So how does one plan anything in a period where the word ‘unprecedented’ has been used so many times, that the usage of this word must be unprecedented? Supply chain planning has certainly never been more complex and unpredictable.
Looking back at the past few months...
We’ve experienced two majorly disruptive events that could not have come at a worse time. These two events being 1) the Suez Canal blockage and 2) the Covid-19 outbreak in the Guangdong Province of China. Looking closely at these back-to-back black swan events can tell us just how deep the hole is that we have to dig ourselves out of and help us prepare for the hardships coming.
Supply chain disruption Suez Canal vs. Yantian
Suez Canal blockage in March. 2021
Gaining widespread attention of the general global public, the image of the Evergiven ship wedged in between the canal became the subject of many internet jokes. However, the effects of this disruption are no laughing matter.
When Suez was blocked by the Ever Given a daily flow of 55,000 teu was impacted, with the crisis lasting for six days. A total of 87 vessels were directly impacted, with many others experiencing slight delays as they were redirected south of Africa to avoid getting caught in the queue.
The current Yantian port slowdown
We’ve seen massive problems with congestion all over the US coasts, especially the Port of LA/LB as well as in Europe. However, none of this has been quite as disruptive to the supply chain as the current congestion in China’s largest manufacturing hub. The Port of Yantian accounts for more than one-third of Guangdong's foreign trade and one-fourth of China's trade with the US.
To put that in figures, in 2020, the Port of Yantian handled 13.3m teu, equal to 36,400 teu per day. Due to the anti-Covid restrictions and outbreak amongst dockworkers, the port had been working at 30% operating efficiency since the outbreak was detected in late May, that would mean 25,500 teu per day had not been handled for weeks.The port has recently reported that operational activity has increased to 70%.
What to expect in the near future
Christmas orders will likely be delayed. High season for container carriers comes in July and August. It's at this time in which a significant proportion of Christmas goods are included in what is being freighted. Hapag-Lloyd CEO Rolf Habben Jansen expects this “to be extended due to a chaotic market”.
Each day that the Yantian Port is not running at full capacity, the backlogged cargo piles up. According to Lars Jensen of Vespucci maritime, "once the ports re-open to normal operations we should expect a surge of cargo – at least to the degree there are even vessels available to handle this. This in turn will cause ripples of potential congestion at the destination with a lag time of some 2-5 weeks.”
How forwarders can survive these catastrophic events
It’s time to reflect, analyse, recalibrate and focus on growth. Tackle new opportunities and widen networks. Unprecedented events continue to happen and only the quick, flexible and adaptable will survive. Joining a forwarder network of experts like 7ConNetwork can help your business unlock new opportunities through the continued chaos this global pandemic brings.