ports or terminals due to congestion, the freight containers are idling with it. Yantian port is seeing the major bottleneck but other ports are also seeing the pattern of one or two days waiting. Shekou, Nansha, and Hong Kong are seeing a wait period of 2-4 days but the scenario may worsen due to shipping companies skipping Yantian port. The ports are resuming the services but due to the closure, it is seeing heavy congestion outside the port and backlog in the yard. There are more than 23,000 storage containers waiting for export to reach the destination.

By seeing the patterns and reports, the experts estimate that the delay in shipping may go on till 2022. During this phase, the world will see an increase in container prices and container shipping rates. This will happen as the demand for goods from consumers is going to increase only.

Now let’s look at some of the other causes of supply chain disturbances.

Different Weather Conditions

There are many times when the ships and the shipping containers jam in the mid-voyage in the sea. Also while traveling by other means in the mid-way due to bad weather situations. The weather conditions like hail, storms, tsunami, cyclones, stop the container journey in a way. This results in a huge delay in shipping units.

Bad planning and over-listening to forecasts

The supply chain also bears damages when the shippers or business people don’t plan well. There is nothing called too much planning. As to when you plan beforehand well then also one or other thing that is not in your hand may go wrong. But, planning too little for the imports and exports will not let you meet supply chain demand. With this, not only you, the whole trade will suffer loss.

In the same way, listening to too many forecasts from unreliable sources also affects trade. Forestalling everything just by listening to them will hamper the supply chain. As many times the forecasts have gone awry and blown the shippers’ budget.

Government Regulation Changes

The governments of different countries keep changing their regulations from time to time. If you don’t listen to them, then also you are going to face some hiccups. And you may not be able to carry on the import and export activities properly.

Fluctuation in Transport Costs

The fluctuating port costs, fuel costs, and other such charges add up to the business person's budget. This may delay the shipper’s plan of sending off or receiving cargo. As they may not be able to meet the extra charges.

Human Error

There have been incidents where due to human error the supply chain sees huge damages. This gives a huge shake to global trade. According to the estimate, human error is the reason behind around 75% of losses.

Absence of Documents

There have been many incidents when the freight container can be seen waiting at the ports, terminals as the shipper has missed the needed document. The other scenario is when the receiver misplaces the documents. In the case of no document or missing document, the related person has to bear the costs. Due to this when they are not able to meet the extra costs, they leave the containers there. There are many ports that are seeing an exiguous number of empty steel containers and the carriers are not able to sell empty containers in full to meet up the buying capacity of business people.

In this way, we see that the port closure of large ports like Yantian has a deep effect. They feel like a bombshell on world trade as they contribute hugely to imports and exports. The shippers and business people need to be aware and prepare in advance. Like if they need to, they should buy shipping containers in advance so that they have the needed number of shipping boxes in hand. They should also pre-prepare for goods that they are sending in advance. So that export activity goes on time. And on the other side, the receiver should be ready with all the necessary documents. They should get the metal containers released on time. By following some of the steps mentioned above, one can avoid the problem from the human side. And we can also avoid the supply chain disturbance and world trade will see profit despite losses.