Seeking Alternatives to Shipping, due to Lack of ContainersBy Sofía Hanna | Wed, 10/13/2021 - 11:55
Due to the latest ship and port logistics crisis, retail companies such as Walmart and Costco are developing new strategies to secure tight ship space so that merchandise arrives in a timely manner for “El Buen Fin” and throughout the Christmas season.
The reactivation of the world´s economy has been making progress, nevertheless, the number of shipping containers in the world has not kept up with the same pace. The ocean freight rate in 2H2021 continues at record highs due to increasing levels in demand, this has caused shipping troubles for China, as reported by MBN. This is what has prompted companies like Walmart, Costco Target, Homme Depot and Dollar Tree, to be chartering their own vessels to overcome these supply chain disruptions that pose a threat to the retail holiday season, according to information from Transporte MX. Joe Metzger, Walmart´s Executive Vice President of Supply Chain Operations said chartering has been one of the few areas in which they have had to make investments in order to ship the products so that they would arrive in a timely manner.
These shipment issues are worrying retail experts, stating that the final sale is being or will be affected; as well as manufacturing costs. These shipment delays have caused a shortage of computer chips, resulting in the closing of General Motors and Ford automakers and has prompted firms like Whirlpool to strive to stock refrigerators and dishwashers. For example, ship cargo congestion in California has led Levi Strauss to redirect Asian cargoes to less crowded ports on the East Coast, despite longer and more expensive itineraries. In order to solve these problems, companies have opted for 53-foot units that are used almost exclusively to transport goods by truck and rail within the US. However, this solution also has its limits and it is unsustainable.
As a result, much emphasis has been placed on the fact that the US is decades behind in comparison to other European and Asian ports in regards to getting shipping lines, terminals and shippers to mutually facilitate access to ports and business data for planning purposes. Mexico´s participation, on the other hand, could enter the Top 10 global economies if its exports maintain the recovery they have had so far. Nevertheless, the shortage in the production of electronic devices, the lack of containers, reduced activity in ports and the increase in the cost of international freight and reducing the number of products that can be sold in the upcoming dates, might be factors that could prevent a robust recovery to happen, as reported by MBN.