Global Supply Chain disruptions, Freight rates surge over 300% - Masakorala

By Rajiesh Seetharam | Published: 2:00 AM Oct 16 2021
FT Global Supply Chain disruptions, Freight rates surge over 300% - Masakorala

By Rajiesh Seetharam 

On Wednesday (13), U.S. President Joe Biden announced that the Port of Los Angeles would be working 24/7, in a bid to overcome the current supply chain disruptions, caused by the COVID–19 pandemic. “Today I’m announcing that the Port of LA will begin operating around the clock 24/7 to make sure Americans can get the goods they need.” Under the plan, the Port of Los Angeles is expected to nearly double the number of hours that cargo is transferred from container ships to trucks. The goal is to process and unload 3,500 extra containers during the night each week, Los Angeles Times reported. 

The Global Supply Chain crises has affected Sri Lankan exporters as well. Sri Lanka Manufacturers and Exporters of Rubber Products’ (SLAMERP) Press release noted that sometimes export entries are processed and cleared through Customs, but the actual shipment dates have delayed eight to twelve weeks due to shipping space not being available, containers being stuck in terminals at origin or destination and sometimes turning over at transshipment ports. “Although the Customs system would say export cleared, either the shipments are sitting at a terminal or in a ship without reaching the buyers,” noted SLAMERP Director General Rohan Masakorala. 

COVID-19 disrupted operations at many Ports in the last two years. Shortage of truck drivers in Europe and other parts of the world have further aggravated the issue. Meanwhile, Consumer demand has picked up as COVID restrictions are lifted in many parts of the world. Freightos Baltic Index notes Containerized Freight Rates for Asia – U.S. West Coast last week is USD 16,749, which is 330 per cent increase from the corresponding week in 2020. Freight rate for Asia – East Coast is USD 19,429, a 315 per cent increase in comparison to same corresponding week last year. Masakorala, who is also CEO Shippers’ Academy Colombo stated, “The world fleet of container ships are around 5,500 with about 26 million containers. 

Currently, about 8-10% of the container ship fleet are stuck in ports idling without loading or discharging containers. About 100 ships are stuck in the U.S. In China and Europe similar number are waiting to get a berth. Containers that have gone into inland destinations have not returned to Asia and are stockpiled in USA and EU and there is a shortage of empty containers in Asia. This has reduced both ship, equipment capacity across the world and demand has peaked for shipping space and container equipment. This has resulted in massive freight rate increases to around 300 per cent to 800 per cent in main trade lanes. This situation is expected to continue to for the next 12 to 18 months, which may result in product shortages and higher inflation.

By Rajiesh Seetharam | Published: 2:00 AM Oct 16 2021

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