LOS ANGELES / LONDON (Reuters) – Amazon seller Bernie Thompson has moved half of his production from China to reduce his business risks and is still facing the chaos of logistics facing the movement of goods around the globe.
An increase in demand for furniture, exercise equipment and other goods for home buyers in a worsening COVID-19 pandemic has intensified normal trade flows.
This has blocked empty cargo containers in the wrong places, creating blockages that now stretch from factories to seaports. Container ship operators transport most consumer goods, and sources of transport and trade warn that the prolonged disruption of the industry could lead to shortages and complicate the global economic recovery. Thompson, the founder of Plugable Technologies in Washington, sells work staples at home, such as laptop docking stations. He diversified supply to rely less on a single country for production and less exposed to US tariffs on Chinese goods.
Things did not go as planned and now, like many other importers, he is worried about keeping enough product in stock. “We moved production from China and moved directly at a disadvantage,” Thompson said.
Its new plant in Thailand first suffered delays of about four weeks, in part because shipping companies routed empty containers to the US-China priority trade lane. Those logistical problems have fallen by the wayside and now its remaining deliveries from China – manufacturer no. 1 in the world – are postponed by up to three weeks. And it’s not alone – US retailer Costco Wholesale Corp and Honda Motor Co Ltd in the UK have also suffered delays. “Everyone is trying to slip through this narrow opening all of a sudden,” said Rick Woldenberg, executive director of Learning Resources in Illinois, which supplies educational toys to Amazon.com and other major retailers. He can “really cheat on your plans,” he said. Container ships have been sailing at full load since August – something that hasn’t happened in a decade, said Peter Sand, chief shipping analyst at BIMCO.
Rolf Habben Jansen, executive director of Hapag-Lloyd in Germany, told investors that the container line “deploys every available ship”. MOUNTING FRUSTRATION Frustration develops. Importers and exporters are “upset that they can’t move their product or harvest as well as they would like,” said Gene Seroka, executive director of the Port of Los Angeles – the busiest seaport in the United States. “We need to make trade flow the engine of the entire world economy,” said Christopher Tang, a business professor at the University of California-Los Angeles. Reducing port staff due to safety rules COVID also plays a role.
“It’s a combination of strong volume and slower and less efficient operations,” said Lars Mikael Jensen, head of networking with AP Moller Maersk in Denmark, the world’s largest container line. “This is the perfect storm for global container flows,” Jensen said.
Reporting by Lisa Baertlein in Los Angeles and Jonathan Saul in London; Edited by Lisa Shumaker