Cuyahoga Falls, Ohio — Global shipping and logistics challenges aren’t likely to go away any time soon, according to two industry executives.
Michael Jakobsen and Dan Fries spoke at the 2022 International Silicone Conference, hosted May 10-11 in Cuyahoga Falls by Rubber News. Jakobsen and Fries both work at DSV Air & Sea, a global cargo carrier based in Denmark.
Global port congestion remains an issue, with 12% of global capacity effectively cut for several reasons, including COVID-19 closures and lack of manpower, said Jacobsen, branch manager based in the region of Cleveland.
“Twelve percent is a lot,” he said. “That’s the equivalent of 3 million containers.”
The two main ports on the West Coast of the United States – Los Angeles and Long Beach, California – are remote to the point where ships approach the ports and then drift due to a lack of anchor points, the forcing them to approach again. Upcoming negotiations with the longshoremen’s union there could also influence the situation.
“There was a delay the last time they negotiated, and we didn’t have those other issues,” Jakobsen said. “Now the shipping companies are printing money and the union will want to capitalize.”
Marine delivery reliability is currently between 13% and 30%, well below the historical average of 65%. Worldwide shipping delays average between six days and 15 days. Fuel prices have also increased in recent months due to the Ukrainian crisis.
The air freight market “hasn’t fared much better” than ocean freight, according to Fries, a Detroit-area-based general manager. DSV is the third largest air freight forwarder in the world.
Fries said DSV partly avoided staffing problems at major airports by using its own network of charter planes to fly into smaller areas. The company’s charter network handles 20% of its air shipments.
Although air supply is catching up with demand, Fries added that the situation has been complicated in recent months by the inability to fly over Russian airspace.
Overall, chemical shipments rose 21% last year due to strong demand for COVID-19 test kits, with shipments of fashion items up 18%. Fries said high-tech and auto shipments were also up.
On the East Coast of the United States, some rail shipments cannot double containers because they must pass through tunnels, reducing the amount of freight that can be shipped.
Shipping companies now charge between $15,000 and $20,000 per container, up from $3,000 before the pandemic. Current lead times from China to Chicago — port to container yard — are 45 days, but Fries said that doesn’t include the 4 to 6 weeks needed to plan a shipment in advance.
“At the end of the day, we’re trying to control an industry that depends on the ability to get things done,” Fries said. “We feel the same pain as you.”