Continued Uncertainty in Global Shipping through 2021

Continued Uncertainty in Global Shipping through 2021

Posted on September 2, 2021

As I drove into work one sunny and warm morning last week, I notice a large crack running right through my windshield (what was only a tiny chip the day before became a full-on windshield casualty from a rogue rock on I-94). So I began the process of working with the insurance agent and glass repair specialist. After scheduling the repair for later that week, the scheduler mentioned that I was one of the lucky ones! Some common windshields have been hard to come by, putting people out for three months or more.

Now, this was certainly not an emergency. However, it brings us back to the reality that we still live in a disrupted world where global supply chains and logistics struggle to keep up with everyday demands across the world.

Global supply chains, shipping containers, and overland travel have had significant disruptions due to the global pandemic. The sudden halt in China of some of the busiest shipping ports in early 2020, the quick changes of consumer spending throughout the pandemic, several major man-made disasters (the Suez Canal blockage) and environmental disasters, including the most recent flooding in China and Europe, have turned the maritime shipping business on its head.

So, when will the shipping across the globe return to normal? Most experts agree it will be well into 2022 before we see some consistency coming back into global shipping. Currently, 30-40% of sea cargo arrives on time, which is much lower than pre-pandemic levels, and the shipping costs have increased dramatically. Companies are seeing as much as 500% increases in the cost of shipping containers traveling from China to the US. What was once $3000-$5000 expense for a 40-foot container is now is well over $20,000, reports Forbes (Verdon, 2021). Many businesses are forced to make tough decisions on how to afford these increases, if they should be passed on to consumers, absorbed by the business, or if the items should be delayed (Butterbrodt, 2021).  Philip Damas, Managing Director at Drewry told Reuters  that “these factors have turned global container shipping into a highly disrupted, under-supplied seller’s market, in which shipping companies can charge four to ten times the normal price to move cargoes (Muyu Xu, 2021).”

We also see information from shipping companies like Maersk reporting huge gains with their first-quarter 2021 revenues over $12 billion dollars, a 30% increase over the previous year (Baldwin, 2012). Shipping prices are higher than ever, but demand is also very high. Early fall is when US consumer spending typically rises for the back-to-school and holiday shopping season. While anticipating these habits, a premium is placed on getting goods to the US, and containers are shipped back empty due to timing and turnaround,  creating a shortage in shipping containers for exporters in the US.

Once the ships reach the US many spend days or even weeks waiting to be unloaded, and further transport inland becomes difficult with widespread labor shortages. “ The railroads are full. The warehouses are full. Port terminals are full. Ships are coming in and waiting to get worked. The factories are behind in orders. This incredible demand has got everybody in the entire value chain just clipping out at levels we never could have imagined — and it’s still not enough,” says Gene Seroka, executive director of the Port of Los Angeles (Miller, 2021). Maersk highlighted that they see 30% more cargo through ports, and that means you need 30% more of everything else beyond the port of entry to process the cargo (Baldwin, 2012).

North Dakota Soybean exporter Bob Sinner explains challenges for exporters sending goods from the midwest. There is a geographic mismatch, where a large amount of products in the midwest (such as soybeans) are waiting to be exported, but that takes additional time and logistics for the containers to be loaded and sent back to ports. Shipping companies do not want to take that time, and they are more willing to send empty containers back to Asia for more consumer products. Where the shipments from Asia to the US  pay a very high premium, this mentality comes with increased pressure on US producers to their Asia clients. “If we can’t deliver products in an efficient and reliable way, customers are going to look elsewhere,” says Sinner.

This fall will look very different to the American consumers who are used to full shelves of goods throughout the holiday season. Experts say that there will be many more out-of-stock goods with the increased shipping rates, railway disruptions, and chassis shortages (Tan, 2021).

Finding ourselves still entrenched in the impact of the global pandemic, many of us seek to find some normalcy, but we will not see it in the global shipping industry quite yet. Normalizing shipping container pricing and increases in the labor force may be on the horizon for 2022 as we adapt to more hiccups along the way.

References

Baldwin, S. (2012, July 16). How Maersk Dominates the Global Shipping Industry. Retrieved from CNBC: https://www.cnbc.com/video/2021/07/16/how-maersk-dominates-the-global-shipping-industry.html

Butterbrodt, L. (2021, August 9). Shipping Delays Affect Northern Minnesota Game Businesses. Retrieved from Post Bulletin: https://www.postbulletin.com/business/small-business/7143695-Shipping-delays-affect-northern-Minnesota-game-businesses

Miller, G. (2021, August 3). In the Eye of the Congestion Storm: Q&A with Port of LA’s Gene Seroka. Retrieved from Freight Waves: https://www.freightwaves.com/news/in-the-eye-of-the-congestion-storm-qa-with-port-of-las-gene-seroka

Muyu Xu, R. K. (2021, August 5). China-U.S. Container Shipping Rates Sail Past $20,000 to Record. Retrieved from Reuters: https://www.reuters.com/business/china-us-container-shipping-rates-sail-past-20000-record-2021-08-05/

Tan, W. (2021, August 2). Another Shipping Crisis Strikes, Threatening Delays to Black Friday Shopping. Retrieved from CNBC: https://www.cnbc.com/2021/08/03/shipping-crisis-strikes-black-friday-shopping-amid-europe-china-floods.html

Verdon, J. (2021, August 3). Shipping Container Crisis Could Derail Holiday Toy Sales. Retrieved from Forbes: https://www.forbes.com/sites/joanverdon/2021/08/03/shipping-container-crisis-could-derail-holiday-toy-sales/?sh=7a13bde8f89e

Top Reasons to Attend the Big Iron International Visitors Program

Top Reasons to Attend the Big Iron International Visitors Program

Posted on May 18, 2020

Below is a list of the top 5 reasons to attend the Big Iron International Visitors Program.  For more information on the event, including participating hotels, agenda and registration, please click here.

1) Specialized ‘International Visitors’ Day
The Big Iron Farm Show runs annually from Tuesday through Thursday.  Each year, on the Monday prior to the opening of the Big Iron Farm Show, the North Dakota Trade Office and US Commercial Service hold special programming for our international guests participating in the Big Iron International Visitor’s Program (or Big Iron IVP).  This year, international guests will have the opportunity to tour a farm and learn about the farming practices used in our region.

2) Specialized tours allow participants to see North Dakota agriculture at workIMG_2464
While trade shows are a great way to see a variety of products at once, at the Big Iron IVP we understand that sometimes seeing the dealership or manufacturing facility and the agricultural technology in the field is important.  That’s why we hold specialized tours each year, with different focuses, to allow international guests to see North Dakota machinery at work, whether it’s a tour of one of our member’s dealerships or an educations session on a specific crop, we can assure our international visitors that they will learn about our agricultural technology on a deeper level.

IMG_21123) Networking with top government officials
Agriculture has always been a driving force in North Dakota’s economy, and our state leaders are proud of this heritage.  Because of this, our leading government officials are involved in the Big Iron IVP.  This is an opportunity for our international guests to be officially welcomed to North Dakota by our leaders, because our state truly appreciates your visit.

_MG_59934) Ground transportation provided
One of the most difficult aspects of being in rural United States is getting from your hotel to the places where business deals happen.  At the Big Iron IVP, we provide large tour buses for transportation to ensure that you can get to the Big Iron Farm Show and to facilities without any worries.  And, don’t worry about paying for this transportation – it’s on us.

_MG_64205) International Visitors Pavilion
Last, but certainly not least, the Big Iron IVP has a designated International Visitors’ Pavilion for our global guests to call home at the Big Iron Farm Show.  In this Pavilion you will find coffee, water, snacks, free Internet access (with computers), private meeting space and – most importantly – warmth.  Additionally, if you need access to an interpreter, this is where you will find them waiting for you.

Our goal is to make the Big Iron International Visitor’s Program as successful as possible for our international guests as well as our North Dakota companies.  And, in typical North Dakota fashion, we want you to feel ‘at home’ and comfortable during your visit here.

For more information on the event, including participating hotels, agenda and registration, please click here.

We hope to see you at Big Iron 2020!

Featured STEP ND Activity: Marketing your Company with Virtual Reality

Featured STEP ND Activity: Marketing your Company with Virtual Reality

Posted on October 18, 2018

Give international customers a tour of your facility, let them see the crops growing in the field or get an in-depth view of your product -- all without travel and language barriers. That is a virtual reality tour. STEP ND is now reimbursing companies up to $3,000 for virtual reality (VR) projects related to international marketing. A virtual reality tour is created by filming your location or product with special cameras and processing the footage into 360° digital media. VR tours are typically accessible via website, an emailed link or social media. By clicking a button, international customers may experience an engaging, interactive tour using a headset and smart phone. It’s an exciting tool to differentiate your company from the competition and build a personal connection with buyers. Apply for STEP ND reimbursement before you begin a VR project by filling out and submitting the STEP ND Company Application and the STEP ND Marketing Application.

A local company currently providing virtual reality services is Be More Colorful, based in Fargo.

Import Process A-to-Z: Documents & Handouts

Import Process A-to-Z: Documents & Handouts

Posted on March 17, 2015

Thank you for attending the March Trade Talk, 'Import Process A-to-Z.'  Below are links to the presentation and other documents Mr. Laden referenced during his presentation.  Please feel free to download he documents as needed.  If you have any questions, please contact Lindsey Warner at lindsey@ndto.com.

Marine Insurance Webinar – Speaker Bios

Marine Insurance Webinar – Speaker Bios

Posted on October 20, 2011

Bob Furjanic, President of Four Anchors Worldwide LLC
Bob Furjanic is a graduate of Northern Illinois University in DeKalb, IL. He has been president of Four Anchors Worldwide LLC, a Marine insurance brokerage, in Pleasantville, NY, since 2007. Prior to founding his own company, Bob worked for various brokers producing and servicing cargo and hull and machinery insurance for over 30 years. Earlier in his career, he was a claims manager for a steel importer and a legal assistant for a maritime law firm. Four Anchors Worldwide LLC specializes in cargo insurance on agricultural and steel products and is licensed in 13 states, including North Dakota.

www.fouranchors.com

Steve Erhardt, Vice President of CSL Global
Steve Erhardt is a graduate of the U.S. Merchant Marine Academy in Kings Point, New York with a bachelor's degree in Marine Transportation.  He has worked in the marine surveying field since 1992, for various national and international  companies, working in the Ports of Houston, Norfolk and presently in Minneapolis.  Steve is a Certified Marine Surveyor  with the National Association of Marine Surveyors and specializes in conducting both cargo claims investigations and cargo loss control surveys.  He currently holds the position of Vice President with CSL Global, an international marine consultancy company, managing their Project Cargo and Loss Control surveying business in North America.

Peter Hamner, Project Manager for Conway & Robinson LLC
Peter Hamner has a BS degree in Wood Science and Forest Products from Virginia Tech and a Master's Degree in Forestry from the University of Kentucky. Until the summer of 2010, he worked for nine years as a research associate at Virginia Tech's - Center for Unit Load Design, the only laboratory with facilities capable of evaluating all aspects of pallet, packaging, and material handling design and efficiency. Over the past 6 years, Peter has accumulated particular expertise and experience in the area of mold and moisture mitigation targeting all forms of wood packaging materials. Subsequently, he has worked as a project consultant for White & Company Packaging Solutions to develop comprehensive mold control programs for wood pallet suppliers, provide technical evaluations and recommendations for mold and moisture contamination issues associated with products shipped on wood pallets, and evaluate the efficacy of mold control chemical treatments for lumber and wood pallets. Peter currently works as a project manager for Conway & Robison LLC providing audit, certification, and consulting services to wood packaging manufacturers.