The collapse of maritime transport: the great hidden crisis

The collapse of maritime transport: the great hidden crisis

Container shortages and rising global prices are straining supply chains.

As we approach an uncertain 2022, the concept of “crisis” seems to have entered our vocabulary to such an extent that we no longer even think of it as something to worry about. In 2020, we faced the biggest health crisis of this century, and in 2021, we had to live with the economic crisis resulting from it. However, there is an unprecedented crisis in freight transport, which is one of the main threats – if not the main threat – to the activity of companies and, consequently, to the consumer’s pocket.

In 2019, freight was paid at around 1300 euros, and now, in 2021, at more than 10,000 euros. The sharp increase in the number of containers in which raw materials and goods are moved, and the scarcity of capacity and means to transport products by sea to any point in the world, are the main aggravating factors in this crisis. Increased costs for companies, problems of shortages and shortages in the supply chain are the main consequences. Consequences that increase the prices that citizens pay for products.

The main reason for this crisis lies in the West’s dependence on Asia, specifically the Chinese manufacturing markets. The Asian giant is the world’s leading manufacturer and exporter, and Europe is the main customer. For decades this relationship has been of constant benefit and without imbalances or major market disturbances, until now.

Port of Galicia

The turning point lay in the reactivation of world trade after the pandemic. Companies and factories resumed their business and the volume of goods for maritime traffic was overwhelmed: an increase in the number of products to be transported and the maritime fleet itself. Thus, the shortage of ships and containers began to resound in all the ports of the world. Since then, ship delays and congestion at strategic points in the transport of goods have marked the political agenda. All this situation was linked to the collapse already experienced in the ports as a consequence of the coronavirus crisis, with intermittent confinements, reduction of personnel and increased restrictions and security protocols.

Sergio Mata, executive director of the international trade consultancy Cecogrup points to more causes than the covid effect. He points to the Chinese government’s decision to stop buying scrap metals and plastics from Europe and the United States at the beginning of 2020 as the starting point for this logistical chaos. These goods used to take up a large part of the freight to the Asian country, so now they take longer to fill up and leave port.

As in every crisis, there is always someone who benefits. Ten shipping lines control 85% of the global merchant fleet, with Denmark’s Maersk leading the way, closely followed by MSC. In the second quarter they made a profit of 23.6 billion euros. Many agents linked to logistics and international trade accuse them of acting as an oligopoly, encouraged by the pandemic. And they charge that European legislation allows these giants to establish operational alliances that would not help competition.

Image source: elEconomista


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