Cole’s experience hints at a range of factors currently plaguing global supply chains. First, improperly manufactured items, which Cole’s suppliers blame for power allocation in China as the country tries to move away from coal power; Cole’s contacts in China could not find the freighter to fulfill the order. Cole believes his two 40-foot shipping containers will be loaded onto a ship near Shenzhen on November 13, but the items didn’t make it to sea until November 19. it left port, it meant an 11-day sailing between Shenzhen and Sydney, but they added three more days,” Cole said. He is uncertain that the items will eventually land even then, and there is no guarantee that the Australian side will also go smoothly. “Usually it takes a two-day turnaround to get from port to warehouse, but I don’t trust it at all,” he said.
Levinson says the inability to track orders accurately is a problem throughout the shipping supply chain, and it exacerbates broader problems. “There is no real-time traceability of most shipments moving through the freight system,” he said. “That’s why everything was scattered on all sides and everything went missing.” That uncertainty has been compounded by severe supply chain disruptions over the past year, from last-minute closures of ports due to the Covid epidemic – as happened in Ningbo, third busiest port in the world, in August 2021—to the temporary blockage of the Suez Canal, through which 12% of total global trade passes, in March 2021. China has also asked its 20 largest provinces and cities to reduce energy consumption for the rest of the year to try to meet environmental targets, keeping factories and industry open for part of the day.
Result? The global slowdown in the supply chain has turned things upside down — and made it more expensive to ship items globally than ever before. “The economics of shipping are great for shipping lines,” says Levinson. “They’re making record profits.” While freight rates have long been out of balance, with the cost of sending a shipping container from Asia to Europe higher than from Europe to Asia, costs across the country have skyrocketed. For example, shipping a single 40-foot container from Shanghai to Los Angeles in early August 2019, cost $1,700. A year later, it had grown to $3,000. In August 2021, it was priced at $10,200, according to data tracked by analytics firm Drewry World Container Index. Cole previously paid around $2,500 to ship a single 20-foot container from China to Australia. Now it’s $5,500. “I was a little nervous when I saw the bill for my 40-foot containers,” he said. “I didn’t get the bill until the container docked.”
With such high prices, many large businesses are avoiding the traditional shipping industry and going it alone, finding it more economical to do so. Costco has chartered three container ships that would work to ship to the US and Canada from manufacturing facilities in Asia, as well as Walmart, Ikea and Home Depot. Costco CFO Richard Galanti told investors as he released the company’s most recent financial results. “Higher labor costs, higher freight costs, higher shipping demand and port delays, increased demand in certain product categories, various shortages of everything. from computer chips to oil and chemicals, and higher commodity prices” all have an impact on the retailer’s business, Galanti added. Those who haven’t chartered their ships are feeling the impact. Half of lingerie retailer Victoria’s Secret stranded at sea. The rest are being flown in — but that’s now taking nine days instead of two, because the race for resupply flights is also causing a backlog there.
