Compared to the last The holiday season of the year sees major shipping lines operating relatively smoothly, shipping rates coming back down to earth and ports moving cargo at a steady clip.
Now that’s all good news for businesses and consumers about inflation and talk of a recession, but those improvements are illusory.
A closer look shows that global shipping speeds have not returned to pre-pandemic levels, and severe challenges continue to plague supply chains. If we don’t act and improve shipping technologies, the logjams we’ve endured for the past two years will become commonplace.
New season, new problems
This year’s improvement in shipping reflects a slowdown in consumption rather than an improvement in underlying infrastructure.
Businesses are still taking too long to ship their goods from Asia to the US or Europe. While this is better than the record delays we saw during the height of the pandemic, it still takes businesses 69 days to ship goods from China to US ports, nearly double the time it took before the outbreak. This is happening against the backdrop of a sluggish economy, with shipping company Maersk forecasting a 2% to 4% drop in global container demand this year.
A number of other challenges, both new and familiar, are plaguing global logistics in 2022, such as volatile oil prices, protracted labor negotiations and labor shortages.
Meanwhile, large and small businesses are a sign of problems. Retailers like Target and Wal-Mart are struggling with inventory builds ahead of the holiday season. This squeezes profits and creates friction among investors, causing pain for small and medium-sized businesses that struggle to keep space in warehouses crowded with large retailers’ goods.
