Since the pandemic’s beginning, the Maritime/ Shipping industry has come to the spotlight and made many headlines but, unfortunately, only for the wrong reasons.
First, there was an issue with the crew change and the inability of seafarers to travel freely to perform their jobs, causing them to become prisoners of the situation.
Not long after, while the crew change crisis was still looming over, there was a new problem- backlog, bottlenecks, port congestion, and what so not?!
This may sound like a riddle to the casual observer, but try to say it out loud: Santa is not coming this year! That itself may resonate a bit louder than some third-world country human being held prisoner for the sake of the greater good.
The Covid-19 pandemic ravaging the world for almost two years has primarily shown inefficiency, disorder, and complete disfunction in the Maritime/ Shipping industry, i.e., their world. It has brought to light all the flaws and problems in the maritime sector that have been ignored; we can freely say – for centuries! All this would probably not be a big problem, nor would it ever reach the public eye, if, (un)fortunately, maritime transport alone was not responsible for almost total global trade.
Although seafaring is perhaps an essential branch of the industry, the rule in maritime affairs is: “Why to fix something if it is not broken?!”.
Well, perhaps now is the time to start over and finally change that stubborn attitude and accept the change. The huge problems within the industry and the ignorance of those responsible for ensuring that global trade takes place efficiently and sustainably were shattered and unbalanced even before the pandemic but are now so distorted that the whole world is at a virtual standstill.
Backlog, bottlenecks, and congestion caused by greed and complete ignorance by the entire industry are getting worse and worse day by day. It is no longer just about ports on the West Coast of the USA, but according to some estimates, as many as 60 to 70 of the 100 most influential and busiest ports globally regularly face problems and congestions. The causes are different and complex, but in the end, congestion and disruption occur mainly due to – problems with infrastructure, lack of equipment, lack of skilled labour, and poor productivity of ports, all of which could have been fixed a long ago.
As a result of all these and more, we come to the problem of chronic blockades in many ports worldwide. Ships wait at sea for weeks, even a month, to discharge their cargo. The containers by now are buried in huge piles in clogged terminals. Trucks wait in lines for hours or even days to pick up just one container, and customers worldwide receive goods with massive delays that last for weeks. Congestion and bottlenecks resonate throughout the supply chain, creating a considerable trade barrier for exports and imports, hurting the economy.
Any attempts to calculate the exact costs of global supply chain dysfunction are not yet possible because the overall impact is still impossible to foresee. What is certain is that the worldwide supply chain is tearing at an accelerated pace, and exporters worldwide are starting to lose customers. Manufacturers are forced to slow down or stop production lines because it becomes impossible to store all the goods or to receive materials needed for production. As a result, perishable products are left to rot, and large and small retailers are left with empty shelves. It is expected that a considerable amount of ordered goods will miss important sales seasons for the coming holidays – Santa is not coming this year!
Unfortunately, there is no quick fix. The supply chain is terribly damaged and wholly dysfunctional. The only way out is a complete reform and a completely different approach, or else the world risks a prolonged time of draught and much more significant problems shortly.
The good old approach of the “Wild West” for which the maritime industry is known has no place in the modern world! An excellent example in which something no longer serves its purpose and has the opposite effect, but the shipping industry still sticks to it, is the so-called Demurrage! Unfortunately, Demurrage has become a steady stream of revenue for port operators that have begun to look like classic racketeering. Shippers are forced to pay hundreds of thousands of dollars for containers stored in terminals even if the blame for failing to move them exclusively falls to terminal operators. This raises the question of whether, in times where labor shortages and poor infrastructure cause congestion, port operators deliberately hold goods to profit from it?
The good old storage also doesn’t work because, for example, Nike reportedly spent 200 million dollars for carrying an additional 7 to 14 days of stock due to unreliable transportation caused by port congestion. An extra 200 million dollars for 7 to 14 days of production sounds like a complete loss. Any attempt to calculate the additional costs that this approach will cause globally is impossible and completely unnecessary because it is not sustainable or reasonable.
The maritime industry is making headlines for entirely wrong reasons. Still, there is hope that all this negative publicity that many in the industry are unfamiliar with, as they had worked behind the curtain for ages, will result in the positive changes that maritime has longed for since the last industrial revolution, back in the late 19th century!