The 2021 Global Shipping Crisis and how it affects you

All over the world the affects of the global shipping crisis are being felt, and with no sign of improvement on the horizon – only more chaos can be expected in the short term whilst we try to get to grips with the “new normal.” Are we ever going to see things go back to where they were before?

There are no exceptions, the pandemic has disrupted trade in a way that no one could have possibly imagined. Not only causing massive delays due to demand, but also driving up shipping costs, creating a brand-new challenge to the fragile global economies desperately trying to recover.

How did this shipping problem happen?

It all started with a massive surge of demand for goods due to various lockdowns and restrictions imposed by governments to control COVID-19. People had more time at home, and more disposable income due to no commuting costs, and cheaper cost of living at home (for most). Also, with no days out or holidays abroad - most looked to improve their quality of life instead with home improvements like a new kitchen or bathroom.

This meant more ordering from manufacturers abroad, and eventually the orders going into China, stripped out the available containers to physically move the goods to their respective destinations. Products are being made, but there is no way to physically ship them out on the shipping containers.

This led to another problem, with the ports in the west receiving the goods being overburdened with empty containers, leading to UK ports and many others being overcrowded and physically unable to receive further shipments before removing some of the empty containers. With the added stress of isolated workforce, some unable to work due to family commitments like children not at school – the stress on the infrastructure is just too much to bear.

As you can imagine, this problem has got progressively worse, and shows no sign of easing up in the short term. Many new containers are made in China, and the manufacturers are scrambling to catch up with the demand, stating that it could be as late as the end of the year before historic orders are cleared.

What does this mean to me?

Obviously at face value, you may be thinking – I do not ship anything, how does this affect me? The answer is, in a massive way, and more than you may realise day to day.

As shipping becomes more difficult, it becomes more expensive. The shipping companies do not bear these costs – it is manufacturers and retailers that must cover them. To give some idea of how much these costs have increased, for container deliveries it is around 120% and, in some cases, more than that.

So, if we quantify that, a container costing around £2,000 pre lockdown, is now costing nearly £10,000. If you have a container with 1000 items inside, the cost to ship a single item into the UK (not accounting for any taxes/VAT) was £2, and now it is £10.

Although these are only very rough figures, it does paint a bleak picture for the current state of international shipping. With the shortage of goods already, and the rise of shipping costs, it is clear to see that the price of most goods is going to go up – and until this mess sorts itself out, it is only going to escalate. Do not think that is just luxury goods like electronics and garden furniture (to name a few) either. This will affect the price of many things we use daily, including fuel, drink, and food.

Here are some news articles from popular news sites.

BBC News:

The Loadstar: Box shortages and port congestion now an 'industry-wide challenge' across Asia