DHL Warns Global Supply Chain Disruptions To Persist Next Year

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by Tyler Durden
Friday, Aug 27, 2021 - 03:00 AM

The complex web of seaports, container ships, and trucking companies that move goods worldwide remains deeply tangled. 

More than 18 months since the virus pandemic forced governments to shut down their economies and, in return, disrupt global supply chains. The emergence of the Delta variant has metastasized into more logistical hell for shippers. 

Bloomberg spoke with companies on the front line of production and transportation to gather intel of what was happening on the ground. What they discovered was increasing supply chain disruption that will persist through 2022. 

"We do not expect freight rates to stabilize in the near term," according to Karsten Michaelis, head of ocean freight at DHL Global Forwarding Asia Pacific.

"The combination of a year of disruption, lack of containers, port congestions and a shortage of vessels in the right positions is creating a situation where cargo demand far exceeds available capacity."

Michaelis said his customers had been given alternative routes and modes of transport to navigate the turmoil. "We have to be prepared that costs will stay at elevated levels and are not expected to go back to pre-Covid levels," he said. 

Global container prices are at record highs. 

Michaelis said the seasonal surge for holiday goods has already begun and will keep ocean freight "tight" for the remainder of the year. 

"Capacity planning for the Christmas season has started much earlier this year because capacity is so tight in ocean freight," he said. "We are seeing some customers even planning to fly in typical seasonal goods just to make sure they are on stock/in store on time."

In a series of shipping notes, titled "California Congestion Nears New High, East Coast Gridlock Worsens" and "US West Coast Port Congestion At Record High Amid Transpacific Trade Route Disruptions," we outlined congestion at US West and East Coast ports is mounting once more. 

The latest word from the frontlines is that supply chains disruptions are not waning anytime soon and will pressure consumer prices higher. So much for the Federal Reserve's "transitory" narrative.