Global cargo logjam deepens, delaying goods bound for retailers, automakers
By Lisa Baertlein and Jonathan Saul
LOS ANGELES / LONDON (Reuters) - Amazon seller Bernie Thompson shifted half of its production out of China to reduce its business risks and was still in the crosshairs of the logistical chaos that plagued the movement of goods around the globe.
Growing demand for furniture, exercise equipment, and other goods for shoppers seeking shelter at home amid a worsening COVID-19 pandemic has stimulated normal trade flows.
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That has stranded empty freight containers in the wrong places, creating bottlenecks that now stretch from factories to seaports. Container ship operators carry the majority of consumer goods, and transportation and trade sources warn that persistent disruptions in the industry could create bottlenecks and hinder the global economy from recovering. Thompson, founder of Plugable Technologies in Washington, sells 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 he, like many other importers, is anxious to keep enough products in stock. "We moved production out of China and were directly at a disadvantage," said Thompson.
In his new factory in Thailand there were initially delays of around four weeks, among other things because shipping companies were giving top priority to empty containers on the trade route between the USA and China. These logistical shortcomings cascaded and now its remaining deliveries from China - the world's leading manufacturer - are being postponed for up to three weeks. And he's not alone - US retailer Costco Wholesale Corp and Honda Motor Co Ltd in the UK have also suffered delays. "Everyone's trying to squeeze their way through that narrow opening at once," said Rick Woldenberg, executive director of Learning Resources in Illinois, 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 with full loads since August - something that hasn't happened in a decade, said Peter Sand, chief shipping analyst at the BIMCO trade association.
Rolf Habben Jansen, managing director of the German Hapag-Lloyd, told investors that the container line "uses every available ship". ASSEMBLY FRUSTRATION Frustration increases. Importers and exporters are "upset that they cannot move their product or harvest as willingly as they would like," said Gene Seroka, general manager of Port of Los Angeles - the busiest seaport in the US. "We need to get the flow of trade going to keep the engine of the entire world economy running," said Christopher Tang, an economics professor at the University of California at Los Angeles. The downsizing in the port due to the COVID security rules also plays a role.
"It's a combination of heavy volume and slower and less efficient operation," said Lars Mikael Jensen, head of the network at Denmark's A.P. Moller Maersk, the world's largest container line. "This is the perfect storm for global container flows," said Jensen.
(Reporting by Lisa Baertlein in Los Angeles and Jonathan Saul in London; Editing by Lisa Shumaker)
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