Customers carry packages up the stairs to a US Postal Service office in New York on Thursday. Agence France-Presse
Global cargo logjam deepens and it delays goods bound for retailers, automakers. Besides, Logistics companies reap ‘vaccine economy’ benefits as European Union (EU) gears up for roll-out.
A surge in demand for furniture, exercise equipment and other goods for shoppers sheltering at home in a worsening COVID-19 pandemic has upended normal trade flows.
That has stranded empty cargo containers in the wrong places, spawning bottlenecks that now stretch from factories to seaports.
Container ship operators ferry the majority of consumer goods, and transportation and trade sources warn that prolonged industry disruption could cause shortages and complicate the global economic recovery.
Amazon seller Bernie Thompson shifted half of his production out of China to reduce his business risks and still found himself in the crosshairs of logistical chaos besetting the movement of goods around the globe.
Thompson, founder of Washington-based Plugable Technologies, sells work-from-home staples like laptop docking stations. He diversified sourcing to be less reliant on a single country for manufacturing and less exposed to US tariffs on Chinese goods.
Things did not go as planned and now, like many other importers, he is concerned about keeping enough product in stock.
“We’ve moved production out of China and moved ourselves right into a disadvantage,” said Thompson.
His new factory in Thailand was first to suffer delays of about four weeks, in part because shipping companies routed empty containers to the top priority US-China trade lane.
Those logistical snags cascaded and now his remaining shipments from China – the world’s No. 1 manufacturer – are postponed by as much as three weeks.
And he is not alone – US retailer Costco Wholesale Corporation and Honda Motor Co in the United Kingdom have also suffered delays.
“Everyone’s trying to squeeze through this narrow opening all at once,” said Rick Woldenberg, chief executive of Illinois-based Learning Resources which supplies educational toys to Amazon.com and other major retailers. It can “really screw up your plans,” he said.
Container ships have been sailing at full load since August – something that has not happened in a decade, said Peter Sand, chief shipping analyst with trade association BIMCO.
Rolf Habben Jansen, chief executive of Germany’s Hapag-Lloyd , told investors that the container line was “deploying every available ship”. Frustration is building.
Importers and exporters are “upset they’re not able to move their product or crop as willingly as they would like to,” said Gene Seroka, executive director of Port of Los Angeles – the busiest US seaport.
“We need to get the trade flow going to grease the engine for the whole world economy,” said Christopher Tang, a business professor at the University of California-Los Angeles.
Port staffing reductions due to COVID safety rules also play a part.
“It’s a combination of strong volume and slower and less efficient operations,” said Lars Mikael Jensen, head of network with Denmark’s A.P. Moller Maersk, the world’s biggest container line.
“This is the perfect storm for global container flows,” Jensen said.
The USPS indicated that they were currently experiencing “unprecedented volume increases and limited employee availability due to the impacts of COVID-19” which might lead to temporary delays of mail delivery.
Logistics firms are reaping ‘vaccine economy’ benefits as European Union gears up for roll-out.
Joern Schneemann thought he would be helping manage logistics for the Tokyo 2020 Olympics this year. Then, the COVID-19 crisis intervened, pushing the event back to 2021.
Instead, the head of Swiss logistics company Kuehne + Nagel’s European Expo & Events unit has been setting up vaccination centres in convention and sporting venues in Germany’s North Rhine-Westphalia state, the nation’s most-populous with 18 million residents.
Schneemann’s pandemic pivot illustrates how logistics firms like Kuehne + Nagel, Germany’s Deutsche Post DHL, Denmark’s DSV Panalpina and Spain’s Grupo Logista have turned COVID-19 disruption into opportunity, grabbing a share of the burgeoning “vaccine economy” while managing record demand in traditional businesses.
“Because of the pandemic, things turned out quite differently than we had planned,” Schneemann told Reuters from his German offices. “And it turned out well.”
Neither North Rhine-Westphalia, which kicks off its vaccination programme in nursing homes on Sunday in line with the rest of Germany, nor Kuehne + Nagel disclosed the contract’s value.
The company, which has secured other, undisclosed government contracts, will manage the rollout of millions of vaccines including Pfizer and German partner BioNTech’s , which won European approval on Monday.
It must coordinate deliveries to halls filled with refrigerated containers that can handle the vaccine’s minus 70 degrees Celsius storage requirement at 53 sites around the state.
Europe is due to get 12.5 million doses of the Pfizer/BioNTech vaccine by December 31, with Germany expecting up to 4 million doses through January, enough to inoculate 2 million people with the two-shot treatment.
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