WORLDWIDE - The team at ANUK has been closely following the volatility of transportation logistics, with prices soaring across freight, labor, and now, cargo. Recent reports have been circling on the rising costs of shipping containers, impacting transportation operations worldwide, and, as we know, fresh produce is not exempt.
The Wall Street Journal reported on the matter this week, offering insights from multiple logistics experts, each of which have a hand in transporting fresh food. The primary issue, as the article stated, is a gap in capacity for ocean-based shipping, ultimately creating what the news source writes will be a tight market for the remainder of 2021 and into 2022.
“Global trade right now is the hottest restaurant in town,” said Brian Bourke, who is the Chief Growth Officer at Seko Logistics, an Illinois-based operator that works in trans-Pacific shipments for industries including food and retail. “If you want to get a reservation, you need to plan it out two months in advance. Everyone’s trying to grab any spot they can, and they’re all spoken for.”
The news source went on to state that prices for a 40-foot container are quadruple what they were last year, topping $8,399 on July 1. Drewry Shipping Consultants, which operates out of London, referred to its current cost index, also stating that the cost to ship freight from China to Europe and the U.S.’s West Coast are reaching $12,000 per container, while some last-minute shipments have reported costs around $20,000.
As the buy-side maintains its urgency in implementing post-pandemic strategies, these experts have seen supply chain delays at shipping ports and distribution centers, which, they say, has contributed to the upward trend in costs for ocean-based cargo. And, with some shipments getting stuck in the ports for days or weeks at a time due to the influx of traffic, the availability of shipping containers continues to decrease.
“Everyone is spending much longer on round trips,” said Philip Damas, Head of the Supply Chain Advisors Practice at Drewry. “Containers are sitting on the water for much longer periods of time; containers are waiting at ports for much longer. Productivity in container shipping is deteriorating. Every failure is effectively creating ripple effects. It’s a vicious cycle.”
Damas explained that shippers continue pressing to get goods on the ships up until the moment they leave the port, contributing to the absolutely historical rates we see today.
“Now everything is overbooked,” he continued. “Shippers are desperate to book tomorrow. It’s more a bidding war than it is a traditional tariff, and this bidding war is accelerating. Some of these $23,000, $24,000 prices include the inland distribution cost, and that can easily add far more to the final cost.”
In conclusion, the news source posed one incredibly poignant question: Will this rise in pricing lead shippers to pull out of overseas shipping programs? As we keep an eye out for how these shifts will impact the fresh produce industry, keep clicking back to ANUK.
