Current State of the Shipping & Logistics Industry
The industry is finally recovering from the 2021-2022 global shipping supply chain meltdown, explains Barry—when ports around the world were at standstills, there were months-long logjams of merchandise and ships, and not enough shipping containers, among other factors.
Some critical context: Last year at this time there were more than 100 container ships were backed up off the ports of Los Angeles and Long Beach, California, with 150 additional vessels waiting at all North American ports.
Consequently, many shifted operations to the East Coast. While not a direct route to China—America’s largest trade partner—this did help ease some of the congestion-related delays. These and other concerns such as mounting tensions between China and Taiwan and the United States, however, caused many importers to seek alternatives throughout other burgeoning markets throughout South and Southeast Asia.
With many of these pandemic-related conditions now abating, Barry says the market is attempting to stabilize—with some aspects returning closer to previous levels yet others still a ways to go.
“COVID really distorted the market for a couple of years, and now it’s trying to return to sort of a normal state, which it hasn’t been in a year,” he explains. “The current supply-chain market is really soft, and I think that’s a function of the overcapacity, overimporting, and over inventory experienced in 2021 and early 2022.”
“It was all about the supply and demand in terms of containers and space rates, so importers were trying to hedge their bets,” recalls Barry. “Plus, they couldn’t gauge consumer demand, so it was all really overdone. It caused the market to go into a really slow, oversupplied, over-capacity state that is going to take some time to draw down.”
The CAF Worldwide president says these and other factors make now the perfect time for importers to consider shifting their supply chains to other markets, such as Bangladesh and Vietnam.
