A week ago Monday, nobody outside of cargo owners and logistics professionals who knew the name “Ever Given” had the slightest clue that TEU means “Twenty-foot Equivalent Unit” and likely couldn’t find the Suez Canal on a map.
But last Tuesday, the grounding of the 20,000 TEU ship captured the world’s attention, drove up oil prices as traders feared an interruption in supply, and provided comedians and internet meme-creators a diversion from the day-to-day challenges for nearly a solid week.
Thankfully for companies needing critical components, shippers of perishable food and medicines, and importers and exporters of every imaginable kind of product worldwide, the Canal is once again open to passage.
The BBC reports thirty-seven ships transited the waterway Monday night. An additional seventy are scheduled to make the passage today, and the Canal Authority hopes to have all the backlogs cleared in less than four days.
However, while the Canal operators are out of the woods, global trade will suffer another series of cascading delays and shortages. Companies should be prepared to affect everyone worldwide, not just in their respective countries, regions, or trade lanes.
Vessels operating on fixed-day sailings have scheduled arrival and departure times at container ports around the world. If a vessel’s slot was last Wednesday or Thursday and they were trapped in the Mediterranean or Red Seas unable to make their scheduled port call, they’ll have to arrive and wait for their berth to become available.
You might not need a reminder, but it’s what Southern California has been enduring now for months.
Along with the delays in arrivals and departures, a global container imbalance started in Asia with the pandemic. It was further exacerbated by hundreds of blanked sailings that didn’t put empty boxes where they needed to be, and carriers are now playing catch-up. This is something that is so critically hurting US exports that the government is currently investigating.
These late arriving ships with their late-arriving containers will mean further delays, additional congestion. They could very well leave carriers in the position of having to involuntarily blank sailings to get their services back on schedule.
At a time of record-high rates, the last thing companies need is a further capacity reduction to drive up the spot market – but that is what may happen in the weeks to come.
We have been working diligently with our clients in the US and abroad to focus on prioritization and early booking of both slots and equipment. If an absolutely time-critical shipment appears, we are counseling shippers that it is better to pay equipment demurrage and hold a container rather than hope that when the time comes to load that there is a box, or boxes, available. Here at Sobel, we continue to monitor conditions worldwide, both through trade press and through our memberships in multiple local, national and global logistics associations. If you ever have questions, just reach out to your Sobel representative to learn more about your specific trade lane needs.