Global Shipping Disruptions Rattling Supply Chains says an article on Seeking Alpha.
- one of the biggest ports – Yantian shut down of a COVID-19 outbreak
- shipping companies to conduct massive logistical exercises to re-adjust their routes.
Yantian shut down
Plagued by the coronavirus pandemic, as well as the Suez Canal blockade, the shipping industry was just getting back on its feet before being dealt another blow. One of the biggest ports in the world called Yantian was recently shut down because of a COVID-19 outbreak (the Chinese port also happens to export 90% of the world’s electronics). It’s causing massive headaches across the maritime shipping world, as well as complicating efforts to reopen the global economy.
The impact
While it’s difficult to compare the two latest incidents – one is a port, the other is a chokepoint – the amount of cargo that was affected at Yantian was even larger than the Suez obstruction seen in March. The fallout could be another rise in the price of goods, which have already been significantly impacted by inflation in recent months. Container shipping companies have also needed to conduct massive logistical exercises to re-adjust their routes.
As shipping costs skyrocket, so have the stocks that are dominant in the industry. Shares of Danaos (NYSE: DAC), Global Ship Lease (NYSE: GSL), and ZIM (NYSE: ZIM) are up 1,700%, 370%, and 278% over the past year. Other shares that have set sail: Navios Maritime Partners (NYSE: NMM), Matson (NYSE: MATX), and Mærsk (OTCPK: AMKBY).
This also comes before the shipping industry enters its peak season, with retailers stocking up before they return to school and year-end holidays. “The ripple effects of this slowdown in Yantian will be felt in about four weeks’ time in the United States,” said Mirko Woitzik of Everstream Analytics. “Depending on how quickly the West Coast ports can clear the current vessel backlog, the congestion will only get even worse when the Yantian exports start arriving.” With ships from Asia taking two weeks to unload, domestic freight like Union Pacific (NYSE: UNP) and FedEx (NYSE: FDX) has even accelerated peak season surcharges by months.
Outlook
“The supply chain disruption issues, especially the congestion affecting our key maritime ports, are causing significant challenges for America’s retailers,” the National Retail Federation wrote to the Biden administration last week. The group is calling for action on port challenges, with 97% of retailers having been impacted by shipping delays. “As the administration undergoes supply chain reviews for critical sectors, including transportation, addressing the current state of our nation’s ports and freight movement needs to be a critical component of the strategy. As trade continues to grow, we need to make sure we have truly 21st-century ports and freight movement.”
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Source: Seeking Alpha
